The Gulf Cooperation Council (GCC) offers immense opportunities, especially under public private partnership (PPP) model, in the healthcare sector, which is slated to grow at a compound annual growth rate (CAGR) of 12.5% up to 2020, according to report.
“The outlook for the sector remains positive given the rising demand for healthcare services and secondly government’s efforts to promote healthcare led by a mix of public and private initiatives,” Global said in a report.
Rising life style related diseases, favourable demographics and socio-economic conditions would also add to the prospects of healthcare in the region, where PPP model can, to a great extent, manage the increasing healthcare cost, boost competency and effect systemic transformation. According to a Frost and Sullivan study, healthcare PPPs have enabled governments globally to cut their costs by as much as 25%.
“The PPPs would have to be tailored to the specific requirements of the particular GCC country and healthcare system,” Global said, adding the regional governments are likely to promote private players to ease budgetary pressures.
Highlighting that the public sector finances of 63% to 89% of the total healthcare expenditure across the GCC countries, compared with most developed nations and other emerging markets, which depend on the private sector; the report said this is likely to change with oil and gas prices staying significantly lower, which would impact the GCC healthcare industry.
It is also essential for the countries to streamline healthcare investments and spending, improve availability and access to health services, and ensure quality solutions in the healthcare sector, Global said.
Highlighting that population growth is a driving force for any country’s healthcare services, which helps in giving shape to the system and attract investments, Global said the collective population of the GCC is around 53mn as of 2015 and it has been growing at a 10-year CAGR of 4%, which is quite high compared to the rest of the world.
Although the healthcare industry in the region has gained momentum over the past few years, the percentage of healthcare spending to gross domestic product (GDP) in the GCC is less than half compared to the developed countries, it said.
Among the GCC countries, Bahrain has the highest healthcare expenditure as a proportion to GDP of 5% for 2014, while Qatar’s healthcare expenditure to GDP was at 2.1%. However, Qatar leads GCC in terms of GDP per capita which stood at a whopping $96,733 in 2014; the lowest GDP per capita is in Oman at $19,310.
Finding that the introduction of mandatory health insurance initiatives in some GCC countries has led to sizeable expansions in private care facilities, Global said the private sector now holds a “significant” share in health infrastructure and services in some GCC countries.
The healthcare construction market in the GCC appears to be growing at a steady rate as various high-value construction projects are being developed in the region.
According to the BNC Project Intelligence database, there are about 709 healthcare construction projects with a combined estimated value of $65bn out of which 133 are worth over $100mn each. These projects make up almost 80% of the total value of all healthcare projects in the region.
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