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Healthcare market in GCC to cross $100 billion by 2023
February 17, 2018, 2:15 pm

Strong and continuous support to healthcare sector in the six-nation Gulf Cooperation Council (GCC) bloc will see the market double in size to over US$100 billion by 2023. Over 700 healthcare projects, with a combined value of more than $60 billion, are currently underway, being tendered, or in the planning stage, across the GCC. These include mega hospital projects, specialized health centers, primary care clinics and medical research establishments.

A study of the GCC Healthcare Industry, by leading global financial advisory firm, Alpen Capital, shows that healthcare sector in the region — estimated at over $50 billion in 2017 and growing at an compound annual growth rate of 12.1 percent — is projected to cross the $100 billion mark within five years. Despite this huge outlay, overall healthcare expenditure in the GCC, at 3.5 percent of GDP, still remains well below the 9.9 percent global average in 2014.
Delivery of healthcare in the region has for long been dominated by public health services. In 2015, more than 70 percent of the medical services, over 60 percent of the total 705 hospitals, and a significant portion of the primary health clinics in the region, were provided by the public healthcare system.

However, in recent years, relatively low oil prices have impacted government revenues and led to consecutive budget deficits and a slump in public spending. Though healthcare sector remains a priority for regional governments, and has remained relatively unscathed from recent spending cuts, nevertheless, continued significant disbursements to healthcare sector are straining the seams of state budgets.

Financial constraints to the public healthcare system are further exacerbated by the robust growth in population, higher life expectancy, lower infant mortality, and changes in lifestyle patterns, all of which demand more healthcare interventions. The GCC population, which was around 52 million in 2015, is growing at a CAGR of 4.4 percent and is expected to cross 65 million by 2020. The average life expectancy at birth in the GCC is about 77 years and the crude death rate of three per 1,000 people is much lower than that of many developed countries.

In addition, rising affluence in the region has promoted sedentary lifestyles and high-fat, fast food choices that have led to an upsurge in chronic non-communicable diseases (NCD), such as obesity, diabetes, cancers and cardio-pulmonary diseases. Nearly three-quarter of all the deaths registered in the region in 2015 were from NCDs; and the rates for cardiovascular diseases, cancers and diabetes are among the highest in the world.

Meanwhile, according to latest figures from the World Health Organization (WHO), the overall number of physicians per 1,000 people in the GCC averaged 1.75; nursing personnel averaged 4.75 per 1000 population; and the number of hospital beds per 1,000 population averaged 1.73. These figures contrast sharply with those for the developed world, for instance the figures for the United States and the European Union were on average 3.1 physicians, 8.9 nursing staff and 4.2 beds per 1,000 population.

The combination of economic and financial pressures, together with increased demand and limited health resources, have forced governments in the region to invite greater private sector participation in the delivery of health services.. In line with this strategy, there has been a foray of private players into various healthcare sectors, including investments in specialized hospitals and individualized healthcare services.

However, the presence of state-funded and private healthcare providers have led to confusion about the strategic directions of healthcare delivery in the GCC. Public health facilities currently offer free healthcare to citizens of GCC, and at a nominal charge to expatriates. With pressure on existing health services mounting, there is an increasing trend in the region to limit public health care to citizens, or at least charge expatriates considerably more to access public health facilities and services. Meanwhile, private health facilities target mainly the more affluent sections of citizens and expatriates in the society.

But, with a significant portion of expatriate population in the GCC made up of blue-collar workers, who can ill-afford high healthcare costs, it is clear that  policy makers need to devise a strategy that provides for Universal Health Coverage (UHC) as mandated by the WHO. This mandate calls for ensuring delivery of essential healthcare services across all strata of society, without causing financial hardship to any healthcare recipients.

The healthcare challenges and strategies being implemented to overcome them, by GCC states are hampering efforts towards achieving UHC across the region. Even the planned roll-out of mandatory national health insurance schemes is rife with potential potholes. It has been shown that private medical insurances generally tend to increase overall healthcare expenditures and moreover, at this stage, it is not clear who would foot the bill for insurance premiums — the employer who would in most cases not be willing to, or the employee who cannot afford to.

In view of these challenges, policymakers in the region are being urged to emphasize, prioritize and strengthen sustainable healthcare strategies. Among the recommendations made by the Eastern Mediterranean Regional Office of the WHO is to design and launch programs that focus on shifting the service modality from curative to preventive primary care; from reactive to proactive care; and from intermittent to continuous and consistent care. The healthcare policies should not only ensure the sustainability of GCC healthcare services, but also to safeguard its affordability and accessibility to all sections of society.


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