Regulations to encourage new providers add to Dubai's quality health care sector

Medical tourism, pharmaceutical production and changes to insurance billing are the chief talking points in Dubai’s health sector at present. The private sector has led rapid growth in recent years, and while high average health spend and a favourable regulatory environment continue to encourage new hospital operators to enter the market, a tilt in the supply-demand balance means providers must closely watch market needs. In the long term, a growing population, supportive governance and a focus on non-communicable diseases (NCDs) are likely to continue to create opportunities for both international and local players.

Oversight

Health care providers in Dubai are subject to both local and federal regulations. The sector is governed at the federal level by the UAE Ministry of Health and Prevention (MoHP), and at the emirate level by the Dubai Health Authority (DHA). The DHA is the relevant authority in terms of provision and oversight, while the MoHP’s role is largely limited to national policy decisions. Dubai Healthcare City (DHC), meanwhile, is a free zone governed by the DHA and regulated by the Dubai Healthcare City Authority (DHCA).

The DHA was created in June 2007 by Sheikh Mohammed bin Rashid Al Maktoum, vice-president and prime minister of the UAE, and ruler of Dubai. The authority has oversight of the entirety of the emirate’s health sector and is mandated to bolster private sector engagement. The authority’s purview includes regulating medical services, enhancing sector competitiveness and transparency, and applying international best practices to both medical services and products.

In 2018 two legal changes expanded and elaborated the DHA’s mandate. Law No. 6, issued in May, gave specific attention to ensuring the availability of quality medical insurance, further improving medical standards, creating more attractive frameworks for investment, promoting medical tourism, encouraging innovation in the sector and improving preventive care. Furthermore, the law allows the authority to regulate prices in the private sector, propose draft legislation where relevant, and collaborate with other authorities on medical education and research. According to Humaid Al Qutami, director-general of the DHA, the law will also bring about a gradual shift in the DHA’s internal organisational structure.

The second, Law No. 17 of 2018, created two DHA subsidiaries, Dubai Healthcare Corporation and Dubai Health Insurance Corporation (DHIC). The DHIC is tasked with overseeing the emirate’s health insurance industry, including private sector financials and pricing patterns. Dubai Healthcare Corporation, for its part, manages and operates the emirate’s government health care facilities, including primary care centres, specialty centres, medical fitness services centres and occupational medicine centres.

Policy

The two most relevant policy documents for the government’s development of the health sector are the Dubai Health Strategy 2016-21 and, more broadly, UAE Vision 2021. The Dubai Health Strategy 2016-21 was launched in January 2016 and is divided into four approaches – namely, health and lifestyle, excellence in providing service, smart health care and governance – with six objectives to be achieved via 15 programmes and 93 initiatives. The objectives of the plan include improving the efficiency of health care provision and creating an integrated database to inform decision-making in coordination with the emirate’s smart government policy.

Health care also forms one of the pillars of the national development strategy, UAE Vision 2021. Among the aims of the plan are to have all public and private hospitals accredited “according to clear national and international quality standards”, and to reduce the prevalence of lifestyle-related health issues such as diabetes and cardiovascular disease.

Sector Indicators

The UAE federal budget designated Dh5.2bn ($1.4bn) for health care in 2019, an increase of 15.8% on the Dh4.5bn ($1.2bn) allocated in 2018. A strong budget has supported increasing levels of health and care provision in Dubai, in line with the emirate’s rapid economic development and population growth. According to the World Bank, between 1960 and 2018 the UAE’s population grew from 92,418 to 9.63m, and life expectancy at birth rose from 51.5 years to 77.7 years. Meanwhile, infant mortality per 1000 births dropped from 134 in 1960 to 6.5 in 2018.

These gains are largely down to improvements in the scale and quality of health care in the country. The number of physicians per 1000 people increased from 0.9 in 1970 to 2.4 in 2016, per the most recent World Bank data available, while the UAE’s current health expenditure increased from 2.4% of GDP in 2000 to 3.5% in 2016. Although this remains significantly lower than the OECD average of 10% of GDP, the country has been successful in allowing the private sector to drive health care development. The Legatum Prosperity Index by the Legatum Institute, a London-based think tank, measures health as one of nine key contributors to a country’s prosperity. In the 2018 index, the UAE ranked 10th out of 149 economies in this metric. These factors are playing a role in the nascent medical tourism industry being promoted by the DHA.

“The largest source market for medical tourism in Dubai is the other emirates – people coming from Sharjah, Ajman and Ras Al Khaimah, instead of patients flying in on a medical tourism visa. However, this shows that the UAE’s outbound medical tourism has reversed, with fewer Emiratis going abroad for health care and more choosing high-quality facilities in Dubai,” David Hadley, CEO of UAE-wide health care provider Mediclinic, told OBG (see analysis).

Disease Burden

As a result of improvements in overall levels of health, the focus of health care policy in the UAE has shifted to tackling NCDs such as cancer, diabetes and cardiovascular disease via preventive measures that include encouraging healthier lifestyles, increasing awareness and improving early detection. As of 2017 heart disease, stroke and cancerous tumours accounted for the largest number of non-accidental premature deaths in the UAE. Chronic obstructive pulmonary disease – a common form of lung disease – diabetes and chronic kidney disease were also among the top-10 causes of death. Cardiovascular diseases and cancer accounted for 51% of deaths in Dubai in 2016, and the UAE’s mortality rate due to cardiovascular diseases is almost three times higher than in Australia or the UK, at 147.9 per 1000 inhabitants. Similarly, a diabetes prevalence ratio of 17.3% is two to four times higher than in the UK or Australia, according to the DHA’s “Dubai Health Investment Guide 2019” report.

Many of these health issues are lifestyle related. Average summer temperatures range from 28°C to 40°C, representing a barrier to spending a lot of time outdoors and contributing to a prevalence of vitamin D deficiency despite high levels of sunshine; a proven contributing factor in cardiovascular disease is vitamin D deficiency. Obesity and tobacco use are also acknowledged as major contributors to Dubai’s disease profile, with approximately one-third (34.5%) of adults classified as overweight and more than onefifth (21.9%) smoking cigarettes.

When it comes to obesity, measures are being taken to tackle the problem in childhood, and prevalence among youth in Dubai is decreasing: a study of 260,000 children aged 5 to 18 years old showed that the percentage of obese children as measured by body mass index decreased from 10.1% in academic year 2014/15 to 8.9% in 2016/17. The decline was supported by measures implemented by the DHA and other agencies, such as a guidance manual for school canteens, improved food labelling and health awareness campaigns.

Public Sector

In the realm of public facilities, the DHA operates four hospitals: Dubai Hospital, Rashid Hospital, Latifa Hospital for Women and Children, and Hatta Hospital, as well as specialty centres that include the Dubai Diabetes Centre and 13 primary health centres. The DHC free zone also hosts government facilities, including Al Jalila Children’s Hospital.

In March 2019 the DHA launched a new patient appointment system for public health care centres to minimise no-shows, reduce wait times and increase efficiency by restricting walk-ins to emergency cases. An appointment can be booked via call centre or the website dubaihealthbooking.com. According to Dr Manal Taryam, CEO of the DHA’s primary health care sector, by the end of 2019 patients will be able to book and reschedule appointments through the DHA’s flagship mobile phone app as well.

Private Sector

In recent years the utilisation of private sector health services has increased at a faster rate than uptake in the public sector, according to figures from the DHA and the DHCA. The number of people seeking private sector outpatient care grew by an average of 6.2% annually between 2012 and 2016, as opposed to 2% in the public sector, while inpatient numbers grew by 10.7% and 1.3% in the private and public sectors, respectively.

The expansion of private sector services is combined with high health care spend, as residents of the UAE are in the top 20 globally when it comes to per capita health care outlay, spending more than $1200 per year. This environment has led to continued private investment in Dubai. In March 2019 a King’s College hospital in Dubai Hills, which has links to the King’s College Hospital in London, became the fourth of the franchise to open in the UAE, while in September Barraquer Ophthalmology Centre, a leading eye clinic operator based in Spain, announced it would build the Barraquer-UAE Eye Hospital in the DHC. In addition, American Hospital Dubai plans to expand its main Oud Metha campus beginning in late 2019.

However, there are signs that the sector may be growing too rapidly. “There is an oversupply of clinics and insurers in the UAE, and not enough patients,” Mark Adams, founder and chairman of The Healthcare Network, told OBG. “As new supply comes on-line, an increasing number of hospitals will struggle to reach more than 60% occupancy.”

Nevertheless, in 2019 the DHCA implemented a number of measures to increase the free zone’s attractiveness for health care investment. In March the regulator announced that the fees for issuing or renewing operating permits had been reduced, a move that will affect almost 150 clinical practices in the free zone, as well as prospective operators. The fees for inpatient and outpatient facilities were lowered by up to 30% and 24%, respectively, while diagnostic centres and medical laboratories had their permit fees reduced by 32%. The decision also saw lower fees for community pharmacies and non-medical diagnostic centres, and the authority waived fees altogether for 240 non-clinical entities including retail outlets, hospitality facilities and training centres.

In May 2019 these financial incentives were complemented by the Fawri Commercial Licence. In addition to reducing the processing time it takes to secure a commercial licence, the new instrument removes the requirement that providers own or lease premises during their first year of operation in the DHC, drastically lowering the cost of market entry to the free zone.

Although most news coming from the private health sector in Dubai is positive, the DHA announced it had shut down a number of private facilities in August 2019 for failing to comply with regulations. In explaining the decision, the DHA said that the absence of necessary equipment in operation rooms and a lack of emergency medication were among the reasons for the closure, underlining that while it encourages private investment, patient safety is the top concern.

Insurance

Mandatory health insurance for foreign residents was introduced in 2013 and rolled out in phases, the last of which was implemented in March 2017. As of January 2019, 98% of Dubai visa holders carried medical coverage. According to Saleh Al Hashimi, advisor at the DHIC, although the number of insured people in Dubai has increased by almost 3m since the introduction of the programme, the system continues to require fine-tuning. Among the recent measures to improve health insurance coverage is blocking visa renewals for residents until they obtain a policy.

The mandatory health insurance programme operates in tiers, beginning with the essential basic policy (EBP). Sponsors, whether an employer or family member, for residents who earn less than Dh4000 ($1090) per month are required to at least purchase an EBP, which is available from 12 companies and typically costs Dh550-770 ($150-210) per year. At present, an employer or family member failing to insure employees or dependents can be subject to a Dh500 ($136) fine per person for every month of non-compliance.

Emirati nationals in Dubai are eligible for coverage under the Saada health programme, a DHA-run initiative intended to provide for citizens not currently using any government-funded health insurance programme. The scheme allows citizens access to treatment and services at private health care providers, as well as DHA health centres. In January 2019 the DHA signed an agreement with Neuron, a UAE-based tech firm specialising in health care system administration, to be the primary third-party administrator for the Saada network. Using only their Emirates ID card, nationals can self-register at Saada kiosks and submit reimbursement claims via mobile app.

Billing

In September 2019 it was announced that the DHIC would be introducing a new billing system for its health insurance provision in 2020 based on the diagnostic-related grouping (DRG) scheme, which many countries already use. It works by classifying hospital cases into one of a number of groups – 467 in the original iteration of the system. As opposed to an insurance company paying a hospital for what it spent taking care of a patient, the company pays a fixed amount based on the patient’s diagnosis. The hospital can then make a profit or loss depending whether it spends less or more than the DRG sum on treating the patient. The system calms insurance company concerns that hospitals are overtreating patients, although critics say it could lead hospitals to discharge patients early.

The DRG system uses algorithms to calculate rates based on factors such as hospital operating costs and the specifics of each patient’s profile. In the long run, the system is expected to reduce insurance premium and approval waiting time for patients.

Medical Staff

Although medical professionals are attracted to the emirate, recruiting has historically been a challenge for the sector. According to the DHA, there were 38,468 health care professionals working in Dubai as of April 2018, including 8160 doctors, 16,691 nurses or midwives, and 2199 dental care staff. While the number of health care professionals grew by 8.1% per annum between 2014 and 2017, a report by consultancy Alpen Capital in March 2018 estimated that Dubai will require an additional 8300 physicians and 8800 nurses by 2025 to keep up with growth.

Recruiting can be particularly challenging for specialist and tertiary facilities. “As a pediatric hospital, it is difficult to recruit and retain staff. For example, surgeons need to perform a certain number of operations per year or they will go somewhere else to retain their skills,” Dr Abdulla Al Khayat, CEO of Al Jalila Children’s Hospital, told OBG. He added that most hospital staff come from the UK or the US, but with some background in the region. Dr Kishan Pakkal, COO of Medcare Hospital Sharjah, echoed this sentiment and highlighted the regulatory requirements in place. “Before a member of hospital staff can be hired, they must pass a stringent set of tests by the regulatory medical authorities, ensuring safe clinical practice in line with international guidelines. In specialty areas, it can be particularly difficult to recruit doctors, nursing staff and technicians. Recruiting and retaining good talent is a challenge,” he said. However, Mediclinic’s Hadley told OBG that medical staff turnover in Dubai remains in the single digits, compared to as high as 30% annually in the wider region.

Pharmaceuticals

Ramping up local pharmaceutical production is an area of focus of the Dubai Industrial Strategy 2030. The UAE imports upwards of 90% of its pharmaceutical products, and the strategy is looking to reduce this dependence by attracting $2.5bn in investment in the industry between 2017 and 2022. According to BMI Research, pharmaceutical sales in the UAE as a whole are projected to rise to $3.84bn by 2021 and account for 18% of total health care spend, up from $2.62bn and 16.2% in 2016, respectively.

The number of international pharmaceutical companies in the UAE is set to reach 75 in 2020, a 150% increase on the 30 firms that were operating in 2013, when mandatory health insurance was first enacted. “The introduction of mandatory health insurance in the UAE has been an important growth enabler for the pharmaceutical industry,” Joe Henein, CEO of NewBridge Pharmaceuticals, told OBG. “However, more is needed to educate and encourage insurance companies to include the latest innovative therapeutics proven to improve patients’ journeys and add pharmacoeconomic value to the health care system.”

In 2019 Dubai had three pharmaceutical production facilities, the newest of which is a Dh125m ($34m) plant at Dubai Science Park in Al Barsha, which opened in late 2018. The other two plants are located in Dubai Investments Park and in the Jebel Ali Free Zone. The Al Barsha facility is operated by Pharmax, a partnership between local company Al Ittihad Drug Store and two Moroccan companies, Cooper Pharma and Bottu Pharmaceuticals. The plant will produce generic medicine for illnesses such as diabetes and high cholesterol, psychiatric and neurological disorders, and cardiovascular and gastric ailments (see Global Perspective).

Outlook

Dubai is set to remain a place of opportunity for health care providers and pharmaceutical companies, particularly as the population grows, ages and battles creeping incidence of NCDs. Data published by the DHA in 2019 forecasts the highest future supply needs in primary care and allied health, while gynaecology, plastic surgery and dermatology are seen as the specialties most likely to be oversupplied.

Meanwhile, the switch to the DRG system is expected to streamline billing in the health insurance market to the benefit of insurers, providers and patients alike, while legislative changes will continue to create an efficient and investment-friendly environment to help achieve the long-term goals of the DHA and the DHCA.