In recent decades there has been a major improvement in the quality of health care in Oman. Rising living standards have greatly reduced the impact of contagious diseases, though the high rates of non-communicable diseases (NCDs), common among many GCC countries, continue to climb. Despite feeling the impact of the fiscal austerity caused by low oil prices, the country’s health sector is poised to resume growth, aided by the expected introduction of mandatory health insurance for expatriates.
Structure & Oversight
Oman offers a universal health care system, which for citizens is free at the point of delivery and for expatriates is offered at subsidised rates. Overall service provision is overseen by the Ministry of Health (MoH). Also part of the regulatory framework is the Central Quality Control Laboratory, which monitors the safety and quality of medicines. The Oman Medical Specialty Board, set up by the MoH and Sultan Qaboos University in the 1990s, supervises post-graduate medical training.
Total public and private health care expenditure in Oman was estimated at $3.2bn in 2017, and predicted to rise at a compound annual growth rate (CAGR) of 9.1% to $4.9bn in 2022, according to the March 2018 “GCC Healthcare Industry Report” published by investment banking research company Alpen Capital. The report said health spending in Oman was growing at the second-fastest rate within the region, behind the UAE, due to population growth, the rising cost of care, and the rollout of mandatory health insurance. Spending growth is also driven by the rise of NCDs and an increase in preventive care. Rising demand requires that there be a CAGR of 3.2% in the number of hospital beds, adding 1144 new beds starting in 2017 to reach a capacity of 7937 through 2022.
According to the MoH, total public health care spending fell by 0.4% to OR789.4m ($2bn) in 2017. The fall is attributed to austerity as a result of low international crude oil prices. The ministry, in its 2017 annual report said total health expenditure (THE) was 2.7% of GDP and mostly funded by the public sector. The government covered 81.1% of the THE, and provided 83.1% of the hospitals, 92.5% of hospital beds, 62.2% of outpatient services and 94.5% of inpatient services.
The government has been involved in updating a major long-term health policy, known as Health Vision 2050, the document for which was first completed in 2012. Among the principles established in that document is the need to provide quality services, to focus on measurable outcomes, to emphasise disease prevention, to be patient-focused, and to keep up with emerging technologies.
Also relevant is the sultanate’s ninth five-year plan, which covers the 2016-20 period. Priorities under the plan include building integrated medical cities, investing in human resource development, restructuring medical education and boosting health care spending. The plan had difficulty meeting some of these objectives due to the impact of the 2015-16 slump in oil prices, prompting tighter state budgets.
According to the IMF’s “World Economic Outlook” released in October 2018, Oman’s population stood at 4.26m people. It is a comparatively young population with a median age of 25.6 years. It is also now a largely urban society, with 77% of the population living in cities. Gross national per capita income is $52,170, which puts Oman in the high-income category. Life expectancy at birth as of 2016 was 77 years. For both sexes, life expectancy rose by over four years in the 2002-16 period, according to the World Bank. The country has made significant progress in the health-related UN Millennium Development Goals. For example, the under-five mortality rate per 1000 live births has been cut from 39 in 1990 to 11 in 2013. In the same period maternal mortality was cut from 48 per 100,000 live births to 11. One factor helping the reduction in maternal mortality has been the policy of birth spacing, encouraging young and middle-aged women to increase the interval between pregnancies. MoH clinics operate a national birth spacing programme in collaboration with the UN Population Fund.
Conversely, deaths due to HIV/AIDS have increased from 0.8 per 100,000 people in 2000 to reach 5.5 in 2012. Additionally, one of the major issues, shared with other GCC countries, is the growth of NCDs, associated with rising income levels and more sedentary lifestyles. The World Health Organisation (WHO) calculates the burden of disease, which is measured in terms of years of life lost (YLLs) due to premature mortality, and years of healthy life lost due to disability (YLDs). In 2012 the most YLLs and YLDs were due to cardiovascular diseases and diabetes. These were followed, in order of prevalence, by neuropsychiatric conditions, unintentional injuries, and other NCDs, including blood and immune disorders, and cancers. Oman scored relatively high in certain types of risk factors for NCDs, including smoking, mostly among Omani men aged 18 and older, with 14.7% of this demographic identifying as smokers; obesity, mainly among women, with 36.9% of this group deemed overweight; elevated blood pressure; and to a lesser extent, increased blood glucose levels, which is associated with diabetes.
The government has invested in expanding public health facilities. In 2015 the number of public primary health care institutions was increased to 235, ensuring that over 90% of the population lives in proximity to a medical centre. In 2017 there were 69 hospitals operating in the country, offering over 6400 beds. Work on constructing new facilities has been ongoing. These include the $1.5bn Sultan Qaboos Medical City in Muscat, a major complex housing five separate hospitals and related facilities, and the $1bn International Medical City in Salalah, designed as an integrated medical tourism project offering 530 beds and speciality services such as organ transplantation.
In 2018 the Oman Investment Corporation (OIC) published construction tenders to build the country’s first specialised hospital for women and children, to be located in the northern coastal city of Sohar. According to Khalid Elkondakly, health care project development director at OIC, the planned hospital will have 70 beds, three major operating rooms and a recuperation area which will be supported by an intensive care unit for adult and paediatric patients. “Additionally, the hospital will feature nine labour and delivery rooms, plus highly advanced neonatal facilities and a well-being centre for women, alongside supportive specialities such as internal medicine, general surgery and on-call surgery to treat various tumours in women. There will also be a physiotherapy department,” Elkondakly told local media in July 2018.
The rising demand for medical services has meant that the sultanate requires more doctors and qualified medical staff. From just under 6000 doctors in 2016, the National Centre for Statistics and Information has calculated that an additional 13,000 will be needed by 2040. Under the state’s Omanisation policy, efforts are being made to train more citizens as doctors and gradually reduce reliance on foreign doctors. Speaking to local press in April 2018, Dr Bashir A P, head of internal medicine at Badr Al Sama Hospital, said a mix of foreign and Omani doctors would be required to meet the 2040 target. “There’s no reason why Omanis cannot do the job. The medical graduates just need proper training,” Bashir said. By the target date, the country should be in much better position to take on a greater responsibility within the health care sector. In order to meet growing demand, apart from adding more doctors to the workforce, the number of hospitals will also need to increase alongside a better distribution of facilities throughout the interior of the country.
According to a MoH study published in June 2018, 41% of all doctors working in hospitals, health clinics and other health centres are women, up from 27% in 1990. In 2016 there were 2403 female doctors, an increase of 17% from 2012 levels; and 3472 male doctors, up 19.6% over the same period.
According to the MoH, the private sector’s contribution to health services is still comparatively small. Private hospital beds represent only 7.5% of the total, and around 27% of the clinics are privately owned. Despite these figures, the government has recently expressed interest in vastly expanding the role of the private sector.
Haitham Abu Hashim, executive director of Muscat Private Hospital, told OBG that the medium-term outlook for private sector health care providers was very positive, although the sector had experienced some shorter-term difficulties. He estimated that as a result of the financial squeeze witnessed, turnover in the private health sector had fallen by as much as 25-30% during 2018. However, Muscat Private Hospital had seen no more than a 5-10% fall in business. This was, in large part, because it was an A-category hospital with a large proportion of its patients covered by medical insurance. Abu Hashim estimated that while only about 7-10% of the overall number of admitted patients are insured, the proportion of insured patients usually treated while receiving care at the hospital was much higher at around 50%, while the remaining 50% pay for their medical treatment up front. For insurance purposes, hospitals are ranked in A, B and C categories. The annual premium for medical cover in an A-class hospital is OR300 ($779), while in a B-class hospital it is OR180 ($467) and in a C-class it is OR100 ($260).
Mandatory insurance for expatriates will be key to growth within the private sector, as patients will be incentivised to see treatment in Oman. For example, some foreign workers who smoke are currently uninsured. When they suffer smoking-related diseases, they have an incentive to return to their home countries for medical treatment. However, once health insurance becomes mandatory – the government will only issue work visas to employees who are currently covered – it will make sense to seek treatment in Oman instead. Muscat Private Hospital has plans to expand its presence with a second polyclinic in the capital, and was considering opening facilities in Salalah, the sultanate’s second biggest city, as well as in Sohar.
Health Insurance Schemes
A major development occurring within Oman’s health sector is the introduction of mandatory health insurance, which is expected to happen before the end of 2019. In July 2018 the Capital Market Authority (CMA) said it was working with other agencies, including the MoH and the Ministry of Manpower, to require the provision of compulsory health insurance for migrant workers in the private sector. In August 2018 Waleed Al Zadjali, president of the Oman Medical Association (OMA) said the mandatory system would be introduced at the beginning of 2019 if all the stipulations that the OMA required were in place for the rollout. The following month, Abdullah bin Salim Al Salmi, executive president of the CMA, said that the new insurance scheme would cover approximately 1m employees and be phased in over five stages. The project would be able to provide a digital link between private insurance companies, private health institutions, regulators and other industry stakeholders. In September 2018 the CMA said that the system would require an increase in hospital capacity within the private sector, given that there are only 15 private hospitals operating within Muscat.
Before the introduction of mandatory health insurance it was possible for certain categories of employees – particularly blue-collar workers – to slip through the safety net and be unable to fund necessary medical treatments. The MoH estimated that only 9% of Omanis and 10% of expatriates in the private sector had private health insurance cover.
“We have seen an increasing demand for group medical schemes since 2015, but this trend was not seen for the blue-collar category. Once medical insurance is made mandatory like motor insurance, this will be beneficial to the workers and will be cost-effective,” Philip K Philip, CEO at Muscat Insurance Company, told industry media.
The shift from patients paying cash at the point of medical service delivery to insurance scheme coverage might also encourage doctors to treat each individual case more comprehensively. A typical example of this is that during the lifetime of a patient’s care, a physician is more likely to order background tests, laboratory reports and more inclusive prescriptions that treat the diagnosed condition should the patient be insured, according to Philip. As long as the system is not abused, this would benefit both the employee and employer.
The transition to mandatory cover will boost the local insurance sector. According to the “Annual Financial Stability Report 2018” published in September 2018 by the Central Bank of Oman, insurance penetration, which is measured using the ratio of the total amount of gross written premium to GDP, was only around 1.6% in 2017, comparable to other GCC countries, but lower than the global average of 6.5%. In 2017, 86% of total gross premium were paid for general or non-life cover, and within that category, motor vehicle insurance had the largest share at 34%, followed by medical insurance with 30%. Therefore there is significant scope for the medical insurance segment to grow.
The incidence of NCDs is growing across both Oman and the GCC region as a whole, which goes some way to explaining rising health care costs. Some hospitals and clinics lack the facilities needed to deal with cancer, neurological conditions and cardiovascular disease, meaning that many nationals and expatriates still travel overseas for specialised treatment. At the same time, however, medical supply is beginning to adapt to the changing needs of patients. In response to NCDs and the needs of a gradually ageing population in the region, there has, for example, been investment in long-term and post-acute care rehabilitation clinics and a general shift towards preventive care. People are becoming aware of the need for healthier lifestyles and are beginning to understand the benefits of annual medical checkups and disease screening.
NCDs have grown in significance as a cause of mortality. According to the WHO, by 2016 NCDs accounted for 72% of all deaths in Oman. The most prevalent were cardiovascular diseases (36% of all deaths), cancers (11%), diabetes (8%) and chronic respiratory diseases (2%). In the absence of NCDs, other fatalities included injuries and accidents (18% of the total), and deaths caused by communicable, maternal, perinatal and nutritional conditions (10%).
Oman has followed a UN initiative to develop a national policy for the control of NCDs. In October 2018 as part of this drive, the MoH announced that Oman was the first country in the GCC to publish a comprehensive cancer incidence report, which found that the country’s cancer rates were not a matter of concern or at dangerous levels when compared regionally and worldwide. Dr Ahmed bin Mohammed bin Obaid Al Saidi, minister of health, said that the report had concluded that the most common cancers in the sultanate were breast cancer among women, followed by prostrate cancer among men. The cancer incidence rate was calculated at 103.8 cases per 100,000 people.
Dr Matlooba Al Zadjali, a cardiologist and the founder of the International Specialised Centre for Heart and Vascular Diseases in Muscat, has said that the main causes of these NCDs are hypertension, diabetes, high cholesterol and obesity. She said that the latest available data, as of September 2018, indicated that there were 89,246 registered diabetes cases in the country. A MoH screening exercise found that 36.2% of those aged 40 or older had body mass indices of over 30, which classified the patient as obese. “Certainly, increasing tax on certain foods, more specifically fast food and soft drinks, will reduce the burden of NCDs,” she told local media in September 2018. “Moreover, there is evidence to indicate that reducing salt in flour and bread will reduce the prevalence of hypertension.”
Foreign Direct Investment
Health industry trends point to an increasing role for private investment, and the opportunity Oman shares with other GCC countries. Within the region, there remain a number of investment opportunities in the sector, despite collapsing oil revenues and a subsequent slowdown in spending. As a result, however, an increasingly important role for the private sector has been encouraged, taking advantage of both mandatory insurance reforms and government incentives. The potential for the sector’s growth will in large part be determined by careful cost-benefit analyses that are undertaken by private investors. Some industry observers have forecast that there is a surge of mergers and acquisitions activity as new players begin to enter the market and existing providers seek to expand their market share, as well as increase the number of physicians and specialists on contract and their medical capabilities.
The sector’s future is positive for a number of reasons. First, as hydrocarbons prices have gradually improved over the course of 2018 and economic growth continues to improve, public health care spending and demand-led private health care spending is positioned to pick up in 2019 and 2020. Second, the expected introduction of mandatory health insurance for expatriate workers will provide a major boost in 2019. Lastly, a combination of demographic and health care trends also points to the increasing demand for health services. These include the need to tackle the incidence and prevalence of NCDs and the shift from a curative to a preventive-based model of sound medical treatment.
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