Diabetes in the Arab World
In 2017, it was estimated that 39 million people in the Middle East and North Africa (MENA) had diabetes. According to the International Diabetes Federation, this number is projected to surge by 110 per cent to 82 million by 2045. The increase in diabetes has been attributed to rising obesity, unhealthy diet, rapid urbanisation and lack of exercise – factors that largely lie outside the realm of healthcare.

Of course, this is not breaking news. Doctors have long been aware that access to hospital care is considered one of the smallest determinants of human health. Other factors such as economics, physical environment, behaviour and genetics all play an arguably larger role.

Designing homes, offices and schools to support human health and well-being is frequently discussed in both academic and industry literature. But what about ‘third places’ such as retail establishments? The scale and prevalence of retail centres in the MENA region make them ideal spaces to promote health and wellness. 

How can these retail centres be key, unexpected allies in helping the public lead a healthier lifestyle?

The Potential of Retail 
Designing wellness-focused retail spaces could be a particularly strategic opportunity to offer preventative health solutions. In general, the MENA region’s hot, arid climate has largely made enclosed malls a preferred retail solution. Shopping centres are omnipresent and operating 24/7 in some regions. They are the centres of neighbourhoods, communities and cities; and serve as bustling hubs for shopping, social gatherings, entertainment and information. 

In the last few years, the retail market has expanded to include more civic, culinary, educational and cultural elements to offer experiences beyond shopping. A growing number of enclosed retail centres are connected to multiple modes of transportation and offer security, cleanliness, community connection, improved air quality and a comfortable temperature. Amenities that can be offered to support social connection (e.g., tables and chairs, free concerts, etc.) and cleaner indoor air (e.g., air filtration) are particularly important. Recent research shows correlation between social isolation and Type 2 Diabetes and PM2.5 air pollution and risk of Type 2 Diabetes.

Some institutions and entities are already paying attention to this potential preventative health solution. For example, the U.S. Centers for Disease Control (CDC), together with Health Promotion Research Center at the University of Washington School of Public Health, published “Mall Walking – A Program Resource Guide” in 2015. This guide outlines the benefits of mall walking and design suggestions that ‘nudge’ physical activity. 

Project name: Huafa New Town Phase Six in Zhuhai, China Huafa New Town Phase Six in Zhuhai, China by HOK integrates colourful skylight, outdoor greenery and waterfront view into a continuous internal retail street that is ideal for shopper – walker. Credit: Hannah Chu 

Elements of Wellness Retail 
Most major cities in the MENA region have large shopping malls, like The Avenues in Kuwait City, and the Dubai Mall in Dubai. These malls offer kilometres of walking area with weather protection, security and amenities. A daily dosage of widely recommended 8,000 to 10,000 steps can be easily exceeded by walking each floor of the Dubai Mall.  

If interested, designers and developers can take several actions that may enhance the health and wellness potential of these modern retail facilities. These might include:

- Using environmental graphics and signage to encourage walking
- Offering healthy dining options in food courts
- Creating open spaces for exercise 
- Incorporating biophilic elements (like interior green spaces and living walls) into building design
- Launching apps to help people navigate healthy features of space
- Increasing daylighting and views to the outdoors

Traditional patterns of design that have been proven successful should also be acknowledged and incorporated into more modern facilities. The “souk” (or traditional Arab retail street market), for example, offers local food options and space to walk and connect to the community. Coupling these design elements with modern solutions (like mobile apps) will likely be key in promoting increased physical activity.

Wellness retail could benefit a wide range of ages and demographics —particularly ‘vulnerable populations’ such as children and the elderly. Families with children might feel safer in an enclosed environment away from cars and other potentially dangerous activities on the street. Older individuals will likely be more comfortable with temperature-controlled spaces that have easy access to amenities like benches, air filtration, drinking fountains, restrooms and spaces for social connection. 

Evolution of the Mall
The rapid rise of diabetes in the MENA region is an urgent health issue that needs to be addressed from multiple angles and across industries. Hospital campuses will not be able to address an issue of this magnitude in a silo. Healthy, preventative behaviours like physical activity and healthy diet will need to be integrated into daily life. Wellness retail is one way to provide environments that support and encourage this. 

Along with the growth of the experience economy, health and wellness are trendy topics especially among millennials. Wellness benefits are the ideal perk for health-conscious shoppers as they bring their foot traffic to stores and businesses. The emphasis on retail venues as centres for health and wellness can have a significant reciprocal effect for the stores. By reframing the existing space as a free exercise opportunity, for example, retail centres may bring more foot traffic to all stores, restaurants, entertainments venues and other attractions – reaping the benefits of spontaneous shopping experiences. 

In this way, building retail centres that support a key societal value – health and well-being – can be a win-win-win for hospitals, businesses, and consumers alike making us rethink health beyond the hospital.

According to BNC Network, there are currently over 445 Greenfield Hospital projects in planning or execution phase throughout the Gulf Cooperation Council (GCC) countries. However, many of these projects will not come to fruition or meet the expectations of their investors and owners. There are multiple reasons why this is so. Hospitals are highly complex facilities and organisations that require in depth planning, market driven services, the right number of qualified staff, hospital management expertise, and a long-term mindset.

Realistic Vision
The first step to any successful project is to have a clearly defined vision and understanding of what the investors/owners expect from the hospital. This vision needs to be based on realistic projections and growth plans. It is unrealistic to believe “if we build it they will come”. Most people prefer to access healthcare services close to home. 

The first step of any project is to understand the catchment area this hospital will serve and the demographics of that area. The demographics will drive the number of patients, visits and procedures, types of clinical services required as well as the ability of people to pay for healthcare services. For example, building a 1,000-bed hospital in a catchment area of 400,000 people will never generate enough patients, visits and procedures to fill the hospital even if 100 per cent of the population made it their preferred hospital. When you add in competitors in the catchment area, insurance plans, income level of the population, you reduce these numbers even more.

It is critical for any successful project to have a comprehensive, geographic specific market study. The study should define a realistic catchment area, create a demographic profile, analyse the local competition and their service offerings, analyse how healthcare is paid for i.e. insurance, out of pocket, government and evaluate the current and future burden of disease for the area. This study then in turn will drive the medical and business concept for the hospital. For example, a catchment area of 400,000 people of which 25 per cent are under age 20 and 60 per cent are nationals may indicate a need for 150 bed specialised children’s hospital while the same size catchment area of which 70 per cent of the population is under 45 and 70 per cent expatriate might indicate a need for a 100-bed primary care hospital to cater to basic insurance patients. Each of these hospitals would then have a very different financial profile with differing levels of revenue, expenses and profitability, which may or may not meet investment criteria or expectations.

Once a realistic financial feasibility study is completed and it is agreed to go forward with the project, it is imperative to engage companies with strong hospital expertise whether it be architects, contractors, consultants, advisors or planners. It is also important to engage expert hospital management professionals early on. The planning and design of a hospital can have significant impact on patient safety, operational efficiency and financial profitability. For example, if you plan for 20 medical beds and design them as two 10 bed wards this may require duplication of staff to operate them safely when compared to a single ward of 20 beds. With staffing accounting for anywhere from 50–70 per cent of a hospital’s operating cost, this can have significant impact on financial performance. Improper planning, design and project management can also lead to delays during construction, which can end up costing millions of dollars in re-work, in cost of staff and resources not being properly utilised and in not beginning to generate financial return in a timely manner. It is critical to involve seasoned professionals with strong track records in hospital planning, design, start-up and management.

It is also important to involve the hospital operator early on, usually during the design phase, to avoid delays and design issues. During construction, the operator will begin developing the policies and procedures, systems, and processes, as well as assist with project management and supervision. Over time they will also begin to hire key senior management and staff to prepare for operational commissioning and opening. The commissioning of a hospital can take up to nine to 12 months, so it is best to begin during the latter part of construction and not wait until three months before opening. Recruitment of staff is also crucial to a successful opening. It can take six to nine months to recruit one doctor or nurse given visa and licensing requirements. Once recruited, the staff need to be oriented and trained on the policies, processes, equipment and practices of the hospital. This can require another two to three months. The operational planning time frame is lengthy and needs to be incorporated into the overall timeline of hospital construction, technical commissioning and building handover to avoid delays.

Rewarding Investment
In addition to the hospital operator, there are many external parties such as the Ministry of Health, Civil Defense, Department of Radiation Protection, and Electric Company to name a few, that need to approve, certify and/or license the building before it can be operated. If not involved early and communicated with frequently external parties can create significant delays and additional costs before the hospital can be occupied. Proactive project and stakeholder management is vital to keeping a Greenfield project on time and budget. A project requires people who are skilled and knowledgeable in local codes, regulations and licensing requirements for not only the building but for hospitals and specific hospital departments such as radiology, lab, waste management.

Lastly, it is important to understand that most Greenfield hospitals require three to five years of operation before they reach their capacity and begin to turn a profit. Focus is usually put on the cost of designing, constructing and equipping the building and not on initial operational start-up deficits. Once the facility and staff are ready for operation, there needs to be enough funds or working capital available to see the hospital through the first few years. The costs of running the hospital i.e. salaries, medicines, supplies, utilities need to be covered during the period the hospital is ramping up its services. In many cases, working capital is often forgotten in the budgeting stages for a Greenfield hospital and can create additional delays as well as investor/owner dissatisfaction when additional funds are required.

Building a hospital is a complex and highly technical initiative that requires a well-conceived, market-based plan, realistic projections and budget, early involvement of subject matter experts and rational time lines to attain the owners/investors vision and expectations. Even when implemented well, there are still many things that can go wrong. Strong project and risk management are imperative, as well as a clear understanding of all that is involved and required. If given the right ingredients for success, a Greenfield hospital can be both personally and financially rewarding. Hospitals can provide a long term, stable investment that provide a much-needed service while giving back to the community.

The cornerstone of a first-class equipment procurement initiative is a high functioning value analysis committee (VAC). Before the emergence of VACs, purchasing decisions were subject to influence by one or two key individuals. VACs are comprised of a diverse collection of individuals who are employed by the hospital. While they differ in size and composition, VACs typically include at least one of the following:

- Clinical staff who will be using the equipment
- Members of the hospital’s purchasing department
- Hospital supply chain managers
- Members of the hospital’s finance team
- Hospital administrators
- Risk mitigation specialists
- Clinical engineering specialists
- Facilities management and operations team

VACs meet on a regular basis to review equipment requests and determine whether the hospital can accommodate proposed devices and whether procurement makes financial sense. In addition to contributing to a standardised equipment purchasing strategy, VACs serve as a checks and balances system that prevents any single stakeholder or individual from single-handedly controlling the purchasing process.

The Greatest Challenge to Procurement Efficiency
Even with a robust equipment procurement strategy and the rise of VACs, today’s hospitals still face barriers in the procurement arena. Of all of the roadblocks in the supply chain management process, one of the most challenging barriers is a lack of equipment standardisation throughout the hospital and collaborative vendor vetting protocol. This typically stems from conflicting product preferences among clinical staff in different departments. Examples of this type of conflict include the following:

- A new staff member demands a different style of stretcher than the stretchers currently used in recovery, but research shows currently used stretchers could meet their requirements with addition of accessory
- Physician requests specific transport ventilator because they used that model throughout their residency, but current ventilators meet all clinical requirements for the facility.
- Medical equipment vendor works directly with physician to spec out equipment, but the equipment does not meet procurement standards.
- The monitors used by a hospital were supplied by four different manufacturers and accessories are not interchangeable
- Staff request for newest and highest-grade model of equipment as opposed to mid-grade model that meets requirements.

When a hospital purchases from a variety of different equipment manufacturers in an effort to satisfy the individual preferences of multiple clinical departments, the end result is higher expenses. Suppliers are less likely to extend package discounts to hospitals that do not purchase in bulk or with any consistency. Additionally, equipment servicing expenses are costlier because service contracts must be established for every manufacturer. Essentially, the hospital’s buying power is compromised due to a lack of consistent purchasing.

Building a thorough vendor procurement protocol requires collaboration between physicians, clinical engineering and sourcing from planning inception through long term strategic planning. A solid process ensures medical equipment standards are created and maintained.
Bringing in key stakeholders early allows both clinical requirements from physicians and standardisation from sourcing to meet specific criteria before making a purchasing decision.

Streamlining the Purchasing Process
Fortunately, stakeholders, managers, and hospital staff are beginning to recognise that a unified, streamlined effort is required to control costs and improve outcomes. Leveraging a well-organised capital equipment request and budgeting software is a key building block of successful hospital supply chain management.
Ideally, the software should make it easy for a diverse value analysis committee to identify why the equipment is needed and whether procurement would be cost-effective. 

A well-organised request capital budgeting software should include the following elements:
1. Preloaded contact details for ease of submitting requests.
2.Robust catalogue that incorporates updated equipment categories and associated information
3. Vendor catalogue with concise contact information
4. Categories for financial and safety related benefits.
5. Supporting documentation to include cut sheets, specifications and reporting on previous success with the device.
6. Ability to attach and share documentation such as formal quotes, technical information and pro forma from vendors.
Utilising a tool to funnel information such as Attainia’s BUDGET offers a simplified method to:
7. Determine critical need
8. Simplify the review and approval by the value analysis committee.
9. Consolidate and standardise final requests
10. Create a pathway for review and approval.
11. Automated prompts to ensure completion of all requests.

Capitalising on GPO Contracts
“Group Policy Objects (GPOs) save hospitals and free-standing nursing homes between 10 to 15 per cent off their purchasing costs. Overall, this means GPOs enable hospitals to save up to $33 billion each year through lower product prices.” – Healthcare Supply Chain Association (HSCA)

GPOs are playing an increasingly critical role in controlling hospital purchasing costs. With GPOs saving hospitals billions of dollars annually, it is no surprise that 96 to 98 per cent of hospitals now use GPO contracts to facilitate their purchases. As noted by the HSCA, GPOs offer a number of valuable services that extend beyond volume discounts. They include the following:
- GPOs help hospitals navigate through an increasingly complex purchasing system
- They help eliminate medical errors by promoting equipment standardisation and product education
- GPOs provide a means by which doctors and other providers can evaluate new products and share feedback

With nearly every hospital in the U.S. now reaping the benefits of GPO memberships, suppliers have responded by adjusting their sales tactics. Specifically, they are proactively working with hospitals to standardise their equipment, offer package discounts, and help hospitals streamline their purchasing processes. Capital budgeting software should include a catalogue of capital equipment indicating whether an item is on contract to encourage leveraging GPO pricing.

The Key to Future Supply Chain Excellence
Building a collaborative VAC enables hospitals to ensure that stakeholders are able standardise equipment throughout a hospital. Hospital systems are constantly increasing scrutiny on cost efficiency, which is correctly driving systems to streamline their procurement systems.

The key to maximising cost efficiency is to introduce a user-friendly, software platform that can transform a hospital into a model of efficiency. This can be done by bringing together a single system so equipment planners, hospital systems, suppliers, and GPOs can successfully request capital equipment through a digital process such as with Attainia’s BUDGET software.

With the support of local authorities, the private sector has been at the forefront of this development for years. For example, each of the nine new hospitals added in Dubai between 2010 and 2016 are private. The same applies to Oman, where 10 new hospitals were built over the same period, exclusively by the private sector. In Abu Dhabi, one new public hospital was added between 2010 and 2016, compared to 22 for the private sector.

Providers that focus on standards of care are consolidating to normalise the level of care being offered, and investors are contributing to innovative care solutions such as telehealth, which have helped address the requirements of patients.

Despite many changes in recent years, rapidly evolving healthcare needs of the population and the scale of technology-induced change have led many to doubt the value and practicality of government regulation. Regulators and the regulations they create and enforce play a critical role — but one that may need to evolve to remain relevant and effective to keep up with the need for further investment.

Here we try to examine the core challenges experienced by the private healthcare sector in the GCC, and the role regulators are expected to represent in the rapidly evolving landscape of private healthcare provision. Specifically, we’ll explore challenges related to keeping up with a growing number of service providers, dealing with continuously under-supplied areas of care, and introduction of innovative technologies. 

We then try to identify opportunities for regulatory bodies to navigate today’s challenging landscape and prepare for enhancing investment — both in the way they make rules and the way they enforce them. In many ways, regulators can harness the very trends that have caused disruption and use them as means to modernise regulatory practices and increase effectiveness of the healthcare system.

Challenges
In our opinion, it is a myriad of complexities that the maturing private healthcare sector experiences in the region, as regulators are finding it more difficult to balance the need to provide healthcare coverage and provide a fair playing field for both providers and payers, with the need to avoid impeding innovation.

Other destinations around the world who are competing to attract patients for medical tourism that provide high quality care in the private sector are better supported on key capacity and investment. This has primarily been the case due to the presence of strategic frameworks from regulatory bodies, aligning the needs of the region with the standards and coverage of care required.

A trend that afflicts the GCC’s private healthcare sector has been investors targeting a narrow space of infrastructure (i.e. multispecialty hospitals and clinics in secondary care), which contrasts with the holistic range of services offered globally by most destinations that house high quality providers. A further focus highlights the trend to invest in already competitive, high return services in contrast to several under-supplied areas of care. As an example, the recently released HAAD Capacity Masterplan for Abu Dhabi highlights strong gaps in medical specialties that would appear quite common in mature markets, such as: rheumatology, paediatric surgery, surgical oncology, or mental health.

On the other hand, we see investors facing a lack of overall funding (when compared to other attractive investment destinations globally) and simplified licensure mechanisms with complex multiple overlaps, for both greenfield projects and acquisitions, which could result in lengthy, stressful and quite discouraging processes, especially for foreign investors who have limited prior business exposure to the region.

Coverage of services remains patchy, due to lack of supportive cost savings evidence as well as directive for insurers to consider preventative and other long-term medical services from any of the regulatory bodies. Additionally, inflexibility to adopt more innovative models primarily to enhance coverage can be attributed to general lack in frameworks to regulate Third-Party Administrators (TPAs). Finally, the introduction of basic coverage in some of the GCC countries aimed at offering healthcare coverage for low skilled expat workers has admittedly contributed to creating a new market for healthcare providers, but is widely considered as a low profitability activity, and certainly does not contribute to elevating the overall quality and diversity of care in the region.

Lack of clarity on adoption, development and implementation of standards and guidelines for good practice pale in comparison to that of other maturing systems. Very little emphasis is placed on maintaining professional standards, studying introduction of innovative care, patient data protection, and actively encouraging adoption of stringent quality of care. Several initiatives continue, however their complete adoption lags considerably.

Opportunities
In our opinion, a distinctive regulatory management system used by regulators to attract investment includes: a clear articulation of strategy and overall agency direction; a well-defined operating model; and an organisational culture needed to achieve the regulatory body’s mission. Strong capabilities in all three components are critical and must be consistent and reinforce each other. We understand that a distinctive regulatory management system is the foundation of efficient and effective regulatory programmes. Each of the three tenets below clearly define what is needed to achieve improved outcomes:

Regulatory management system:
Strategy – Policies and standards, risk assessment, regulatory science, collaborations and partnerships;
Operations – Core processes and systems, IT and informatics, infrastructure and footprint;
Organisation and culture – Organisation structure, governance and decision making, performance management, talent development

Effective regulatory activities:
Pre-market – Standards and guidance, licensure;
Post market – Inspections and safety surveillance, operations

Regulatory impact monitoring:
Patient – Quality of outcomes, out of pocket expenses, overall experience and satisfaction;
Provider – Price and profitability dynamics, talent and competences development, overall competition and consolidation dynamics, investment in research and innovation;
Payer – Premium dynamics, financial solidity, range of services covered, quality of operations

Those regulatory programmes must be sustained and enhanced over many years, with clearly communicated roadmaps and objectives. As any provider or investor will say: anyone can accommodate weak regulatory systems, it’s the abrupt and unexpected change of regulation that can harm a market.

Daylight: To Improve Sleep, Stress, Mood and Burnout
Daylight is an area with compelling evidence around it. Studies link daylight to reducing depression, improving mood, reducing opioid usage, reducing ICU delirium (by supporting circadian rhythms) and reducing LOS (Length of Stay). Orientation matters when it comes to daylight — research shows that in brighter orientations, such as SE, the average LOS was shorter than patients in rooms with No Window (NW). In healthcare environments daylight is now mandated in all patient rooms in the U.S. But daylight can have profound impact on caregivers and family as well. For example, exposure to daylight for at least three hours a day was found to cause less stress and higher satisfaction at work. Using daylight as a key component of not just design, but the health plan in itself, is a great opportunity. What if doctors prescribe daylight as part of the discharge plan for patients? Or as part of a healthcare stay?

Figure 2: Texas Health Frisco, Breezeway Connector to activate biophilic public space – ©HKS Architects

Access to Nature to Reduce Pain Medication, Stress and Anxiety, Improve Social Connection and Memory, and Encourage Mobility
Nature can be considered another powerful non-pharmacological intervention. A compelling body of evidence links exposure to nature to reduced LOS, reduced medication, and reduced stress. Exposure to nature can also improve memory, which is key for an increasingly aging population. Research also shows that exposure to nature can be beneficial in both real, and simulated settings (through visual art, VR, multi-media etc.).

Additionally, having nature as a destination within a health facility can also become a mobility incentive that can enable early mobility, and thereby discharge, for patients. Gaining health habits while in health facilities could be a powerful goal. 

Figure 3: Strategies for promoting healthy movement and healthy food choices ©CADRE 2017

Point of Decision Design Strategies to Nudge Healthy Choices 
In all health settings, but especially primary care settings, the built environment can also be used to encourage patients (and staff) to make better decisions around food and movement. Recent research argues that the most effective way of promoting better health decisions is to focus on designing for points of decision. For example — to think about where someone decides about eating junk food or healthy food, and make the healthy food option more available, accessible, affordable, and appealing. Similarly, to think about where someone plans about movement — walking/ biking/ public transport or car and make healthy mobility choices easier and more attractive. Figure 3 shows some of the strategies that can be used to promote healthy diet and movement in health facilities. If health facilities can serve as catalysts for healthy habits, then they can actively influence the continuum of health.

Figure 4: Proposed Master Plan for Children’s Hospital Campus (c) HKS Architects

Public and Fluid Spaces to Promote Social Connectivity and Patient Engagement
Public spaces can also be used to facilitate social connectivity. The ability to leverage waiting areas for education, empowerment and engagement, as well as build communities (especially for specialty clinics) could be significant. Research also suggests that social integration is a strong predictor of well-being and longevity and the characteristics of outdoor common spaces can play a role in maintaining social ties. All too often the health facility is constrained to the walls of the building. Tremendous potential of making health facilities, health facilitators, lies in the master planning. This way the entire design can have a connective tissue of whole health. 

In summary, we do our field a disservice if we limit ourselves to purely clinical objectives. Clinical excellence is key and should be a given. However, it is creating a healing fabric, where facilities can actively promote, rather than passively support health, that can make our facilities, health facilitators, and an active contributor to better health for our people and communities.  

References available on request.

In an interview with Arab Health Magazine, Shearon talks about his new role, his thoughts on the GCC’s healthcare construction industry, as well as his vision for the future. Excerpts from the interview:

Tell us about yourself. How did you venture into the healthcare design industry?
Throughout my childhood in California, I would frequently visit my grandfather in the hospital. During his final admission I remember being struck by how much he and his room transformed when my grandmother brought him a colourful blanket, pictures, and an overstuffed chair. I guess I have always been fascinated by how environments influence experiences. I feel that when it comes to hospitals, the place where so many people begin and conclude life, as designers, we can create better suited environments. 

I completed my post-baccalaureate studies in biomedical science and architecture; combining these two passions naturally led me to healthcare design. I have concentrated my career on developing shared understandings and adroitly managing complex healthcare engagements in multiple cultures. I have partnered with healthcare clients in 18 countries. From Iceland to India, it is critical to understand how regional healthcare delivery paradigms and contextual cultural practices influence the translation of global best practices and design. I have developed dedicated healthcare design teams in the GCC and across the globe and enjoy traveling internationally nearly every month to engage existing and new target clients. I represent the firm at global healthcare conferences as well as industry speaking and teaching engagements. Recently, I was appointed to the Architecture Advisory Board at the American University in Dubai.

What are your thoughts on the GCC’s healthcare construction industry? According to you, how can hospital construction processes be improved? What are some of the important factors to consider when designing a hospital?
Increasing capacity to meet the demand for inpatient and ambulatory services continue to drive the healthcare industry in the GCC. The healthcare facilities of tomorrow embody global best practices to focus on user experience, clinical outcomes, growth, fiscal stewardship, operational efficiency and brand recognition. Currently, the industry is challenged to push seamless collaboration throughout project delivery. A collaborative approach increases value, reduces waste, and maximises efficiency within all phases of the project. Successful delivery of healthcare facilities requires transparent processes that align users, stakeholders, operators, systems, business structures, and clinical protocols from visioning through design, construction, and operation. Specifically, in the GCC, it is critical to think of design as an alliance that addresses user experience, patient outcomes, talent recruitment and retention, cultural clinical care delivery paradigms, owner and operator expectations, efficient and standardised processes, as well as brand development.

What are some of the latest trends in hospital design? What types of technological developments will have an impact on hospital design in the near future? 
The healthcare industry is evolving beyond solely the acute care of illness and injury. Digital technology is transforming the healthcare experience to respond to a “customers first” philosophy. Today’s healthcare consumers seek an active partnership with their providers that offer personalised and convenient options to address wellness, disease prevention, and chronic management. Consumers seek walk-in visits, no waiting or registration, kiosk check-in, online scheduling, virtual visits, direct messaging with providers, and self-monitoring and self-management of personal health. In the GCC, the demand for Concierge Medicine is rapidly increasing.

Tell us about your new role, its challenging aspects, and your vision for Perkins Eastman.
As a healthcare leader at Perkins Eastman, one of my primary objectives is to grow the firm’s international portfolio of healthcare clients, specifically in MENA, India and China. We focus on developing strong client bases in these regions and implementing business practices that enable international resources to operate successfully in these countries from the firm’s 17 office locations. Strategically, I enjoy establishing firm direction for near- and long-term goals that elevate the Perkins Eastman healthcare brand internationally. This includes the development of high-performance teams poised to deliver global thought leadership to clients worldwide. Perkins Eastman is a global design firm founded on the belief that design can have a direct and positive impact on people’s lives. By keeping the user’s needs foremost in the design process, the firm enhances the human experience in the places where people live, work, play, learn, age, and heal.

Discussing Strategic Approaches at Building Healthcare
Shearon shares: “This will be the eighth year I am participating in the Building Healthcare Innovation & Design Show in Dubai. Each year I am impressed with the conference’s increasing calibre of contributors and content. I’m honoured to be speaking at this year’s conference themed “Delivering Fit-for-Purpose Healthcare Facilities”. The big picture objective is addressing the main challenges involved in planning, designing, building and operating healthcare facilities in the MENA region. I am looking forward to delivering a platform presentation on October 2, day one of the three-day conference. The first session’s morning agenda is dedicated to “Vision and Masterplan” and will cover analysis of the MENA healthcare market, executive perspectives, facility responses, and game changers. Specifically, my presentation will discuss strategic and comprehensive large-scale masterplan approaches to developing successful medical cities that adapt to tomorrow’s needs and technologies.”

The user is not the payer: Financing healthcare for citizens and expats has been a priority for most governments in the region. Insurance penetration has increased over the years. Steps towards mandatory insurance are being taken in Oman, the KSA and remaining emirates of the UAE [Sharjah, Ras Al Khaimah and Ajman]. The impact on the economics of healthcare is being felt in the region already. With higher propensity to consume services, patients are visiting doctors and hospitals more often. Demand for higher end diagnostic and curative services has also seen a surge in recent years and the trend will continue. Market forces are mandating the infusion of the latest technology and higher end procedures and this will also continue. Expats who used to go back to home countries and citizens who travelled westwards for treatment earlier are now choosing to stay back and demand treatment in the country of their residence, as insurance covers it.

Overall, volumes in terms of patients, prescriptions and procedures have gone up in the areas that have witnessed higher infusion of health insurance. With increase in volume, the marginal cost of providing a service has come down, thereby impacting the overall average cost of each procedure. However, there is a likelihood of increased costs in the short run as more infrastructure and manpower will be required to serve the increased number of patients.

When healthcare costs for a person are paid by a third party, the dynamics change rapidly. The user of the service is not the payer of the service anymore. Further, the payer has incentives to save or defer the payment and be more profitable. On the other hand, the service provider does not face much resistance from the user for payments of diagnostics, tests and treatment. This in turn, can sometimes entice the provider to overtreat and overprescribe. The interesting interplay when three parties are involved results in attempts by each of them to shift the burden of costs to another.

Hence, overall margins will stay under pressure as payers will incessantly bargain for better discounts as they grow in stature with more policies being sold. This will increase price pressures and hence providers will have to turn towards cost optimisation to maintain healthier margins.

Cost of providing care is a game changer: We have witnessed pressure on pricing of services by payers in the markets for the reasons stated above. Service providers are now being driven to take a hard look at their costing and cost structures to maintain margins. We reckon that providers that manage to continuously maintain lower relative costs in comparison to their closest competitors will create a deeper advantage for themselves, provided they do not compromise on clinical outcomes and quality. This will require innovative and possibly disruptive cost structures that are difficult to replicate.

There are various models that are being tried by the early innovators in the region. Activity Based Costing to determine costs of top procedures and diagnostics has been done by a few leading players. Some are looking at reducing the capital expenditure (CAPEX) by pay per service arrangements with equipment suppliers. Outsourcing of services is on the rise. In some cases, even the core services are being outsourced.

The time and money taken to hire a skilled doctor or a paramedic and pay for their license, visa, insurance, etc. adds to the cost burden of providers in the GCC. Organisations that hire these people are beginning to look at various ways in which resources can be retained or in some instances, even outsourced. We have come across examples where a group of visiting physicians takes over the onus of setting up and running a department in a hospital on a revenue sharing basis.

The graphic below depicts a typical structure of cost bifurcation of a hospital in the region

Source: Frost & Sullivan Analysis

Manpower cost is a crucial component in any healthcare system: Nearly 50% of the costs in a healthcare delivery system are attributed to manpower. The requirement is diverse; from various kinds of doctors to nurses to technicians, healthcare has always been challenged by cost and availability of manpower. The economic viability of healthcare entities hinges on how manpower allocation is planned and its costs are structured. Recently, physician engagement models in some Middle Eastern countries have undergone a change. We are also witnessing more visiting doctors and part-time physicians being hired by various hospitals. The coming years will see further interesting changes in how healthcare organises its manpower to deliver services.

As depicted in the table below, the number of physicians and nurses in two of the largest markets in GCC has been steadily increasing over the years. We reckon this trend will continue for the foreseeable future.

Management of working capital is critical in modern times: Payment cycles are more relevant than ever before. Healthcare providers must keep a tight leash on the money required to run daily business, because they get paid for their services later. This also has an impact on how the vendors are paid and inventory that can be stocked. Urgent payments are gaining priority over the ones that can be deferred.

Governments are not insulated from the change in the overall economic forces at work: Public facilities are looking to share the burden with private ones and arrive at a balance between private and public sector participation in healthcare. For instance, there have been a series of announcements in the KSA, which indicate a shift towards the Public Private Partnership model in healthcare delivery. Oman has also indicated its openness to private participation in some of the initiatives. Other countries will follow suit as the market evolves further.

We have also witnessed the interest of government hospitals to participate in the insurance eco-system. Governments have either started or shown interest in many instances in participating in the health insurance system and have their hospitals raise claims to payers for treating patients. This will add to the payouts of insurance companies, thus impacting the overall premium being paid to them.

Pharma industry is undergoing a metamorphosis as well: Expensive branded medicines are now less preferred by payers than the cost-effective generic ones, especially in markets where insurance is playing a dominant role. With more people from the middle and lower income strata coming under insurance, this trend will amplify further. This will compel pharma companies to either focus more on generic production and distribution or innovatively engage industry stakeholders to promote branded medicines.

In short, the economics of healthcare is largely driven by the shift in the financing of care. As the transition from self-pay to third party payment continues, the eco-system will see many interesting changes in the future. Healthcare providers, payers, pharma companies and governments will need to continuously re-invent systems that they have relied upon in the past.

A cost-effective and efficient supply chain is an integral part of a hospital or medical facility’s functioning and is one of the main tools in maximising a provider’s revenue. In fact, the cost of a hospital supply chain is only second to labour cost representing a huge burden on the efficacy of a healthcare facility. This is particularly important given the current economic environment with governments in the Gulf Cooperation Council (GCC) working hard to provide universal healthcare across the region.

Alpen Capital estimates that current healthcare expenditure (CHE) in the GCC is projected to reach US$ 104.6 billion in 2022 from an estimated US$ 76.1 billion in 2017, implying a CAGR of 6.6%. Expanding population, high prevalence of NCDs, rising cost of treatment and increasing penetration of health insurance are the factors auguring growth. Between 2017 and 2022, CHE on outpatient services is predicted to grow at an annualised average rate of 7.4% to US$ 32.0 billion, faster than an anticipated CAGR of 6.9% on inpatient services to US$ 45.4 billion. So with an expanding population, the rise in costs of managing the burden of chronic diseases such as Type 2 Diabetes and cardiovascular disease, poor infrastructure, increasing penetration of health insurance, and acute skills shortages, the entire hospital supply chain needs to be carefully streamlined and managed to reduce rising healthcare costs and improve quality.

According to Takudzwa Musiyarira, who is a Transformational Health Research Analyst at Frost & Sullivan, healthcare financing is one of the major challenges for most organisations, particularly the private sector which has access to patients using both private and public health insurance.

“Public-private partnerships assist through cost-sharing among stakeholders, reducing the financial burden, and may include co-payments for health insurance claims. This enables both private and public sectors to save on costs while increasing efficiency,” he explains. “It is important for a healthcare facility to ensure its supply chain is managed effectively in order to cut costs and thus manage any revenue fluctuations.”

Two popular supply chain cost-saving methods that can be used are self-management and the Japanese-inspired just-in-time method. As Musiyarira explains, the self-management method essentially cuts out the middleman, who may be a distributor or other third-party suppliers. This method requires the healthcare facility to engage directly with the manufacturers of pharmaceuticals and medical suppliers, for example, and negotiate the best deals. However, this may require a proper inventory management system. “Additionally, for larger hospital groups, there is the additional advantage of collective purchasing through economies of scale. This results in further cost savings,” Musiyarira adds. 

The just-in-time option focuses on keeping only important items in the inventory and sourcing the rest as and when needed. This however, requires an efficient distribution system to ensure lead times are short and not negatively affect patient care. This method also reduces overstocking which sometimes leads to the expiry of stock in storage, particularly for pharmaceuticals. Ultimately costs are saved due to reduced wastage. 

“Other methods of cost control involve the digital transformation of a healthcare facility,” says Musiyarira. “The use of digital tags placed on all forms of inventory can be useful in tracking movement of stock, thereby automatically notifying the supply chain manager if they are running low. This ensures effective stock and cash flow management, focusing spending mainly on necessary and current costs.

A much-needed transformation

According to Federico Mariscotti, who is a vice president in A.T. Kearney’s Procurement & Analytic Solutions Practice in the Middle East, most GCC healthcare systems have put third-party spend into too small of a box tagged with a narrow definition of procurement: basic tendering and material handling. He says much bigger benefits can be achieved if hospital management gives procurement a more advanced role and that there are four regional challenges that tend to thwart attempts to reduce costs:

Doctors’ diverse backgrounds. GCC healthcare systems are staffed with doctors from around the world. This unique diversity of backgrounds brings with it an endless array of preferences for medical equipment, consumables and pharmaceuticals, making it difficult to standardise using basic methods.

A skills shortage. There is a lack of procurement professionals who specialise in healthcare, and local schools do not offer courses to train the workforce in healthcare supply chain management. Therefore recruiting category managers who are key to driving the advanced techniques is exceedingly difficult.

Procurement’s low status. Even when limited procurement skills do exist, supplies’ functions are often seen and operate as a transactional entity that simply purchase goods and services under instruction from doctors and others. Few hospitals give procurement a genuine voice in which products are purchased.

Competitiveness of the local supply market. Local companies often have exclusive rights to international products and brands and distributor mark-ups can double costs. A nascent manufacturing sector means a limited local market for even basic products.

In response, Mariscotti outlines four sourcing strategies can deliver substantial and sustainable cost reductions:

Change specifications: optimise what you buy. Hospitals have an excessive number of products, primarily because of a lack of governance and control mechanisms. For example, in the GCC, doctors and nurses often have a choice in which gloves they buy. Because of variations in personal preferences, hospitals end up purchasing a wide variety of gloves. In more advanced hospital settings, purchasing departments have a strong influence over the final decision.

“One hospital system we worked with was buying three brands of infant formula with identical specifications but vastly different prices,” Mariscotti explains. “By standardising to the most affordable option, the company reduced its costs for formula by 70% with no negative impact on the standard of care.”

Reduce demand: decrease waste and underuse. GCC health organisations have expanded quickly to meet the population’s needs, often without setting up clear rules for spending. Because of this, many warehouses are full of an assortment of items, often in quantities which invariably leads to a lot of it becoming obsolete and being thrown away. According to Mariscotti, policies contribute to stockpiling because many hospitals have a use-it-or-lose-it budgeting practice that results in unnecessary purchases.

“What’s lacking is rigorous planning with stock thresholds and governance mechanisms that define what is desirable and what is excessive.”

Leverage competition: do things better. Despite the region’s healthcare market being relatively small, two factors give it a big bargaining power: the growing and ageing population and the fact that GCC countries tend to be cash rich and have demonstrated a willingness to invest in healthcare. This makes the region attractive for companies with an eye on growth. For example, the United Arab Emirates is among the world’s top improvers in terms of its business environment, and the government is committed to attracting foreign direct investment. Too often, however, negotiating power is lost because of poor planning. “For example, one company we worked with was buying blood-collection tubes from the same supplier every few months but at hugely variant price points, primarily because orders were being placed by different hospitals,” says Mariscotti. “Combining demand and establishing long-term contracts lowered the cost of the tubes by 74%.”

Partner with the right vendors: choose your suppliers wisely. Mariscotti says that identifying strategic vendors and forming meaningful partnerships can create the right conditions to benefit both the hospital and the supplier. For example, a hospital in the United Kingdom has a long-term partnership with a provider of cardiac devices. The partnership extends beyond product supply into patient lifestyle sessions and follow-up clinics. This encourages both the hospital and the vendor to take a long-term view of patient satisfaction and clinical outcomes as well as the commercial opportunity.

Locking in Sustainable Results

According to Rahul Anand, who is a director in A.T. Kearney’s Supply Management Practice, there are four practices that are proven to help keep costs down:

• Change the setup of your procurement team.
  A world-class procurement organisation is created by investing in talent, and infrastructure, to build serious capability, and consulting support to mobilise that capability quickly and with immediate results. The return on this investment is measured by the benefits that procurement delivers, including lower costs and better results. A.T. Kearney’s unique Return on Supply Management Assets study found that for every dollar invested in developing and running a health organisation’s procurement function, the company gets $4.30 in return.

• Bring stakeholders together in a cross-functional clinical value team.
  Advanced healthcare organisations have clinical value teams that act as decision-making groups. “Comprised of doctors and nurses along with people from supply management and finance, these teams pinpoint the right specifications for the whole organisation, for example the ideal type of gloves,” Anand explains. “In addition, this level of transparency and information-sharing enhances compliance to the jointly agreed product selections.”

• Overhaul the engine with fit-for-purpose processes.
  According to Anand, many GCC health organisations struggle with the timely management of procurement requests and bottlenecks and delays tend to be the norm. Strategic sourcing requires a flexible approach to adapt to both the organisation’s needs and the market’s changing conditions. Category managers need the freedom to choose the most appropriate strategy, from making purchases on demand to setting up multi-year agreements. Leading organisations standardise and automate the process, often by using dedicated software.

• Use enhanced analytical capabilities to uncover hidden opportunities.
  With the large variety of products that a healthcare system buys, and the countless unique item numbers, enhanced analytical capabilities are essential to uncovering the opportunities buried under all the data. Analytics can also prevent overstocking and reduce working capital by optimising inventory and defining reordering policies. In more advanced applications, statistical analysis of historical patient data from electronic medical records can be used to develop predictive models for low-cost interventions, reduce the number of readmissions, identify chronic illnesses, and evaluate the effectiveness of treatment.

The way forward
According to experts from A.T. Kearney, a forward-thinking approach to third-party spend can create significant economic gains, including reducing third party spend by 20%, which can, in turn, be used to support investments to sustain the region’s escalating demands for healthcare.

“Unlocking the full range of opportunities will require a proficiency in generating competition among suppliers to get the best prices, systematically managing demand to avoid unwarranted range complexity, creating clinical value teams to facilitate a healthier cost-benefit dialogue with clinicians, and, most challenging of all, developing differentiated supplier interaction models, including strategic partnerships, to get the most from your suppliers,” says Anand. “A complete improvement transformation can take 12 to 18 months, but we have found that by working collaboratively most of the savings can be delivered in the first six to eight months.”