Direct healthcare costs in the GCC are expected to increase five-fold by 2025 to $60 billion (Dh220bn) from $12bn (Dh44bn) now, with health risk factors – ageing, population growth and medical inflation contributing to the cost escalation. But that is paltry compared to America’s soaring health-care costs, already $2 trillion (Dh7.43trn) a year – and predicted to double in a decade.
Dissatisfaction with the rocketing price of care will only get worse as demanding and health-conscious “baby-boomers” hit retirement and start to suffer the costly ailments of old age.
“Soaring costs are one of the factors, but not the only one,” argued Cedric Bonnard, Managing Director, MSH Dubai Ltd, a subsidiary of the Paris-based Mobility Saint-Honoré, one of the largest and most comprehensive suppliers of expatriate insurance services in the world.
In countries such as Britain and Canada, with supposedly universal coverage, state spending is not keeping up with growing demand, so patients face long and agonising waits for operations. “West European Governments cannot subsidise a full cover any longer – even France has introduced a deductible,” said Bonnard. “In some European countries, waiting lists are getting longer – Britain is one of the examples,” he added.
Also, in the prosperous bits of Asia and, indeed, the Middle East, growing numbers of people are demanding high-quality medical care they cannot get locally. All this presents a fantastic business opportunity for the UAE, particularly Dubai, which has excellent private hospitals that are used to treating foreigners and where costs are much less than those in the Western world. “I believe there is, indeed, an opportunity for Dubai as far as medical tourism is concerned,” said Bonnard.
Worldwide, “medical tourism” is booming as patients look abroad for cheap, fast treatment, often combined with a holiday afterwards. Josef Woodman, the author of Patients Beyond Borders, a new guide for Americans seeking surgery abroad, said: “As the number of uninsured and underinsured Americans continues to grow, travel abroad for treatment is rising dramatically – with international hospitals and clinics reporting 15-40 per cent increases in the number of Americans seeking treatment.”
He added: “More than 150,000 Americans headed abroad for healthcare this year, and that number is expected to double in 2008.” However, as Woodman pointed out, not all international hospitals and medical facilities are equal. Standards and services can be uneven and most consumers do not know how to find the best doctors and hospitals. “At the end of the day, customers look for a better cost/benefit ratio being individuals or governments,” said Bonnard.
But for medical tourism to become a reality in the UAE, hospital operators in the country must actively look at courting Western health insurers and employers desperate to rein in soaring medical costs.
Bonnard believes there are two sets of target customers. “Individuals who opt to receive treatments abroad due to the lack of insurance/government coverage – for instance, Thailand has been very successful in attracting individuals seeking dental care or comprehensive medical check-ups for a reasonable amount of money.
“In this case, I believe the medical complexity of treatments sought is quite low,” he said. The other target Bonnard referred to comprises of “institutions such as governments, insurance companies or large corporations looking at external sources due to a better cost/benefit ratio, better medical capabilities, and/or quicker access to care and access to centres of excellence.” In this case, Bonnard maintains a wider spectrum of medical procedures is concerned, covering from simple to complex treatments.
“In the first case, the quality of the non-medical service – location, type of room, facilities available in the immediate vicinity – is most significant [whereas] in the second case, the quality of medical services will probably come before the non-medical environment,” said Bonnard.
In terms of infrastructure, Bonnard suggests a boutique-style environment. “A small facility with hotel-like rooms with additional services seems to be the best choice.”
According to Woodman, more than 100 hospitals and clinics across the world carry bona fide American accreditation.
But are insurance companies in the UAE geared up to take the leap? “Currently, the UAE insurance companies encourage their insured members to fly out of the UAE to have an operation completed for a lower cost. Also, I do not think the solution will come from them as most of their insured members are UAE-based,” said Bonnard.
So what needs to be done? “For Dubai to become a destination for medical tourism, discussions should take place with major insurers – either domestic or international. There are very few insurance schemes that offer the possibility to be treated abroad in exchange of a premium reduction. A partnership with a major insurance firm might be the best way for Dubai to become a destination for medical tourism,” Bonnard offered.
Of course, there are challenges on the way. There is already a booming medical tourism market in India and other parts of Asia, with low labour costs a key factor. Moreover, booming demand is encouraging rapid expansion at big stock market-listed hospital operators such as Thailand’s Bumrungrad and Bangkok Dusit, Singapore’s Parkway and Pacific Healthcare and India’s Apollo Hospitals. “India and Thailand are perceived as countries with strong medical capabilities – number of doctors, quality of training, number of hospitals, etc,” said Bonnard.
He suggests Dubai should try to compete for complex treatments. “The best market for Dubai is the corporate one as individuals will always be attracted by a cheaper option. By striking deals with foreign governments and large insurance companies, I firmly believe Dubai could become a prominent destination for medical tourism in the long run.”
Although demand for healthcare in the GCC is rising, the extent of this increase and the forces that will drive it have been matters of debate. To inform the debate, McKinsey & Company constructed a proprietary model of healthcare demand covering each of the six GCC countries across 20 specialties and five age brackets.
The model projects a substantial increase in healthcare costs, as well as in the number of patients and hospital beds over the next 20 years. It is based on population growth, demographic profile, development of risk factors, treatment patterns and medical inflation.
The model projects the following by 2025:
- Over the next 20 years, treatment demand will rise in the GCC by 240 per cent. In particular, cardiovascular disease will experience a steep increase (419 per cent), as will diabetes-related ailments (323 per cent).
- Demand for hospital beds in the region will more than double, requiring almost 162,000 beds to meet this demand. Saudi Arabia and the UAE will register the greatest percentage increase.
- Healthcare delivery will cost about $60 billion (Dh220bn), increasing five-fold from today. Cardiovascular disease will become an enormous cost burden on the GCC. Now it already accounts for 12 per cent of total healthcare expenditure in the GCC countries.