middle east healthcare:

oasis of growth opportunities

30 May 2008

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 middle east healthcare: oasis of growth
opportunities Kavitha Hariharan

Advanced provision levels achieved over years of public sector investment

In the short span of a few decades, health care delivery in major Middle Eastern markets
(Saudi Arabia, United Arab Emirates, Kuwait) has developed from minimal to advanced
levels comparable to the West. Although the region's ratios of 20 hospital beds and 16
physicians per 10,000 people 1 are low by Western standards, the heavily urbanised
populations enjoy wide access to high-quality primary, secondary and tertiary care. Key
cities such as Riyadh in Saudi Arabia and Abu Dhabi in the UAE also house specialist
hospitals providing advanced diagnostic and treatment services.

The expansion in health care provision has been achieved mainly via immense government
investment in infrastructure and personnel, for instance through five year plans in Saudi
Arabia. Between 1980 and 1985, the kingdom's Ministry of Health made 66% more hospital
beds available, and nearly doubled the number of doctors. Most doctors practising in the
Middle East have been trained in the United States and United Kingdom, and ~60% of
medical professionals are expatriates.

Government facilities
Middle East - GDP and income per capita dominate, but private
sector will grow
Per capita - Saudi Arabia Per capita - Kuwait

2500
Per capita - UAE % GDP - Saudi Arabia
7.0%
The public sector continues
% GDP - Kuwait % GDP - UAE to be operationally
responsible for 70-80% of
6.0%
2000
health care provision in the
region, through hospitals
5.0%
833
under country-level
1500
Ministries of Health and the
4.0% 4.0%
technologically more
679 3.4% advanced military and
1000
3.1%
448
3.0% security hospitals. The
2.6%
public sector accounts for
2.2%
362 2.0% roughly three-quarters of the
500 687
total expenditure on health
1.0% in each key market.
523
Governments in the region
0 0.0%
heavily subsidise treatment
2000 2005 for citizens: public hospitals
provide free or heavily
subsidised care at similar quality compared to private facilities.

1
All figures from the World Health Organisation’s Statistical Information System, unless stated otherwise

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With government resources stretched by rising health care costs, private investment has
been identified as crucial to continued expansion in health care infrastructure. Regional
governments are hence increasingly encouraging private funding, through approvals of
more private hospital construction projects, public-private partnerships (e.g. contracts
between UAE government hospitals and leading US providers Cleveland Clinic and Johns
Hopkins), and policy support (e.g. mandatory private insurance for expatriates in Kuwait). In
addition to nurturing the private sector, governments in the region are also continuing to
build new and modernise existing healthcare facilities, to cater to growing demand and to
attract patients from less-equipped countries in the region.

Government investment in public services in the major Middle Eastern markets has
historically been funded by oil revenues; health care is no exception. Soaring oil prices
continue to facilitate public-sector investment in health care infrastructure, aimed at meeting
increasing demand from growing populations (2.9% annual growth on average, as of 2006).
In the most populous of the markets, Saudi Arabia, growth is driven also by government
plans to position the market as a regional health care hub. Despite the regional demand,
growth in not assured: health care financing depends too heavily on oil prices that have
proven to be unstable, and provision requires support from a large base of expatriate
medical professionals (~60% of personnel) that experiences frequent turnover. There have
been recent efforts to train more local doctors, nurses, dentists and pharmacists, for a more
stable staffing situation.

Changing disease pattern, speciality demand spur outbound health tourism

In line with substantial development of health care infrastructure over the past 20-30 years,
the major Middle Eastern markets have also achieved significant progress in public health.
Preventive medicine
campaigns have
boosted life expectancy
to over 70 years, and
child mortality rates
have dipped below 10
per 1000 live births.
Also comparable to
Western achievements
in health indicators,
there is a marked
decrease in the burden
of communicable
diseases: in 2002,
approximately 17 years
of life were lost to these
on average across the
region.

However, there has been a sharp increase in non-communicable diseases and injuries.
Diabetes has become one of the most common diseases in the region: about 25% of the
Saudi Arabian population is now affected. Cardiovascular disease and hypertension are
also increasing in the region, due to hectic lifestyles and dietary changes. Road traffic
accidents have also become widespread: they are now the largest cause of death in adult
males aged 16 to 36 years. Hospital facilities in the larger Middle Eastern market are largely

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equipped to cope with the changing disease profile in the region. Facilities in Saudi Arabia
especially also cater to inbound patients from neighbouring Middle Eastern countries
(Bahrain, Yemen, etc.) as well as Africa.

Despite local infrastructure and expertise, a small minority of Middle Eastern patients –
either foreigners or citizens sponsored by the government – continues to seek treatment
abroad. Organ transplants, particularly of the liver, kidney and bone marrow, are the biggest
driver for outbound patients, due to scarcity of organs available in the home country. In line
with international law, Saudi Arabia, UAE and Kuwait only accept organs with approval of
the deceased; these countries also limit donors to direct relatives of the recipient. Outbound
patients from the Middle East also seek a few advanced specialities that are lacking in their
home countries. In line with the evolving disease profile, these include cardiology,
neurology and hip replacements.

These recent developments raise the following questions:

How will initiatives to attract inbound health tourists affect health care provision in the
three large Middle Eastern markets?

To what extent will such initiatives affect outbound health tourism from the region?

Which health tourism destinations are currently serving outbound patients from the
Middle East?

How can emerging Asian health tourism destinations such as India, Thailand and
Singapore grow their share of Middle Eastern health tourists?

In light of increasingly popular public-private partnerships, how can leading Asian health
care groups expand in the Middle East market?

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Kavitha Hariharan is an associate at Clearstate.

You may contact the author via email at: thinking@clearstate.com

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