A lot has changed in the UAE healthcare since the first positive case of the Covid-19 was detected in the country. The pandemic has led to significant changes in healthcare, not only in the UAE but around the world. Such significant changes are in their nascent stages and will continually change in the coming years. Even before the pandemic, the healthcare sector in the UAE had undergone a considerable number of infrastructure and procedural changes. This has helped the country to position itself as a leading healthcare provider and also an important destination for medical tourism.
Even prior to the pandemic, the country was a major contributor to healthcare. According to KPMG, the UAE government contributed 66 percent of its total healthcare spending which stood at $15 billion in 2018. In the following year, the government outlays comprised approximately 70 percent of total GCC healthcare expenditure and the UAE government-funded approximately 69 percent of its total healthcare expenditure of $16 billion. According to GCC growth forecasts, contributions from the private sector are expected to grow at a compound annual growth rate (CAGR) of 7.4 percent compared to a CAGR of 4.9 percent for the government sector during the period between 2018 and 2022.
With the pandemic, the dynamics within the sector are dramatically changing. There is a drive to promote private spending in the healthcare sector by encouraging the adoption of public-private partnership (PPP) models. Since the public-private collaboration has worked well for the UAE, it could further drive the growth of the healthcare sector and prove to be a model for other economies, not only in the Middle East but across the world.
Why public-sector cooperation is key?
To ensure that the healthcare sector was sustainable and ready to tackle the problem of Covid-19, an important decision that the administration took was to promote partnerships between private and government healthcare institutions. One of the biggest challenges that the healthcare providers in the UAE needed to address was to test, identify, isolate and treat Covid-19 patients according to their conditions. In the initial days of the pandemic, this required huge manpower, funding and resources. The government in the UAE was quick to recognise this. The UAE has anticipated the need for testing in gigantic numbers and quarantining facilities. This is where public-private cooperation has helped the UAE healthcare sustain itself. Many private hospitals and healthcare firms in the UAE have stepped in. In May, the UAE achieved a milestone for carrying out the highest number of Covid-19 testing per capita in the world.
Working in close collaboration with the government, the private healthcare sector has brought in its expertise and manpower to fight the virus. What resulted was that the public sector joined forces with the private sector, setting up field hospitals for thousands of Covid-19 patients across the UAE, while private organisations have helped in managing those by providing human resources. With the public-private cooperation in the healthcare sector helping the UAE to fight the future, there is anticipation that the collaboration will see new advancements in the region. Many experts predict that such collaboration holds the key to the development and growth of the overall healthcare sector in the UAE.
Richard Stolz, Associate Director, Advisory, KPMG Lower Gulf told International Finance, that there is a drive to promote private spending in the sector by encouraging the adoption of public-private partnership (PPP) models. “One key driver for the promotion of private investments is the increased need to bring in niche healthcare sector skills, for example, cardiology, that are not yet widespread in the UAE,” he said. “From 2018 to 2022, private-sector healthcare spending is forecast to increase at a cumulative annual growth rate (CAGR) of 9.5 percent, compared with the government contribution growth rate of 4.4 percent.
“Growth is mainly supported by the rising emergence and support for PPP, as well as the increasing demand for treatment and hospital beds amongst an ageing population. Further, the privatisation of hospitals and mandatory medical insurance, especially in Dubai and Abu Dhabi, will likely encourage spending and contribute to a more integrated health system.”
To curb the spread of the virus, lockdown measures were introduced in the UAE and had forced citizens to follow social protocols. On the bright side, there was significant growth for digital health. Many healthtech companies rose during the period to fulfil the demand. For example, Meddy is a GCC-based healthcare firm that allows patients to find doctors, hospitals and book appointments with them through its web-based platform. In light of public-private cooperation in healthcare, Meddy’s Chief Executive Officer Haris Aghadi, told International Finance, that he firmly believes that public-private cooperation in healthcare holds the key for the sector’s development.
“I believe that the pandemic put us in such a situation that we had to come together as a nation to combat it. The healthcare sector in the UAE has witnessed significant growth over the past few years and for it to grow more, the government’s association is key—whether it is in keeping regulations favourable for the private sector, aiding in the healthcare setup, or diminishing problems as we are currently doing in the case of Covid-19,” Aghadi said. Another important aspect of the healthcare sector in the UAE is that most of the population comprises expats. Around 82 percent of physicians and 96 percent of nurses in the UAE are expatriates. Also, citizens above the age demographic of 50 years merely make up 5 percent of the population. This highlights the importance of grooming homegrown talents for the healthcare sector and it can be effectively achieved through public-private cooperation.
Tech innovation improves patient outcomes
KPMG, in its ‘Who cares, wins, the first edition of our UAE healthcare perspectives report’ said that digital innovation is a growing priority. In the present day, a rising number of technologies are disrupting the healthcare information technology (HIT) space and at a very rapid pace. On a global level, administrations are understanding the important aspects of HIT. Additional funds in the form of administration and private investors are being poured into developing technologies that deliver faster, cheaper and more accessible care—while keeping patients well informed. In the UAE, the government is leveraging healthtech and smart healthcare to promote an integrated experience and improve patient outcomes. In particular, the local government seeks to tackle lifestyle diseases putting the country’s healthcare system under pressure.
According to KPMG, the UAE accounts for approximately 26 percent of the total healthcare spend in the GCC. It is ranked among the top 20 countries in the world in healthcare spending per capita, at $1,200. In short, the UAE’s health regulators are increasingly considering the adoption of new smart technologies. A study published by PwC last year shows that 67 percent of consumers in the Middle East are willing to receive healthcare services through virtual means. Some of the UAE’s health regulators are increasingly considering the adoption of new, smart technologies to modernise the healthcare ecosystem. The country is predicted to add an additional $182 billion to its economy by 2035 on the back of accelerated artificial intelligent adoption, further contributing to its vision of becoming a leading, global technology hub for healthcare.
Stolz said, “New models of care are likely to emerge, for example, greater digitalisation with a focus on remote monitoring and consultation. Telehealth, the use of communication technologies to access healthcare remotely, is likely to be integrated into PPP models and government healthcare systems. We will see increased spending on healthcare R&D and innovation.” According to KPMG, the UAE government plans to prioritise fostering the development of future technologies. Regulatory authorities’ openness toward futuristic technologies and their application in the healthcare industry creates an agile environment.
Telehealth is a big game-changer
Telehealth is a game-changer and it is here to stay. Telehealth eliminates the need to physically visit a doctor’s clinic or the hospital and the pandemic has given this a significant push. To curb the spread of the virus, social distancing measures were introduced by the government and this has resulted in telehealth becoming an important communication and treatment tool during the Covid-19 pandemic.
Telehealth facilitates either a synchronous or asynchronous session between the patient and his doctor. Companies providing such services grew significantly in the last year globally. While many new startups providing telehealth services have sprouted since the beginning of last year, big players have also set up their telehealth platforms to tap into the growing segment.
Richard Stolz believes that digitalisation and telehealth have the potential to revolutionise the healthcare sector. Given the implementation of online collaboration tools and platforms driven by the outbreak of the Covid-19 pandemic, remote monitoring and consultation solutions will likely become predominant in the future healthcare landscape. Stolz said, “The UAE has witnessed multiple private-sector hospital players embark on the telehealth journey throughout 2020 – within a short time of the outbreak of the pandemic, several had set up digital telehealth offerings that were quickly absorbed by the market.”
“Patients can consult specialists from the comfort of their homes and offices, get e-prescriptions and sick leaves on their phones, and their medicines re-filled and delivered by the pharmacy to their doorstep,” Aghadi explained. “Telehealth has made treatment convenient for both the patient and the doctor, in terms of cost, effort and comfort.”
The UAE’s pronounced efforts in medical tourism
KPMG estimates the global health tourism industry to have generated revenues of approximately $32.5 billion in 2019 at a CAGR rate of 17.9 percent for the period 2013 to 2019. According to the World Tourism Organization (UNWTO), the medical tourism industry is expected to become a $207.9 billion industry by 2027, expanding at a CAGR of 21.1 percent. The growth is attributed to the growing middle-class populations, especially in regions such as Southeast Asia. Their ability to board a flight seeking medical treatment is enhancing medical tourism. Inbound medical tourism in the UAE has grown steadily. Visitors often arrive in the UAE seeking treatments such as surgery, rehabilitation and cosmetic corrections. Dermatology, orthopaedics and ophthalmology are in their prime at this point. According to the latest Medical Tourism Index Ranking, Dubai and Abu Dhabi ranked sixth and eighth for the best global destinations for medical tourism.
What makes the region attractive for medical tourism is its wider tourism ecosystem. The UAE has a strong tourism sector supported by its tourism attractions, hospitality, entertainment and the provision of world-class aviation and transport logistics. These factors, along with low cost contribute to the UAE’s growing medical tourism industry. KPMG said in its report that the average cost of a hip replacement in developed countries such as the USA and Switzerland is $26,500 and $19,722 respectively; however, when it comes to the UAE, the same procedure costs under $15,000. On the downside, the UAE exhibits higher costs of medical treatments and services compared to countries such as India, Thailand and Singapore, which could push local patients to seek treatments abroad, KPMG said in its report.
Aghadi explained that Dubai is the top Arab destination for medical tourism. It is slowly becoming the hub for offering world-famous treatments with its high-end facilities and medical staff. This in return is boosting the healthcare industry in the region more than ever. “Licenced healthcare professionals are becoming skilled; the entire experience is no less than a vacation with a bonus for travellers as well. And it is important not to forget the economic boost, increase in local employment, and improved tourism activity, with the government’s focus on aiding and improving the healthcare sector in the country,” Aghadi added.
Work models likely to change for greater digitisation
Certainly, healthcare in the UAE remains one of the fastest-growing sectors. This is attributed to the growing number of hospitals and clinics in the country. Aghadi said that in some ways, the pandemic has acted as a catalyst for the healthcare sector in the country. Stating Meddy’s example, he said that within a time frame of two weeks, their team created a HIPAA compliant, which is a telehealth platform that allows patients to access doctors on video calls from anywhere, at any time. “The entire process of consulting the doctor from the payment to the follow-up was shifted online. Similarly, pharmaceutical companies have been in a rush to develop, clinically test, and supply vaccines,” Aghadi further explained. “However, alongside the quick innovation and collaborative problem solving, the virus has left the healthcare industry drained—overworked staff, lesser space, higher costs, and unemployment are just a few of the issues which have arisen during the outbreak. This pandemic has allowed the healthcare sector to always be ready for the future.”
The level of merger and acquisition (M&A) activities not only in the UAE but across six countries of the GCC has increased significantly since last year. Due to the pandemic, many smaller private healthcare providers were hard hit by the lockdown and many of them were mandated to allocate resources to fight against Covid-19. This has to some degrees impacted their liquidity significantly and some were even on the brink of closing their business.
On the other hand, larger private healthcare groups acquiring smaller healthcare players seeking financing aid and support seemed to be a viable option to sustain themselves amid the pandemic. “Increased consolidation through merger and acquisition activity in the global and regional healthcare sectors, as smaller private healthcare groups increasingly face liquidity difficulties caused by the Covid-19 pandemic,” Stolz said, additionally pointing out the phased return of elective surgeries were postponed during the pandemic. Teleradiology and online pharmacy retail are witnessing unprecedented demand. An increasing number of citizens in the UAE are adopting these kinds of new services which were still relatively new to the sector.
The pandemic has also led to greater government focus on healthcare spending, in terms of emphasizing an efficient, robust and dependable healthcare sector for the welfare of its people. As a result, Stolz hopes that policies and decision-making will likely be conducted in a more efficient and coordinated manner. Additionally, the pandemic is anticipated to drive global intergovernmental collaboration. For example, the World Healthcare Organisation and other international and national healthcare authorities will jointly monitor the potential emergence of viruses, Stolz added.
“New models of care are likely to emerge, for example, greater digitalisation with a focus on remote monitoring and consultation. Telehealth, the use of communication technologies to access healthcare remotely, is likely to be integrated into PPP models and government healthcare systems. We will see increased spending on healthcare R&D and innovation,” he added.