Health care spending to be a burden on GCC nations for years to come

Published February 25th, 2013 - 12:59 GMT
The GCC region is facing a major health spending burden, according to new research
The GCC region is facing a major health spending burden, according to new research

The health care spending will impose a hefty burden on GCC governments in years to come, according to research by Booz and Company.

"As we enter 2013, health care costs continue to increase in the region - partly due to the high prevalence of chronic diseases," according to the report.

"Today, GCC governments recognise that the current model - in which the state shoulders most of the direct health care costs - is unsustainable over the long term. In light of this, governments must use a public-private partnership approach in order to tame expenditure, improve quality of service, and provide further access to expertise," the report stated.

"In recent years, the health care systems in GCC region have achieved myriad accomplishments, including widespread provision, rising professional standards and regulation, generous funding, and growing levels of investment," remarked Booz and Company partner Gabriel Chahine.

"Population screening programs, impressively rapid system-wide transformation programs and long-range strategic planning efforts have also placed these countries at the forefront of the healthcare industry," he stated.

According to the study, GCC governments are currently engaged in major efforts to improve accessibility and quality of care as part of their national development programmes. In effect, major expansions in care provision are occurring across the region, it stated.

These state-funded investments aim to close the supply-demand gap for inpatient and outpatient services as well as reinforce trust in local healthcare provision and reduce outbound medical tourism, said the study.

GCC countries have also recently begun to introduce mandatory health insurance, observed Chahine.

"Yet, the truth remains that these forward-looking initiatives will be most effective if the region can find a new way to pay for its future health care needs and build its health systems' capabilities, the expert stated.

"Their goals can only be reached if adequate and long-term strategic plans are formulated. After all, GCC healthcare systems are still struggling with capacity gaps and inconsistent quality of care. In addition, there is a shortage of healthcare professionals, limited availability of competent specialized services and an elevated rate of non-communicable diseases," he added.

These ongoing healthcare challenges, and in particular the aging of the current young generation, will force the GCC governments to spend more on healthcare services.

"While expenditure is currently below international benchmarks when compared to developed countries on a per capita basis, this will undoubtedly change," revealed Jad Bitar, a Principal with Booz & Company.

"As a result, governments will logically seek more private-sector participation, but this must be introduced in a controlled manner," he noted.

According to him, without proper regulation, private companies will compete with each other and the government for manpower in a market with a limited supply of skilled labour - thereby escalating costs.

To avoid such situations, governments must take a regulated, multi-dimensional, multi-stakeholder approach that will ensure that the private sector brings complementary capabilities to the table.

"Given the complexity of the GCC's healthcare challenge, and how it differs among the six countries, it is important to recognise that there is no silver bullet," remarked Dr Nikhil Idnani, a senior associate with Booz & Company.

"Instead, the careful and targeted use of partnerships between public and private stakeholders can begin to address the core issues of accessibility, quality, and affordability," he stated

The most effective method for combining the complementary capabilities of public- and private-sector players is through PPPs. GCC countries can use PPPs as a means of managing rising healthcare costs, as a mechanism to enhance the capabilities of the healthcare system, and as part of a program of systemic transformation of the sector.

According to the study, the public and private sector each bring different strengths to the table. As the licensors of the health sector, governments can identify healthcare gaps from the perspectives of accessibility and quality.

More importantly, they have the power to regulate the market, introduce incentives, and sometimes simply enforce reform, it stated.

"From its side, the private sector can improve the efficiency and effectiveness of health operations by leveraging its expertise in fields such as clinical, administrative, or support services," remarked Chahine.

"Moreover, the private sector can call on financial resources to inject capital into profitable opportunities, and mobilize entrepreneurship to spur innovation," he added.

You may also like