Healthcare expenditure in the GCC countries is expected to swell to $79.02 billion in 2015, with public health expenditure amounting to 64 percent of the aggregate, Kuwait Financial Centre (Markaz) said in the executive summary of its GCC Healthcare report.
The report cited top-five healthcare projects that are currently under execution in the six countries. Unlike emerging economies which have regulatory bodies that focus exclusively on the insurance industry, the GCC countries' insurance markets are regulated by either the central bank or a public authority.
GDP per capita in the GCC has grown at a CAGR of six percent between 2000 and 2009. The highest Adolescent Fertility Rate (AFR) in the GCC in 2010 (24.7 in UAE) happens to be lower than that of UK (30), US (33), Egypt (43) and India (79).
Alpen Capital in a separate report on GCC Healthcare Industry in December 2011 said the healthcare market in Saudi Arabia is expected to expand at a CAGR of 12.3 percent to $25.7 billion in 2015 from an estimated $14.4 billion in 2010. The growth would be mainly driven by population explosion – population in the largest of six GCC countries is likely to increase by 3 million over the next five years – and improving life expectancy.
Life expectancy at birth levels in Saudi Arabia increased nearly 30 years from 44.9 years in 1960 to 73.6 years in 2009. The outpatient market is estimated at $22.0 billion, while the remaining would be contributed by the inpatient market.
Given the strong demand for healthcare services, we believe the number of beds in Saudi Arabia is expected to expand at a CAGR of 2.0 percent to 63,930 in 2015 from an estimated 57,994 in 2010. The government has been aggressively implementing policies to build infrastructure and enhance private sector participation due to rising demand for healthcare services.
The key drivers of demand for healthcare in the GCC are population trends, high growth in GDP and the prevalence of lifestyle diseases that require life-long treatment, Markaz report said.
The distinguishing factor of the GCC markets as against other emerging markets is the massive role played by the governments and its unsustainability over the long run. Given that medical inflation is steeper than food inflation, the need for lowering government share in health expenditure cannot be overemphasized. Government's willingness to promote the healthcare sector is seen as a positive sign for a surge in private investment in the region.
While Saudi had the highest Crude Birthrate (CBR) at 21.6, Qatar had the lowest at 12.7. The Crude Death Rate (CDR) has been on the decline too with the UAE registering a maximum decline of 30 percent over the ten-year period. Qatar has the highest life expectancy at 78 years comparable to the US (78) and the United Kingdom (80).
The governments of the GCC countries have consistently endeavored to promote good health in the states.
The Saudi Arabian Ministry of Health has made it mandatory for Haj pilgrims to be vaccinated against communicable diseases including yellow fever, cerebrospinal meningitis fever and polio. The MoH invites consultant physicians from Jordan, Pakistan, Egypt and US to pay periodic visits to the Kingdom. The UAE government has undertaken several measures including the National Immunization Program against polio, the Malaria Control Program, Directly Observed Treatment Short course (DOTS) and the National Tobacco Control Program. Dubai has the distinction of being home to two free healthcare zones – the Dubai Health Care City and the Dubai Biotechnology and Research Park.
The Kuwait government has undertaken the extension of 9 medical towers that is expected to increase hospital capacity by 30 percent.
Oman accords special importance to women's and children's health. The MoH reports that antenatal care coverage was more than 99.4 percent in 2010. Bahrain's MoH has launched I-SEHA program to manage and streamline health information systems in the country.
The prevalence of lifestyle diseases and the lack of adequate infrastructure and trained workforce in the healthcare sector underline the need for Public Private Partnerships in the region. The GCC nations are heavily import-dependent for their surgical equipment needs. The manufacture of pharmaceuticals and surgical equipment are both limited and these allied sectors provide scope for private investment.
Of the six GCC countries, Saudi Arabia and the UAE are most receptive to foreign investment in healthcare-related sectors. The two countries import bulk of their medical equipment from the US and Germany.
Over the 10-year period, health expenditure per capita has grown at an annualized rate of 7.9 percent for the GCC nations as a whole.
Kuwait's health expenditure per capita grew at 10.8 percent per annum. In absolute terms, Qatar's health expenditure per capita was the highest, despite the fact that the amount as a proportion of GDP was the lowest in the GCC.
Public health expenditure in the GCC countries ranges between 63 percent and 80 percent of total health expenditure. The GCC Governments would like to reduce their contribution to the healthcare sector over time, given that the availability of petrodollars cannot be sustained forever. Country-level healthcare expenditure forecasts are made using a top-down approach with a break-up of public and private healthcare expenditure.
The Saudi Gazette