The UAE healthcare sector appears to be following a path similar to that seen at a regional level. From 2013 to 2017, the number of hospitals in the emirates has grown from 107 to 137. As of 2017, this comprises a total of approximately 13,200 hospital beds, representing a CAGR of 4.8% in that period. Similar to the expenditure pattern across the GCC, there is a predominance of government related expenditure. In 2018, the UAE government contributed 66% of the country’s total healthcare spending of USD 15 billion. Going forward the private sector is expected to witness stronger growth.
From 2018 to 2022, the private sector healthcare spend is set to grow at a CAGR of 9.5% compared the government contribution of 4.4%. This is mainly supported by:
Considering the past growth of the healthcare sector in the UAE, one might argue that the market has reached a certain stage of maturity. Changes in the sector over the coming decade may be determined by several key themes affecting supply/demand dynamics; regulatory and market demand driven factors are likely to shape the sector in the years to come.
The introduction of mandatory health insurance in the Emirate of Abu Dhabi has led the way in promoting coverage for all UAE nationals and residents in the emirate. UAE nationals living in that emirate are covered at no cost through the “Thiqa” program. Additionally, all employers are required to provide health insurance to their employees and their employees’ dependents in Abu Dhabi. In general, a mandatory health insurance scheme drives demand for private facilities that will also attract investments.
In 2017, the UAE government made significant steps towards setting up PPP schemes to promote private sector investments. In particular, the UAE Cabinet issued a resolution on the procedures manual for partnerships between federal entities and the private sector. The aim was to diversify mechanisms for developing strategic infrastructure projects and improve the quality of services. A steady increase in public private partnerships is projected in various areas of healthcare delivery, including ambulatory care, home care, long-term stay and day-surgery centres among other areas.
Looking at the consumer side, certain factors affect the demand side for healthcare services. The population of the UAE is growing, exhibiting an underlying change in demographics. The World Bank projects that the UAE’s population will grow from 9.4 million people in mid-2017 to almost 11.1 million by 2030, with an average life expectancy of 79.8 years (up from 77.5 years in 2015). Also, the UAE’s demographics are projected to change, as residents aged 65+ are expected to comprise a growing proportion of the population, increasing from 1.1% at present to 4.4% by 2030.
Opportunities to educate and develop UAE medical professionals within the nation are expanding—the landscaping is changing. Today, the country is home to multiple medical universities across the emirates providing local and international students access to education including from medicine, dentistry, pharmacy, and nursing among other fields. Furthermore, as per the Dubai Health Authority (DHA) Strategy 2016–2021, a government directive supports Dubai’s aims to attract, retain, and develop the healthcare workforce, with a goal of providing access to world-class medical educational opportunities. These initiatives are well placed given that 82% of physicians and 96% of nurses are expatriates and considering that the country intends to reduce that dependence on expat practitioners in healthcare.
The growing emergence of medical tourism is another factor shaping the outlook of healthcare in the UAE. The country has witnessed a continuous increase in medical tourism, with visitors seeking treatments ranging from major surgery to rehabilitation and cosmetic corrections. In 2016, the Medical Tourism Index indicated that Dubai and Abu Dhabi were respectively ranked as the 16th and 25th best global destinations for medical tourism.
The rapid development of the healthcare sector over the last decade, driven by government and private funding, has certainly put regional healthcare provision on the global map. Now, with the sector gradually maturing, it is key for existing healthcare players and new entrants to align their business model to today’s regulatory changes and shifting market conditions.
Sources: *BMI research database, Gulf Labour Markets and Migration database, Alpen Capital, Bain and Company, Euromonitor database, Willis Towers Watson