Health sector to drive spending in Arabian Gulf

GCC healthcare spending will rise sharply, says a report from Ernst and Young.

Private and public sector spending in the Arabian Gulf is forecast to surge as more governments put mandatory health insurance in place.

A report from Ernst and Young says spending on health care will rise an average 11.4 per cent this year and next, driven by population growth, higher income levels as well as by the incidence of lifestyle diseases and mandatory health insurance policies.

“With demand linked to age, sector demand will certainly grow over time,” said Hani Ramadan the managing director of principal investments at the Abu Dhabi-based Waha Capital. “The UAE specifically has a number of peculiar health challenges, in particular high rates of obesity and diabetes, which are running at close to twice the levels as in the West.”

The company has earmarked Dh250 million in investment in the UAE over the next three to five years.

On Sunday, The National’s sister publication Al Ittihad reported the Ministry of Health had allocated Dh519 million in this year’s budget for procurement of medicines and medical equipment.

“We expect the growth to continue in the future with higher incidence of lifestyle diseases and an increasing amount of GCC governments enforcing mandatory medical insurance,” said Andrea Longhi, the advisory healthcare leader for Middle East and North Africa at Ernst and Young.

Dubai’s recent move to make health insurance mandatory for all workers is also expected to boost health care and ancillary industries in the UAE.

“Patients may also now prefer to be treated here rather than in their home countries,” said Sanjay Vig, the managing director at the investment bank Alpen Capital. “In-patient business will expand.”

It will also alleviate the financial burden on the Government, and patients will benefit substantially due to insurance as well as competition among the players with respect to pricing, he said.

In June, Al Ittihad reported that the Ministry of Health predicted total government spending on the healthcare sector would reach Dh40 billion by 2015.

In 2011, overall spending reached Dh36 billion, including investments in the private sector.

Of the 92 hospitals in the country, 15 are owned by the ministry. It has plans for 35 projects in Northern Emirates, including specialised and general hospitals and primary healthcare centres.