Standards of care: A rapidly growing sector awaits big system changes on the horizon

Developments to modernise Dubai’s health sector over the last decade have seen its infrastructure indicators speed ahead of the regional average in most major categories. The government accounts for 74% of all health care spending in the UAE, according to the latest World Health Organisation (WHO) statistics from 2011, but private health care providers in the emirates, and in Dubai especially, are an important and growing part of the sector.

While all UAE citizens are entitled to free health care, foreigners are responsible for their own medical costs, either through insurance or out of pocket payments, and rely on a handful of private hospitals and a wide variety of clinics to meet their needs.

Change Is Coming

 Insurance is not currently required by law, and many blue collar migrant workers are not insured, which has burdened public emergency services that are required to treat anyone who comes in, regardless of their ability to pay. Change is coming though, and legislation is in the works to introduce an employer-based health insurance mandate. When it is finally implemented, the law is expected to bring with it a shift in the quantity and type of medical services demanded in the emirate.

In the longer term, the demographics and health indicator trends show that increased capacity will be needed throughout the industry. In addition to domestic demand, medical tourism is becoming a growing part of the sector. Although it may not currently pose a threat to some of the more established destinations throughout the world, private and public entities are currently working together to develop more unified strategies for leveraging the emirate’s strengths to increase Dubai’s competitiveness.

Health Landscape

Key medical statistics show that while health care in Dubai has come a long way, there is still room for improvement when compared to developed nations. Add to that the coming health insurance mandate, as well as rising medical tourism, and it is clear that the industry is set to see a sharp increase in capacity needed from both private and public facilities. According to the WHO’s “2013 World Health Statistics Report”, the UAE had 19.3 doctors for every 10,000 people, which puts it well ahead of the regional average of 10.8, but below many European countries. The same report showed similar statistics for nurses and midwives, with 40.9 per 10,000 residents, again well above the regional average but far behind most European states.

Government health care spending in the UAE has risen sharply over the last decade, jumping from just $684 per person in 2002 to $1289 in 2011, as per the WHO’s most recent data. Despite this increase, the proportion of the federal budget spent on health care has remained fairly constant, rising four-fifths of a percentage point in the same period to 8.8%. Overall, public and private spending in the UAE combined was 3.3% of GDP in 2011, which ranks similar to other Arab states with high oil revenues such as Kuwait, Qatar and Saudi Arabia.

Indicators

 Health indicators show that even though the population is young – 88.6% of the populace is under the age of 45 – obesity is at epidemic levels and has led to a spike in non-communicable diseases. According to a report published in BMC Public Health in 2012, the UAE had the highest calorie intake in the world, with a daily average of 3017 calories per person, and was the fifth-heaviest country in their listing. The International Diabetes Federation’s latest numbers from 2012 estimated that the UAE had a comparative diabetes rate of 18.9% of the population – 11th highest in the world. Cardiovascular diseases caused by obesity are also prevalent, with the WHO reporting that the UAE has high levels of heart attacks, hypertension and strokes. The government has been investing in public health programmes to change the lifestyle norms that lead to these problems, but both increased preventive care and treatment of symptomatic patients will be needed to address such trends.

Regulation

The Dubai Health Authority (DHA) is the sector’s main regulatory body in the emirate. It operates the public health care facilities and is directly responsible for ensuring the accreditation and the quality for most private hospitals. Private hospitals that are regulated by the DHA must be accredited by an organisation approved by the International Society for Quality in Health Care. Hospitals and clinics inside Dubai Health Care City (DHCC), Dubai’s medical free zone, do not answer directly to DHA, but rather to the Centre for Health Care Planning and Quality, which is DHCC’s independent regulatory body that works with Partners Harvard Medical International. Hospitals within the free zone do not have the same level of choice for accreditation and must go through the USA-based Joint Commission International.

Health care professionals are regulated similarly to the hospitals. While most receive their licences from the DHA, those that work in DHCC interact directly with their officials. Licensing regulations continue to develop, and all medical professionals must renew their licences annually and participate in continuing education as a part of the process.

The DHA and the DHCC have focused heavily on increasing the amount of data available from the sector, as well as ensuring patient empowerment and recourse in the case of poor service or malpractice. The DHA now collects a broad spectrum of data from all major private and public hospitals and aggregates it into an annual report, which is of interest to both public health professionals and private investors. Patient protection has also improved as Dr Azad Moopen, chairman of Dubai-based DM Health Care, told OBG, “The sector’s regulation is showing signs of life and evolution. As awareness of the importance of health care comes along, clients also become more aware of their rights and become more communicative with complaints and remarks, which is a positive force in the industry’s development.”

Public Services

Despite making up just six of the 28 hospitals in Dubai, the DHA-run public facilities accounted for 83,652, or 34.8%, of all 216,046 inpatient treatments in 2012, according to official statistics. The DHA has set strategic goals to further shift inpatient treatments towards private hospitals until public facilities are only treating 30% of patients.

The three biggest public hospitals are the 549-bed Rashid Hospital, the 443-bed Dubai Hospital and the 314-bed Latifa Hospital. According to the DHA, Rashid Hospital admitted 9896 foreign nationals compared with just 3743 UAE nationals in 2012 – the most of any public hospital in Dubai and the only one to treat more foreigners than locals. Latifa Hospital accepted some 22,387 inpatients in 2012, and because it specialises in treating female patients, it was the only hospital to treat more women than men. Dubai Hospital admitted a total of 19,290 patients with no particular demographic favouring.

Restructuring

 While the DHA has direct operational control of all public hospitals in the emirate, the authority is going through a restructuring process which will split its regulatory and operating functions. What the final outcome of this restructuring will look like remains to be seen, but one of the options that has been proposed is to seek private partners for the operation of some public health care facilities. Whatever path is chosen, the DHA has made it clear that it wants to work closely with private industry going forward. As Essa Al Maidoor, director-general of the DHA, put it, “DHA’s aim is not to be the biggest service provider, our aim is to ensure we deliver the best health care service for the emirate, regardless of who delivers this service. To fulfil this vision, private and public sector collaboration is essential.”

Private Providers

The private health care system is competitive and includes many smaller clinics throughout the emirate, but there are also several large private hospitals that are growing in number. There are 22 private hospitals in Dubai, which treated 132,394 inpatients in 2012, according to DHA statistics. Far from just serving foreign residents, Emiratis made up 62.2% of those who received inpatient treatment in private hospitals. Private hospitals have 1468 beds and had a 56.6% occupancy rate in 2012.

GROWING DHCC: Much of the government’s focus on encouraging private sector growth is on the development of DHCC. Launched in 2002, DHCC is home to two hospitals and over 120 outpatient facilities that employ roughly 3700 medical professionals. Chief among DHCC attractions are that it allows for 100% foreign ownership, free repatriation of capital and no taxes on profits. The impact of the project is palpable, Michael Karsta, president of Middle East and Africa for medical technology firm Draeger, told OBG.

“Projects like DHCC have clearly shown the importance of the health care sector for the UAE and especially Dubai. Considering Dubai’s great infrastructure and DHCC’s very good cooperation and support for clinics and medical companies like Dräger, it has proven to be a very good location to lead business activities in the UAE and the entire Middle East,” he said.

One of the largest institutions in DHCC is the 229-bed Mediclinic City Hospital. Opened in 2008, it is already in the middle of a Dh213m ($58m) expansion that will add an oncology centre and provide more space for existing services. Tarek Fathey, director at City Hospital, told OBG that the expansion is in response to demand across the region. “There has been a rise in certain cancers in younger patients and we see there will be a lot of need in Dubai, the UAE and in the GCC. One of our plans is to work with our Swiss arm and hope that our new centre will be a hub for oncology in the region,” Fathey said. There are a further three hospitals currently under construction in DHCC that will bring another 290 beds to the city.

Private Growth Elsewhere

Beyond the grounds of DHCC, the 143-bed private Saudi German Hospital opened its doors in 2012. While the facility treated 1755 patients in its first year, it has the capacity to compete with the American Hospital, Mediclinic’s Welcare and City hospitals, as well as the Canadian Specialist Hospital, as one of the major private health care facilities in Dubai.

Despite the increased competition, the American Hospital and the Canadian Specialist Hospital both treated more inpatient clients in 2012 – 16,152 and 9578, respectively – than they did in 2011. Mediclinic City Hospital saw a slight decrease, treating 13,352 patients. Looking ahead, plans to build a Dh600m ($163.32m), 170-bed Korean hospital on the grounds of the Meydan Racecourse were announced in the spring of 2013, though the facility will not be open Medical clinics also play an important role in the emirate’s health sector, and according to official statistics, they accounted for roughly 47.3% of all 5.6m outpatient visits in 2012. While there are many independent clinics, some of the larger medical groups have outpatient-specific facilities, in addition to their hospitals. The vast majority of outpatient services, some 86.4%, were provided to non-nationals.

Labour Force

 According to the DHA, hospitals employed a total of 27,824 people in 2012. Historically, Dubai has relied heavily on foreign health care professionals to staff its hospitals and in 2012, nationals made up just 16% of the labour force. The private sector accounted for 64.5% of all employment in the sector in 2012 and 69.1% of all doctors.

According to a report from UK-based human resources firm Hays, salaries for private physicians range from $25,000 to $95,000. The guide estimated the average salary for a general practitioner with less than five years’ experience was between $25,000 and $35,000. On the other end of the pay scale, an experienced consultant with a medical degree and a PhD could expect to earn from $73,000 to $95,000.

Salary and human resources expenses will become a growing concern for private and public facilities if regional and domestic trends continue. According to the “UAE Healthcare Sector Forecast to 2014” put out by research firm RNCOS, in addition to the expected 16% compound annual growth, doctor-to-population ratios lag behind those in developed countries. It estimated that this could lead to a shortage of up to roughly 12,000 doctors throughout the sector by 2014. Because of the international makeup of the medical labour force, Dubai must also compete with other countries in the region for staff. With the growth of established centres and the development of new facilities throughout the GCC, health care providers in the emirate will have to work hard to attract and retain medical professionals.

Health Insurance

On hold since 2009 when it was originally slated to be introduced, a health insurance mandate for all residents is becoming a reality. Legislation was signed in December 2013 phasing in compulsory employer-based insurance between 2014 and 2016, with companies employing over 1000 staff required to provide coverage by October 2014 and smaller firms following by 2016. Although most white collar expatriates have health insurance already many blue-collar workers currently without insurance will benefit from the change (see analysis).

A similar system is already in place in Abu Dhabi, where 98% of the population now has insurance coverage, compared to just 30% of the population in Dubai. However, the Abu Dhabi law requires employers to provide health insurance to both their workers and employees’ family members, whereas the Dubai legislation largely limits employers’ responsibility to their staff, with employees insuring their dependants.

Concerns

The implementation of the mandate does not come without challenges, however, and both public officials and private health care providers have expressed concerns about problems that may arise if so many people enter into the system all at once. As Haidar Al Yousuf, director of health funding at the DHA, said earlier in 2013, “Mandatory health insurance is a massive change to our entire health service. This is a very complicated plan and one that affects every expatriate and local worker in Dubai, so, therefore, it is not something that can be rushed.” The distribution of costs between government facilities and private sector, for-profit hospitals will be an issue that needs to be addressed, for example.

The logistical challenges of implementing the legislation thus requires the coordination of insurance companies, health care providers, government ministries as well as the emirate’s many employers. If successful, though, it will unburden emergency services that now deal with most of the uninsured and would bring millions of new customers into the local health care market, presenting significant opportunities.

Medical Tourism

Accounting for an estimated $1.69bn of revenues in 2012, medical tourism is a growing industry in the emirate. While Dubai has the infrastructure in place and capacity to handle increased medical tourism, the industry remains somewhat fragmented. Other countries in the region such as Qatar, Jordan and, recently, Oman have developed government coordinated centres, but Dubai has, for the most part, let the market dictate its growth. Although this approach has had its advantages, it has also limited the level of cooperation between health care providers and hotels, airlines and other partners. It can also be difficult for a prospective patient from abroad to know what services and treatments are available, because they have to identify all the different private providers themselves, and with hospitals throughout the city, cannot just go to one central location (see analysis).

This is starting to change, though, and the government has been taking a more active role in planning and coordinating an industry-wide strategy that involves all potential public and private sector partners. As part of this strategy, the emirate is working to find its niche in terms of price, services and quality of care. Azad Moopen, chairman of DM Health Care, told OBG, “As for medical tourism, Dubai offers an advantage when it comes to anything travel related. It may not compete in costs for the most part, but the quality of the health care and accommodation, including on a linguistic level, are hard to beat.”

Education

 Medical education has been constrained to a degree by the private nature of both health care and education in the emirate. While it provides many advantages and has helped develop a modern health care system, medical education still relies on public facilities, and there are not enough places in these hospitals to accommodate students completing residences to obtain a degree.

For health education to take off in Dubai, investments to increase capacity are needed, and because of the high cost and risk involved, this will most likely have to come from the government. This is already one of the government’s goals and central to it is the Mohammed Bin Rashid Academic Medical Centre (MBR-AMC), located in DHCC. Opened in June 2013, MBR-AMC is home to a new research library and a medical simulation centre. Also opened in 2013, and attached to the MBR-AMC, was the Dubai School of Dental Medicine (DSDM), which welcomed its first class of post-graduates. DSDM is offering a full range of three-year master’s programmes and students will be able to sit for exams at The Royal College of Surgeons of Edinburgh upon completion of their degrees.

Teaching Hospital

Looking towards the future, DHCC also has tentative plans for a University Teaching Hospital. Its development is currently paused, but if this 400-bed teaching hospital were to come to fruition as planned, it would provide much needed opportunities for medical students in the emirate to gain practical experience and will be needed if Dubai is to transition from a centre of health care services into one that provides medical education as well.

Education programmes for medical administration and support services have proven easier to develop in the emirate, as they require much less physical infrastructure and can be incorporated into programmes that already exist. IT degrees that focus on specific industries, including health, have increased in popularity and are offered by many of the private branch campus universities in Dubai’s International Academic City. Meanwhile, the state-run Hamdan Bin Mohammed e-University recently launched a doctoral programme in health care management.

A Regional Centre

 Dubai is an attractive location for a growing number of firms in the industry to base their regional headquarters. Moritz Hartmann, general manager for the Middle East of Roche Diagnostics, told OBG, “Many companies continue to base their decision-making for the Middle East region out of European or US headquarters. But, given that these markets are increasingly different it is being seen as more and more valuable to set up within the region. Dubai offers perhaps the most in the region in terms of talent, logistics and ease of doing business.”

Two of the largest health care providers that use Dubai as a management base are DM Health Care and Mediclinic Middle East, a division of Mediclinic International. DM Health Care was founded in the emirate and has its corporate headquarters and much of its operations in Dubai as well. The health care provider has grown to operate in locations throughout the region and is readying to expand further into India. Mediclinic Middle East is part of publicly traded Mediclinic International and has eight clinics throughout the UAE, alongside its two hospitals.

In addition to health care providers, a whole host of international companies that provide support and products to the industry are based out of Dubai. Home to GE, Siemens, Philips and many others, the emirate is becoming a competitive market for companies looking to provide products and services to the growing number of medical centres in the region.

Pharmaceutical

 Pharmaceuticals companies have also been looking to Dubai as a production and research centre following the announced development of DuBiotech, a biotechnology and research free zone, in 2005. With all of the ownership and regulatory benefits of DHCC and other free zones, it has been successful in attracting many global players to its grounds, and by the end of 2012 the free zone was home to roughly 126 companies.

Still not fully completed, DuBiotech launched lab and office facilities in 2009 and a warehouse the following year. Private companies have also begun to invest in their own facilities on DuBiotech property. One of the largest of these investments was made by Pharmax Pharmaceuticals for a 3716-sq-metre factory at a cost of some Dh40m ($10.89m).

Outlook

Through private and public investments, the medical industry in Dubai has been transformed over the last decade, though even more change is on the way. Domestic demographics and health indicators, combined with the upcoming health insurance mandate will create a dramatic increase in the need for health care capacity in the emirate.

Like all markets in Dubai, the increase in demand will be heavily segmented between the emirate’s different demographics. Newly insured blue-collar workers will require affordable clinic treatment, while nationals and some higher-income expatriate groups will demand top-level service.

Although public hospitals will remain vital to providing medical care to the emirate’s residents, the private sector is set to continue to grow in importance as well. The government has set targets that will reduce the amount of emergency and hospital care that is provided by the public facilities and shift them to the private ones.

Medical tourists are expected to be a small but growing portion of the patients, and they will expect high-quality care at costs that are competitive with other global destinations. It is likely that competition from the other medical centres throughout the region will prove to be one of the biggest challenges to health care providers in Dubai, but that competition will also ensure that the medical industry in the emirate will continue to develop into a top-level centre for care.

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The Report: Dubai 2014

Health chapter from The Report: Dubai 2014

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