UAE's private healthcare operators have pulled their weight over the years, but there are inefficiencies built into the system that will need a quick phasing out. Survival itself will depend on that. Image Credit: Ador T. Bustamante/Gulf News

Being a large-scale, qualitative private healthcare provider in the UAE means different things to different people. For the average patient, when they look at a large private hospital with world-class specialists and equipment, the immediate thought that comes to their mind is that the hospital is highly profitable – going by what they see.

On the other hand, the top management of the said hospital actually understands what it really takes, in terms of financial resources and commitment, to operate the hospital and keep its world-class services running smoothly.

Impressions and mismatches

It is not an easy task to run a leading private hospital in the UAE while attempting to turn in a reasonable profit. Moreover, the cost of hiring and paying monthly salaries of quality specialists and other essential healthcare staff, state-of-the-art medical equipment, costly pharmaceuticals, high-quality consumables, hardware and software, international accreditation, regulatory fees, utilities, and other capital and operating expenditures does mean running a private hospital is capital-, technology and manpower-intensive.

Hence, functioning in an ultracompetitive market where the average operational cost of healthcare for outpatients and inpatients in a private hospital averages Dh2 million to Dh3 million for a hospital bed per year, profit margins are a paltry 4-5 per cent at the most.

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No where near actual costs

Now, if we analyse a situation wherein an outpatient – with a low, annual health insurance policy of Dh500 – visits a private hospital or a private clinic five times a year on average, the typical per visit billing for the outpatient visit to a private hospital ranges between Dh400-500 for consultation, investigation and medication. And about Dh200-300 for a private clinic visit.

Hence, the average cost of outpatient treatment is Dh2,000-2,500 for a private hospital and around Dh1,000-1,500 for a private clinic, respectively, for all those visits.

Furthermore, the standard outpatient-to-inpatient conversion rate is about 5 per cent, and with an average stay of four- to five days, the treatment cost alone works out to be Dh20,000-22,000 for the private hospital.

Deepens the imbalance

With the high operational cost and the average monthly salary of doctors attending to outpatients ranging between Dh40,000-Dh70,000 in a hospital setting, the low-end health insurance policies do not do justice to the cost incurred by a private hospital. And presents a disconnect and creates an imbalance in the system.

As a result, insurance companies find it difficult to reimburse reasonably to the private healthcare providers, even as compromising on the quality of healthcare offered cannot be the solution.

In fact, recent incidences of some TPAs (Third Party Administrator) shutting shop, and depriving several healthcare providers in UAE of millions of dirhams of reimbursement amounts, clearly indicates the non-viability of the system. This requires a solution, which we must come up with to increase the feasibility.

Remove pain points

It is high time that both private health insurance companies and private healthcare providers understand and respect each other’s pain points, strategise, and work on a win-win situation for both sides. One that ensures that private healthcare providers can continue to provide patients with high quality healthcare, while being able to meet their standard capital expenditure and operating costs.

Seriously flawed

After the various emirates gradually stopped providing subsidised healthcare for UAE residents in 2016, apart from UAE nationals, private health insurance players unveiled annual policies for various segments of society without essentially taking private healthcare providers’ operating costs into account. This gave rise to a serious cost flaw and whose effects reverberate to the present day.

On the one hand, by studying best practice options, such as the Medicaid progamme in the US and the NHS system in the UK, the UAE can still improve on being able to provide world-class private healthcare to residents of all income levels. On the other hand, private health insurance players must understand and appreciate the great financial constraints private healthcare providers are facing in offering patients high quality healthcare, despite facing substantial financial loss, brought on primarily by low health insurance policies.

The need of the hour is for private health insurance companies in the UAE to offer annual policies that meet the minimum operating costs of private healthcare operators. And allow them to continue to offer high quality healthcare they have been offering patients all along, while being able to stay afloat... financially.

- Dr. Raza Siddiqui is Executive Director at RAK Hospital.