Building a healthy future: Increased investment will be vital to making the emirate more competitive

The leadership of Ras Al Khaimah has long demonstrated a strong commitment to developing the emirate into a thriving and modern economy. A core part of this vision includes promoting human and social development, with a particular focus on the provision of quality health care and improving outcomes. With support from the federal government, RAK has made significant progress over the last five years in building the infrastructure and institutions required to anchor a robust health care sector. A dedicated medical zone, new and improved hospitals, and institutions to train medical staff provide physical evidence of this drive. The private sector is also playing an increasingly important role in delivering medical services in the emirate. While federal hospitals and clinics are likely to maintain a competitive presence, private firms are eyeing opportunities for investment in niche segments such as diabetes, heart and cancer care.

Growing Demand

The emirate is seeing increasing demand for health care services as citizen and expatriate populations continue to grow. Federal health care facilities cater to the bulk of local demand, but a clear need for private participation in building and managing hospitals, clinics and other facilities has been identified. Despite the recent progress, however, health care providers in RAK continue to face significant challenges. The increasingly wealthy population with rapidly changing lifestyles has created a new set of health problems. The prevalence of non-communicable diseases has become a major issue, with cardiovascular diseases, hypertension, diabetes and cancer accounting for significant levels of mortality and morbidity. Furthermore, the shortage of quality health care professionals globally places additional pressure on local medical institutions. RAK’s hospitals and clinics have to compete for medical staff with other rapidly growing markets in the UAE and Gulf region, including Dubai, Abu Dhabi, Qatar and Saudi Arabia. While higher salaries in the UAE help attract staff, the supply and demand equation for medical professionals requires attention.

Private service providers face additional challenges due to stiff competition from free federal hospitals and private players in Dubai, as well as low insurance penetration. The lack of a centrally managed database to collect important data and to help link the various hospitals, clinics and other facilities also hinders additional investment. However, the government is tackling these issues as the sector continues to evolve.

Taking The Pulse 

The population of the UAE has more than doubled over the last decade. RAK’s population has followed this trend, growing from 231,000 in 2008 to an estimated 416,000 in 2012, according to the RAK Department of Economic Development (RAK DED), and is expected to rise to 750,000 by 2020. The emirate has also witnessed rapid economic expansion despite the global financial crisis, posting growth of an estimated 8% between 2011 and 2012. RAK’s population has a larger proportion of UAE nationals compared with Dubai and Abu Dhabi. These figures are significant in the context of the health care sector as UAE nationals receive free treatment at all public health care facilities, a benefit that has wide repercussions for health care financing and sector strategies.

National Vision 

The UAE Government Strategy 2011-13 enshrines the country’s priority of achieving the highest standards of living by “ensuring access of all citizens and residents to primary health care, and by improving the quality of health care services provided in the country to global standards”. According to the national strategy, specific measures to achieve the vision of a leading health care system will, “Ensure universal access to health care services by ensuring availability of health care services in all regions, [and] reduce epidemic and health risks by promoting a healthy way of life that reduces the prevalence of diseases, strengthening preventive medicine, and developing readiness to deal with health epidemics.”

Managing The Sector

The health sector in the UAE falls under the purview of the Ministry of Health (MoH) at the federal level. The ministry has ultimate regulatory authority over all medical centres and is mandated with implementing the government’s national strategy, coordinating public efforts to reduce lifestyle diseases, and dealing with national epidemics and diseases. However, each emirate has a significant level of autonomy to design and implement specific policies and sector strategies at the local level, which in practice is In the southern region, which comprises Abu Dhabi, the Health Authority of Abu Dhabi regulates the sector and the Abu Dhabi Health Services Company (SEHA) oversees delivery of services. In the central region, which comprises the emirate of Dubai, the Dubai Health Authority (DHA) regulates the sector and delivers most services. The only exceptions are private hospitals and clinics that have been established in the medical free zones, such as Dubai Healthcare City, which have alternative regulatory authorities approved by the MoH and DHA. Finally, in the northern zone, which includes Sharjah, Fujairah, Ajman, Umm Al Quwain and RAK, the MoH regulates and delivers health services. All public and private medical facilities within RAK, therefore, require certification and licensing from the MoH.

Financing

The UAE has invested significantly in developing the sector over the last decade. According to the World Health Organsiation (WHO), per capita expenditure in the UAE has almost doubled from $885 in 2000 to approximately $1450 in 2010. This dwarfs the average of $252 per capita in Arab countries, with only Qatar investing more per capita in the GCC region. However, it is still less than half of what is spent in the UK and only one-fifth of the expenditure in the US.

While most of this money comes from the federal government, the WHO estimates that private spending accounts for 26% of total health care expenditures in the UAE, predominately coming from individual households. Medical insurance is not yet mandated in RAK, but that is part of the long-term strategy.

Within The UAE

There are also significant disparities in financing within the UAE. According to analysis by management consulting firm TCO, SEHA, in Abu Dhabi, and the MoH, in the northern region, have a similar number of patient encounters but costs vary between the two. SEHA spends an estimated $486 per appointment compared with $176 for the MoH. Some of this variation is likely down to economies of scale achieved in Abu Dhabi that are not available in the Northern Emirates, which have proportionally lower populations. It might also be partly attributable to higher incomes and mandatory insurance in Abu Dhabi, and is likely to account for differences in health outcomes between regions. Interestingly, while the southern and northern zones have a similar number of hospitals, beds and public health clinics, SEHA has 6500 more employees in its medical workforce than the MoH.

Improving Outcomes

Health care standards in RAK and, more generally, the UAE have continued to improve due to a combination of targeted investment, a business-friendly environment and improved regulatory oversight over the last few decades. The UN’s Human Development Index ranks the UAE 41st out of 187 countries, placing it above all its GCC peers. The UN data shows the under-five mortality rate in the UAE has dropped from around 30 per 1000 live births in 1980 to just seven per 1000 in 2009, higher than countries such as the US. Similarly, life expectancy at birth has improved from 68.2 years in 1980 to 76.7 years in 2012.

Like the rest of the GCC, the UAE displays a distinctive array of risk factors that have emerged from changing lifestyles and behaviours. The prevalence of diabetes, obesity and cardiovascular disease is striking. The WHO estimates that 38% of deaths in 2002 were due to cardiovascular disease. Almost 20% of UAE nationals have diabetes compared with a global average of 8.3%, according to the International Diabetes Federation.

Health care infrastructure and facilities in RAK and the UAE are among the best in the GCC region. According to the RAK DED, there were six public and private hospitals with 683 hospital beds in the emirate as of the end of 2010. In addition, there were 18 public health centres and 43 pharmacists in RAK. The MoH manages the majority of hospitals and clinics. The RAK Medical Zone serves as the centre for public facilities. UAE total health expenditures, 1995-2011 PUBLIC FACILITIES: Sheikh Saqr Hospital, in the RAK Medical Zone and one of the largest medical facilities in the emirate has 278 beds, 57 doctors and 262 nurses. The 151-bed Ibrahim bin Hamad Hospital complements services available at Sheikh Saqr Hospital. It also has a large psychiatry unit with 34 beds and serves as a centre for the treatment of infectious diseases.

The 126-bed Obaidallah Geriatric Hospital, opened in 2009, serves as a home-care centre for the elderly and features recreation rooms, swimming pools, entertainment halls and restaurants. Finally, Shaam Hospital, the smallest of the four government hospitals, was built as a general hospital to provide services in the northernmost areas of the emirate. It has a total of 67 beds, and prior to the construction of Obaidallah Geriatric Hospital was the only public facility that offered specialised care for the elderly.

Private Hospitals 

RAK’s biggest private hospital, RAK Hospital, is the premier private facility and is considered the Northern Emirate’s leading hospital. The 65-bed facility is managed by the Arabian Healthcare Group with Sonnenhof Swiss Health. The RAK Hospital complex was designed by Ellerbe Becket, the firm that designed Minnesota’s Mayo Clinic, and houses three suites, nine super-deluxe rooms and 24 deluxe rooms. The facilities feature an eight-bed intensive care unit, four operating theatres, a cardiac catheter lab and 26 outpatient clinics. The hospital is gradually building facilities and expertise for specialised tertiary care, but is moving cautiously to ensure it stays in line with demand. The original business model for the hospital was based on proposed plans for universal health insurance. Up to 85% of its business is paid for by insurance but only 25% of the population is insured. The hospital recently adjusted its revenue model to attract medical tourists from Africa and Asia (see analysis).

RAK Hospital is planning to add specialised services to maintain growth going forward. The facility recently announced plans to partner with India’s Apollo Hospitals to introduce cancer care management in the emirate. The partnership will enable RAK Hospital to offer chemotherapy and other cancer treatment programmes. The hospital also signed a similar deal with the LV Prasad Eye Institute, also from India, to open a new eye-care centre in RAK.

Another private provider is the Al Zahrawi Hospital, which is the oldest private hospital in RAK, established in 1987. The institution has one labour room, an operating theatre and emergency surgery facilities. Other major treatments available at the facility include dentistry, dermatology, neurology, ophthalmology, psychiatry, radiology and paediatrics.

New Facilities

It is anticipated that the emirate will invest more than $300m over the next five years to upgrade its health care facilities. The Dh947m ($257.7m) Sheikh Khalifa Specialist Hospital, a landmark project, is nearing completion, with an expected opening date of December 2013. The new hospital will add critical specialist facilities for patients in RAK and the Northern Emirates. These will include oncology, neurosurgery, vascular surgery and paediatric surgery. The 248-bed facility is part of a broader federal programme to develop infrastructure in more remote regions of the UAE.

Work on the Abdullah Rashid Omran Hospital, in the Al Digdaga area on the outskirts of RAK, is also nearing completion. The hospital, which is being constructed at an estimated cost of Dh100m ($27.2m), will have 60-80 beds. According to RAK’s government, the MoH has set up a roadmap for improving health care in the emirate that also includes establishing an electronic network to link hospitals and health centres and creating a national database to hold patients’ records. The Wareed project will connect all hospitals through an integrated platform.

Pharmaceuticals

The private sector is involved in more than hospitals and clinics. Julphar, for example, is a successful pharmaceuticals firm that was established in 1980 by RAK’s former ruler, Sheikh Saqr bin Mohammad Al Qassimi, and later restructured by Sheikh Saud bin Saqr Al Qasimi. The company has rapidly grown into an influential global player. In 2012 it recorded Dh1.18bn ($321.1m) in revenues and 15.3% year-onyear growth in sales. Julphar has 12 production facilities globally and a distribution presence in 40 nations. Its diverse portfolio includes a number of segments, including endocrinology, cardiovascular and gastroenterology, anti-infective, nephrology, dermatology, respiratory, metabolic, and burn and wound management.

In 2012 the company launched Julphar Diabetes, a multimillion-dollar project to become the first local manufacturer of recombinant DNA, the raw material used in the production of insulin. The rising prevalence of diabetes in the region and worldwide makes this development a particularly significant step for Julphar. The facility is set to produce an estimated 1500 kg of the insulin crystal, which can be used to prepare almost 40m vials of the final product. This would make Julphar the fifth-largest producer of insulin globally. The $136m facility is located in RAK, but expects to export the majority – up to 80% – of its total output.

In 2013 Julphar also opened a $9.6m plant in Addis Ababa, Ethiopia. The new plan will produce 25m bottles of suspension and syrup, 500m tablets and 200m capsules annually. The investment is expected to cement Julphar’s presence on the African continent.

Challenges & Opportunities

The medical environment remains quite challenging for private players. RAK Hospital has been able to succeed locally partially because it was the first major private hospital in the emirate and because of support from the government. Hospitals in Dubai and Abu Dhabi provide stiff competition because they are able to tap into larger customer bases to generate significant revenues, which can in turn be invested in higher salaries and better facilities. Adding to the imbalance, insurance companies pay higher fees in Dubai and Abu Dhabi than in RAK, which again puts a strain on margins for private players.

Nevertheless, growing demand for local services still offers private facilities promising opportunities in niche market segments. The market for diabetic care, for example, will continue to grow, meaning there should be opportunities for a full range of services from diagnosis facilities and dietary consulting to foot-care counselling (see analysis). Eye care is another niche that is currently not properly served in the emirate.

Rising Costs

UAE citizens receive free medical care at all public facilities. However, the cost of providing it is rising at an alarming rate, burdening public facilities and private health centres alike. Daman, an insurance firm with a strong presence across the UAE, revealed that just 50 drugs account for 40% of total pharmaceuticals costs in the UAE. In response, the federal government slashed the costs of some 6600 medications by 40% in mid-2013. This is expected to reduce profit margins for pharmacies, lower insurance premiums and ensure wider availability of treatments. While some have cautioned that price reductions could affect the quality of drugs, Dr Ayman Sahli, the CEO of Julphar, told OBG that as pharmaceuticals producers in the emirate depend on global sales quality will not suffer as long as prices are predictable and allow for a profit margin.

The government of RAK is also expected to introduce compulsory health insurance. The process has faced delays over a variety of concerns, including whether employers, particularly small and medium-sized enterprises, would be able to afford to insure their staff.

However, the move is likely to provide critical support for private players in the health care sector. For example, Raza Siddiqui, the CEO of Arabian Healthcare Group, the parent company of RAK Hospital, told OBG, “The opportunity that will be generated for private investment when medical insurance becomes mandatory is very significant, not only for private hospitals, but also for clinics, specialty centres, pathology labs and medical equipment.”

Under the new scheme, residents would have a choice of getting treatment at public or private facilities, removing one of the bigger obstacles for private players. While the system is likely to reduce the burden of costs in the sector, it also risks creating incentives for hospitals and doctors to prescribe additional and unnecessary tests and treatments.

Training The Workforce

Training and retaining quality staff is a growing challenge globally. According the WHO there are only an estimated 0.11 health care workers per 1000 people worldwide. This highlights the global shortage when compared the estimated 10 health care workers per 1000 people in developed countries such as the US. RAK faces particular difficulties in attracting doctors and nurses away from more lucrative jobs in Dubai and Abu Dhabi.

To help tackle this issue while meeting the goals of Emiratisation, the government established the RAK Medical and Health Sciences University (RAKMHSU) to establish a quality local medical programme. RAKMHSU is now fully owned and operated by the UAE government. The university, which is adjacent to the Saqr Hospital and RAK Hospital, has grown rapidly, and has a student body of more than 740 students from 40 countries, 98 full-time and 76 adjunct faculty, and 65 nonteaching staff. The Ministry of Higher Education and Scientific Research has accredited all the university’s academic programmes. RAKMSHU’s third class graduates in September 2013.

Rakmhsu Has Four Colleges

RAK College of Medical Sciences; RAK College of Pharmaceutical Sciences; RAK College of Dental Sciences; and RAK College of Nursing. The College of Medical Sciences started a five-year bachelor’s of medicine programme in 2006 and graduated its first batch of medical students in September 2011. The other colleges began offering bachelor’s degrees in dental surgery and pharmacy, as well as a bachelor’s of science in nursing in 2007.

The university and the government have several initiatives to enrol more local students to its medical and nursing programmes designed to build up the local sector workforce. The Sheikh Saud bin Saqr Al Qasimi Foundation for Policy and Research, for example, provides scholarships to students who are UAE nationals.

The MoH sponsors up to 50 students a year for RAKMHSU’s nursing programme, although there are currently just 25 students enrolled under this scholarship. The university itself also provides merit-based scholarships. Students who score above 95% on their exams automatically receive a scholarship that covers 20% of their fees. RAKMHSU recently rolled out a “conversion” course to allow students in the arts stream to shift into science subjects. The course emphasises knowledge in chemistry, biology and English, and enables students to enrol in RAKMHSU’s nursing degree.

RAKMHSU reports a wide gap between the core skills that incoming students bring and the rigorous requirements of preparing for a degree in medicine. English and communications skills are cited as the biggest weaknesses, pointing to a need for greater coordination between the health and education sectors.

Preventive Care

The data and trends regarding the prevalence of diabetes and the proportion of the population that is overweight illustrate a need to shift towards preventive health care with a focus on lifestyle choices. Other emirates have started drafting strategies to tackle the issue, but are yet to implement reforms in the health sector. The government of RAK has several public health initiatives, but currently lacks a clear strategy that ties health outcomes to a comprehensive approach to preventing and not just curing diseases. However, the government is engaging more with the public to promote education about lifestyle issues. The RAK Medical Zone, for example, is studying public awareness of diabetes. The data will be used to shape a public awareness campaign and also feed into treatment programmes at public hospitals.

Rural Care

While most of RAK’s population lives within the vicinity of RAK City, there are a significant number of communities in the emirate’s more isolated corners. Investment at the federal level in roads and infrastructure has connected these rural communities. Now, the MoH is looking to implement similar initiatives to do the same with health services. Primary health care units and home-care teams are currently being set up to serve rural households. Home-care is seen as a growing segment across the UAE. In addition to benefitting residents, it helps reduce the burden on hospitals.

Outlook

The health sector has improved dramatically over the past decade, but the government still faces challenges in providing high-quality care to all residents. Many doctors see the lack of a standardised system for health care as a key challenge. The regulatory environment is efficient, but tends to focus on a basic quality of service. According to RAK Hospital, reforms to restructure the sector must include a push for centrally managed data collection and analysis that links all medical facilities. This would encourage greater participation from the private sector, and enable the government to implement evidence-based policies and better manage the sector for improved outcomes. The introduction of mandatory insurance will boost the private sector and reduce the burden on public facilities. While public providers will likely dominate the field going forward, opportunities await private players.