Governments and FDI agencies of all countries in the GCC are aligning and preparing themselves via new regulations and laws to attract more investment, as dependence on oil and its products is progressively being reduced. Good examples are energy industry plans underway in the Gulf, namely, Dubai Energy Strategy 2030, Oman’s Energy Master Plan, the National Transformation Programme in Saudi Arabia and Vision 2030, which are testament to this shift in dependency.
Of this ‘shift’, healthcare sector upgrade is recurring for most GCC countries. A lot of them are already in the process of overhauling the system, preparing it for attracting investments and allowing healthy competition from the private sector. In Saudi Arabia overall, the private sector contribution to total healthcare spend currently stands at 25 per cent, which the National Transformation Programme (NTP) targets to raise to 35 per cent by 2020 for this KPI. This will have to be done at a relentless yet thought through pace, considering private providers only account for 54 per cent of clinics in the Kingdom (vs. 46 per cent for Ministry of Health {MoH}), and 24 per cent of hospital beds (vs. 60 per cent for MoH and 16 per cent for other Government organisations). While the overall governance of MoH is shifting gradually by clearly separating regulatory and delivery function and creating independent provider networks with operational autonomy and greater accountability, little is known on how to ‘clearly’ flag the sector ‘attractive’ for private investors.
Exploration of existing conducive factors quickly highlights features, which can directly drive the required change. An example is how Saudis are power users when it comes to technology. Look at gaming, social media, and e-commerce and the numbers will tell you that Saudi Arabia is always on the top 10 either in terms of number of users, spending and early adoption.
When applied to a sector such as healthcare delivery, the clear winners include digital health: offering tools for patient self-service, prevention, unified patient records and workforce efficiency. Another one rightfully being public private partnerships (a variety of models to execute), which can facilitate private sector involvement through ownership and/or management of MoH hospitals and services; and lastly innovative medicine, which focuses on out of hospital care, which can easily be integrated into the new model of care being implemented currently.
Healthcare sector upgrade is recurring for most GCC countries. A lot of them are already in the process of overhauling the system, preparing it for attracting investments and allowing healthy competition from the private sector. In Saudi Arabia overall, the private sector contribution to total healthcare spend currently stands at 25 per cent, which the National Transformation Programme (NTP) targets to raise to 35 per cent by 2020 for this KPI.
While there is now clear recognition of how change needs to happen at the regulatory level to allow for a healthcare system to develop, which encourages vigorous competition, while aiming at delivering high quality healthcare – it remains a challenge due to several factors. These include little or no guidance from the regulator identifying demand-supply imbalances, redundant investor approach to investment, and foremost no ‘push’ from the top (only until recently) to enhance service quality in this sector.
Some recent examples to counter the above-mentioned include the ‘one doctor for every patient’ initiative in Dubai. Similarly, a different example is being laid by The National Unified Procurement Company (NUPCO) in Saudi Arabia, which is expected to expand its services to private healthcare providers by providing strategic value-added services; development of a communications platform run by the Saudi Arabian General Investment Authority (SAGIA), to promote Venture Capitalists (VCs) to gain license in three hours only, and initial conversations on the development of a new model of care for Oman, among others.
Hence, to succeed in attempt of privatisation and diversification of the economy in general, most GCC countries need to get creative. Efforts such as:
- Scaling and phasing planned mega projects in line with anticipated market demand;
- Differentiating the offer from current and planned competing schemes in the region;
- Building a legal and regulatory environment that enables the foreign investment required to deliver these projects, are critical foundations for success. Together these can further privatisation, encouragement of small/medium enterprises and international influx, which can considerably reduce the cost burden GCC countries’ finance while boosting private sector contribution and job creation.
To bear the fruits in full, reforms must be viewed as a perpetual, fast-paced effort across policy making, planning, and executive branches. Dubai is converting this methodology into constructive steps to develop ‘sector’ specific policies targeted at attracting private investors into the market. Long term goals have been aligned to tick bigger boxes – such as diversification of economy into a reliable sector with slow but sure returns. In addition, these are intended to help ‘raise’ the standards of service direly needed in the region and offer protection to investors that they are looking for.
A specific example from Dubai Health Authority (DHA) is the recent announcement to introduce the ‘Certificate of Need’ policy for the healthcare sector, which aims to do all of these in one go. This piece of regulation, once in place, is expected to attract private investment, plug the demand-supply gaps in the sector and drive quality of care up. However, several critical factors such as development of a unified payer’s ecosystem, robust capacity planning, and incentives (such as exclusivity to operate, enhanced reimbursement, etc.) offered to ensure the least financially attractive services are still being invested in are absolute necessities for its success.
This approach is ‘truly’ in tune with today’s age of accelerating regulation and scrutiny, where the regulator understands that financial and human capital are required to build strong infrastructure, which is then turned into long-term asset, and that the private sector due to several reasons is far more suitable to take lead. It can create value and contribute to the bottom line, ‘quality’ in this instance; and that the new Certificate of Need programme effectively delivers on that aspect.
DHA's ‘Certificate of Need’ policy is expected to attract private investment, plug the demand supply gaps in the sector and drive quality of care up.