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Expand, Consolidate & Support:

Meeting the GCC Healthcare
Challenge 2050

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© Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved.
 About Ithmar Capital & Dow Jones

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Capital is a private equity specialist with local and international
expertise, connectivity and industry insight. From offices in Dubai, Ithmar
Capital targets exceptional growth capital and buyout opportunities in com-
panies that are either GCC-based or, if international, GCC-related.
With a focus on innovation and value creation, Ithmar Capital brings
together unique core competencies that make the firm a distinctive player in the GCC industry. Through
regional shareholders and investors, coupled with an exceptional team offering years of industry experience,
Ithmar Capital uses high-profile partnerships and best-in-class connectivity to provide hands-on support for
the success of its portfolio companies. In a first for the region, Ithmar Capital has also entered into a strate-
gic alliance with global private equity leader 3i, thereby combining local knowledge and networks with truly
international reach and best practices.
Ithmar Capital is currently managing proprietary investments in excess of $500 million in some of the
most attractive sectors across the GCC.

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collected through interviews with leading figures in the private equity sector, industry analysis and secondary
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Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
Table of Contents

4 Acknowledgements
5 Foreword
6 Executive Summary

7 The Context
Figure 1: Growth in GCC GDP per capita, Current Prices ($) 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Figure 2: Average Hydrocarbon Prices ($) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Figure 3: Top Ten Current Account Surpluses, 2008 ($B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Figure 4: Annual Births & Deaths per 1,000 Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Figure 5: Projected Population Mid-2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Figure 6: Total Fertility Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Figure 7: Life Expectancy at Birth, Both Sexes (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Figure 8: Immunization of Children Aged 12-23 Months Against Measles (%) . . . . . . . . . . . . . . . . . . . .10
Figure 9: GCC Populations, 1970-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Figure 10: Overweight Individuals Aged 15+ (% of Population) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Figure 11: Motor Vehicles per 1,000 of Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Figure 12: Total Sales in Saudi Arabia, Fast Food Chains (€M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Figure 13: Tobacco Consumption (% of Adult Population) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

14 The GCC Healthcare Challenge 2050

3
Figure 14: Current Available Medical Facilities per 1,000 of Population . . . . . . . . . . . . . . . . . . . . . . . . .15
Figure 15: Current Public Healthcare Expenditures (% of Total HC Expenditure) . . . . . . . . . . . . . . . . . . .16
Expanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Figure 16: Minimum Number of Hospital Beds Required by 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Consolidating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Figure 17: Minimum Number of Physicians Required by 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Supporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Figure 18: Minimum Number of Nurses Required by 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

25 Case Study - An Interview with Mark Adams, Enaya Healthcare

26 Case Study - An Interview with Shailesh Dash, Global Investment House
27 Case Study - An Interview with Faisal Bin Juma Belhoul, Ithmar Capital

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
Editorial: Nicholas Smith
Design & Production: Brett Gillett, Tara M. Sapienza
Artwork: Cover: ©iStockphoto.com/Peter Spiro; Page 7: ©iStockphoto.com/Nikolay Suslov; Page 11: ©iStockphoto.com/Jeffrey Smith;
Page 13: ©iStockphoto.comMichael Valdez; Page 14: ©iStockphoto.com/Slobo Mitic; Page 21: ©iStockphoto.com/atbaei

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Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 Acknowledgements

Special Thanks To –
Mr. Mark Adams, Chief Executive Officer, Enaya Healthcare,
Dubai, United Arab Emirates

Mr. Faisal Bin Juma Belhoul, Founder & Managing Partner,

Ithmar Capital, Dubai, United Arab Emirates

Mr. Shailesh Dash, Senior Vice-President & Head, Alternative Investments Department,
Global Investment House, Kuwait City, Kuwait

Dr. Pablo Fetter

Mr. Imad Ghandour, Executive Director, Gulf Capital,

Abu Dhabi, United Arab Emirates
4

Mr. Brendan Hughes, Director, Information Analysis, Dow Jones & Company,
San Francisco, United States of America

Mr. Khawar Mann, Partner, Healthcare, Apax Partners, London, United Kingdom

Ms. Fiona Nicholas, Partner, Healthcare Advisory Services,

PricewaterhouseCoopers, Dubai, United Arab Emirates

Mr. Mohammed Al-Qahtany, Chief Executive Officer,

Al-Aman Investment, Kuwait City, Kuwait

Dr. Danny Ramadan, Technology Investment Advisor,

Qatar Science & Technology Park, Doha, Qatar

Mr. Ahmad Al-Sari, Managing & Executive Partner,

Malaz Group, Riyadh, Saudi Arabia

Dr. Khaldoon Tabaza, Chairman & Chief Executive Officer,

Riyada Ventures, Amman, Jordan

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
Foreword

Faisal Bin Juma Belhoul, Founder & Managing Partner, Ithmar Capital

Khaldoun Haj Hasan, Co-Founder & Managing Partner, Ithmar Capital

Some certainties remain even in unpredictable

times. Economic challenges come and go, but the
demands which the world makes on the human body
are unfailingly constant. Consequently, the require-
ment for healthcare provision to meet the needs and
aspirations of populations the world over is undimin-
ished in the face of unprecedented financial turmoil.

In the GCC, remarkable progress has been made by governments over recent years
in putting this capacity in place. As a result, the inhabitants of the Gulf can today look
forward to life expectancies unparalleled in the history of the region. However, this
signal achievement is now facing a series of potentially terminal threats caused by the 5

very growth which has made it possible.

In response, Ithmar Capital (www.ithmar.com), in partnership with Dow Jones &

Company (www.dowjones.com), is delighted to present the latest in our highly suc-
cessful series of thought-leadership reports on private equity investment in the GCC.
The first half of this groundbreaking paper introduces the exclusive numbers behind
the GCC Healthcare Challenge 2050, a fresh and innovative conceptualization of
the issues facing policy-makers and healthcare providers in the region, whilst in the
second half of the report we set out a compelling case for private sector involvement
in facing this challenge, with some of the foremost players in the GCC private equi-
ty industry putting forward their views.

We fully expect the essential data and insights contained in this pioneering publi-
cation to form an invaluable paradigm in discussing and addressing the future of Gulf
healthcare. Moving to meet the challenges of this future, and securing the GCC’s con-
tinued health and well-being, is a responsibility which the region cannot avoid –
regardless of the uncertainties of the present.

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 Executive Summary
• Despite current global uncertainty, the rapidly-attained
prosperity of the GCC shows little sign of rapidly disap-
pearing, and the long-term outlook for the drivers behind
recent growth appears promising. This carries numerous
health consequences for the region.
• On the positive side, growth has led to major improve-
ments in the provision and operational standards of
public healthcare facilities, sanitation levels and disease
prevention. Life expectancy levels in the GCC, which
have risen by up to 50% since 1970, are now globally
competitive.
• More negatively, prosperity has also subjected expanding
Gulf populations to unprecedented health problems.
Even as they live longer, GCC inhabitants are increasing-
ly suffering from ‘diseases of affluence’ such as diabetes
and obesity.
• Increased tertiary-sector employment, a disincentivizing
climate, car-oriented urban planning and generous fuel
subsidies have all created a deficit in physical exercise lev-
els. A sizeable consumer market has arisen in convenience
food, and higher disposable incomes, combined with leg-
islative inactivity, have served to promote tobacco usage.
6
• The economic development which has enabled such
impressive progress in GCC healthcare has simultane-
ously played a defining role in the proliferation of seri-
ous health problems. Given the medium- to long-term
growth potential of the GCC, the enabling conditions
for these diseases are likely to strengthen.
• Even allowing for preventative programmes, the con-
tinued provision of current levels of care in the GCC
over the next forty years will require:
o A total of 2,738 hospital beds to be available by 2050
in Qatar, 3,585 in Bahrain, 7,702 in Oman, 9,582
in Kuwait, 15,698 in the United Arab Emirates and
99,660 beds in Saudi Arabia.
o In 2050, Bahrain will require 3,585 physicians, Qatar
4,107, Oman 7,702, Kuwait 9,582, the United Arab
Emirates 15,698 and Saudi Arabia 99,660.
o Finally, in 2050 a total of 4,780 nurses will be needed
in Bahrain, with 6,845 in Qatar, 15,404 in Oman,
19,164 in Kuwait, 31,396 in the United Arab
Emirates and 149,490 in Saudi Arabia.
o Across the whole GCC region, a grand total of 138,965
hospital beds, 140,334 physicians and 227,079 nurses
will be required by 2050 to maintain current care lev-
els. These are minimum figures – positive long-term
growth prospects, the nascent introduction of universal
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
health insurance and efforts to achieve global care par-
ity may render them overly conservative.
• This is the GCC Healthcare Challenge 2050.
Meeting it will require GCC policy makers to expand,
consolidate and support healthcare through a more
substantial engagement with the private sector.
o Expanding – The priorities of private sector players
dovetail perfectly with those of a market-driven GCC
healthcare industry. They can provide the capital
accessibility and skill-sets to support flexible, properly-
targeted GCC healthcare expansion. This will be vital
in addressing restricted access to capital markets, a
pressing need for institutionalization and financial dis-
cipline, and previous failures in regional growth.
o Consolidating – GCC healthcare provision is institu-
tionally fragmented. The private sector can assist in
reducing over-capacity and excessive costs whilst main-
taining optimal patient volumes and leveraging
economies of scale. Consolidation will function as a
key industry driver in the coming years, with the ‘roll-
up’ strategy an attractive medium-term prospect.
o Supporting – Intellectual fragmentation is also an
issue, with GCC healthcare remaining reliant on
imported expertise, whilst government projects to
develop native talent are strictly long-term. The pri-
vate sector offers the capital resources and global
connectivity to support the continued provision of
personnel to meet changing disease patterns and
management responsibilities.
• The private sector is a partner to governments in GCC
healthcare, rather than a competitor. Meeting the GCC
Healthcare Challenge 2050 will require a consensus-
driven healthcare infrastructure and regulatory environ-
ment which plays to the strengths of all parties and posi-
tions the sector as an accessible opportunity. Perhaps the
most useful action which governments can take is simply
to demonstrate trust, clear an appropriate space and
allow investors to expand, consolidate and support with-
in a responsive and intelligently constructed regulatory
framework.
• The creation of modern healthcare systems which have
rapidly raised the life expectancies of their populations
stands as one of the signal achievements in the short his-
tory of the modern Gulf states. However, the private sec-
tor must take a central role in a radically broadened gov-
ernment vision if this achievement is itself to look for-
ward to a similarly assured lifespan.
The Context

Economies may move in unpredictable cycles,
but the innumerable biological processes which define
human life remain resolutely linear. Yet although age, ill-
ness and disease represent a common inheritance, time,
place and situation can often determine the needs and
changes faced by the body. An oft-noted paradox of
healthcare is the remarkable specificity of the sector in
different geographies, with every region of the world
almost invariably presenting a range of unique challenges
to a universal human biology. These pose urgent ques-
tions to healthcare providers, governments, private
enterprise and investors, all of whom are faced with the
requirement to adapt, reformulate and optimize their
strategies accordingly if the needs of their regions are
truly to be met. The Arabian Gulf is no different in this
regard.
The populations of the six Gulf Cooperation Council
(GCC) countries – Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia and the United Arab Emirates – have wit-
nessed incredible material growth in recent years. The
past five years have been particularly significant in this
respect, with steadily increasing oil and gas prices
between 2004 and 2008 raising gross domestic product
63.11% in Oman – with Qatar witnessing a truly aston-
ishing 78.16% increase during this period1. Even against
7
a backdrop of a world in early 2009 swept by winds of
economic uncertainty, and in the face of considerably
diminished hydrocarbon revenues, growth forecasts for
the GCC nations remain relatively robust. Given the
global slowdown, average crude oil prices are expected to
decline 56.6% in 2009 compared to the previous year
before a 26% rebound in 2010, whilst a 12.8% fall is
predicted this year for natural gas2. Yet the accumulated
momentum of the Gulf economies – along with a gener-
al recognition that the spike which pushed crude prices
Figure 1: Growth in GCC GDP per capita,
Current Prices ($) 2004-2008
80% 78.16%
62.56% 63.11%
60
49.15%
45.24%
40 37.07%
20

(GDP) per capita levels of these hydrocarbon-producing

territories at a remarkable speed. The latter rose by 0
Bahrain Kuwait Oman Qatar Saudi United Arab
37.07% in Saudi Arabia, 45.24% in Kuwait, 49.15% in Arabia Emirates
Source: International Monetary Fund
the United Arab Emirates, 62.56% in Bahrain and

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 ability remains that despite current weakness the long-
Figure 2: Average Hydrocarbon Prices ($)
term trend for energy prices is still strongly upwards, as
$100 $99.55 evidenced by projections of an average price of over
Crude Oil (barrel)
$100 a barrel between now and 2015 – and an average
80 Natural Gas (mcf)
$73.32 of $200 a barrel by 20307. In short, the rapidly-attained
60 $54.50 general prosperity of GCC populations shows little sign
$43.25 of rapidly disappearing, and the long-term outlook for
40 the drivers behind recent growth appears equally prom-
ising.
20 $13.00 $13.47 $11.74 $12.12
Material well-being has numerous consequences. The
0 improved social conditions usually attendant on eco-
2007 2008 2009 2010
(projected) (projected) nomic growth often cause populations both to expand
Source: Energy Information Administration
faster and live longer. In the case of the GCC, rapid eco-
nomic expansion has also had the significant result of
to almost $150 a barrel in mid-2008 was unjustified by attracting large numbers of non-GCC nationals to the
the prevailing market fundamentals – is projected to be region. The number of expatriate residents has grown
sufficient to sustain continued GDP growth throughout from a total of 2.5 million in 1975, or around 25% of
this period, with a consensus figure of 3.5%3 in marked the population8, to dominate today’s Gulf demographics
contrast to the contractions in growth currently evident – the past year alone has seen the population of Kuwait
in many of the world’s developed economies. Moreover, become 69% expatriate9, and a total of 3.11 million for-
the region’s governments remain committed to wide- eign workers are now employed by approximately
ranging spending plans encompassing such diverse sec- 260,000 establishments in the United Arab Emirates,
8
tors as infrastructure, logistics and manufacturing4. GCC accounting for 90% of the private sector workforce10. It
governments have earmarked $700 billion in funds should be noted that the current global economic tur-
towards infrastructure modernization by next year, have moil, along with incipient government measures to
$2 trillion of projects under construction5, and are sup- redress an increasingly politicized imbalance11, may
ported in these undertakings by current account balances restrict any significant short-term increases in these fig-
which compare favorably with those of any other nation. ures – for example, although the number of new residen-
In fact, a list of the world’s largest government surpluses cy visas being issued in Dubai at the start of 2009 was
reveals two Gulf states – namely Kuwait and Saudi still higher than those being cancelled, the latter number
Arabia – among the top ten positions6. Finally, the prob- was up 86% compared to the opening months of 200812.
However, the demographic effect of years of heavy immi-
Figure 3: Top Ten Current Account gration is already profound. This impact is even more
Surpluses, 2008 ($B) pronounced when considered in combination with the
$400B large family groupings traditionally characteristic of the
$358.62
Gulf – with total fertility rates in the region reaching an
300 average of 3.4 in Oman and 4.0 in Saudi Arabia, to give
just two examples13, and resulting in average family sizes
200
of eight persons in Qatar14 and ten in Kuwait15, to give
$164.71 $159.14
two more. As a result, GCC birth rates vastly outstrip
death rates, as the Saudi Arabian ratio of almost ten
100
$68.14 $67.80 $64.59 $58.28 $58.01
$41.94 $33.50
births for every death – giving a rate of annual increase
of 2.7%, compared to 0.6% in the United States – clear-
0
ly demonstrates16. This cultural bias has, moreover, in
ina

itz n
d

ia
bia

Si ds

it
an

Ne rwa
pa

lan

or
wa
Sa uss

lan
Ch

ra

ap
rm

Ja

er

Ku
No
iA
R

er

ng

high probability been further enabled by factors such as

Ge

th
ud
Sw

Source: International Monetary Fund consecutive years of steady wage increases, which have
resulted in expanded means for household and family

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
Figure 4: Annual Births & Deaths Figure 5: Projected Population Mid-2050
per 1,000 Population 80%
50,000,000 77% 75%
Births Deaths Rate of Annual Increase
49,830,000
Bahrain 20 3 1.7 40,000,000
Kuwait 21 2 1.9 53%
Oman 24 3 2.1 48%
30,000,000 42%
Qatar 17 2 1.5
Saudi Arabia 29 3 2.7
20,000,000
United Arab Emirates 15 2 1.3
Source: Population Reference Bureau
10,000,000 7,849,000
4,791,000 3,851,000
1,195,000 1,369,000
expenditures – GCC nationals in Dubai can currently 0
Bahrain Kuwait Oman Qatar Saudi United Arab
expect an average annual income of Dh324,00017. The Arabia Emirates
long tradition of generous family benefits and guaran- Population Change 2008-2050 (%)
teed employment for nationals in territories such as Source: International Monetary Fund

Qatar may also have served as an incentive to the perpet-

uation of these practices18. In short, the region’s econom-
ries to embrace the sector fully – and take impressive
ic growth has had the dual impact of attracting expatri-
strides towards parity with the rest of the developed
ates whilst simultaneously supporting the preference for
world. Significant numbers of hospitals have been built,
large families amongst GCC nationals, thereby creating
clinics opened and healthcare accorded a prominent place
a combined population which exceeds all previous levels.
in policy decisions and budgetary frameworks. The past
From a total population of 8,218,000 in 197019, the six
five years have seen the inauguration of new public
Gulf states grew to encompass 39,729,000 inhabitants
amenities such as the Al-Rahba Hospital in Abu Dhabi24 9
by mid-200820 – an increase of 383.43% in less than
to complement more established institutions such as the
forty years. Some of the individual country increases are
King Faisal Specialist Hospital – the largest hospital in
even more staggering, with the Qatari population
the Middle East – and the King Khaled Eye Specialist
expanding by 721.23% in this period and that of the
Hospital in Riyadh, which has become one of the most
United Arab Emirates by an astonishing 1701.6%21.
respected ophthalmic care facilities in the world since
Despite current economic challenges, the long-term
opening in 198325. Compared to 1970, when the king-
prognosis for GCC population growth remains consis-
dom had only 74 hospitals, Saudi Arabia now has over
tent with these recent rises. By 2050, the total popula-
350 hospitals26, and the number of available hospital beds
tion of the GCC has been projected to reach 68,885,000
in Dubai has increased by over 36% to just under 3,000
– corresponding to a 75% increase for the United Arab
from 1,895 in 200127. In Kuwait, Qatar and the United
Emirates, a 77% increase for Saudi Arabia, and 80% for
Kuwait22.
The rise of the GCC to prosperity has affected not Figure 6: Total Fertility Rate
only the size of the local population, but also exercised a 4.0%
4.0%
determining influence on its general health and welfare.
3.4%
This has assumed a number of forms, some positive and
3.0
other less so. Beginning with the positive, it is beyond 2.5% 2.6% 2.6%
question that the growth of the Gulf economies has led 2.0%
2.0
to major improvements in the provision and operational
standards of public health facilities. On gaining inde-
pendence, each of the Gulf states were relatively swift in 1.0

creating dedicated government ministries to oversee the

development of healthcare. In fact, Saudi Arabia has had 0.0
Bahrain Kuwait Oman Qatar Saudi United Arab
a Ministry of Health since 195123. However, it is the Arabia Emirates
Source: Population Reference Bureau
recent economic growth which has allowed these territo-

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 Figure 7: Life Expectancy at Birth, Both Sexes Figure 8: Immunization of Children Aged
(years) 12-23 Months Against Measles (%)
80 78 76 46.2% 78 99% 99% 99%
75 74 48.0% 75 100% 96% 95% 92%
66 63
62 61
60 80
50 52
60
40 23.0% 23.8% 48%
21.0% 45%
18.2% 40 34%
20 26%
22%
20
8%
0 0
Bahrain Kuwait Oman Qatar Saudi United Arab Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates Arabia Emirates
1970 Today % Change 1980 2006
Sources: Population Reference Bureau & World Bank Source: World Bank

Arab Emirates 100% of all births are attended by skilled
health staff, with Bahrain, Oman and Saudi Arabia lag-
ging only marginally behind at 99%, 98% and 96%
respectively28. Universal access to adequate sanitation was
achieved ten years ago in Saudi Arabia29, and the preva-
lence of serious diseases has been dramatically reduced.
10
A striking example is tuberculosis, which in Bahrain fell
from a rate of 120 per 100,000 of population in 1990 to
45 per 100,000 by 2006, in Kuwait from 89 to 25,
Oman 26 to 13 and from 47 to 24 in the United Arab
Emirates30. Child immunization programmes have been
successfully established across the region, and near-uni-
versal coverage achieved against diseases such as measles
– remarkably, Saudi Arabia rose from a mere 8% measles
immunization rate in 1980 to 95% by 200631. As a result
of all these developments, life expectancy levels in the
GCC are now comparable to much of the developed
world. The average Bahraini and Qatari can today expect
to live to an age of 75, a year more than an inhabitant of
Oman and a year less than a Saudi, whilst in Kuwait and
the United Arab Emirates this figure is 78 years – the
same as the United States32. The incredible progress
made in the healthcare field can be assessed by compar-
ing these figures with the life expectancies for the inhab-
itants of these same countries in 1970 – all have risen by
around 20% in this short time-span, and in the case of
Oman and Saudi Arabia, by almost 50%33.
Without question, these are remarkable achieve-
ments, and the governments of the GCC deserve real
credit for their efforts thus far. However, the prosperity

Figure 9: GCC Populations, 1970-2008

30,000,000 28,147,000
1,701.60%
25,000,000

20,000,000

15,000,000
721.23%
10,000,000
256.81% 249.00% 6,109,000 360.74%
5,000,000 254.54% 4,486,000
2,669,000 2,719,000
220,000 780,000 748,000 779,000 113,000 928,000 249,000
0
Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates

1970 2008 % Growth

Sources: People Facts & Population Reference Bureau

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
of the Gulf has by no means had a wholly benign influ-
ence on the region’s well-being, and it would be pre-
sumptuous, if not reckless, to assume that wealth has
automatically equated to health. The economic maturity
of the Gulf region may have contributed to radical
demographic changes, improved healthcare facilities and
impressive public health achievements, but it has also
inaugurated an era in which GCC populations are sub-
ject to new and serious health problems on a hitherto
unprecedented scale. A key paradox may be identified
here – even as their numbers increase and they live
longer, the inhabitants of the GCC are becoming
increasingly unhealthy. Conditions such as diabetes,
obesity and autoimmune problems, long established in
the canon of so-called ‘diseases of affluence’ and previ-
ously virtually unheard of in the Gulf, can now be read-
ily identified in the region. With the exception of Oman,
over half the population of each of the Gulf states can be
considered overweight, with the figures for Kuwait –
where 70% of men and 79% of women fall into this cat-
egory34 – particularly striking. The average body mass
11
index (BMI) of Saudi nationals aged 15 years and older
is now 30 kilograms (kg)/m2 – considerably above both
the global average of 23 kg and also the 25 kg generally
recognized as overweight35. Moreover, obesity can itself
form an initial step on the route towards diabetes, car-
diovascular disease, kidney failure and cancer. The preva-
lence of Type 2 diabetes in particular is already
approaching epidemic proportions in the region36, with
10.1% of adults in Kuwait suffering from the condition,

Figure 10: Overweight Individuals Aged 15+ Figure 11: Motor Vehicles
(% of Population) per 1,000 of Population
80% 79% 600
67% 70% 70%67% 510
61% 64% 63%64%
60 58% 420 432
48% 400
43% 339
40

200 176
20

0 0
Bahrain Kuwait Oman Qatar Saudi United Arab Bahrain Kuwait Oman Qatar Saudi Arabia
Arabia Emirates
Men Women
Source: Population Reference Bureau
Source: World Bank

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 Figure 12: Total Sales in Saudi Arabia, Although the paradigm is under constant review, with
Fast Food Chains (€M) recent research suggesting an incipient shift in cardiovas-
cular disease risks to low- and middle-income coun-
€100M
tries43, an overall consensus has been achieved as to the
€87.7
80 61.9% 61.2% mechanisms responsible for this relationship. Improved
general sanitary conditions result in reduced exposure to
€61.4 48.0% 49.9%
60 pathogens, leaving populations with lower natural
€45.6 immunity levels and a greater reliance on medication
40 €35.3
34.5% €27.4
and antibiotics – ideal conditions for the development of
20 allergies and autoimmune diseases44. However, the most
significant factor is probably simple lack of exercise, with
0 tertiary sector economic growth increasing the propor-
Al-Baik Burger King Herfy Fuddruckers McDonald's
tion of the workforce with desk-bound, commutable
2007 % Change from 2003 employment.
Source: Euromonitor International
In short, lifestyle changes translate into physical con-
ditions. However, a number of specific local factors
12.7% in Qatar, 13% in the United Arab Emirates and attendant on the economic growth of the GCC have
14.3% in Bahrain37. In fact, these countries now account reinforced the prevalence of these conditions. Most obvi-
for four of the top five countries in the world by the ously, the region’s climate serves to disincentivize sus-
highest percentage of adult sufferers38, and recent anec- tained outdoor activity. Each of the six Gulf capitals
dotal reports suggest that around 90 diabetes-related average around nine hours of sunshine each day and
emergency amputations are carried out in Riyadh’s hos- experience average daytime temperatures of over 30°C45,
12
pitals each month39. Meanwhile, cardiovascular disease along with high humidity levels in coastal areas during
has become the leading cause of death in both the the summer months. Consequently, urban planning has
United Arab Emirates – where it is responsible for 41% been strongly orientated around personal car ownership,
of all mortalities40 – and Oman41, and the prevalence of with the central districts of some Gulf cities markedly
hypertension in Kuwait and Qatar has reached 26.3% deficient in pedestrian accessibility46. The status of the
and 32.1% respectively42. As the term ‘diseases of afflu- GCC nations as major hydrocarbon producers has also
ence’ suggests, the prevalence of these conditions can enabled the provision of significant fuel subsidies to sup-
generally be shown to increase alongside the economic port this planning dynamic – these subsidies, which have
development of the territories in which they occur. been estimated to cost the Bahraini government up to
$1.3 billion every year47, amount to around $10 per bar-
rel of gasoline in the United Arab Emirates and $57 per
Figure 13: Tobacco Consumption barrel of diesel in Saudi Arabia48. The result is high levels
(% of Adult Population) of private car ownership, as can be seen from the statis-
40% tic that Qatar has over 500 vehicles for every 1,000
37.0%
members of the population, closely followed by Saudi
30
29.6% Arabia and Kuwait on 432 and 420 vehicles per 1,000
23.5% respectively49. A culture of near-total car dependence,
22.0%
20 18.3% with the corollary of deficient overall physical exercise
15.5% levels, has been created in the GCC, and has led to an
10 environment in which, to take just one example, only
5.7% 23% of students in Oman are physically active in a
1.5% 1.5% 0.5% 1.0%
0 <1% meaningful sense50.
Bahrain Kuwait Oman Qatar Saudi United Arab
The longer working hours and commuting times,
Arabia Emirates
Men Women along with expanding consumer markets, which are asso-
Source: World Health Organization
ciated with economic growth have also promoted the

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
consumption of convenience food with insufficient
nutritional content. A rapidly growing market has been
created for fast food outlets and franchises, often
Western-owned or modeled. The local opportunity for
these businesses is almost unique, given that the GCC
states have historically imported over 90% of their food51
in order to compensate for a lack of arable and perma-
nent crop land – the 8.45% of the surface area of
Bahrain available for agriculture is by far the largest pro-
portion of any Gulf nation52. Taking the region’s largest
market, Saudi Arabia, as an example, more than 1,500
new foodservice outlets have opened in retail locations
such as shopping malls in the kingdom since 2002 – a
growth rate of 48%. Already valued at €3.6 billion, sales
in the sector in Saudi Arabia are expected to reach €4.5
billion by 2012. These outlets are dominated by fast
food, which accounted for nearly 60% of total sales in
200753. International franchises such as Burger King,
McDonald’s and Fuddruckers have seen local growth of
34.5%, 49.9% and 61.2% respectively since 2002, with
local chains such as Herfy and Al-Baik which offer sim-
ilar foods matching these figures with growth rates of
48% and 61.9% in the same period54. Meanwhile,
Dunkin’ Donuts posted profits of $11 million for its
Kuwait, Oman and United Arab Emirates outlets in
2008, achieving a 22% increase in same-store sales in the
latter country55. The increasing popularity of these busi-
nesses carries severe public health consequences. The
most popular item on the McDonald’s menu, the double
cheeseburger56, contains 440 calories and 23 grams of fat.
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
When combined with a medium serving of French fries,
this totals 820 calories and 42 grams of fat – 64% of the
recommended daily intake for the latter57. Given such
statistics, the unprecedented availability and popularity
of such dietary options can, without doubt, be viewed as
a significant contributory factor to the rising levels of
obesity and diabetes in the GCC.
A further local factor in the healthcare paradigm spe-
cific to the GCC is tobacco use. Governments in the
region have only recently begun to address this issue con-
sistently through legislation against smoking in public
spaces58 and increases in tobacco taxes59, which has
allowed the habit to become more prevalent. Almost
30% of adult males in Kuwait regularly use cigarettes, a
figure which rises to 37% in Qatar60. Although small by
the standards of a wider region in which 77% of Yemeni
males smoke61, it is worth noting that the higher dispos-
able incomes which have become available to individuals
in the Gulf states in recent years have pushed personal
consumption levels beyond much of the Middle East –
in fact, the personal average annual total of 3,062 ciga-
rettes, or 8.4 per day, amongst smokers in Kuwait is the
13
third highest in the world62. Nor is the problem confined
to adults – smoking by GCC nationals aged between 13
and 15 years in Bahrain (with 10.6% smoking) and
Kuwait (with 10.8%) is the highest for any Middle
Eastern territory with the exception of the West Bank –
and is more than twice the regional average of 4.9%63.
The strain which this will place on GCC healthcare
infrastructure in future years will clearly be considerable.
 The GCC Healthcare Challenge 2050
The public health situation confronting care
providers, policy makers and investors in the Gulf
14
states is therefore a complex one. The economic devel-
opment which has enabled impressive progress to have
been made in the sector has simultaneously played a
defining role in supporting the proliferation of new
and serious healthcare problems across an ever-expand-
ing population. Moreover, given the medium- to long-
term growth potential of the GCC, the conditions
which have enabled these diseases to take root are not
only likely to persist, but to strengthen. Drastic reme-
dial action has become necessary if this challenge is to
be met. Preventative measures will naturally be essen-
tial, with public awareness programmes and incentives
having a key role to play. However, as Mark Adams,
Chief Executive Officer of Enaya Healthcare, points
out: “The GCC does not have a developed public sector
machinery around disease screening, prevention and edu-
cation. The flipside of the current market opportunity for
treating conditions is an ongoing deficiency in preventing
them”. Such initiatives must therefore be constructed
virtually from scratch, and even the most ambitious
and wide-ranging cannot be expected to achieve a total
success rate. Instead, an immediate recognition is
required that healthcare capacity needs to be increased
by a significant degree. Taken as a whole, this situation
can be conceptualized as the GCC Healthcare
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
Challenge 2050. The most recent figures demonstrate
that five of the six Gulf nations currently offer two hos-
pital beds for every 1,000 members of their popula-
tions, with Bahrain marginally more advanced with
three beds per 1,00064. The availability of physicians is
similar – Bahrain again, along with Qatar, offers three
doctors per 1,000 people, and two per 1,000 remains
the figure for the other four states65. The provision of
nurses, meanwhile, is slightly higher, as can be seen
from the five per 1,000 in Qatar, four per 1,000 in
Bahrain, Kuwait, Oman and the United Arab Emirates,
and three per 1,000 in Saudi Arabia66. Although the
provision of this capacity, being established as it has
been within a comparatively short space of time,
undoubtedly represents a major achievement, it still
serves only as a starting point.
Based on the projected populations of the six Gulf
states in 2050, the continued provision of current lev-
els of care, as measured by beds per 1,000 of popula-
tion, will require a total of 2,738 hospital beds to be
available by that year in Qatar, 3,585 in Bahrain, 7,702
in Oman, 9,582 in Kuwait, 15,698 in the United Arab
Emirates and 99,660 beds in Saudi Arabia. In total,
this represents the equivalent of 155 King Faisal
Specialist Hospitals, which currently offers 894 beds67.
If the same numbers of doctors per 1,000 of popula-
tion, which at present largely match the numbers of
beds, are to be preserved in 2050, Bahrain will require
3,585 physicians, Qatar 4,107, Oman 7,702, Kuwait
9,582, the United Arab Emirates 15,698 and Saudi
Arabia 99,660. Finally, in 2050 a total of 4,780 nurses
will be needed in Bahrain, compared to 6,845 in Qatar,
15,404 in Oman, 19,164 in Kuwait, 31,396 in the
United Arab Emirates and 149,490 in Saudi Arabia.
Across the whole GCC region, a grand total of 138,965
hospital beds, 140,334 physicians and 227,079 nurses
will be required by 2050 to maintain current care lev-
els. It is essential to note, moreover, that these are min-
imum figures, sufficient only to maintain the status
quo. Although making specific projections about future
disease incidence is fraught with uncertainty, it seems
clear that the enabling factors which have supported
the current trends in GCC public health outlined
above are more likely than not to continue for the fore-
seeable future, any preventative measures notwith-
standing – meaning that the Gulf populations of 2050
may well be significantly unhealthier than those at
present. Furthermore, although GCC nationals have
long been theoretically guaranteed access to free health-
care, the capacity limitations of public facilities, along
with certain perceptions relating to the quality of care
on offer, have led to those who can afford it opting usu-
ally for the private sector. Those without such means,
particularly in Saudi Arabia, have on occasions been
forced to forego treatment completely. Recognizing this
situation as clearly unsatisfactory, GCC governments
are set to implement sweeping changes. Employer-
funded health insurance has been compulsory since
2007 for expatriates working in both Saudi Arabia68
and Abu Dhabi69, and there are proposals to develop
these initiatives into national health insurance schemes
which would enable participants to receive free care –
through either public or private channels. In the case of
the United Arab Emirates, a time frame of the next
three years has been mooted for universal coverage70.
The impact of this can be expected to be profound, as
entire populations, subject to the physical conditions
outlined above and growing increasingly unhealthy,
begin to assume the role of enfranchised health con-
sumers. As a result, these levels of increase could still be
insufficient. Finally, the assumption has been made
that current levels of care are adequate, when this is in
fact questionable. Although the GCC standard of two
to three doctors per 1,000 people is broadly consistent
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
with developed healthcare markets around the world,
the current provision of hospital beds on a similar scale
puts the region some distance behind. The most recent
figures show a high income-Organisation for Economic
Co-operation & Development (OECD) average of six
beds per 1,000 people, with France and Germany offer-
ing eight beds and Japan a remarkable 1471. The high-
est availability of nurses per 1,000 of population in the
Gulf, namely Qatar with five, is only half the ten nurs-
es per 1,000 offered in Germany72. In short, even high-
er levels of capacity could prove necessary, and these
already dramatic figures may, in the long run, prove to
be overly conservative.
This is the GCC Healthcare Challenge 2050. In
addressing these changing markets and putting this
capacity in place, sweeping changes will be required to
the prevailing framework of healthcare provision and
management in the GCC. At present, governments in
the region are shouldering the majority of this burden,
with the public sector accounting for 66% of healthcare
expenditure in Bahrain, 72% in the United Arab
Emirates, 76% in Saudi Arabia, 77% in Kuwait, 78% in
15
Qatar and 85% in Oman73. Whilst this highly national-
ized system has been instrumental in raising standards
to their current levels, the region’s rapidly changing
healthcare demands necessitate a new, multilateral
approach. In order to meet these demands and ensure
the continuing well-being and prosperity of their popu-
lations, GCC policy makers must dramatically expand,
consolidate and support healthcare through a more sub-
stantial engagement with the private sector. The latter
Figure 14: Current Available Medical
Facilities per 1,000 of Population
5
5
4
4 4 4 4
3 3 3 3
3
2 2 2 2 2 2 2 2 2
2
1
0
Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates
Hospital Beds Physicians Nurses
Source: World Bank

Figure 15: Current Public Healthcare
Expenditure (% of Total HC Expenditure)
100%
85%
77% 78% 76%
80
66%
60
40
20
0 nations74. However, even an increase in GCC govern-
Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates
Source: World Bank
has long been active in the region’s healthcare industry,
albeit on a relatively limited scale, and the time has
arrived for it to play a significantly more central role.
Such involvement can be focused into several separate
channels – existing private clinics and hospitals, pub-
licly-owned facilities which could come under private
finance management schemes or full privatization, and
16
new facilities constructed under public-private partner-
ships (PPPs). It should be emphasized that whilst these
distinctions are important ones, the practical issues
which the new Gulf health paradigm raises for all of
them are in fact very much alike. As a result, businesses
in the public and private sectors, as well as those in
between, will require very similar assistance, and unless
otherwise stated, the following should be taken as
applying in equal measure to both.
Expanding
The most obvious channel through which the bur-
geoning public-private sector relationship can be initiat-
ed is through private support for the expansion of exist-
ing institutions and the creation of new ones. Khaldoon
Tabaza, Chairman & Chief Executive Officer of Riyada
Ventures, explains that: “The GCC healthcare sector is a
highly fragmented one which depends on small institutions
and a relatively limited number of people. There is a need
for rapid expansion through integrated companies and sys-
tems if the needs of the population are to be covered”. It is
unreasonable, and possibly impracticable, for the invest-
ment required to implement the dramatic capacity
changes outlined above to derive solely from the public
purse. This is not to absolve governments of all funding
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
responsibilities – it is certainly worth noting that despite
the current public sector dominance of the healthcare
industry, GCC government healthcare spending as a
proportion of GDP is considerably less than that in
mature markets. The most recent figures show Bahrain,
72%
Qatar and Saudi Arabia spending an equivalent of 3%
of their GDP on the sector, with Kuwait, Oman and the
United Arab Emirates devoting only 2%. In compari-
son, France allocates public funds equal to 9% of GDP
to healthcare, Germany 8% and Japan 7% – the latter
figure also being the norm for high income-OECD
ment funding to these levels would probably be insuffi-
cient to meet all of the demands which the region’s
healthcare systems can expect to face. The capital acces-
sibility of the private sector can make an immediate
impact here, given the high costs associated with expan-
sion of new healthcare facilities, and also given that the
vast majority of GCC healthcare groups do not, at pres-
ent, otherwise have access to capital markets, as Ahmad
Al-Sari, Managing & Executive Partner at Malaz Group,
notes: “We do not have publicly-held companies which
operate hospitals in Saudi Arabia – our private hospitals
are held by family groups or businessmen. Unless some of
them start to go public, it will be difficult to them to
expand without private capital”. Fiona Nicholas, Partner,
Healthcare Advisory Services at Pricewaterhouse-
Coopers, makes the additional point that: “Even before
considering expansion, many regional healthcare providers
are facing sustainability challenges. Costs are going up and
resources are scarce. However, the most significant issue is
the demand for improved quality. This often drives an
increased need for investment in equipment, IT and
processes with which some small players are struggling”.
Meeting the GCC Healthcare Challenge 2050 will
necessitate these institutions taking on new capital part-
ners and quite possibly opening up their ownership in
doing so, which provides the window of opportunity for
private investment.
However, new capital and expansion merely in
themselves will be insufficient. As a result of the Gulf ’s
changing disease profile, all parties need to ensure that
growth takes place in a manner explicitly targeted
towards new markets. Brendan Hughes, Director,
Information Analysis at Dow Jones remarks that: “The
range of care available in today’s GCC facilities, both pub-
lic and private, is increasingly misaligned with the condi-
tions which are coming to define the region” – with this
capacity deficit in treating the most complex diseases
clearly reflected in the fact that the United Arab
Emirates currently spends around $2 billion annually
on sending patients overseas to receive treatment other-
wise unavailable locally75. Mohammed Al-Qahtany,
Chief Executive Officer of Al-Aman Investment,
laments the fact that: “Instead spending a great deal of
money on sending people outside the Gulf for treatment,
governments should be able to send them to local clinics
and hospitals which provide the same standards of care as
elsewhere in the world. If that money were spent here in the
region we would begin to see a much better healthcare sys-
tem almost straight away”. The issue is that governments
do not always treat healthcare as a fully customer-driv-
en sector, focusing instead on overly centralized systems
and processes, and the more market-orientated
approach of the private sector is required. As Ahmad Al-
Sari observes: “The private sector can quickly activate or
deactivate specific services depending on market demand,
and governments are just not able to do that”. Private
investors bring invaluable expertise of identifying prof-
itable expansion models for institutions in evolving
markets, given that sustainable business growth is, in
the final analysis, a fundamental component of success-
ful investment. Ahmad Al-Sari explains that: “Many
businesses are primarily looking for growth and market
support from investors rather than to sell completely. Money
is by no means the only consideration”; a conclusion to
which Khawar Mann, Partner, Healthcare at Apax
Partners, assents: “A good private equity house will bring
a lot more than just capital. The best investors can offer a
great deal of knowledge and best practice, along with a net-
work of managers around the world which can be brought
in as required. As a result, performance is improved, man-
agement is supported and the right acquisitions can be
made, and all this produces stronger businesses. So operators
should certainly be looking beyond capital - they should be
looking for capital which can actively help them in what
they are trying to achieve”. Institutions will, in many
cases, require re-engineering to achieve their market
aims, and through a core focus on optimal corporate
alignment and structuring, investors are able to ensure
that their businesses are completely driven by the needs
of their customers. As the GCC will need institutions
with extensive new treatment capabilities tailored
towards the specific conditions which are coming to
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
define the new Gulf public health paradigm, this
approach represents the only feasible path forward for
the region.
In any case, the GCC will require all the private sec-
tor experience and intellectual capital that it can muster
in its efforts at healthcare expansion – for at least two
reasons. Firstly, it seems fair to suggest that the charac-
teristics of the region’s healthcare market are possibly
unique in the world. As a result, the degree to which
systems and processes can simply be transplanted by
governments from overseas is, unfortunately, fairly lim-
ited, and these must instead be created anew. This
necessitates the involvement of high-level skill-sets
which private players are perfectly equipped to provide.
Secondly, the few previous attempts by private health-
care institutions at regional expansion have not met
with conspicuous success. Business owners have thus far
struggled to translate robust market positions and track
records in one GCC territory into similar strength else-
where in the region, and consequently there is an ongo-
ing lack of strong regional healthcare brands or franchis-
es. One possible explanation for this phenomenon is
17
that medical professionals are not necessarily entrepre-
neurs, as Imad Ghandour, Principal at Gulf Capital,
clarifies: “Doctors view the healthcare sector as a profes-
sion, not as a business. That has restricted the growth of the
industry. The typical scenario for a doctor with some busi-
ness vision is to open a stand-alone clinic, possibly one more
a few years later, and that is as far as it goes. When you look
at these businesses, they are almost ‘mom and pop shops’”.
Pablo Fetter supports this view: “Many clinics in the
GCC are structured around a small number of doctors who
deliver a localized service. If these clinics are to expand
regionally and establish a scaled franchise, they need a
strong commercial sense which these individuals typically
do not have”. As a general rule, doctors should not be
expected to include high-level business skills in an
already extensive body of professional knowledge and
competencies, and the standard approach instead sees
them start a private enterprise in order to meet a specif-
ic local need, with little attention paid to how that busi-
ness can be properly institutionalized and developed on
a regional level. Imad Ghandour continues: “As an
investor, you bring many things. Capital is very important,
as healthcare is a sector which definitely needs it. But even
more than capital, you help to build institutions. You cre-
ate structures, bring in talent and support the growth of
 Figure 16: Minimum Number of Hospital Beds
Required by 2050
99,660
100,000
80,000
60,000
40,000
20,000 15,698
9,582 7,702
3,585 2,738
0 pitals today is that they are poorly managed, and this
Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates
Total = 138,965
Source: Dow Jones
businesses on a national or regional level, whether through
organic means or acquisitions, which you can eventually
bring to the public markets. This institutionalization is
something rare in the sector today”. Khaldoon Tabaza con-
curs: “There is a tremendous opportunity in institutional-
izing GCC healthcare organizations. Most of the successes
18
so far have been driven by individuals or small teams, and
talent remains in the hands of the practitioners rather than
the organization as a whole. This is holding back compa-
nies back from the next level”. Once appropriately struc-
tured, there opens up the possibility of joint ventures
between private sector players and healthcare businesses
looking to access new and unfamiliar markets, as
Mohammed Al-Qahtany explains: “Any successful project
which is looking to expand across the GCC should consid-
er a joint venture approach with an experienced partner on
the ground. This ensures both local support and at the same
time enables the project to benefit from the accumulated
experience of the organization as a whole. Joint ventures
have a successful track record, and this is the way to move
forward”. Fiona Nicholas adds the more general point
that: “GCC healthcare operators are still focusing primari-
ly on their local interests, rather than trying to move across
the region. Without proper external assistance, there is a
limit to how much they can take on at a time – and how
quickly they can move – without overstretching resources”.
The support that the private sector can contribute is
therefore clearly essential if the previous failure to
expand is to be reversed through successful institution-
alization and the development of models and partner-
ships which can sustain successful regional expansion.
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
This approach will also be critical in assisting previ-
ously public institutions in making a smooth transition
to a more market-driven era. As a consequence of years
of sub-optimal management, many of these facilities
will, in fact, require as much – if not more – institu-
tionalization than their private sector counterparts. The
public healthcare sector in the GCC has long operated
with heavy government subsidies, poorly-defined or
non-existent performance targets, and considerable
budgetary latitude. Partly as a result of these internal
problems, the external perception of GCC public hos-
impacts directly on the choices made by consumers
when seeking treatment. A renewed focus on discipline
and accountability is therefore required if these institu-
tions are to compete on equal terms with their peers
and attract an appropriate market share, and just as
with the non-public facilities discussed immediately
above, this dovetails perfectly with the priorities of the
private sector, as Pablo Fetter highlights: “As a matter of
principle, I believe that free enterprise is the answer to
most services, and that it is equipped to deliver them more
effectively than any public initiative. In particular, the
private sector is typically much more efficient when it
comes to managing costs and implementing financial dis-
cipline”. However, private operators taking on the chal-
lenge of restructuring and expanding these institutions,
whether under management contracts or full privatiza-
tion, must be aware that it may prove necessary for
such facilities to make additional efforts – not just to
overcome their structural issues, but also to reverse
their poor public image. Patient expectations in the
Gulf have grown proportionately with the rising wealth
of the population, and although there is unquestion-
ably a market for their services, as has been firmly
established earlier in this paper, the successful growth
of these facilities will ultimately depend on their being
able to re-establish a reputation within their target mar-
kets. Pablo Fetter explains: “The consensus in the region
is that there is room for improvement in the level of health-
care. The typical behaviour pattern is that if people are
unfortunate enough to have anything serious, they look for
advice elsewhere in the world. The perception is that the
level of healthcare here is insufficient”. Fiona Nicholas
supports this contention: “When it comes to treatment,
people in the GCC are used to going overseas to get quali-
ty. There needs to be trust in the system if they are going to
stay here. This is a huge challenge, so the pace of change in
behaviour may be considerably slower than some are pre-
dicting”. The entrenchment of such consumerist
patient attitudes is not only playing an increasingly
central role in healthcare planning and delivery the
world over76, but also influences the long-term market
viability of treating institutions. It goes without saying
that a satisfied patient is considerably more likely to
develop a deeper and longer-lasting relationship with
their medical provider than an unsatisfied patient.
Consolidating
The case for private sector involvement goes beyond
supporting expansion. Healthcare provision in the Gulf
region is, at present, institutionally fragmented, as
Brendan Hughes explains: “Not only does the GCC need
extra capacity to address all the new conditions which it
faces, but it also requires a more efficient approach towards
those which it currently can treat”. To give just one exam-
ple, Dubai offers only one public maternity hospital at
present, with patients often confronted with long delays
in receiving care. Much of the pressure on the Al-Wasl
Hospital comes from its role as a de facto facility for
women across the northern Emirates77, and as a result it
represents a key component of Dubai’s long-term
healthcare expansion plans78. But despite these inten-
tions, the same northern Emirates are also looking to
grow their maternity capacity, with Al-Qasimi Hospital
in Sharjah currently building a new maternity hospital79,
Ajman initiating a similar project80 and the specialty
forming a central element in Ras Al-Khaimah’s plan to
build three large new hospitals in the emirate by 201081.
These initiatives are before consideration of private sec-
tor clinics, both existing facilities and those which will
doubtless become available in the future. Processes and
resources are becoming replicated in both the maternity
and many other sectors, which will in the long term
result in unnecessarily high costs and considerable loss-
es in efficiency. Khawar Mann believes that: “There is a
danger that the GCC, through creating so many facilities
within a small geographical radius and competing inter-
nally for the best specialists, will end up duplicating capi-
tal expenditure. It is much better to deploy capital and
resources intelligently, and create true centres of excellence
which can be shared between different areas and attract
talent. This creates a virtuous circle, where investment
secures top doctors, who in turn attract good staff who want
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
to work with them. Unless this happens, the region will
soon discover that capital has been duplicated and that it
has failed to create the really powerful centres of excellence
which it could have done through consolidation”. This is of
real concern when considered from a patient care per-
spective. Although the precise mechanics of the phe-
nomenon form the subject of ongoing discussion, a
consensus has developed in recent years to support a
direct link between patient volume for a given medical
facility and eventual patient outcomes. Hospitals and
clinics which perform more surgical procedures tend to
have better outcomes than those which carry out fewer
such procedures – both in the short and long term82.
Patient volume is particularly significant both in man-
aging serious illness, with high intensive care unit (ICU)
volumes associated with lower mortality rates in high-
risk critically ill adults83, and also in specialty areas.
Consequently, the evidence from elsewhere in the world
shows that successful surgical intervention in conditions
which will prove increasingly relevant to the GCC such
as cardiac disease84 and lung cancer85 requires consistent-
ly high patient thresholds at the treating institutions. It
19
is in recognition of this fact that countries such as
Canada, France, and Switzerland have long opted for a
regionalized system of cancer care86. There is thus the
potential for the current fragmented system and undis-
ciplined expansion to lead to serious consequences in
patient care and overall public health.
A more market-driven sector will go a considerable
distance towards resolving these problems. Institutions
will have little option but to be competitive, and
increased private sector responsibility for healthcare will
result in less budgetary support and subsidies from gov-
ernments. As a result, instances of over-capacity can be
expected to decline as institutions and investors focus
on markets which will provide the patient volume nec-
essary to drive revenues and ensure service quality. In
addition, spurred by the need to make a return on their
investments, private investors are ideally positioned to
make a vital contribution towards identifying and lever-
aging the successful economies of scale necessary to
overcome current inefficiencies and enable disparate ele-
ments to be combined in a more patient-centered and
profitable manner. In the words of Ahmad Al-Sari: “If
the government really gets out of service provision, consoli-
dation will serve healthcare companies very well because
they can respond and leverage their strengths better”; a
 Figure 17: Minimum Number of Physicians
Required by 2050
99,660
100,000
80,000
60,000
40,000
20,000
9,582 7,702
3,585 4,107
0 process, along with the pragmatism and commitment
Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates
Total = 140,334
Source: Dow Jones
theme which Khaldoon Tabaza develops further: “Many
healthcare businesses are not managed, planned or run as
scaled operations, and private investment can help to
develop networks that can be leveraged for scale, revenues
and profitability, whilst building institutional reputations
and brand names to drive the creation of truly regional
20
franchises”. Medical institutions, in particular hospitals,
are expensive to build and operate, and only through a
clear assessment of where synergies can be created will
costs be kept at a sustainable level as the region expands
the number of facilities to meet demand.
Consolidation plays will, without question, become an
increasingly important part of the GCC healthcare
landscape in the coming years as the number of larger
institutions increases, and can be expected to function
as a key driver of the industry. Mohammed Al-Qahtany
believes that: “Consolidation will definitely come. As the
number of institutions with the size and ability to make
acquisitions grows, more and more opportunities will
begin to appear”. However, with this representing a
medium-term prospect, the so-called ‘roll-up’ strategy,
whereby an initial set of small acquisitions serves as a
platform for building a larger, integrated portfolio,
should prove especially relevant in the short term.
Pablo Fetter notes that: “There is a real opportunity for
private equity to buy a number of smaller clinics and con-
solidate them into a more competitive single entity”; and
Fiona Nicholas agrees: “We are seeing real interest in the
roll-up strategy. There are many small players in the GCC
healthcare market, and there is certainly an opportunity in
acquiring these entities, wrapping them up, improving
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
quality and cost synergies, and then branding them effec-
tively”. Mohammed Al-Qahtany, meanwhile, cites per-
sonal experience of this approach: “The roll-up strategy
is a model which we have adopted. We started with the
purchase of several clinics in Kuwait which we integrated
under one name and one brand. Our intention is to con-
tinue with this model locally and eventually expand it into
the rest of the Gulf ”. Whatever the particular strategy
employed, private investors can bring practical experi-
15,698
ence and skill-sets which are simply unavailable to the
public sector in navigating businesses through this
to institutionalization which will allow knowledge and
entrepreneurial drive already present within an organi-
zation to be optimally leveraged. The consolidation
phase is one of the most important stages in the jour-
ney of any new and rapidly growing sector towards
maturity, and such assistance will prove invaluable in
supporting the growth of true market leaders.
Supporting
Even before consideration of the massive increases
in personnel required by the GCC Healthcare
Challenge 2050, the region’s healthcare sector is
already beset by intellectual, as well as institutional,
fragmentation. Brendan Hughes explains that: “There is
a tangible lack of qualified human capital to manage both
the long-standing and more recent conditions in the
Gulf ”. This is a historical problem – for instance, whilst
healthcare provision grew threefold in Saudi Arabia
between 1984 and 1999 when measured by the num-
ber of hospital beds, it increased less than twice when
measured by the number of personnel87. The region is
currently unable to source sufficient numbers of health
workers locally, and continues to rely heavily on over-
seas staff to fill the deficit. Only 20% of physicians in
Saudi Arabia are natives of the kingdom88, and the
country is currently seeking to recruit up to 5,000 new
doctors from overseas89. Meanwhile, nationals represent
a mere 900 of the 11,000 nurses working in Kuwait90,
and Asians currently comprise 91% of nurses employed
in Dubai91. In fact, the emirate is at present exploring
the possible formalization of this dependence through
a healthcare pact with the Indian state of Kerala92.
Moreover, the Arab staff present in the sector are, in the
main, nationals of non-GCC countries93. This already-
serious regional skills gap will be felt even more keenly
in the future on account of the number of additional
personnel required. Two further complicating factors
must also be taken into consideration. Firstly, new
fields of medical expertise will need to be available in
line with changing disease patterns and demand for
better care – the GCC cannot expect to treat 21st-cen-
tury conditions using 20th-century intellectual
resources. Secondly, a private sector-driven healthcare
system will require an improved management talent
pool. At present, the administrative and management
burden on public facilities is largely taken on by gov-
ernments, and as these same facilities gradually move
towards privatization, a skills gap will begin to open up.
Likewise, private operations will require increased
management resources to support their growth and
expansion. In short, a world-class healthcare system is
simply impossible without world-class medical profes-
sionals and managers.
Private sector involvement in GCC healthcare can
support the region in this regard. The sector has instant
access both to regional and global talent pools which makers across the region have, by and large, recognized
are not immediately available to governments, and this the limited achievement in reducing the need for
21
unparalleled connectivity will facilitate efficient trans- patients to travel overseas for treatment by bringing
fer of expertise, as Mohammed Al-Qahtany underlines: overseas expertise to them. Instead, the region’s contin-
“The problem with many healthcare facilities here is lack ued reliance on foreign personnel must eventually be
of good management. Most projects are run with very lit- replaced by mechanisms to produce sufficient local
tle management experience, and once they are up and run- knowledge, and a number of GCC states have created
ning, they are faced with numerous difficulties. As partnerships with leading global institutions – both
investors, we bring a professional, total solution approach public and private – in order to build their own med-
which includes the personnel to do projects from scratch – ical education capacities. As Fiona Nicholas explains:
from planning and construction to operations”. The ongo- “Education is a fundamental aspect of the healthcare sec-
ing global shortage of healthcare professionals94 means tor, and international partnerships are a necessity for the
that the capability of the private sector to compete for GCC. Education across the region has been left behind,
talent on a global level is of crucial importance. In par- and quality international partners will enable rapid
ticular, it can continue to offer the attractive compen- improvements to be made and skill-sets to be efficiently
sation packages which have thus far been instrumental transferred. Governments are not only trying to raise the
in encouraging staff to relocate to the region – the high bar, but to do it quickly”. Khaldoon Tabaza applauds
cost of living in the Gulf having recently been high- these efforts, noting that: “Strong educational systems
lighted as a potential barrier to healthcare recruit- have been vital in enabling Middle Eastern countries such
ment95. As Ahmad Al-Sari points out: “Governments can as Jordan and Egypt to take a leading role in healthcare.
be restricted by rigid salary scales, whereas the private sec- They have historically succeeded in graduating large num-
tor is not. It can be much more flexible when it comes to bers of healthcare professionals who are well recognized on
personnel policies and pay scales”. The immediate impor- a regional and global level. The importance of education
tance of this contribution becomes even clearer from is something that they have appreciated very quickly,
consideration of the fact that the remedies for the rather than depending on others to supply their healthcare
human capital question which GCC governments are needs”. Within the GCC, Qatar has taken an important
beginning to implement are strictly long-term. Policy lead in this respect, two prominent examples being the

Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
 Figure 18: Minimum Number of Nurses
Required by 2050
149,490
150,000
120,000
90,000
60,000
31,396
30,000 19,164 15,404
4,780 6,845
0 healthcare infrastructure is required which will play to
Bahrain Kuwait Oman Qatar Saudi United Arab
Arabia Emirates
Total = 227,079
Source: Dow Jones
establishment of a Weill Cornell Medical College cam-
pus in Doha, which produced its first graduates in May
200896, and a recent partnership with Imperial College
London in a centre for robotically-assisted surgical
training in the Qatar Science & Technology Park
(QSTP)97. As Danny Ramadan, Technology Investment
22
Advisor at the QSTP, explains: “Our current research col-
laborations to develop and commercialize novel methods
and solutions for patient care include, but are not limited
to, robotic surgery, digital mammography, locally-developed
healthcare solutions, proteomic research platforms and
health lifestyle telemetry technologies. These collaborations
are with academic institutions, small companies and corpo-
rate multinationals. Our goal is to ensure that the majori-
ty of activities we support are executed in Qatar and serve
the specific healthcare needs of the country”. An important
corollary of these collaborations is that through leverag-
ing external talent, local expertise will eventually be
developed. However, such initiatives, admirable though
they may be, should not be expected to produce instant
results. They are, on the contrary, generational in both
their aims and timeframes, as Pablo Fetter explains:
“The plan is to create local know-how using local educa-
tional facilities. However, this is a very long-term question.
We are talking about a generation, rather than five years or
so, before we see if governments in the region can truly suc-
ceed in creating this expertise”. In any case, the volume of
personnel required by 2050 may well exceed the capac-
ity of even the most successful educational programmes,
and external human resources will continue to play an
important role, if perhaps not to the same proportion as
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
at present. The short- to medium-term sustainability of
the GCC healthcare system therefore depends entirely
on the talent pools available to the private sector plug-
ging this skills gap until local capacity becomes avail-
able – and even the long-term outlook for the region
will be partly characterized by this externally-sourced
workforce.
It should have become clear that the role of the pri-
vate sector in GCC healthcare is as a partner to govern-
ments, rather than a competitor. If the GCC
Healthcare Challenge 2050 is to be met, a regional
the strengths of all parties. Pablo Fetter underlines how:
“GCC governments are beginning to shift their role in the
healthcare sector from providing to regulating. They are
focusing on setting guidelines for quality and service and
leaving it up to the private sector to actually deliver these
things”. This incipient trend is to be welcomed, as it
enables all stakeholders in the development of the
region’s healthcare sector to focus on their areas of spe-
cific competence, as Ahmad Al-Sari explains: “It is dif-
ficult for governments both to provide and regulate health-
care services simultaneously. They are often mutually
exclusive tasks. So if there is enough interest and enough
incentive for the private sector to take over, governments
are better positioned to regulate, plan and control the
quality of the service. In short, governments are improving
the service by getting out of providing it”. However, there
remain a number of issues for governments to address
if this partnership is to fulfill its promise. The most
pressing is the implementation of a genuinely enabling
regulatory environment. This must prioritize quality
and safety, with the development of standards which
patients can readily access and understand serving as a
key medium-term policy aim. Khaldoon Tabaza devel-
ops this point: “Drafting regulations and setting up regu-
latory authorities is extremely important. I would suggest
that this needs to be done on a regional level, so standards
can be extended and managed easily. As much as I hope
these systems will evolve rapidly, I think it will take some
time”; as does Mohammed Al-Qahtany: “The sector
needs checks and balances, as well as an effective monitor-
ing system when it comes to licensing. Regulatory authori-
ties have a responsibility to make sure that standards are
upheld and that appropriate levels of service are being pro-
vided. If these can be maintained, then it is a win-win sit-
uation for everyone”. At the same time, the framework
also needs to support free market dynamics, as operat-
ing in the sector carries an excessive bureaucratic bur-
den at present, which Ahmad Al-Sari highlights: “The
current regulatory structures can create practical difficul-
ties. For example, anybody starting a hospital in Saudi
Arabia has to go through numerous processes to acquire the
workforce. There is a great deal of bureaucracy involved in
obtaining visas and documentation”. Another example is
the regulations relating to an overseas doctor wishing to
work in the United Arab Emirates, which require the
individual in question to travel to a selected emirate on
a visit visa and undergo a series of examinations before
being permitted to seek employment. This process
must be repeated in full each time the doctor wishes to
transfer to another emirate. Likewise, although 38% of
hospitals in Saudi Arabia are already privately operated,
their functions and staff training remain supervised by
the kingdom’s Ministry of Health98. Imad Ghandour
notes that: “I believe that it is very important to address
the fact that the GCC healthcare sector remains heavily
over-regulated. Some rules are frankly archaic, and are
highly restrictive to building institutions rather than
stand-alone professions”. Restrictions such as these only
act as a handbrake on the development of a sector
needing to attract considerable levels of personnel and
investment. Instead, an environment needs to be creat-
ed which will position the region as an attractive and,
most importantly, accessible opportunity. Dialogue
must be initiated, consensus formed and a mutual
understanding reached on the optimal role for all par-
ties, who should keep in mind the fact that an active
partnership will achieve considerably more than a pas-
sive one, as Mohammed Al-Qahtany outlines:
“Governments in the Gulf are basically failing to cope
with the changing healthcare needs of the region, and I
strongly believe that the private sector can really be very
helpful by plugging the gaps in the system. But for this to
happen, the relationship needs to be much stronger
between the private sector and governments”. Ahmad Al-
Sari adds that: “The public and private sectors have to
support each other. Governments have to communicate
with the private sector and understand what is needed for
investment to work. The private sector can then express
itself in terms of the policy changes and incentives which
the government can provide”. If this process can be com-
bined with general reform and unification of cumber-
some public healthcare administration structures, so
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
much the better – for example, three distinct organiza-
tions, namely the local Abu Dhabi Health Authority
and the federal Ministry of Health and Department of
Health & Medical Services, currently jostle for jurisdic-
tion in the United Arab Emirates capital. All this will
enable legislative priorities to be clearly identified and
resources smartly allocated in order to ensure the full
development of the opportunity. However, whilst posi-
tive incentives are of course most welcome, the GCC
healthcare market opportunity is, in the final analysis,
its own incentive. Consequently, a guiding principle
should be the identification of a happy medium
between the implementation of appropriate safeguards
and oversight capacities on the one hand, and a meas-
ure of independence granted on the other. This is in
many respects an issue of trust – in the ability of the
private sector to meet the needs of the market, and in
the power of the market to determine the ultimate suc-
cess or failure of the private sector. Perhaps the most
useful action which governments can take is simply to
demonstrate this trust, clear an appropriate space and
allow investors to expand, consolidate and support
23
within a responsive and intelligently constructed regu-
latory framework.
Given that the ultimate responsibility of govern-
ments is the well-being of the people which they gov-
ern, the creation of modern healthcare systems which
have raised the life expectancies of their populations so
rapidly stands as one of the signal achievements in the
short history of the modern Gulf states. That this has
thus far been insufficiently recognized – both within, as
well as outside, the region – represents less of a dimin-
ishment of the GCC’s accomplishments in the health-
care sector than a reflection of the region’s success in
other industries. Yet the dramatic peaks and troughs of
natural resources, financial services and real estate serve
as a reminder of certain permanencies. In the end,
human beings will always aspire towards health and
happiness, and the governments of the region stand at
a crossroads in meeting the GCC Healthcare
Challenge 2050 and continuing to successfully sup-
port these efforts to 2050 and beyond. The people of
the Gulf states today enjoy life expectancies unprece-
dented in the history of the region. Only a radically
broadened government vision, with a central role for
the private sector, will ensure that this achievement can
itself look forward to a similarly assured lifespan.
 Footnotes
[1] World Economic Outlook Database, International Monetary Fund, October 2008.
[2] Short-Term Energy Outlook, Energy Information Administration,
January 2009.
[3] ‘IMF Predicts GDP Growth of 3.5 Per Cent for the GCC’, Middle East
Economic Digest, February 2009.
[4] ‘GCC States to Spend $700b on Infrastructure’, Gulf News, February 2008.
[5] ‘Gulf Arab Govts to Boost Spending Despite Turmoil’, Forbes, October 2008.
[6] World Economic Outlook Database, op. cit.
[7] World Energy Outlook 2008, International Energy Agency, November 2008.
[8] The Impact of Oil Revenues on Arab Gulf Development (London & Boulder,
CO: Croom Helm & Westview Press), 1984: M.S. El-Azhary.
[9] ‘Kuwait Population 69% Expat’, Arabian Business, March 2008.
[10] Labour Report 2007, United Arab Emirates Ministry of Labour, April 2008.
[11] Arab versus Asian Migrant Workers in the GCC Countries, United Nations
Expert Group Meeting on International Migration & Development in the Arab
Region, Beirut, May 15th-17th 2006: Andrzej Kapiszewski.
[12] ‘Dubai Cancels 86% More Residency Visas – Official Figures’, Arabian
Business, February 2009.
[13] 2008 World Population Data Sheet, Population Reference Bureau,
August 2008.
[14] Major Trends Affecting Families in the Gulf Countries, Division for Social
Policy & Development, United Nations, May 2003: Yahya El-Haddad.
[15] The Family and Life Within It, Embassy of the State of Kuwait in Japan, 2000.
[16] 2008 World Population Data Sheet, op. cit.
[17] ‘Study Reveals Gulf Between Dubai Wage Earners’, Arabian Business,
February 2009.
[18] ‘Oiling the Learning Machine’, Times Higher Education, August 2008.
[19] People Facts, OS Connect, December 2001.
[20] 2008 World Population Data Sheet, op. cit.
[21] 2008 World Population Data Sheet, op. cit.
[22] 2008 World Population Data Sheet, op. cit.
[23] The Kingdom of Saudi Arabia (Gainesville, FL: University Press of Florida),
1998: David E. Long.
[24] ‘New Hospital Opened in Abu Dhabi’, Gulf News, August 2003.
24 [25] The Health Care Network, Information Office, Royal Embassy of Saudi
Arabia in Washington, D.C., 2006.
[26] The Health Care Network, ibid.
[27] ‘UAE Healthcare Market to Have Risen from US3.2 Billion in 2005 to
US$11.9 in 2015’, Zawya, October 2007.
[28] HNPStats, Health, Nutrition & Population Group, Human Development
Network & Development Data Group, World Bank, 2009.
[29] 2008 World Population Data Sheet, op. cit.
[30] HNPStats, op. cit.
[31] HNPStats, op. cit.
[32] 2008 World Population Data Sheet, op. cit.
[33] HNPStats, op. cit.
[34] HNPStats, op. cit.
[35] ‘Booz Allen Hamilton: The New Saudi Arabian Healthcare Market’, AME
Info, March 2007.
[36] ‘Diet and Diabetes: Defensive Eating’, Arabian Business, November 2008.
[37] The Diabetes Atlas (Third Edition) (Brussels: International Diabetes
Federation), 2007: Delice Gan (ed.).
[38] ‘Middle East Moves Towards “New Era” in Challenge of Managing
Cardiovascular Diseases’, AME Info, November 2007.
[39] ‘Riyadh Sees 90 Diabetes Amputations a Month’, Arabian Business, March 2009.
[40] ‘Middle East Moves towards “New Era” in Challenge of Managing
Cardiovascular Diseases’, op. cit.
[41] ‘Cardiovascular Disease Leading Cause of Death in Oman’, Khaleej Times,
February 2009.
[42] ‘Middle East Moves towards “New Era” in Challenge of Managing
Cardiovascular Diseases’, op. cit.
[43] ‘Rethinking the “Diseases of Affluence” Paradigm: Global Patterns of
Nutritional Risks in Relation to Economic Development’, PLoS Medicine, 2 (5):
e133, May 2005: M. Ezzati, S. Vander Hoorn, C.M.M. Lawes, R. Leach, W.P.T.
James et al.
[44] ‘Diseases of Affluence’, ArticleWorld, November 2005.
[45] BBC & Weather2Travel.com.
[46] ‘Trains, Planes & Automobiles: Transport Planning in Dubai’, Resource for
Urban Design Information, 2006.
[47] ‘Food, Fuel Subsidies Cost Bahrain $1.3bn a Year’, Reuters, June 2008.
[48] ‘UAE Has Lowest Subsidies on Fuel among Oil Producers’, Emirates Business
24/7, July 2008.
[49] 2008 World Population Data Sheet, op. cit.
[50] ‘Cardiovascular Disease Leading Cause of Death in Oman’, op. cit.
[51] ‘Arabian Gulf: Hot Markets for US Foods’, AgExporter, March 1996.
[52] The 2008 World Factbook, Central Intelligence Agency, February 2008.
[53] Saudi Arabia: Major Conglomerates with Operations in Foodservice,
Euromonitor International, January 2009: Michael Schaefer.
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
[54] Saudi Arabia: Major Conglomerates with Operations in Foodservice, ibid.
[55] ‘Fast Food Firms across Middle East Post Record Profits’, Arabian Business,
March 2009.
[56] ‘Salads or No, Cheap Burgers Revive McDonalds’, New York Times, April 2006.
[57] McDonald’s USA Nutrition Facts for Popular Menu Items, McDonald’s
Corporation, January 2007.
[58] ‘New UAE Law to Plug Legal Loopholes in Smoking’, Gulf News, May 2008.
[59] ‘GCC May Raise Tobacco Tax’, Gulf Daily News, January 2009.
[60] Eastern Mediterranean Tobacco Control Profile (EMTCP) Survey, Regional
Office for the Eastern Mediterranean, World Health Organization, 2001.
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[62] The Tobacco Atlas (Brighton & Geneva: Myriad Editions & World Health
Organization), 2002: Judith Mackay & Michael Eriksen.
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National Center for Chronic Disease Prevention & Health Promotion, January
2008: Charles W. Warren.
[64] HNPStats, op. cit.
[65] HNPStats, op. cit.
[66] HNPStats, op. cit.
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[68] ‘Health Insurance Papers a Must for Saudi Iqama’, Khaleej Times, June 2007.
[69] ‘July Marks Start of New Abu Dhabi Health Plan’, Arab News, June 2006.
[70] ‘UAE Plans National Health Insurance’, Arabian Business, September 2008.
[71] HNPStats, op. cit.
[72] HNPStats, op. cit.
[73] HNPStats, op. cit.
[74] HNPStats, op. cit.
[75] ‘Emphasis Shifts to Private Sector Healthcare in Gulf ’, Middle East Economic
Digest, October 2008.
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Practice, 8 (3), 237-242, September 1991: S.J. Williams & M. Calnan.
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[79] ‘New Maternity Hospital Coming Up in Sharjah’, Gulf News,
March 2008.
[80] ‘Ajman to Spend Dh431m on Hospitals and Services’, The National,
July 2008.
[81] ‘UAE: Dh700m for Three Big Hospitals in RAK by 2010’, Khaleej Times,
September 2008.
[82] ‘The Volume–Outcome Relationship: Busier Hospitals Are Indeed Better,
But Why?’, Journal of the National Cancer Institute, 95 (10), 700-702, May 2003:
Linda Wang.
[83] ‘Impact of Patient Volume on the Mortality Rate of Adult Intensive Care
Unit Patients’, Critical Care Medicine, 34 (7), 1925-1934, July 2006: L.G.
Glance, Y. Li, T.M. Osler, A. Dick & D.B. Mukamel.
[84] ‘Volume–Outcome Relationships in Coronary Artery Bypass Graft Surgery
Patients: 5-year Major Cardiovascular Event Outcomes’, The Journal of Thoracic
& Cardiovascular Surgery, 135 (4), 923-930, April 2008: H. Lin, S. Xirasagar, N.
Tsao, Y. Hwang, N. Kuo & H. Lee.
[85] ‘Postoperative Mortality in Lung Cancer Patients’, Annals of Thoracic &
Cardiovascular Surgery, 13 (6), 373-377, December 2007: Kanji Nagai, Junji
Yoshida & Mistsuyo Nishimura.
[86] ‘The Volume–Outcome Relationship: Busier Hospitals Are Indeed Better,
But Why?’, op. cit.
[87] The Political Economy of Saudi Arabia (London: Routledge), 2007: Tim
Niblock & Monica Malik.
[88] The Health Care Network, op. cit.
[89] ‘Saudi to Recruit 5,000 Doctors to Staff New Hospitals’, Arabian Business,
February 2009.
[90] ‘Nurse Pay in Jeopardy Due to Economic Crisis’, Arabian Business,
February 2009.
[91] ‘UAE Healthcare Market to Have Risen from US3.2 Billion in 2005 to
US$11.9 in 2015’, op. cit.
[92] ‘Kerala Explores Healthcare Pact with UAE’, Indo-Asian News Service,
November 2008.
[93] ‘Special Report: Healthcare – GCC States Broaden Private Sector Role’,
Middle East Economic Digest, October 2008.
[94] ‘The Global Workforce Shortages and the Migration of Medical Professions:
The Australian Policy Response’, Australian & New Zealand Health Policy, 5 (7),
May 2008: Saxon D. Smith.
[95] ‘High Cost of Living “Barrier” to Medical Recruitment’, Arabian Business,
March 2009.
[96] ‘Weill Cornell Medical College Announces First Commencement of its New
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[98] The Health Care Network, op. cit.
Case Study
An Interview with Mark Adams, Enaya Healthcare
Please give some brief background on
Enaya.
Ithmar Capital has been looking at the
development of the GCC healthcare sector
for many years. With a number of health
interests in their initial fund, Ithmar saw the potential to
create a roll-up strategy which backs these assets into a
larger platform play to consolidate primary, secondary
and tertiary care throughout the UAE and eventually the
GCC. That is where Enaya comes in.
How do you assess the healthcare landscape of the GCC?
This is a region with a population which will contin-
ue to grow whilst suffering from a high prevalence of
chronic conditions. Because of the temperature, a rich
diet and the difficulty in taking regular exercise, there is a
high prevalence of obesity here with its knock-on conse-
quences. If you reference the UK, the Wanless Report has
identified obesity as the biggest single threat to the eco-
nomics of the NHS. If left unchecked, by 2020 obesity is
projected to have the effect of a 30% increase in strokes,
a 40% increase in cardiovascular conditions and a 50%
increase in diabetes. That was from a 24% base. When
you start from a 70% base as in the UAE, you clearly have
a time-bomb. Finally, just about every GCC state is look-
ing at introducing universal health insurance, which will
dramatically increase the numbers of people who can
afford healthcare for the first time. When Abu Dhabi
introduced employer-funded healthcare insurance in
2007, demand increased by 40% virtually overnight.
How will partnering with a private investor help you
to contribute towards meeting this challenge?
At the present moment it is clearly liquidity. There is
a definite demand for Enaya’s services, and we see a real
and immediate market opportunity. If we tried to
expand organically through our own profitability or
bank funding, then progress could be slow. Instead, we
have the ability to go to an investor and present a clear
opportunity to build a business in a largely recession-
proof sector which is based on the strong fundamentals
just outlined.
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
The GCC healthcare sector has had difficulties in
identifying operating models to work on a region-wide
basis. Given your long-term aim to expand across the
Gulf, how will Enaya address this issue?
You are right in that there is no particularly strong
regional healthcare brand – but these are the first few
years of a long journey. I think local partners with experi-
ence of new markets and their specifics in terms of regu-
lations are absolutely essential, and businesses will have to
work with people who understand the local landscape.
How important is consolidation activity for healthcare
businesses such as yours?’
This is a market which combines the demands of an
increasingly consumer-oriented patient base which wants
access to the best healthcare with competition between scale
operators and a sizeable regulatory burden. As a result, I
expect to see many small clinics merging or forming net-
works in order to maintain buying power and quality, man-
25
age clinical governance and allow their business models to be
sustained. There will be opportunities as that market evolves
– and I think it will evolve quickly over the next few years.
You refer to the regulatory burden on GCC healthcare
businesses. Are regional governments playing a sufficient-
ly enabling role in helping the sector to grow?
There is a reasonably clear mandate in most of the
GCC countries that they want to move from the state
shouldering most of the healthcare responsibility, and it is
to be applauded that they want to take it to the next level
so quickly. At the same time, you’re looking at young
countries emerging with their own systems and controls.
There remain peculiar challenges in operating any busi-
ness in the region, and that goes for healthcare too.
However, in terms of long-term ambition the region is
entirely consistent with private operators providing both
first-class healthcare and shareholder returns. Anybody
seriously looking at the healthcare fundamentals, consid-
ering where to put capital in an uncertain world, and
reflecting that governments are increasingly enthusiastic
to make a change would, I have no doubt, conclude that
the GCC is an exciting place to be.
 Case Study
An Interview with Shailesh Dash,
Global Investment House
Can you summarize the investment
opportunity which GCC healthcare repre-
sents?
It is very simple – there is a huge gap
between supply and demand. Investment
has fallen behind other sectors in the region, primarily
hydrocarbon-related industries. Although activity is start-
ing to mushroom, with a number of new clinics and lab-
oratories springing up, there is still a real deficit of hospi-
tals and primary facilities. These are large projects which
require a lot of capital. However, when we consider that
many people from the Gulf countries spend significant
amounts on travelling outside the region for treatment, it
becomes clear that if even a fraction of that money can be
kept in the region, that will lay the ground for some very
successful large-scale healthcare ventures.
How do you assess the performance of GCC governments
26
thus far in meeting the healthcare needs of the region?
There are two sides to this. On the one hand, I think
governments have done extremely well in providing basic
healthcare and raising overall life expectancies. But when
it comes to more specialized care and treating complex ail-
ments, I think a considerable amount of development still
remains to be done. This is a significant driver behind
governments bringing in external players – both in terms
of investment and education. GCC governments want
the healthcare sector to be driven more and more by the
private sector, and there is a real momentum towards
achieving that.
What are the principal institutional challenges facing
healthcare businesses in the region?
The management team is extremely important. Just
because GCC healthcare is growing, it does not mean that
everybody who gets into the sector will be profitable. It all
depends on who is running the business, what kind of
governance structure is in place and what sort of payment
structure is there. There are always examples of business-
es which are apparently doing well, but in fact their com-
petitors are doing even better because they have a superi-
or management team. Healthcare businesses in the Gulf
often rely on one or two doctors and do not have a broad
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
base of expertise, so there is a real need for proper institu-
tionalization if these businesses are to capture a long-term
market share. This is an area in which private equity
investors can make a key contribution. Overall, an envi-
ronment must be created which enables people with the
right kind of skills to come and work comfortably in this
part of the world. I believe that as the GCC healthcare
sector opens up, private operators will be able to attract
the best talent as their profitability increases and they can
pay more and more for quality.
Is there an issue with the business models currently
used by GCC healthcare operators?
Businesses have had problems in finding a model that
works on a regional basis. The same business may be suc-
cessful in Dubai but not in Riyadh, and there is no model
thus far which has enabled the creation of a true GCC
brand name. Of course, we are still at a very early stage of
industry development. Local partnerships and joint ven-
tures are clearly the way forward, and we are beginning to
see some tentative movement in this area. The stakes are
high – only the best models will be able to attract the best
manpower, and those are the businesses which will ulti-
mately succeed.
What role will consolidation play in addressing the
GCC Healthcare Challenge 2050?
Right now, there is a tremendous opportunity in part-
nering with one venture in buying up different centres
across the region. With the economic scale which you cre-
ate, you can then can hire additional people with very
good skill-sets and develop the business further with bet-
ter branding and quality. However, as we have already
noted, the GCC healthcare sector is still a growth market
at a very early stage of development. Consolidation
becomes particularly important in developed industries
where margins need to be protected. There is room for
considerable growth and consolidation will become even
more vital ten years down the line.
Case Study
An Interview with Faisal Bin Juma Belhoul, Ithmar Capital
Why should private equity investors
be interested in GCC healthcare?
Over the past few decades, govern-
ments in the region have taken the lead
in delivering healthcare services.
Although the private sector has covered
the niche market of people who are willing to pay for
better treatment, it has been competing with a free serv-
ice provided by the government and has not grown in the
way that we have seen in other markets. Almost all local
private operators have been confined within primary and
secondary care – even though there has been a big gov-
ernment spend on sending patients to receive tertiary
services overseas. But with populations expanding expo-
nentially and a range of new health conditions coming to
the fore, these governments are now placing more
responsibility on a fragmented private sector and adjust-
ing the regulatory framework to make the industry more
viable for investors. In this context, there are some
potentially very lucrative opportunities in creating play-
ers which offer first-class care, are well-networked with
efficient economies of scale, and which can grow tertiary
care capacity whilst capturing part of the resources previ-
ously invested abroad.
What is your reaction to the numbers involved in the
GCC Healthcare Challenge 2050?
These figures are a wake-up call. There is no question
that more capacity will be needed by virtue of population
growth, underserved healthcare needs in the market, and
a more mature sector where primary, secondary and ter-
tiary care become increasingly distinct offerings.
Successfully deploying such a strategy is a challenge, and
will require proper planning, commitment and long-
term thinking.
How can private equity investment assist GCC
healthcare businesses?
Healthcare businesses are very capital-intensive. They
require considerable investment in facilities and equip-
ment, as well as large working capital resources. This
means that growing and expanding these businesses is
really a function of capital availability, and with credit
markets currently less open than previously, other
Expand, Consolidate & Support: Meeting the GCC Healthcare Challenge 2050
sources of funding are needed to accelerate such strate-
gies. However, any operator will see an even more signif-
icant advantage if a relationship offers more than just
money. In particular, an industry which is increasingly
driven by consolidation will benefit greatly from com-
bining the expertise of private equity investors with the
operational and domain knowledge which management
can offer. It is a very comfortable marriage.
Can GCC healthcare operators compete for human
capital on a global scale?
People are the most important asset in the healthcare
industry, and being able to attract and retain clinical
excellence is essential for the GCC. The region has his-
torically faced two major challenges in this respect.
Firstly, there was a lack of critical patient mass. Surgeons
are judged by and develop their skills through the num-
ber of procedures which they perform, and institutions
which do not offer these opportunities are unappealing,
27
irrespective of the financial considerations. Secondly,
professionals need affiliation with research and education
if they are not to feel that their careers have been com-
promised by working here. However, the difference
today is that with bigger populations and patient vol-
umes, critical mass is clearly less of an issue, and the edu-
cation gap is being bridged through the establishment of
teaching universities in the region. As a result, the GCC
is now in a much stronger position to compete in a
healthcare human resources market which has become
thoroughly globalized.
Do you see government enthusiasm for private sector
healthcare translating into sufficient regulatory reforms?
That is a very good question. Although governments
have declared their intention for the private sector to
assume a more active position, and have started to look
at legislation and regulatory frameworks to ensure that
they are sufficiently incentivizing, there is still some dis-
tance to travel. If the private sector is to play the role
required, governments must accelerate the transition
whilst developing a better understanding of the key
issues and challenges in order to accommodate those in
its revised legislation. Without a doubt, much more work
remains to be done.