US$104 billion.
This is where the GCC is expected to reach by 2022 in healthcare expenditure, rising rapidly at a CAGR of 6.6% from US$76 billion in 2017. This trend, in a healthcare market which is still operating with only a few performance indicators (occupancy and bed capacity) and is heavily reliant on ex-pat healthcare professionals, is being driven by several underlying changes in the region.
Expanding population across the GCC, compulsory health insurance, Government initiatives to diversify away from Oil revenues and encouragement of Public Private Partnership (PPP) models, improvements in primary health delivery, medical tourism and digital services have all been contributing to a more complex, but broadly successful expansion of clinical services. Improving overall health, and much increased access to generic drugs and improved infrastructure has also significantly reduced communicable disease rates in the region.
The growth picture is tempered though. There are a number of significant challenges baked into the region – the regulatory and compliance burden both in clinical QA and in drugs safety and access, a rising number of patients which has already started to outpace collective bed capacity, and a pipeline of healthcare projects worth over $US60 billion is under development, which will in the current model simply replicate and multiply the underlying operational challenges. The focus on managing provision through capacity and occupancy rates means this focus on building hospitals and clinics at this rate will likely continue unabated. Efforts to contain rising operating costs, in an economy not accustomed to the cost improvement initiatives of Western health economies, will continue to be hampered by a lack of local understanding, buy-in, and metrics.
At a clinical level, there is already a shortage of HCPs per capita – less than 3 physicians per 1000 people, and accordingly within that ration a very limited provision of both expertise and the technology to treat rising rates in oncology, CVD and neuro. This has been driving outbound medical tourism, further undermining the case to develop services locally, and meaning that the centers of excellent needed are slow to emerge. This is further complicated by a legacy preference for generic drugs, meaning access to the most innovative therapeutics is limited and access into the GCC is delayed while patents expire and generics become available. With no state-managed health technology assessment, private insurance plans will need to step up and drive earlier adoption, creating managed markets and defining a future of partnerships with provider organisations. It is interesting (perhaps indicative) in this context that the UAE government is investing in its own precision medicine initiative. Investment in the required data infrastructure and access to the genomic data assets will need to be significant.
Consulting Point sees the overall trends within the GCC to be very positive. Having already exceeded £3 billion in 2019, led by a surge in demand in Saudi Arabia and with other GCC economies rapidly catching up. Saudi Arabia bought over $1.3 billion in consulting services in 2017 alone, and that spend seems to be on the increase despite falling oil prices and geopolitical pressures across the region. Outside of Saudi Arabia and the UAE, demand for consulting services is lower and the market reportedly patchy, not least due to local geo-political issues. Rapid adoption of regional and global risk and regulatory frameworks has also created a pressure on a comparatively nascent health system across the region, though alleviated by the familiarity with such standards that the (majority) expat health practitioners on the ground bring with them.
We see significant opportunities for consulting firms in the GCC through to 2025. There is a significant consultancy demand in efficiency and profitability gains across the diversified provider estates, with both hospitals and clinics looking to understand their operations and cost base, and this will also drive an increase in M&A both from incumbents looking for cost synergies and new private investments, particularly in long term, rehabilitation and preventative care. As private insurers become more embedded in the GCC, the pressure to manage the cost burden on plans will, of course, drive a continued upswing in consultancy engagements, as will the essential adoption of electronic health records. There is good evidence that remote and digital health provision is gaining acceptance in the GCC also - with connected medical devices, telehealth, robotics, and wearables all likely to be central to health plans and wellness programmes.
Written by Kevin Acourt - Principal in Healthcare at Consulting Point
Position: Principal
Expertise: Life Sciences, Healthcare,Consulting
Geographies: EMEA, US, UK
Kevin has over 20 years of experience in executive search, and initiates and delivers both retained and non retained mandates across the US and EMEA markets.
As an expert in the Life Sciences and Healthcare, Kevin leads many of our life sciences and healthcare sector engagements and advises our team on related search and research projects. He also executes search assignments at all levels in the wider consultancy industry, drawing on his experience building and leading retained search mandates across FMCG, Financial Services, Strategy & Operations, Technology and Commercial at senior levels. Kevin has also established himself as one of the world’s leading Pharma Real World Evidence search practitioners, with an expert knowledge of big data and its applications and outcomes in the life sciences. He is also highly experienced in mentoring and coaching search colleagues, and is an active contributor to our internal coaching and development curriculum.
His breadth of market insight has secured his position as a trusted adviser to both his clients and global talent networks, advising on all areas of talent planning, acquisition and competitive intelligence.