Dubai mulling ratings for hospital performance, says Aster founder

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• Dr Azad Moopen interview
• Ratings would affect prices
• Insurers ‘call the shots’
• Profits down in health sector

Dubai is considering the introduction of performance ratings for healthcare providers, Dr Azad Moopen, the founder and chairman of Aster DM Healthcare, has told AGBI.

The system would allow operators to adjust their insurance tariffs – the prices that insurers agree to pay for medical services or procedures – based on their classification, providing an incentive to raise care standards.

Speaking on Monday on the sidelines of the Arab Health conference, Moopen said studies conducted by the Dubai Health Authority and the Dubai Chamber of Commerce had shown the need for performance-based tariffs.

The studies were launched after local healthcare businesses raised concerns about cost and profitability, he added.

The Dubai Health Authority did not respond to AGBI‘s request for comment.

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The healthcare sector in the emirate faces a challenging economic climate, marked by stubborn inflation, high interest rates and slow growth. Mandatory medical insurance policies have also had a big impact.

“In a totally insured market, it is the insurance companies which call the shots,” Moopen said. 

“In the last three years, there has not been any increase in the tariff from insurance companies, whereas [our] costs have gone up significantly. There have been rental increases, salary increases.” 

He added: “That is one of the major reasons why profitability has come down.”

Medical insurance was made mandatory in Dubai in 2014 for all Emiratis and expat residents, along with their dependents.

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A Dubai healthcare rating system could operate in a similar way to the classification process used by the emirate’s education regulator, according to Moopen.

The Knowledge and Human Development Authority evaluates private schools, with those achieving a higher rating allowed to increase their fees.

Aster DM Healthcare, which is based in the UAE and listed in Mumbai, runs 34 hospitals, 131 clinics and 502 pharmacies in India and across the Gulf. It employs 1,651 doctors and 3,679 nurses.

For the fiscal year to March 31, 2023, its revenue grew 16 percent to $1.46 billion. Net profit stood at $51.36 million.

The company derives 75 percent of its revenue from its Gulf business.

It reported a drop of nearly 93 percent in first-quarter profit in 2023, its fourth successive quarterly fall. It attributed the reduction to the cost of opening new hospitals in Oman and India and a one-time tax expense.

Pre-tax profit fell by 14 percent, weighted by a rise of nearly 20 percent in expenses.

Revenue from Aster’s hospital segment, which accounts for more than 58 percent of total revenue, rose 23.5 percent.

The company is demerging its Gulf and Indian businesses.

It will sell a majority investors’ stake in its Gulf operation to private equity firm Fajr Capital in a $1 billion deal, and a 30 percent investors’ stake in its India business for about $300 million.

The family maintains its controlling stake and a board majority in both areas, Moopen said, describing the deal as a “refresh of other investors in India and the GCC” as part of the segregation.

The deals will close “before the end of March”.