A white paper on how to reshape the healthcare sector across the region, from prevention to specialisation
The healthcare industry across the GCC is in the midst of a transition, one that will help enhance the operating environment, reduce costs and increase opportunities across the value chain. However, there are several areas of improvement that need to be addressed for the industry here to reach global standards.
Our exposure to the industry and examination of its practises has resulted in us identifying four crucial areas of improvement.
Insufficient access
Healthcare supply in the Gulf still lags behind international benchmarks. The number of beds per 1,000 inhabitants ranges between 1.3 to 2.2 in the GCC compared to 2.8 in the US and the UK and 6.2 in France and Germany. Similarly the number of nurses per 1,000 inhabitants is significantly below Western European and US levels. More importantly, healthcare under-supply is very pronounced for tertiary care hospitals, specialised and long-term care facilities.
Estimates of GCC spending on medical travel, for instance, are as high as $12bn a year”
Uneven quality
The outcome of care compared with spending in the GCC is below that of equivalent health systems in other regions. While the quality of primary and secondary care is uneven, the quality of tertiary and quaternary care remains generally substandard. To compensate for this, GCC governments send many patients abroad for complex treatments, such as oncology and orthopaedics.
High costs
Inadequate supply and quality result in unnecessary waste for local governments. Estimates of GCC spending on medical travel, for instance, are as high as $12bn a year – money which could be spent developing the local healthcare industry. Similarly, the cost of patients who need long-term care but instead reside in general hospitals is significantly higher than if they were placed in a long-term care facility.
Funding
GCC governments pay on average for 70 percent of all healthcare bills and private-sector payers and providers remain relatively under-represented. As funding this healthcare bill is increasingly challenging in the current environment of reduced government budgets, they might be tempted to impose an aggressive co-pay that would reduce public access to critical services, or to lower reimbursement rates to institutions, a step that could discourage investments needed to address gaps in the current ecosystem.
There is therefore a need to carefully craft policies and sector initiatives that create win-win scenarios for all participants: payers, providers and patients.
Synthesising the experience of healthcare providers, payers and regulators both in the region and from more mature markets, we highlight six areas that should be tackled to build those win-win scenarios. These are:
It is a well-known fact that private players have a major role to play alongside the public sector in healthcare”
1. Wellness and prevention
Prevention and early diagnosis are widely recognised as the most effective levers to reduce healthcare costs and improve clinical outcomes. Diabetes is an example of a common illness in the GCC that could benefit from prevention and early diagnosis. The cost of treatment of diabetes at a later stage, when complications are more likely, is 18 times higher than early stage treatment.
Among the other initiatives that can lead to better prevention and early detection of conditions are improving lifestyle and eating habits in addition to promoting screening and regular health checks and fostering primary care.
2. Specialisation
While most private hospitals offer secondary care specialists, few offer the specialised equipment and expertise of a tertiary hospital. A key means of growing the specialised medical centres in the GCC is by partnering with top-notch Western institutes and by building so-called medical cities or centres of excellence. Other measures include creating payment schemes that will attract investment into areas of specialty and steering new licences towards specialised facilities rather than generalist formats.
3. Consolidation and scale
The private sector remains somewhat fragmented in the GCC. The top five private hospital groups in Saudi, for example, account for just one-fourth of all private beds, and the top five in the UAE make up 40 percent, while similarly sized Western markets are generally much more consolidated.
Consolidation can improve quality, as well as reduce costs. Bigger scale means better purchasing power as well as the ability to attract medical talent and build solid infrastructure and systems, which are all essential in healthcare.
4. Privatisation
It is a well-known fact that private players have a major role to play alongside the public sector in healthcare. Accordingly, all GCC governments are planning a larger role for their private healthcare sector in the future and expect that to drive efficiencies by improving medical service and reducing costs.
Privatisation can take many forms from extending the scope of private insurance to increasing the role of private providers as owners or operators of medical facilities and support services.
5. Incentivisation
Growing healthcare costs have led some governments to try “value-based care” systems designed to align payer and provider interests and motivate good behaviour. “Value-based care” relies on better coordination of medical support enabled by electronic records of patients that avoids duplication of treatments and wasted costs while improving care outcomes. This is still unexplored in the GCC, but should be a key focus over the next decade.
6. Cooperation
Within the GCC, joint planning and coordination could achieve many benefits such as: reaching critical mass in terms of patients volume and case complexity by pathology which is important to attract the right medical talent; avoiding waste or duplication of expensive capital intensive infrastructure in super specialty areas; and greater procurement efficiency.
As the GCC undertakes changes in the delivery of healthcare, there are successful models to learn from and great opportunities for progress. Countries in the region are already examining strategies to address rising health costs and quality concerns. The challenge will be in the internal support behind the reforms, the actual implementation of the reforms as well as the follow-through.
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