Up to $40 billion of Arab world’s spending on health care wasted

A plague of issues such as the over-prescription of drugs and needless medical tests are costing the sector dearly, according to Dr Haidar Al Yousuf, the head of funding at the Dubai Health Authority.

The Middle East and North Africa’s total healthcare spending is estimated to be $125 billion this year, according to Al Masah Capital. Silvia Razgova / The National

LONDON // As much as half of the estimated US$80 billion in annual government spending on health care in the Arab world is going to waste due to widespread inefficiencies, a Dubai health official says.

A plague of issues such as the over-prescription of drugs and needless medical tests are costing the sector dearly, according to Haidar Al Yousuf, the head of funding at the Dubai Health Authority.

“In our region … 50 per cent of the money we spend on health, due to inefficiency, is not properly utilised,” he said.

“I don’t think we need to pump more money into the health system – we just need to use that money more efficiently and ensure that it goes to the right place.”

In the United States, a report by the non-profit Institute of Medicine estimated that 30 per cent of total healthcare spending in 2009 was wasted, amounting to total losses of $750bn.

But the proportion of spending wasted in some Middle East and North Africa (Mena) countries could be much higher, Mr Al Yousuf said.

“A lot of doctors prescribe a lot of medication – they order a lot of tests, but there is no matching of what is actually needed by the patient and what is being done,” he said.

He said the problem of inefficient healthcare spending was far less pronounced in markets such as Dubai, which introduced compulsory health insurance in 2014, and Abu Dhabi, which made health insurance mandatory for all employees in 2005.

Such systems are preferable to public-sector “block-budget” funding, prevalent in much of the wider region, where top-line spending levels are allocated by governments, Mr Al Yousuf said. “In general, these large public systems … tend to be extremely inefficient, especially for healthcare.”

Mr Al Yousuf was speaking at last week’s Telegraph Middle East Congress in London, and was part of a discussion moderated by Mohammed Al Otaiba, the editor-in-chief of The National.

Fellow panellists noted the importance of the private sector in building the Arab world’s future infrastructure needs, including in the healthcare sector.

The Middle East and North Africa’s total healthcare spending is estimated to be $125bn this year, according to Al Masah Capital, a Dubai-based alternative-investment management firm. Government spending is estimated to account for 64 per cent – or $80bn – of the total market, with private-sector healthcare spending making up the rest.

The role of the private sector is expected to increase in the Mena market, according to Al Masah Capital. It forecasts that the private-sector healthcare market will be worth $61bn in 2020, more than double its size in 2011.

Mr Al Yousuf said he expects more governments in the region to move to insurance-led healthcare systems. “We see the whole region moving away from those block-budget funding models into much more accountable health-financing systems, like health insurance and social insurance,” he said.

Political and economic leaders convened in London during last week’s conference. Speakers included Reem Al Hashimy, the UAE Minister of State; Saudi Arabia’s Prince Saud bin Khalid Al Faisal; Hany Kadry Dimian, Egypt’s finance minister; and Boris Johnson, the London mayor.

Clarification: The Dubai Health Authority (DHA) would like to clarify that Dr Haider Al Yousuf, Director of Health Funding at the DHA, was referring to some third world countries when he said that wastage of healthcare spending can reach up to 50 per cent.

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