Growing health care demands in Oman met by increased private sector participation

The introduction of the mandatory health insurance law in March 2019 is expected to have major effects on care provision in Oman. New regulations now require private sector employers to provide coverage for their expatriate staff, as well as for their spouses and children. This comes as the government takes prudent steps to tighten its budget and looks to shift the cost burden of provision – which has been historically reliant on public coffers – to the private sector. Along with increased efforts to invite private participation in hospital and clinic construction through public-private partnerships (PPPs), the new mandatory health insurance law presents a significant opportunity for providers and insurers to expand their presence in the local market.

Structure & Oversight

Oman has a universal health care system that is free for citizens at the point of delivery and offered to expatriates at subsidised rates. Service provision is overseen by the Ministry of Health (MoH), within which there are several key directorates and departments tasked with supervising and administering specific health care objectives. These include the Directorate General of Medical Supplies, the Directorate General of Pharmaceutical Affairs and Drug Control, the Department of Health Education and Awareness Programmes, and the Directorate General for Disease Surveillance and Control, among others. In addition to the MoH, the Central Quality Control Laboratory is responsible for ensuring the quality, safety and efficacy of pharmaceutical products, while the Oman Medical Specialty Board, established in 2006 by royal decree, serves as the independent supervisory body for all postgraduate medical training programmes in the country.

General Indicators

In 2018 there were 50 public hospitals run by the MoH providing 5027 beds, along with 22 polyclinics affiliated with the MoH, 212 primary health centres and 265 public health clinics. That same year, the private sector provided 25 hospitals and 908 beds, in addition to 298 private medical centres and complexes. According to the MoH, however, the private sector’s contribution to health services is still comparatively small, with government hospitals receiving some 15.5m outpatient visits in 2018, for example, compared to around 3.8m at private facilities.

With annual demand for hospital beds in both private and public hospitals expected to increase at a rate of 3.1% per year to more than 7600 by 2025, the government is prioritising the development of new public facilities to keep pace, and the MoH is overseeing the development of 10 new hospitals and 27 primary health care institutions. Under Health Vision 2050, Oman’s major long-term health policy, the MoH is aiming to increase the total number of hospital beds to over 8600 by 2030 and to more than 14,500 by 2050. The ratio of hospital beds to inhabitants is expected to increase from 25.6 beds per 100,000 residents as of 2018 to around 30.8 beds per 100,000 by 2050.

Government Expenditure

In 2019 the government allocated $3.4bn to the health care sector, accounting for approximately 4.3% of Oman’s GDP. Despite public funding cutbacks caused by lower oil revenue, spending on health care as a percentage of overall public expenditure has steadily increased in recent years, from 6% in 2015 to 11% in 2019.

However, due to rising demand for services, total public and private health expenditure in Oman is expected to expand at a compound annual growth rate of 9.1% to reach $4.9bn by 2022, according to the “GCC Healthcare Industry Report” published by investment bank Alpen Capital. Government spending has typically contributed around 85% of total health spending in Oman over the past couple decades, yet potential shifts in the budget could contribute to a gradual decline. Public spending is forecast to fall to an 80% share of the total by 2021, according to professional services firm EY, opening up room for greater private sector investment.

Disease Burden

Contributing to rising health care costs, incidences of lifestyle-related diseases, such as diabetes and hypertension, are growing in Oman in line with regional trends. While increased investment has expanded health infrastructure and capacity, past efforts have primarily focused on treatment rather than preventive care. According to the latest statistics from the World Health Organisation (WHO), in 2016 non-communicable diseases (NCDs) accounted for an estimated 72% of all deaths in Oman, with cardiovascular disease, cancer and diabetes accounting for 36%, 11% and 8% of all deaths, respectively.

While Oman compares favourably to other GCC countries in regards to diabetes rates – with a 13.4% prevalence rate versus 18.7% in the UAE and 16.8% in Saudi Arabia, according to the International Diabetes Federation – it still sits above the global average of 6.4%. Across the GCC, governments spend around 15% of their total health care budgets on diabetes treatment and care alone. With the WHO predicting the number of Omanis living with diabetes to reach 217,000 in 2025, up 190% from 75,000 in 2000, the government has widened its focus to combat NCDs. In 2018 the MoH, with support from the WHO, launched the five-year National Policy and Multi-Sectoral Plan for Prevention and Control of NCDs. Under the plan, state actors hope to reduce the incidence of early deaths resulting from NCDs by 25% before 2025 through public awareness campaigns that focus on preventive measures, such as physical activity and a healthier diet.

Development Plans

In line with providing better overall care, Oman’s Health Vision 2050 has established a number of principles to guide sector policy, including the need to provide quality services, focus on measurable outcomes, emphasise disease prevention, be more patient-centric and keep up with emerging technologies. More broadly, Health Vision 2050 aims to create a well organised, efficient and responsive public care system.

Initiatives of the plan include establishing enough primary health centres to achieve a ratio of 10,000 people per facility, introducing a national certification for patient safety and quality control in conjunction with the WHO, and several other projects covering health technologies, primary care and professional development.

In the near term the country’s ninth five-year development plan, which covers the 2016-20 period, prioritises the development of integrated medical services, further investments in human resource development and medical training, and boosting health care spending. As part of this, an ambitious infrastructure development programme to build new medical cities, hospitals and health centres is on the cards. This includes the construction of the $1.5bn Sultan Qaboos Medical City Complex (SQMCC) in the coastal city of Barka, which was originally slated for completion in 2021, but has since been postponed. It is the country’s first medical city expected to be built under a PPP contract, envisioned to house five major hospitals with 2000 beds, and a dedicated imaging centre and laboratories.

Public Facilities

Sultan Qaboos University Hospital (SQUH) and the Royal Hospital Oman (RHO), both located in Muscat, are two of the largest public medical facilities in the country. Opened in 1990, SQUH is a tertiary hospital and training institute. In 2018 the hospital had a capacity of 600 beds and performed 7% of all operations in the country.

The RHO, meanwhile, is the main referral tertiary care hospital for the MoH and receives patients who require highly specialised care. It also serves as the main secondary care facility for the Muscat region, offering services within the specialities of surgery, paediatrics, obstetrics, gynaecology, oncology and laboratory medicine. Since opening its doors in 1987 with 630 beds, RHO has expanded its facilities to around 1000 beds, and established a National Heart Centre, a National Diabetes and Endocrine Centre, and a National Hyperbaric Medicine Centre.

In conversations with OBG, Dr Qasem Al Salmi, director-general of the RHO, noted the facility’s drive to increase efficiency. “We have introduced lean thinking to our hospital over the past two years through more than 400 projects, looking at ways we can minimise waste and increase efficiency. In the past the waiting period for heart surgery used to be over 32 weeks, and now it is two to four weeks. We achieved this by revising the steps needed before surgery,” he told OBG. A similar focus on improving outpatient services has also allowed the hospital to halve the time taken to complete consultations.

This is reflective of broader efforts in the public health sector to increase efficiency and decrease waste, thereby driving down costs and raising the level of value delivered. As part of this, the government is working to integrate modern technological solutions within the segment. As of 2019 more than 93% of all public hospitals and health care facilities under the MoH were linked to a central electronic database. Further embracing the digital trend, in February 2019 RHO introduced an appointment-based system, replacing the traditional first-come, first-served approach to service delivery.

Private Health Sector

While government investment is set to bring a raft of new hospitals and clinics on-line, increased private sector participation is also helping Oman meet its health care goals. Currently, the private sector’s contribution to health services in the country remains small, representing around 6% of hospitals beds across Oman.

The government has recently expressed interest in opening the sector to greater private investment, with stakeholders looking to expand the use of PPPs. In July 2019 the government released widely anticipated PPP and privatisation laws to open key economic sectors – including health care – to private sector investment. As per the first stages of the law, the private sector is only being invited to design, build and maintain state clinics, with management remaining under the remit of the MoH.

Among segment providers in Oman, Muscat Private Hospital is one of the largest facilities, with 76 beds. The hospital employs more than 200 doctors across 30 specialities, and was the first facility in the country to be accredited by Joint Commission International. The hospital is managed by United Medical Enterprises, a UK-headquartered company and one of the largest private health care management contractors in the Middle East. Badr Al Samaa Group is another major private sector player in Oman, operating eight hospitals and polyclinics in the somewhat underserved regions of Sohar, Salalah, Al Khoud, Barka, Sur and Nizwa. Additional facilities include the NMC Specialty Hospital in the Al Ghubra neighbourhood of Muscat, and the Starcare network of hospitals, medical centres and pharmacies, with a staff of more than 500.

Insurance

Locals have always been provided with free health care at all state-run institutions, negating the need for insurance. Expatriates have typically sought treatment at private hospitals or clinics, only using public hospitals in the case of an emergency or when treatment is not available in the private sector. However, over the past decade, the cost of health care has risen steadily in response to strong population growth and a rising epidemiological disease profile. Per-capita visits to public health care centres are also high, in part due to no-cost services, resulting in frequent and sometimes unnecessary hospital visits.

Overall, the health insurance industry grew by 30.5% from 2011 to 2018, making it one of the fastest-growing segments. According to data from the Capital Market Authority (CMA), in 2018 total health insurance premium increased by 8.6% to OR152m ($394.7m), marking the first time health insurance premium comprised the largest segment of the insurance market, at 33% – surpassing vehicle insurance with a 31% share.

Mandatory Coverage

The growth trend is set to continue as the government launches the Unified Health Insurance Policy (UHIP), which introduces mandatory health insurance for all private sector workers in the sultanate. The UHIP regime stipulates a set of essential benefits that must be covered, including in- and outpatient services, emergency care, doctors’ fees, diagnostic services, medicines and ambulance trips. The scheme is expected to provide insurance cover for 2.1m expatriate workers in the private sector. Of this group, around 70-80% were uninsured in 2018. As of mid-2019 the number of people with health insurance stood at an estimated 450,000 out of a total population of 4.5m.

In addition to shifting some of the health care burden off the government, the new UHIP law is expected to be a boon for the private insurance market and health care institutions. The CMA expects Oman’s insurance sector to reach a minimum of two times the present value as new policyholders, investors and private institutions enter the market. “The UHIP as envisioned by the CMA provides an excellent opportunity for private insurance sector players to get involved and increase their premium,” S Venkatachalam, CEO of National Life and General Insurance Company, told OBG.

Furthermore, in conversations with OBG Haitham Abu Hashim, former executive director at Muscat Private Hospital, described the UHIP as a good move, and one that has been modelled after the successful mandatory health insurance practices of other GCC countries. However, Hashim also mentioned that the CMA should monitor the relationship between insurance companies and health care providers under the UHIP to ensure that as qualified insurance companies grow their premium, high-quality patient care within hospitals is maintained.

Medical Staff

As part of its long-term economic diversification strategy Oman Vision 2040, the MoH has set an ambitious target for increasing the number of medical staff in the country. By 2040 the sultanate will need to train more than 13,000 doctors if it is to reach its goal of 28 doctors per 10,000 inhabitants. Every year the government has made small, but consistent, strides towards achieving its 2040 goal. As of 2018 there were 20.7 doctors, 3.1 dentists, 5.9 pharmacists and 44 nurses for every 10,000 people in the country, a slight increase from 20 doctors, 3 dentists, 5.9 pharmacists and 43.7 nurses the previous year. To compare, there were just nine doctors for every 10,000 people in 1990. On a regional level, Oman compares favourably. In terms of doctors per 10,000 inhabitants, Oman sits only slightly behind other GCC countries such as the UAE (23.9) and Saudi Arabia (23.9). There is also a high number of specialist physicians in the private sector, at 44% of the 2134 doctors in that segment.

A key challenge for the government has been increasing Omanisation rates in health care. Prior to the establishment of the College of Medicine and Health Sciences at SQU in 1986, Omani students needed to travel abroad to pursue medical degrees and specialisations. This left the sultanate almost fully reliant on overseas expertise and medical training. In recent years this reliance has been addressed, and as of 2018 the number of Omani doctors registered by the MoH sat at 33% of the total, compared to just 9% in 1990. Rates of Omanisation among dentists and pharmacists in the public segment have also risen significantly, reaching 74% and 87%, respectively, in 2018. Still, with limited places at universities, it is estimated that the MoH will need to send at least 50 medical students abroad annually to keep up with demand.

Pharmaceuticals

With local production accounting for 7% of total market demand, Oman has historically relied on private sector importers and distributors to supply the country’s pharmaceutical needs. In 2018 it was reported that Oman spent around $311m annually on pharmaceutical imports and another $300m on medical supplies. The segment remains dominated by local private companies such as Muscat Pharmacy and Stores, which imports pharmaceuticals and medical equipment from over 200 global suppliers. However, Oman’s Health Vision 2050 outlines an ambitious programme to establish local drug manufacturing operations and thereby reduce the country’s reliance on pharmaceutical imports. The government wants to raise local production of pharmaceuticals and medical equipment to 20-30% of total consumption through encouraging further foreign investment.

As of the beginning of 2019, there were three local pharmaceutical manufacturers operating in Oman and one manufacturer of surgical consumables. Together, they account for 3.3% of registered manufactured medical products. The industry has some encouraging projects in the pipeline, including a $365m pharmaceuticals plant in the Salalah Free Zone, which will produce over 100 pharmaceutical products upon completion in 2021. The OR140m ($363.6m) project will include research and development facilities and laboratories, and provide 300 employment opportunities.

Outlook

Overcoming local personnel shortages, high government costs, and a dependence on pharmaceutical and medical supplies imports are significant challenges facing the MoH in the coming years. Combating the rising incidence of NCDs – which is placing ever greater pressure on Oman’s already overburdened public services – through public awareness and education programmes is also key. The MoH’s Health Vision 2050 policy blueprint has set ambitious targets to address these concerns, and by leveraging the support of the private sector, the government appears on track to reach its goals.