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By Arnaud Bauer, Managing Director and Dr. Madiha Qazi, Manager, Advention Business Partners, Dubai
The healthcare sector is one of the GCC’s most dynamic business environments, driven by an ever-expanding domestic population, an increasing need for quality services, growing burden of chronic conditions requiring extensive care, and an improving collective coverage for services. With the support of local authorities, the private sector has been at the forefront of this development for years. For example, each of the nine new hospitals added in Dubai between 2010 and 2016 are private. The same applies to Oman, where 10 new hospitals were built over the same period, exclusively by the private sector. In Abu Dhabi, one new public hospital was added between 2010 and 2016, compared to 22 for the private sector.
Providers that focus on standards of care are consolidating to normalise the level of care being offered, and investors are contributing to innovative care solutions such as telehealth, which have helped address the requirements of patients.
Despite many changes in recent years, rapidly evolving healthcare needs of the population and the scale of technology-induced change have led many to doubt the value and practicality of government regulation. Regulators and the regulations they create and enforce play a critical role — but one that may need to evolve to remain relevant and effective to keep up with the need for further investment.
Here we try to examine the core challenges experienced by the private healthcare sector in the GCC, and the role regulators are expected to represent in the rapidly evolving landscape of private healthcare provision. Specifically, we’ll explore challenges related to keeping up with a growing number of service providers, dealing with continuously under-supplied areas of care, and introduction of innovative technologies.
We then try to identify opportunities for regulatory bodies to navigate today’s challenging landscape and prepare for enhancing investment — both in the way they make rules and the way they enforce them. In many ways, regulators can harness the very trends that have caused disruption and use them as means to modernise regulatory practices and increase effectiveness of the healthcare system.
In our opinion, it is a myriad of complexities that the maturing private healthcare sector experiences in the region, as regulators are finding it more difficult to balance the need to provide healthcare coverage and provide a fair playing field for both providers and payers, with the need to avoid impeding innovation.
Other destinations around the world who are competing to attract patients for medical tourism that provide high quality care in the private sector are better supported on key capacity and investment. This has primarily been the case due to the presence of strategic frameworks from regulatory bodies, aligning the needs of the region with the standards and coverage of care required.
A trend that afflicts the GCC’s private healthcare sector has been investors targeting a narrow space of infrastructure (i.e. multispecialty hospitals and clinics in secondary care), which contrasts with the holistic range of services offered globally by most destinations that house high quality providers. A further focus highlights the trend to invest in already competitive, high return services in contrast to several under-supplied areas of care. As an example, the recently released HAAD Capacity Masterplan for Abu Dhabi highlights strong gaps in medical specialties that would appear quite common in mature markets, such as: rheumatology, paediatric surgery, surgical oncology, or mental health.
On the other hand, we see investors facing a lack of overall funding (when compared to other attractive investment destinations globally) and simplified licensure mechanisms with complex multiple overlaps, for both greenfield projects and acquisitions, which could result in lengthy, stressful and quite discouraging processes, especially for foreign investors who have limited prior business exposure to the region.
Coverage of services remains patchy, due to lack of supportive cost savings evidence as well as directive for insurers to consider preventative and other long-term medical services from any of the regulatory bodies. Additionally, inflexibility to adopt more innovative models primarily to enhance coverage can be attributed to general lack in frameworks to regulate Third-Party Administrators (TPAs). Finally, the introduction of basic coverage in some of the GCC countries aimed at offering healthcare coverage for low skilled expat workers has admittedly contributed to creating a new market for healthcare providers, but is widely considered as a low profitability activity, and certainly does not contribute to elevating the overall quality and diversity of care in the region.
Lack of clarity on adoption, development and implementation of standards and guidelines for good practice pale in comparison to that of other maturing systems. Very little emphasis is placed on maintaining professional standards, studying introduction of innovative care, patient data protection, and actively encouraging adoption of stringent quality of care. Several initiatives continue, however their complete adoption lags considerably.
In our opinion, a distinctive regulatory management system used by regulators to attract investment includes: a clear articulation of strategy and overall agency direction; a well-defined operating model; and an organisational culture needed to achieve the regulatory body’s mission. Strong capabilities in all three components are critical and must be consistent and reinforce each other. We understand that a distinctive regulatory management system is the foundation of efficient and effective regulatory programmes. Each of the three tenets below clearly define what is needed to achieve improved outcomes:
Regulatory management system:
Strategy – Policies and standards, risk assessment, regulatory science, collaborations and partnerships;
Operations – Core processes and systems, IT and informatics, infrastructure and footprint;
Organisation and culture – Organisation structure, governance and decision making, performance management, talent development
Effective regulatory activities:
Pre-market – Standards and guidance, licensure;
Post market – Inspections and safety surveillance, operations
Regulatory impact monitoring:
Patient – Quality of outcomes, out of pocket expenses, overall experience and satisfaction;
Provider – Price and profitability dynamics, talent and competences development, overall competition and consolidation dynamics, investment in research and innovation;
Payer – Premium dynamics, financial solidity, range of services covered, quality of operations
Those regulatory programmes must be sustained and enhanced over many years, with clearly communicated roadmaps and objectives. As any provider or investor will say: anyone can accommodate weak regulatory systems, it’s the abrupt and unexpected change of regulation that can harm a market.