The doctor is in: Growing demand for specialised treatments should translate into opportunities for investors

Over the past 40 years, Oman has enacted a series of five-year investment and development plans that have facilitated the rapid modernisation of the country’s health care system. Indeed, since 1970, Oman has increased its number of public hospitals from two to 50 and now hosts 10 private hospitals as well. Today, in the midst of the eighth five-year plan for health development, which runs from 2011-15, the sultanate is turning its attention toward private partnerships to meet various challenges, including public-operator dependency, bed shortages and a rise in non-communicable diseases among the population.

Structure

The health care system is divided into three levels of provision: primary care, consisting of basic clinical health services, secondary care and tertiary care, which includes specialised treatments such as surgery and radiology. The Ministry of Health (MoH) oversees the provision of most of these services across 11 regions, each of which houses at least one regional hospital that provides secondary and tertiary services. The Muscat Governorship is home to four such hospitals: Royal Hospital, Al Nahdha Hospital, Khoula Hospital and Ibn Sina Hospital, which all act as national referral centres for critical cases that come from the regional hospitals. Other major regional hospitals include Nizwa Hospital, Sohar Hospital and Sultan Qaboos Hospital Salalah.

Wilayat Hospitals

Aside from the regional centres, the ministry runs its sub-regional operations through wilayat (or governorate) hospitals and local hospitals, in addition to a number of primary care health centres. Wilayat hospitals provide both primary and secondary treatment to members of a specific governorate, while local hospitals offer primary care at the village level, as well as inpatient services. According to MoH figures from the end of 2011, the latest available, there are 14 regional hospitals, five wilayat hospitals and 31 local hospitals under the auspices of the MoH with a total of 4690 beds. Adding in private hospitals and additional government agency facilities, Oman has a total of 65 hospitals with 5859 beds and 1143 health centres.

Health centres focus on primary care, and private operators account for the majority of health centres across Oman, with 911 of the 1143 such facilities owned by private firms. The MoH’s extended health centres, which also provide certain specialised treatments such as surgical and x-ray clinics, account for 24 of the 186 MoH health centres. Since the eighth five-year plan was published, the MoH has already opened eight new health centres, one each in Dhofar, North Ash Sharqiyah, South Al Batinah, Adh Dhairah, Al Buraymi and Al Wusta, as well as two in Ad Dakhilyah and an extended health centre in Muscat and North Sharqiyah. In early 2013 the MoH launched the OR49m ($128m) Al Masarrah Hospital in the wilayat of Al Amerat, a psychiatric facility that adds 245 new beds. Dr Ahmed bin Mohammed Al Saeedi, the minister of health, has said that the eighth five-year plan aims to construct a total of seven hospitals, five health complexes and 27 health centres.

Spending & Manpower

The 2013 health budget has been increased by 32% over the 2012 allocation – from OR382m ($995m) to OR505m ($1.3bn). Oman’s total 2013 budget is OR12.9bn ($33.6bn), meaning the health sector accounts for 4% of the total. With the population growing at 4% a year, already reaching over 3m people (1.3m of which are foreign workers), according the latest census, the demand for new facilities that will serve both Omanis and expatriates is growing rapidly. This need is putting significant pressure on the government to invest more in its public health infrastructure and to further open up the sector for international investment.

The 2011-15 health plan budget allocation has nearly doubled from that of the 2006-10 period, from OR1.36bn ($3.53bn) to OR2.49bn ($6.47bn), in line with the need for greater investment. According to Dr Ahmed Al Qasmi, director-general of planning at the MoH, the government is allocating a total of OR331m ($859.74m) from the 2011-15 budget to build hospitals, primary health centres and other health facilities. For example, OR140m ($363.64m) is reserved for the Bowsher hospital in Muscat and OR48m ($124.68m) for a new hospital in Salalah. The Mohoot referral hospital is in the pipeline for OR8m ($20.78m) and construction of Jalan Central Hospital in South Al Sharqiya will cost OR35m ($90.91m.) Additional hospitals are planned for Dalkoot and Suwaiq, and as of mid-2013, tenders were nearly ready to be awarded for construction work, said Al Qasmi.

Staffing

The increase in patient numbers has highlighted an issue facing Oman and the wider Gulf region: adequately trained medical staff. The latest MoH data puts the total number of doctors at 6328 and nurses at 14,238. While these figures show a noticeable rise from previous years, the minister has acknowledged that several regions are experiencing a shortage of physicians. One positive development is the approval of the new Oman Nursing and Health Sciences College, announced in April 2013, which will provide bachelor’s degrees in nursing, physical therapy, medical laboratory science, radiology and dentistry.

Non-Communicable Diseases

According to Dr Abdullah Saleh Assaedi, the WHO representative in Oman, communicable diseases, such as malaria and tuberculosis, are no longer a priority of the MoH. “Non-communicable diseases, however, are increasing at alarming rates,” Assaedi told OBG. “Almost 40% of Omanis have hypertension and between 18% and 20% have diabetes. This is a significant health concern, and can be attributed to the region’s unprecedented rapid economic growth.”

Bakul Mehta, the managing director of Muscat Pharmacy, told OBG, “Diabetes, hypertension and genetic disease are plaguing Omani youth.” Indeed, some operators think that diabetes, which is an issue across the GCC, is the biggest health problem facing the country. “Diabetes is the platform for many health issues later in life. It is estimated that approximately 20% of the GCC population suffers from diabetes. It is the obligation of the health care sector to create awareness about the dangers of diabetes and how to prevent it,” Ramesh Prakash, the general manager of Ibn Sina Pharmacy, told OBG.

Addressing Diabetes

Addressing these issues will likely represent the sultanate’s primary public health challenge for the foreseeable future. Two MoH initiatives to address the problem of diabetes include the construction of the National Diabetes and Endocrine Centre, as well as the National Genetics Centre at Muscat’s Bausher Polyclinic complex, both of which are expected to open during the eighth five-year plan, according to the minister of health.

Furthermore, roughly 25% of the population is clinically obese. Diet plays a major role in this, with around 30% of the food children consume coming from fast food sources, for example. Improving awareness of obesity and the need to exercise and maintain a healthy diet will be key to addressing this problem going forward. Azzan Al Barram, the general manager of fitness club Horizon Fitness, told OBG, “Until about 10 years ago, nobody worked out in Oman. The government needs to do more marketing and awareness campaigns about the benefits of fitness and healthy lifestyle choices to the community.” According to Al Barram, gyms and fitness centres may represent an interesting investment opportunity for investors as well. “Apart from the small gyms in four- and five-star hotels, there are only a couple of operators. Now is the time for private operators to enter the market. Competition would be good for business,” he said.

Prevention

Among GCC states, Oman ranks second in cancer prevalence, and it also suffers from an increasing level of genetic disorders. According to an April 2013 report in the local press, the number of cancer patients in the country between 1996 and 2012 reached 20,000, with a diagnosis rate of 120 people per year. The most commonly registered cases were breast cancer among women (104 cases per year) and prostate cancer among men (100 cases per year). Leukaemia was next in line with over 88 cases per year.

In line with regional trends, the authorities anticipate that the incidence of cancer will rise along with improving living standards and lifestyle changes. Increasing the health budget has enabled the MoH to invest in preventive screening programmes for cancer as well as other non-communicable diseases, such as diabetes, hypertension and kidney disease. The National Oncology Centre at the Royal Hospital, which opened in 2004, is the sultanate’s most advanced centre to combat the disease, and medical cities set to be created across Oman will allocate significant resources to disease prevention.

Genetic Disorders

The incidence of genetic blood diseases is also disproportionately high among the Omani population and is considered to be among the highest worldwide, according to Dr Salam Salim Al Kindi, the vice-president of the Oman Hereditary Blood Disorder Association (OHBDA). Studies from the OHBDA suggest that about 25% of Omani males and 10% of females have low production levels of the G6pD enzyme, which leads to diseases such as haemolysis and anaemia. Other common disorders in the Omani population include sickle cell anaemia, affecting 6% of Omanis, and thalassemia, affecting 2% of the population, while around 10% of the population is genetically predisposed to other types of dangerous blood disorders. Al Kindi points out that approximately 56% of Omanis marry within their tribe, and consanguineous marriages are a possible reason for the higher incidence of hereditary blood diseases.

“Thankfully, most births take place in hospitals nowadays, or newborns are brought to a hospital within the first few days of their lives. This means we can obtain samples from 100% of newborns,” said Al Kindi. This positive trend is helping doctors monitor the occurrence of blood disorders more accurately and may help to reduce their prevalence in the future.

Notwithstanding the rise in lifestyle-related illnesses, the average life expectancy is increasing, reaching 72.4 years in 2011, and the infant mortality rate has fallen to 9.5 per 1000 births in the same year, compared to 118 per 1000 in 1970, according to the MoH.

Private Sector

While Oman maintains one of the world’s highest ratios of health expenditure to outcome of care, according to WHO, the government is responsible for 85% of overall provision. This has created significant waiting periods for patient treatment and a greater need for specialised care. To deal with the issue, the government is gradually shifting toward a hybrid public-private system – the number of private hospitals across the country has increased to 10, up from just one in 1995. Indeed, a primary goal of the current development plan is to support the expansion of private sector provision. The expansion of private care is expected to reduce patient waiting times and place greater emphasis on meeting international standards across the sector.

“In the last four to five years, a number of new midsized private players have entered the market,” Nigel Weale, hospital director at Muscat Private Hospital (MPH), told OBG. “MoH interest in working with the private sector is growing noticeably.” Several notable new entrants to the sector include the New Life Healthcare Centre, UK-based Starcare Hospital and India-based Sagar Polyclinic, which is a joint venture with Oman Holdings. Starcare Hospital and United Medical Group’s MPH are the two Joint Commission International (JCI) accredited institutions in the sultanate. MPH is the largest private hospital in Oman, with 72 beds. The facility has plans to increase its capacity by 200 beds in the next two years.

Plans

The largest private health care group, the Omani-based Badr Al Samaa Group, operates eight hospitals and polyclinics in key regions such as Sohar, Salalah, Al Khoud, Barka, Sur, Nizwa and Muscat. The Saudi-based Shifa Al Jazeera Group, a recent entrant to the market, intends to invest OR100m ($260m) in Oman over the next five years to establish 13 medical centres. By 2014, the group will launch two new hospitals in the Ruwi and Al Khuwair areas of the capital, adding an expected 230 hospital beds. Shifa Al Jazeera’s entry into the market should help to boost competition, as the group intends to offer services at a lower cost than many of its rivals. The potential for mandatory health insurance may also result in more demand for private care. The idea of such a mandate is under consideration by the MoH, the Capital Markets Authority and the Ministry of Manpower (MoM).

Outbound Medical Tourism

Higher per capita income has meant that a growing number of Omanis are exercising a preference for immediate private care, and because private operator expansion is not yet able to meet this demand, there has been a notable increase in medical tourism to Asia. In 2012, for example, 60,000 Omanis travelled to Thailand for medical treatment, a number that is expected to rise in 2013, according to Thai authorities.

Licensing & Regulation

One of the underlying issues impeding greater efficiency in the private sector is the government’s licensing process for recruiting new doctors and medical staff. Due to the MoM’s focus on Omanisation regulations, which require at least 30% domestic labour in the health sector, the visa process for expatriate medical professionals is quite lengthy, limiting the availability of foreign expertise. Similarly, a number of nurses are lost due to a strict “basic retraining” process that requires veteran specialised nurses to take foundation courses before they are hired. “The growth of the private health care industry in Oman is dependent on the easing of MoH and MoM regulations,” Marianna Kotze, the chief nursing officer at Starcare Hospital, told OBG. “More foreign expertise at this stage in Oman’s health care development will in turn have greater effects on sustainable quality assurance and overall services.”

Enforcement

The MoH is mandated as the regulator of Oman’s health system, and as new investments come into the sector and more care providers sprout up, the ministry has increasingly stepped up its oversight to ensure international standards are in place. In March 2013, an MoH technical committee shut down three private health institutions until each facility could prove that its practices were up to ministry standards. Several other health care providers received fines of over OR6000 ($15,636) for not complying with health codes. Violations included lacking certain medical equipment and medical staff operating without a permit. In July 2013, the MoH temporarily closed down another four health care providers in North Sharqiyah and issued an additional 30 notices for similar violations. The stringent MoH enforcement is set to be an example for the standardisation of health care across the sultanate.

New Medical Cities

Plans for two new medical cities highlight Oman’s drive to bolster its health care infrastructure. In early 2013 US-based General Electric signed a strategic partnership agreement with Oman’s Apex Medical Group, a subsidiary of Saudi-based Al Joaib Group, to build the $1bn International Medical City in Oman’s Salalah region. Construction of the 87,000-sq-metre health facility is scheduled to commence in early 2014 and is planned to include a 530-bed multi-specialty hospital with a health care complex, a related resort and an education facility. The MoH also announced a plan to a build an OR570m ($1.48bn), 5m-sq-metre medical city located between Muscat and the North Batinah region. According to the MoH, the project management tender was expected to be floated by the end of 2013 (see analysis).

Currently, a significant number of Omani nationals seek tertiary medical care abroad, mainly in India and South-east Asia. Improvements to the local medical infrastructure would help to retain these patients, reducing costs for the state and saving Omani citizens the time and expense associated with travel.

Pharmaceuticals

The local pharmaceuticals industry has experienced steady growth in recent years, with a report projecting sector growth from OR166m ($433m) in 2012 to OR181m ($477m) in 2013. However, local manufacturers face stiff competition from international brands in the domestic market. While locally produced generics must abide by global standards and receive the necessary international inspection approvals, Omani consumers tend to prefer imported brand-name medicines regardless of the cost difference, according to a May 2013 report.

While 20 tablets of internationally branded Cataflam 50, which is used to treat pain and inflammation, for example, cost consumers OR7.1 ($18.40), the locally produced generic version retails for less than half of that, OR3.35 ($8.70). “There is a lack of awareness among patients about the quality of locally made medicines,” Rajendra H Bhandari, general manager of Oman Pharmaceutical Products (OPP), told the press. “We make medicines according to international standards and have all kinds of approvals from global regulators and agencies. The medicines we make here are sold in the US and European countries.”

The industry is relatively new to the country, with OPP only in the market for a few years, so it may take time for consumers to develop confidence with generic medicines. The MoH regulates the pharmaceuticals market through its Directorate of Pharmaceutical Affairs and Drug Procurement, which is responsible for the registration of all pharmaceuticals manufacturers and products, as well as Customs clearances for drug imports and exports.

Outlook

As rapid population growth and new disease concerns continue to draw attention, the need for greater public spending on health care facilities is increasing. The government has responded by doubling down on the five-year health budget and planning for various large-scale projects, hospitals, health centres and prevention programmes, illustrating its commitment to addressing these challenges.

At the same time, the government has complemented its health push with the recognition that the private sector must play a greater role across the sultanate. The trend toward private care is growing each year, while the new medical cities and other projects to build new health care facilities present opportunities for private players to break into the local market.