GCC healthcare sector set to grow at CAGR of 12.5 pc up to 2020

GROWING SWIFTLY: High population growth, improved average life expectancy, non-communicable diseases, sedentary lifestyles and insurance to stimulate healthcare demand  

The healthcare industry in GCC has gained momentum over the past few years, driven by the need to address healthcare service capacity constraints and simultaneously improve the quality of health infrastructure amidst a population that is growing swiftly.
Demographic transition, a rise in the region’s ageing population, rapid growth in lifestyle risk factors (a natural consequence of an increase in household income), and the increasing prevalence of non-communicable diseases were and still are the prime reasons for the demand for healthcare, according to a research paper issued by Global Investment House.
Major investments in healthcare by GCC countries over the past few decades have resulted in significant improvement in the outcome of the region’s overall health status.
The health systems established by GCC states are focused on fulfilling the core public health functions of childhood immunisation, food safety, environmental health, and essential child and maternal health services, the research paper said.
While, the expenditure on healthcare has increased over the past few years, the level of expenditure is still low when a comparison of different indicators is made with the international community; say for example the percentage of healthcare spending to GDP in the GCC is less than half when compared to the developed countries.
It is perhaps because of this that a deficiency exists within the system and that a major expenditure is undertaken by GCC countries on sending patients abroad for treatment.
Among the GCC countries, Bahrain has the highest healthcare expenditure as a percentage to GDP of 5 per cent for 2014 while Qatar’s healthcare expenditure to GDP was at 2.1 per cent.
However, Qatar leads GCC in terms of GDP per capita which stands at a whopping $96,733 in 2014 whereas the lowest GDP per capita is in Oman at $19,310. In terms of absolute healthcare spending, GCC spent $64.4bn in 2014 as compared to $58.3bn in 2013 registering a rise of 10.5 per cent YoY.
Interestingly, GCC’s average GDP per capita stands remarkably higher than the world average, even almost equivalent to the developed world whereas the healthcare expenses per capita is slightly higher than the world average and markedly lower than that of developed economies which indicates sizeable room for growth in the healthcare industry in GCC region.
To prove that further, GCC regions also stand far behind the developing world, let alone the developed worlds in terms of healthcare expenditure (government) as a percentage of total (budgetary) expenditure.
Population growth is a driving force for any country’s healthcare services, which help in giving shape to the system and attract investments.
The collective population of the GCC is around 53m, as of 2015 and population has been increasing at a 10-yr Compound Annual Growth Rate (CAGR) of 4 per cent which is quite high as compared to the world average of just 1.2 per cent.
High influx of expatriate population, already high birth rates and greater life expectancy are major factors driving that.
Life expectancy in the GCC improved to an average of 76.4 years in 2014 (as per World Bank) from approximately 62 years in 1970.
This essentially means that statistically people are living much longer than what they used to do over 40 years ago, leading to slower subtraction from the population equation.
Moreover, this also highlights the rise in the ageing population which draws attention towards the demand for specialised old age health centres and pain management centres.
It should also be understood that an ageing population is closely associated with a drain on the healthcare resources since typically 4/5th of a person’s healthcare needs are incurred after his age of retirement.
Previously, a wide gap existed between the GCC and developed nations with regard to under-five mortality rates, which has now significantly narrowed.
A child born in the GCC now has greater chances of survival, pushing up the infant age group size.
This highlights the greater need for specialised paediatric-focused healthcare needs within the system.