New ‘GCC Healthcare Industry’ report predicts private sector investment growth and an overall healthcare spend reaching US$104.6 billion in 2022, from US$76.1 billion in 2017. Medical tourism is seen as an integral part of economic diversification plans in the region.
Investment bank Alpen Capital’s new ‘GCC Healthcare Industry’ report covers recent trends, growth drivers and challenges in the industry, along with Alpen Capital’s outlook until 2022. Gulf healthcare spending will exceed US$104 billion by 2022.
The GCC healthcare industry continues to offer a wide gamut of investment opportunities. Though traditionally regional governments played an instrumental role in building the sector, shrinking oil revenues have slowed spending.
The role of private sector is increasing, encouraged by government incentives, mandatory health insurance and other reforms. Given the changing demographic and epidemiologic structure, mandatory health insurance, and government initiatives to encourage private sector participation, there will be steady growth in private sector investment in the healthcare industry.
Even though regional governments continue to shoulder a sizeable part of the healthcare expenditure, against a backdrop of budget deficits, the importance of private sector participation is being widely discussed across the GCC nations.
Healthcare expenditure in the GCC is projected to reach US$104.6 billion in 2022, from US$76.1 billion in 2017. Expanding population, high prevalence of non-communicable diseases, rising cost of treatment and increasing penetration of health insurance are the factors driving growth.
Given the ageing population and an expected increase in the frequency of visits to clinics for treatment and preventive care, the outpatient market size in the region is predicted to grow at an average rate of 7.4% between 2017 and 2022.
The inpatient market is anticipated to increase by 6.9%. Growing population numbers, and the rising cost of medicine and ancillary services will drive spending on other healthcare services.
The UAE and Oman are likely to witness growth rates of above 9%, in anticipation of a fast-growing population, implementation of mandatory health insurance and above regional average medical inflation rates. Saudi Arabia, which is the region’s largest market, is expected to see a 6.1% growth.
In view of the anticipated rise in number of patients, the region is expected to require 12,358 new hospital beds by 2022. Current bed capacity is 118,295. The high incidence of chronic cases has led to an increase in demand, particularly in specialised areas of care. Although general hospitals are not running at optimal capacity, the need for beds is rising due to limited availability of speciality hospitals, long-term care centres and rehabilitation centres.
Medical tourism is an integral part of economic diversification plans of the GCC countries and has been receiving stimulus from the region’s governments. Dubai and Abu Dhabi are at the forefront in the GCC in attracting medical tourists.
Being largely hydrocarbon-dependent, the fall in oil prices has widened fiscal deficits of the GCC countries, compelling governments to curtail expenses. A major challenge faced by healthcare providers is the limited availability of skilled healthcare professionals. Shortage of medical workforce locally, localisation of jobs, high attrition and rising staff costs are hindering growth.
The GCC healthcare system has limited capacity and technology to treat ailments such as cancers, neurological disorders and cardiovascular diseases. This has led to locals traveling overseas for medical treatment.
View the IMTJ’s assessment of outbound and inbound medical tourism across all GCC countries.