Dubai: A new fund launched in Dubai hopes to provide a cure for a long-running problem hospitals and clinics have been having – delayed payments from insurers and TPAs (third-party administrators).
The UAE health sector currently has $1.2 billion in medical claims that are in the processing phase.
Alkhair Capital Dubai has brought out the fund, with a target size of $100 million. A ‘healthcare liquidity’ fund, what it will do is help hospitals and clinics with faster access to funds owed to them by insurers.
Then comes the delays in payments on the claims raised by healthcare providers. “Healthcare facilities encounter a delay of 112 days on average to receive 90 per cent of their payments from insurance companies,” said Naveed Aurakzai, CEO of Alkhair Capital Dubai. “We launched this investment fund with the primary aim of addressing one of the most formidable challenges within the sector, estimated to encompass $100 billion in spending within the GCC.”
We are confident that the Alkhair Healthcare Fund will play a pivotal role in addressing liquidity challenges and prolonged working capital cycles, hampering the profitability and expansion of medical facilities
What the fund will do is acquire the receivables hospitals carry on their books and use technology – with AI lending a hand - to speed up the payments to the healthcare companies.
With the receivables – which will eventually get paid by insurers – the fund will have the underlying ‘asset’ to offer investors the promised returns.
“Leveraging our AI-driven insurance claims assessment technology, we aim to optimize and accelerate the claims process, facilitating prompt payments to medical facilities,” said Karim Dakki, CEO of Klaim.
Post-Covid, healthcare investments in the UAE and Gulf have been on one of the fastest growth rates ever. Focus has been on adding super-specialty treatment options, while consolidation too has been going on with some of the bigger entities acquiring mid-sized or standalone hospitals.
But all through this growth, the issue of payment delays continues to be a snag.
“The healthcare sector is experiencing remarkable growth, propelled by the region's expanding senior citizen population, rising life expectancy, and a surge in lifestyle diseases,” said Aurakzai.
“This surge has led to significant challenges, including insufficient infrastructure, higher medical claim settlements, and liquidity constraints due to extended working capital cycles.”
What is in it for the Fund investors?
According to Alkhair Capital officials, the Fund gives investors an investment structure with 'low volatility and income generation'. The Fund aims to 'achieve an annual return of 6-12 per cent'.