Billing cycles weigh on smaller health care firms

Dubai: Having gone through a period of consolidation, the UAE’s health care sector is now maturing under a few leading brands but the end of the cash business could yet see further consolidation, according to Shailesh Dash, founder and board member of Al Masah Capital.

Big player benefitted a lot from consolidation but for smaller players, survival is difficult in the new environment — given that most of the business is derived from direct billing to insurance companies, which requires better financial strength to withstand the lag in billing cycles.

Bill discounting

Cashflow problems are becoming acute in the health care sector, where insurance billings are in the range of 80 to 90 per cent, according industry players who have been leading consolidation efforts.

With the introduction of mandatory health insurance, many standalone clinics have either sold out or are aligning with larger players with deep pockets to wade through the billing and cashflow cycles.

Even larger players are finding the longer payment cycles burdensome.

“There should be innovative financial services solutions in the market to tide over such issues. Ideally, the health care industry should be offered bill discounting facilities to tide over liquidity issues,” said Dash.

While the long billing cycles could cause cashflow disruptions to small and medium-sized health care players, Dash said Al Mash Capital’s health care portfolio is better positioned to meet this challenge as a major portion of its health care businesses allow cash billing for services such as dental, cosmetic fertility treatments that are not covered under insurance.

Global focus on fund raising

Dubai: Al Masah Capital’s fund-raising strategy is no longer focused on GCC investors alone.

Out of the $1.75 billion raised, only 25 per cent came from the GCC while 40 per cent came from Asia, 9 per cent from Africa, 13 per cent from Europe and the remainder from the Americas.

Among investors 35 per cent are corporates, 20 per cent are pension funds and sovereign funds, 38 per cent are individuals, and about 5 per cent are banks and insurance companies.

“We have a network around the world. We need to be the custodian of the money for us to be able to present the right kind of products to the investors which is not the case today,” said Shailesh Dash, founder and board member of Al Masah Capital.

“We do not want to depend only on Gulf money. The idea is to create a network where people from around the world can participate.”

The company’s business formula is to give global investors access to Middle East & North Africa (Mena) and Africa markets and south-east Asia.

It is not dependent on the limited partner/general partner (LP/GP) funding model, rather it wants to stick to a committed group of investors who understand its philosophy of investing for the risk they take to get reasonable returns from such investments that are slowly changing the social infrastructure of the region.