Collier International, released its latest white paper on the changing healthcare sector profile in Dubai, the 13th edition in the Pulse series of research papers on healthcare in the MENA region. The paper provides a snapshot of the key factors impacting the Dubai healthcare market and its outlook.
Mansoor Ahmed, Director of Healthcare, Education and PPP at Colliers International MENA commented:
“Based on a study conducted by Colliers healthcare team in 2019, over 40% of total surgeries are day surgeries. Interviews with healthcare operators indicate that over 60% of total surgeries can be performed under the day-care structure; thus, offering tremendous opportunities for improvement. Moving toward; day-care surgeries will not only reduce capital cost due to requirement of fewer hospital beds but will also be cost effective.”
The Healthcare sector in Dubai is undergoing an evolution on the back of rapid advancements in technology, research and development (R&D). However, healthcare providers and professionals are grappling with several challenges including patients becoming customers and the patient care changing to “fee for quality” rather than “fee for service”. The demand profile is also changing from provision of more beds at general hospitals to; specialised hospitals, daycare surgical centers and Centers of Excellence (COE) and from curative care to preventive care.
Dubai healthcare market is very competitive, but still offers ample opportunities for both operators and investors. Sustainable growth of the healthcare sector in Dubai will be dependent on embracing, developing and adopting new technologies and innovations whilst delivering data driven, patient-centric and result oriented healthcare. Key factors driving Dubai’s healthcare market are:
▪ High population growth rate. The population of Dubai reached 3.35 million at the end of 2019. Based on Colliers projections, the population of Dubai is expected to reach between 4.96 million to 5.73 million by 2030, increasing demand for healthcare services.
▪ The population of Dubai is predominantly a young and expatriate-based population. Majority of whom are considered Generation X (born between 1965 and 1980) and Generation Y (born between 1981 and 2000). As the current population of the UAE including Dubai ages, there is likely to be a sharp rise in healthcare demand as approximately 80% of a person’s healthcare requirements typically occurs after the age of 40 – 50 years.
▪ Introduction of compulsory health insurance in Dubai. Since the introduction of compulsory health insurance, there has been a significant increase in demand for healthcare. At the same time, insurance companies are applying vigilant policies to ensure a balance between insurance premium vs. provision of services and highlighting potential misuse of health insurance.
▪ High returns on healthcare investments. High quality, efficient private hospitals could still achieve 15% – 20% net profit margins after initial stabilisation years.
▪ Heavy reliance on imported medicine and medical equipment. This increases the cost of establishing healthcare facilities. A number of medical equipment suppliers provide medical equipment on long-term leases and even equity investment in order to facilitate healthcare initiatives.
▪ Continued growth of regional medical tourism. The government of Dubai has recently taken several initiatives to establish and promote Dubai as a medical tourism hub.
Impact of increased population on Demand for Healthcare in Dubai
Based on the current ratio of 1.48 beds / 1,000 population, Dubai will require additional 2,630 beds to 3,770 beds by 2030. However, the current overall occupancy of 54.5% at hospital beds is well below optimal level of 75%. Based on Colliers estimates, the demand for additional beds by 2030 at 75% occupancy level will be in the range of 1,100 beds to 2,000 beds. The overall demand of 1,614 additional beds by 2030 as identified by Dubai Health Investment Guide 2019 document falls within this range. The focus should be providing beds for those specialties where there is gap and not just general hospital beds. As highlighted in the Dubai Health Investment Guide 2019, the below exhibit presents the specialty gap for acute care beds in Dubai by 2030.
Lifestyle diseases & Medical Tourism
Life-style related diseases have increased in the UAE. The UAE has the highest prevalence of diabetes in the MENA region, with 16.3%, followed by Saudi Arabia with 15.8% (in the 20-79 age group). In the UAE, almost 90% of deaths are caused by chronic life-style related diseases and injuries. The lifestyle habits / diseases are also linked to a rise in cancer rates. Impact on Demand for Healthcare in Dubai This rise in chronic diseases not only creates the demand for clinical laboratory services required in the diagnosis of these diseases (e.g. Endoscopy, Laparoscopy, Cancer Screening etc.) but concurrently increases the demand for Centers of Excellence for specialised treatments.
Medical Tourism One of the key focus areas of Dubai Health Authority’s strategy is to promote the development of medical tourism in Dubai and position Dubai as a global health tourism destination. Dubai Health Experience (DXH) was launched by HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, as a continuation of “Dubai, a Global Destination for Medical Tourism”. Based on the latest data available from DHA, over 337,000 health tourists were welcomed in Dubai in 2018, generating around AED 1.2 billion in healthcare revenues. DHA’s objective is to attract over 500,000 health tourists by 2021.
Impact of lifestyle diseases on demand for Healthcare in Dubai
The most common treatments sought out by health tourists pertain to orthopedics, sports medicine, fertility, dermatology and skin care and dentistry. Nearly all these treatments are either performed in daycare surgical set-up or in specialised centers.