UAE's hospital operators and insurers tussle over medical bills
Move on to get some hospital and clinic operators to cut their rates or risk coverage
Dubai: The relations between UAE’s medical insurers and healthcare providers are coming under fresh strain, and if not resolved at the earliest, can severely impact the delivery of medical services to citizens.
The latest incident centres around insurers setting an end-of-the-month deadline for some hospital and clinic operators to bring down the cost of consultancy and other treatment costs. This includes one of the UAE’s biggest privately-owned healthcare company.
If not, the insurers will stop “extending cover” to these facilities.
What this means for residents is pretty clear – they will not be able to visit any of the hospitals and clinics operated by these companies because their insurance policy specifically bars them.
Hospitals and clinics need coverage from as many insurers as possible – this ensures they have a wider base of residents to extend their services.
According to sources who spoke to ‘Gulf News’, negotiations are still going on to try and arrive at some solution conducive to all. Apart from insurers, TPAs (third-party administrators) too are involved in the dispute with healthcare companies. (TPAs process and pay out claims generated by healthcare providers on behalf of insurers. They are a vital cog in the medical insurance business.)
“The threat of removing cover is likely intended as a tactic to bring the healthcare providers to the negotiating table,” said a source at one of the leading insurance brokerage firms in Dubai. “Insurers feel these businesses are over-charging and they want to do something.
“If everyone comes to the negotiating table, the chances of reaching some sort of bargain is higher.”
Simmering tensions
Tensions between insurers and hospital operators had been rising since medical insurance became mandatory in Dubai. Over the last two years, it had become even more testy, with insurers going through the claims generated by the hospitals and clinics, and refusing to pay out any claim they feel is “inflated”.
Healthcare companies complain that the insured are taking their own time to process claims, and this is hurting their business prospects. They point to a number of closures of healthcare facilities, primarily small and mid-sized clinics, in recent times as a result of insurers’ tight control over claims payments.
But after COVID-19 struck and healthcare operators saw a sharp and sudden decline in their non-COVID-19 related consultancies, matters became more dire.
Cool down
But many in the industry believe this is not the right time to escalate an insurer-healthcare provider issue. And that it sends wrong signals to the authorities and residents at a time when the business of healthcare is in constant spotlight because of the pandemic.
Hospital operators, however, insist it’s not about cutting their rates and reach a “compromise” with insurers.
“We also cannot afford to compromise on overheads for running the hospital with compromised standards,” said Dr. Raza Siddiqui, Executive Director, RAK Hospital. “So, if insurance companies start being tough, this will have disastrous effects on the entire healthcare ecosystem.
“The healthcare industry which has come up so well in the region providing international quality healthcare - not only to local people, but also to medical tourists - will get compromised. And may lead to healthcare providers shutting down shop simply because they don’t have that much margin to sustain.
“Insurance companies must support the ecosystem for the healthcare systems to thrive and continue providing quality care.”
Will insurers’ tactics work?
In the past, insurers have stopped extending coverage to the odd hospital or clinic over differences related to claims generation and payments.
But when they are targeting leading healthcare networks, it becomes a different game altogether.
“The insured – both corporate clients and individual policy holders - will be up in arms if their policy suddenly excludes an NMC or Aster, or any big medical services network,” said an insured. “They will insist they want access to healthcare operators who have facilities everywhere.
“If not, they will just go to an insurance company who has coverage with these systemically important healthcare providers.
“Insurers, however big they are, will need to tread carefully in this particular fight.”
Healthcare practice has two major operating costs, namely capital expenditure and operating expenditure. Hence, net profits are not more than 5-7%, while the general perception is that healthcare is a very lucrative business