the following article was published Feb. 5 on Nuqudy.com, the leading economic, business and finance portal in Saudi Arabia (based on Effective Measures data).
Simon Leary, Managing Partner for PriceWaterhouseCoopers's Health Industries business in the Middle East, believes that the three most promising areas for healthcare providers and investors in the Middle East today are health insurance services, healthcare capacity building, and medical education.
The Middle East is a large region, home to 300 million inhabitants and 18 countries. Each of these is a different health market, says PWC's Leary, with its own characteristics. A prime difference is naturally the level of spending on health, which ranges from 0.5% to 5.0% of the state's budget in various Arab countries.
Yet as a rule, governments throughout the region are trying to develop their local health industry, both in order to meet spiraling demand from a growing and changing population, and in order to attract medical tourism to their country.
The Arab population is growing at a rapid pace, generating strong demand for more healthcare capacity. Lifestyle changes are causing a marked increase in health issues that were previously far less common, thereby multiplying the medical treatment capacity needs of this growing population base. The growth in demand is far outstripping current medical infrastructures.
Recent studies have indicated, for example, that in the Arab Gulf, demand for cardiovascular disease treatments is set to rise by 419% over the next 20 years, and demand for diabetes ailments healthcare will rise 323% in the same period.
Another factor driving local investment in the health industry is medical tourism. This involves foreign patients coming in from abroad in order to undergo medical procedures in the country. These patients pay well for the treatment, and contribute much-needed foreign currency, usually injected directly into the local health system. Many of the less affluent Middle Eastern nations have discovered that their high-quality medical services, combined with low levels of local salaries and costs, allow them to offer an attractive product to foreign patients.
In Jordan, for example, medical tourism has become a well established facet of the local health care industry. The large extent of this has lead some Jordanians to complain that with local hospitals overflowing with foreign patients there are scant beds left for Jordanian citizens. Health care administrators, however, are vocal in pointing out that the payment international patients have given for their care has amounted in 2010 to $1 Billion, which represents 4% of Jordan's total annual GDP, and that this money was injected directly into Jordan's health care system, thereby subsidizing it for local citizens.
In the GCC, local investment in developing health infrastructure relates to medical tourism in a twofold manner: on the one hand, the gulf countries are as interested in drawing in international patients as anyone else, and feel that the cutting edge capabilities they are developing will be attractive on an international stage. On the other hand, they are also keen to keep many of their own citizens from becoming medical tourists seeking treatment outside their home country, a situation that is today quite common.
Simon Leary, as managing partner for PwC's health industries business in the Middle East, has a wide-ranging involvement with the current efforts of Middle Eastern governments to grow their local health sectors. He notes that countries are moving in a smart way by focusing their efforts in creating local centers of excellence. This is done by bringing in excellent doctors with high qualifications, and investing in facilities and new equipment. However, Leary notes that there is a trap that hobbles the growth of such centers of excellence: Potential patients prefer to go to medical centers which have already accrued a lot of experience with any particular treatment, and this tendency means they avoid newly established providers, thus denying these providers the opportunity to gain that experience which will draw patients to them.
Looking at the Healthcare industry in the Middle East today, Leary identifies three prime areas that offer solid growth potential and ROI: Insurance, capacity, and education.
The case for developing medical insurance products in the Middle East is straightforward: such products are far from developed in the region, yet the limitations of government health care systems, as well as the increased presence of private healthcare providers, both drive a local need for this insurance category.
Capacity is also a high-growth area. Booming local populations and lifestyle-generated medical needs are driving strong demand for additional beds, enhanced primary care, and more efficient services. The growing medical tourism phenomenon, which generates a desire to draw foreign medical tourists in while keeping local patients from seeking care abroad, drives up investment in new equipment, as medical tourists demand better, newer and more advanced equipment.
Education is a natural outcome of local efforts to expand and improve the healthcare industry. Across the board there is increased demand for more medical professionals. In addition, there is growing demand for particular specializations and for acquisition of proficiency in the latest techniques. Third, there is a need for high-quality accreditation.
This strong demand for medical education and training cannot be met with existing local infrastructures. As a result, Leary points out that outside and private providers of health education and training will have to step in to fill in the gap. In view of the preference of Arab governments to carry out these activities locally, instead of sending local professionals abroad for training (or hiring of foreign professionals), there is a strong new market opportunity for in-region medical education and training, at all levels.
With record growth in market demand and in government and private investment, Middle East healthcare is a highly promising field for expansion and investment in the coming years.
