Our team of experts have been serving regional healthcare institutions in providing various consulting services such as healthcare facility planning, asset advisory, market research and demand-supply analysis for the various sub-sectors of healthcare, feasibility studies for establishing new hospitals and clinics or expansion / restructuring of existing ones, technical due diligence and valuation of medical equipment and other related financial and strategic advisory services.
An overview of the market
GCC economies with their high per capita income and growing population have seen a steady improvement in healthcare parameters like infant mortality and life expectancy over the years. However, lifestyle-related diseases such as diabetes and obesity have increased in tandem with growing per capita income and a sedentary lifestyle. According to a 2018 GCC Healthcare Industry Report, the current healthcare expenditure in the GCC is projected to reach USD 104.6 billion in 2022 from an estimated USD 76.1 billion in 2017, implying a CAGR of 6.6%.
Between 2017 and 2022, current healthcare expenditure on outpatient services is predicted to grow at an annualized average rate of 7.4% to USD 32.0 billion, faster than an anticipated CAGR of 6.9% on inpatient services to USD 45.4 billion. The inpatient market will remain the largest segment with a contribution of 43.4% in 2022. In view of the anticipated rise in the number of patients, the GCC may require a collective bed capacity of 118,295 by 2022, indicating a demand for 12,358 new beds. This demand is being mitigated by the 700 healthcare projects worth USD 60.9 billion under various stages of development.
GCC governments pay on average for 70% of all healthcare bills. Funding this healthcare bill is increasingly challenging in the current environment of lower oil prices and reduced government budgets. The private sector participation has increased and is also playing an important part in the development of the healthcare industry, encouraged by mandatory health insurance and other reforms. Private players are now being incentivised through Public-Private Partnerships (PPP) to invest and manage operations, while the public sector becomes the regulator.
All GCC governments are planning a larger role for their private healthcare sector in the future and expect that to improve medical service and reduce costs. The transition is slow, however, and requires a massive shift in the overall healthcare system. Some good steps already taken in parts of the GCC should be replicated across the council. The UAE and KSA lead in mandating all private-sector employers to provide private health insurance. This supports the development of private insurance and providers, as well as a progressive transition toward a private healthcare system.
The demand for healthcare in the region will grow due to a rapidly growing population, rising income levels, increased insurance penetration and an increased prevalence of lifestyle-related diseases. The sector offers attractive investment opportunities as reforms gather pace and the market opens up further.
