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Affordable healthcare in the GCC: a prescription for profit

Patients from the GCC are travelling to India, Thailand or Egypt for cheaper medical treatment Prostock/Alamy via Reuters
Patients from the GCC are travelling to India, Thailand or Egypt for cheaper medical treatment
  • Gap in GCC health market
  • Quality of care ‘highly variable’
  • Big opportunity for investors

The GCC’s affordable healthcare market is ripe for investment, research suggests, as patients are forced to travel to India, Thailand or Egypt to find cheap treatment.

Low-income inhabitants make up about 38 percent of the Gulf’s total population, according to Mansoor Ahmed, executive director for healthcare at Colliers Middle East in Dubai.

The proportion ranges from roughly 25 percent in the UAE to around 40 percent in Saudi Arabia and 45 percent in Oman and Kuwait.

Ahmed says that many low-income expatriate workers find it easier to access cheap medical care in their home countries or elsewhere than in the GCC.

In Dubai and Abu Dhabi, for example, employers are obliged to provide health insurance for workers, without deducting the premium from their pay. Ahmed says blue-collar workers are generally given basic health plans that offer maximum cover of about AED150,000 ($40,850) a year.

“There are instances where the geographical coverage of the health insurance plan extends to the workers’ home countries, where they are able to access better quality of care within the insurance coverage limit,” he says.

In the GCC, demand for complex treatments, an ageing population, high dependence on imports and a lack of specialised treatment centres are all pushing up the cost of healthcare. Research by Alpen Capital of Dubai predicts that healthcare expenditure will reach $135.5 billion a year in 2027. 

Dr Gireesh Kumar, associate partner for strategy and consulting, healthcare, for the Middle East and Africa at Knight Frank, says: “No countries in the GCC are popular as affordable healthcare destinations.”

The market is “relatively fragmented” in most of the region, “with highly variable consumer experience and quality of care”, according to Adeel Kheiri, a partner in Oliver Wyman’s India, Middle East and Africa health and life sciences practice in Dubai.

“For potential investors this offers an opportunity to consolidate, build scale and develop a differentiated consumer and quality-centric brand,”Kheiri says.

Jan Schmitz-Hubsch, leader of the Strategy& healthcare practice in the Middle East, says: “Investing in affordable healthcare – clear value at a reasonable cost – is likely to yield healthy returns.”

Ahmed suggests well-established facilities in this underserved market could achieve “healthy” earnings before interest, taxes, depreciation and amortisation of 15 to 20 percent of company profits.

Aster DM Healthcare, NMC Healthcare, Right Health, Dr Ismail Healthcare Group and Noor Al Shefa Polyclinics are among the UAE companies that have set up dedicated affordable care businesses.

This market segment is a “volume-based game”, says Kumar. “You need more volume to be able to turn out the same revenues that a premium segment hospital would get.

"Ideally, what happens then is you need to be able to provide services in faster times and you need to have your staff see more patients than a typical doctor sitting in a mid and premium hospital would see.

“While a typical consultation would be about 20 minutes in an outpatient setup, you probably need to see patients in 10 minutes to see more volume. That’s when you make money.”

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