A Middle Eastern healthcare market full of opportunity (and some challenges)

The Middle East is seeing a boom in healthcare opportunities. A recent report from the US-UAE Business Council observed that healthcare expenditure in UAE alone is expected to grow from $17bn in 2017 to $21.3bn by 2021, while the the UAE Healthcare Sector Outlook 2023report predicted CAGR of 8.5% between 2018 and 2023.

A combination of factors is driving growth in demand: aging populations, lengthening life expectancies, and sedentary lifestyles that lead to an increase in obesity, cancer and diabetes. A focus on prevention and well-being rather than on simply treatment, is leading to opportunities for new models of care and out of hospital services. Saudi Arabia, for example, has embarked on a programme to build a new healthcare system encompassing primary, community and secondary care.

At the same time, workforce issues – shortages of skilled clinical staff and a heavy reliance on expatriates – is driving demand for technologies including digital health, Artificail Intelligence and robotics to provide innovations to fill the gap. The market for medical technologies in the region is expected to reach $31.6bn by 2025.

All of this underlines the opportunity that exists for UK healthcare providers – both independent and NHS – to exploit their expertise to make in-roads into the market. This might be done through direct provision of care in the region, the supply of services to existing providers, or attracting patients to come for treatment in the UK.

It is surely no coincidence , then, that the annual Arab Health conference is the largest global healthcare conference, attended by over 100,000 delegates and 4,000 exhibitors from 159 countries. We have recently returned from the conference and, as ever, we were inspired by the scale, energy and vibrancy of the event, and the opportunities that exist for the UK market, particularly post Brexit. 

Entering the market

The opportunity seems clear – but how should healthcare providers go about establishing a presence? The market, the culture, the environment are very different from the UK, so the prospect of doing business there can seem daunting.

However, with sensible planning and clarity over what you want to achieve, there is no reason why it can’t be accomplished. At Bevan Brittan, we have helped many providers do just that, from independent players through to NHS entities such as the world-renowned Moorfields Eye Hospital who established a hospital in Dubai.

Firstly, you need to identify which market(s) you want to build a presence in. UAE is an obvious target, but other countries such as Saudi Arabia, Qatar and Oman, and parts of North Africa such as Egypt offer opportunity. Careful market research is needed.

Secondly, you need to establish what model you will follow. Will you build and operate your own hospital or clinic? Or will you ‘white label’ an existing facility or business? Or work in partnership perhaps establishing an exchange and referral programme (for staff and patients) between the UK and the foreign jurisdiction?

The type of business model you chose will determine what licences you need to obtain. Getting these can be a time-consuming process – so another key point is to find a local partner who can get things done on your behalf. At Bevan Brittan, we have long term affiliations with key intermediaries in many countries across the MENA region who are invaluable in supporting us and who work on behalf of our clients. When discussing a potential project with your legal advisors ask them whether they have relevant and current experience of working in the jurisdiction, and do they have partnerships with key individuals and organisations in country?

To be or not to be in the ‘free zones’

Taking the UAE, and in particular Dubai, as one of the most likely destinations to target another key decision is where to base your operation. Many UK companies chose to establish themselves in one of the 45 plus ‘free zones’ that exist in Dubai. These are zones created to facilitate overseas investment into the country, allowing relaxed rules on foreign ownership of businesses, together with a range of tax incentives, the ability to repatriate profits offshore, advantageous leasing terms, and simplified recruitment and workforce processes making it easier to obtain permits for staff.

Other investors look to establish themselves outside the free zones because doing so does not come with any territorial restrictions on business activities or the location of premises. An onshore company located outside of the free zones has the freedom to trade anywhere in the UAE and GCC states.

Different rules and regulations apply according to the type and location of a business, and its legal ownership structure. Many companies opt to become Limited Liability Companies (LLCs) but these are subject to ownership restrictions. Whilst recent regulatory changes allow certain investors up to 100 per cent foreign ownership, this structure restricts working on certain government projects, which is often an important consideration for many healthcare operators. Many models exist – one size does not fit all – so it’s important to take early advice to ensure you achieve your ideal state model.

Standing out from the crowd

The above are some of the key structural steps that need to be followed. However, an equally important question to consider: what do you offer that will differentiate you from everyone else? Whilst there is undoubtedly significant opportunity, at the same time parts of the region are already saturated. In Dubai, for example, there are some 50 acute hospitals and hundreds of clinics; many operating below full capacity.

This means you need to make sure there will be demand for your services, and think about how you will stand out. Will that be through the power of your brand? Some NHS providers such as King’s College Hospital and Moorfields have been successful in this respect. Or will you succeed because you have well-known consultants, or because you specialise in a particular surgical or medical niche for which there is high demand?

Anyone assuming that business will roll in simply because it is a large and growing market could be disappointed.

Attracting ‘health tourists’

The other side of the coin is how to tap into the large potential market of affluent Middle Eastern citizens willing to travel abroad for treatment. Health tourism has become a highly competitive market, with many countries vying to grow their share and the UK is no exception.

The highest potential routes to winning more business include establishing: (a) partnerships with local healthcare providers in selected overseas markets; (b) referral agreements and clinical exchanges for staff and patients; and (c) links with concierge providers in those markets who create packages of care for patients that include everything from the treatment itself to flights, accommodation and even leisure activities for family members.

One of the best ways to begin forming these contacts is to attend sector events like Arab Health. Next year will be a particularly big one because it will take place during Expo 2020. Bevan Brittan’s London event in September is also an excellent opportunity to hear from specialist advisers and operators with an insight into the MENA region.

Ultimately, healthcare is about looking after people. Creating new services abroad is about people too – there is no substitute for getting out there, making contacts, and discussing new possibilities.

This article first appeared in Healthcare Markets Volume 24, Issue 2, March 2020.