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Sharjah MHMC

Feasibility Study Review


Technical and Financial Audit

Draft Report February 28, 2010

Content

Content
1 2 Executive Summary.......................................................................................................1 Introduction....................................................................................................................3 2.1 2.2 2.3 2.4 3 Project Background ............................................................................................3 Project Partners and their Roles.........................................................................3 Scope of Work and Project Goal ........................................................................3 Methodology .......................................................................................................4

Plausibility check of the Market Analysis vis--vis Brief Market & Competitor Analysis 8 3.1 Major Assumptions .............................................................................................8 3.1.1 TAG Report ..............................................................................................8 3.1.2 Inter Health Canada Report .....................................................................9 3.1.3 UHMS Report...........................................................................................9 3.2 Plausibility Check of the Major Assumptions ......................................................9 3.2.1 TAG Report ..............................................................................................9 3.2.2 IHC Report .............................................................................................10 3.2.3 UHMS Report.........................................................................................10 3.3 Conclusion of Plausibility Check.......................................................................10 3.3.1 TAG Report ............................................................................................10 3.3.2 IHC Report .............................................................................................10 3.3.3 UHMS Report.........................................................................................11

Rapid Market Analysis Summary ................................................................................13 4.1 Gulf Cooperation Council Countries Healthcare Outlook .................................13 4.1.1 Factors driving health-care demand and projections in the GCC ..........13 4.1.2 Implications for Private Healthcare providers ........................................16

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4.2

UAE Healthcare Outlook...................................................................................17 4.2.1 Summary Market Analysis .....................................................................17 4.2.2 Population ..............................................................................................21

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4.2.3 Hospital Beds .........................................................................................24 4.2.4 Major Challenges ...................................................................................31 4.2.5 Existing Healthcare Providers ................................................................39 4.2.6 Competitor Analysis ...............................................................................43 4.3 5 Rough Estimations of Patient Volumes ............................................................44

Review of Operational and Financial Analysis ............................................................51

Feasibility Study and Business Plan Review of the MHMC

Content

5.1

Gross Revenue.................................................................................................51 5.1.1 Major Assumptions ................................................................................51 5.1.2 Plausibility Check of the Major Assumptions .........................................51 5.1.3 Conclusion of Plausbility Check .............................................................51

5.2

Operating Expenses: Medical Staff ..................................................................51 5.2.1 Major Assumptions ................................................................................51 5.2.2 Plausibility Check of the Major Assumptions .........................................51 5.2.3 Conclusion of Plausbility Check .............................................................52 5.2.4 Recommendation ...................................................................................52

5.3

Operating Expenses: Non-Medical Staff...........................................................52 5.3.1 Major Assumptions ................................................................................52 5.3.2 Plausibility Check ...................................................................................52 5.3.3 Conclusion .............................................................................................52 5.3.4 Recommendation ...................................................................................52

5.4

Operating Expenses: Consumables and other .................................................52 5.4.1 Major Assumptions ................................................................................52 5.4.2 Plausibility Check ...................................................................................52 5.4.3 Conclusion .............................................................................................53

5.5

Investment Costs: Main Hospital Buildings and Parking Area.........................53 5.5.1 Major Assumptions ................................................................................53 5.5.2 Plausibility Check ...................................................................................53 5.5.3 Conclusion .............................................................................................53 5.5.4 Recommendation ...................................................................................53

5.6

Investment Costs: Medical Equipment, Furniture Costs, Medical Instruments, & IT.......................................................................................................................54 5.6.1 Major Assumptions ................................................................................54

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5.6.2 Plausibility Check ...................................................................................54 5.6.3 Conclusion .............................................................................................54 5.6.4 Recommendation ...................................................................................54

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5.7

Investment Costs: Total Design and Supervision Fees for Construction..........54 5.7.1 Major Assumptions ................................................................................54 5.7.2 Plausibility Check ...................................................................................54 5.7.3 Conclusion .............................................................................................55

5.8

Financing Costs ................................................................................................55

Feasibility Study and Business Plan Review of the MHMC

II

Content

5.8.1 Major Assumptions ................................................................................55 5.8.2 Plausibility Check ...................................................................................55 5.8.3 Conclusion .............................................................................................55 5.9 Review of the Scenarios (Sensitivity Analysis) .................................................56 5.9.1 Plausibility Check ...................................................................................57 5.9.2 Conclusion .............................................................................................57 5.9.3 Recommendation ...................................................................................57 5.10 5.11 5.12 6 Overall Conclusion and Recommendations......................................................57 Recalculation of Financial Projection................................................................58 Risk Evaluation and Risk Mitigation Measures.................................................58

Final Recommendation and Next Steps ......................................................................60 6.1 Development of Mubarak Al Hassawi Medical Complex ..................................60 6.1.1 Overview of Mubarak Al Hassawi Medical Complex..............................60 6.1.2 Implementation and Integration of Service Provision.............................61 6.1.3 Organisation of Main Hospital ................................................................62 6.1.4 Organisation of Rehabilitation Institute ..................................................62 6.2 Next Steps for Development of Main Hospital ..................................................62

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Feasibility Study and Business Plan Review of the MHMC

III

List of Figures

List of Figures
Figure 1: Projected Increase in Treatment Demand in the GCC by 2025 (percent) ..............14 Figure 2: Projected Demand for Hospital Beds in GCC countries by 2025 (percent) ............15 Figure 3: GCC Chronic Disease Burden by Country..............................................................15 Figure 4: Country Comparison of Hospital Beds Per 10000 Population ................................28 Figure 5: Spectrum of Healthcare Services............................................................................61

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Feasibility Study and Business Plan Review of the MHMC

IV

List of Tables

List of Tables
Table 1 Meetings and Organisational Visits for Rapid Market Analysis ...................................5 Table 2 Required Information for Next Step of Project Progress .............................................6 Table 3 Summary Box of TAG Report Review.......................................................................11 Table 4 Summary Box of IHC Report Review ........................................................................12 Table 5 Summary Box of UHMS Report Review....................................................................12 Table 6 Registered Biostatistics of UAE (MoH 2007 Data) ....................................................22 Table 7 Population by Sex Nationality and District (MoH 2007 Statistics) .............................23 Table 8 Beds by Hospital Speciality and District (MoH 2007 Statistics).................................26 Table 9 Potential Bed Share for MHMC on the basis of Sharjah Client Volume....................28 Table 10 Discharges estimated for RCPS, Nervous System, Orthopaedics and Circulatory System ...................................................................................................................................29 Table 11 Hospitals Beds estimated for RCPS, Nervous System, Orthopaedics and Circulatory System .................................................................................................................30 Table 12 Registered Biosstatistics of UAE (MoH 2007 Data) ................................................32 Tabelle 13: Hospital Services to inpatients by specialty ........................................................34 Table 14 Overseas Treatment sponsored by MoH 2007 .......................................................36 Table 15 Hospital Services to Outpatients by Nationality and Specialty (MoH 2007 Data) ...37 Table 16 Operations by Speciality and District (MoH 2007)...................................................39 Table 17 Shiekh Khalifa Medical City Statistics 1st Jan 2009 till 31 Dec 2009 ...................40 Table 18 Statistics of Medical and Surgical Institute (Pavilions) of SKMC.............................40 Table 19 Salient Features of SKMC Surgical Institute Services ............................................41
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Table 20 Salient Features of SKMC Medical Institute Services .............................................42 Table 21 Rough Estimation of Patient Volumes and Comparison with TAG, IHC and UHMS

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Volumes .................................................................................................................................45 Table 22 Summary Box of Results of Rough Estimations of Patient Volumes ......................48 Table 23 Comparison of UHMS, Current and Recommended Project Costs.........................55

Feasibility Study and Business Plan Review of the MHMC

Acronyms

Acronyms
AHD ALOS CAGR CCU Dhms ER GCC ICU HDU IHC JCI KCREC MHMC MoH NICU OT PWC TAG UAE UHMS UK USA USD VIP American Hospital, Dubai Average Length Of Stay Compound Annual Growth Rate Coronary Care Unit Dirhams Emergency Room Gulf Cooperation Council Intensive Care Unit High Dependancy Unit Inter Health Canada Joint Commission International Kuwait Commercial Real Estate Center Mubarak Al Hassawi Medical Complex Ministry of Health Neonatal Intensive Care Unit Operation Theatre Price WaterHouse Coopers The Advisory Group United Arab Emirates Universal Hospital Management Services United Kingdom United States of America United States Dollar Very Important Person

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Feasibility Study and Business Plan Review of the MHMC

VI

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Executive Summary

The Mubarak Al Hassawi Medical Complex Projects intends to be the premier healthcare service provider in UAE and GCC region in general and Sharjah and Northern Emirates in particular. In view of this, the Client initiated planning of the project constituting Main Hospital, Rehabilitation Centre, Wellness and Diet Centre, Hotel, Academic Institutes and Staff accommodation in 2006 with support of it project partners and technical consultants. In the interim period the world saw a major financial crisis including the region of GCC this combined with the increase in number of healthcare providers in the country led to the need of review of the previous project feasibility planning particularly of the Main Hospital. TAG study in 2006 focussed only on given specialties Neurology, Neurosurgery, Orthopaedics, Cardiac and Vascular surgery, Cardiology, and Plastic and Reconstructive Surgery. The methodology and data collection of TAG is found to be plausible, although its applicability in current scenario after a gap of 4 years is not evident. Inter-Health Canada (IHC), in June- July 2007, developed operational and financial data with the reason to feed in Price Waterhouse Coopers financial planning. They added certain specialties and changed the patient volumes per speciality based on certain assumptions, which are considered implausible, as they are not based on market demand but more on experiences and international requirements for minimum workload for specialties. UHMS in June 2009 developed a Feasibility Study and Business Plan on the bases of the previous two studies and added 118 beds without objective evidence on patient volumes / market demand. All of the above led to estimation of 248 beds for the Main Hospital. A Rapid Market Analysis was carried out to estimate need for additional beds in comparison with the internationally accepted benchmark, OECD average hospital beds per 10,000 population. This analysis also included a very basic broad level market demand and supply of services in certain specialties as well the market dynamics in relation to costs and prices as well as environmental conditions. The result was estimation of need of approximately 150 to 160 beds for the Main Hospital; need for provision of secondary care specialties in order to
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establish tertiary care services; identification of seven major considerations in hospital business elaborated in the main report which guides assumptions and/or implications on patient volumes, pricing, costs, human resource availability and competition. The market analysis

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also highlights under supply in areas like Cancer Care Radiotherapy, Renal transplant (due to regulatory issues), IVF centres, and Paediatric and Neonatology while certain specialties are oversupplied (e.g. Dentistry, Plastic and Cosmetic Surgery). Finally it was concluded that the business plan developed by UHMS was not plausible for the reasons that the patient volumes are not plausible. However the estimation of costs were found to be reasonable. The methodology adopted for calculating revenues unit wise pro-

Feasibility Study and Business Plan Review of the MHMC

Acronyms

jection of occupancy instead of case-wise/speciality wise estimation of occupancy is a debatable issue, as the case based methodology could be considered a better one. The estimation of occupancy growth and projections beyond three to four years is again a disputable methodology the reason being that it is difficult to foresee circumstances (market conditions, competition, environment, others). Secondly, a hospital should generally reach full occupancy (85%) within this time frame if there is market need, quality services provided by qualified / reputed doctors, and strong management of the facility and its resources. Total costs of more than 200 million USD for investments lead to high burden for the management of the hospital. For interests for loans and appropriate covering of opportunity costs in total 18 million per year or 1.5 million per month have to be earned by revenues. By average prices of 3,000 $ per case, every month a number of 500 inpatients have to be discharged in order to cover the costs of financing, before the admission of additional patients wil enable the hospital to get liquidity for financing of human resources, consumables etc. Finally the area in m per bed estimated (225) is too high compared to international standards - in spite of the fact that MHMC project is positioning itself with the likes of SKMC and American Hospital, Dubai. The German university hospital standard is 110-130 m but German hospitals receive only one tenth of outpatient cases, hence outpatient area has to be calculated additionally. Secondly German hospitals have double beds, and hence a gross floor area of 150-160 m per bed could be recommended for MHMC plus a separate area for outpatients. The overall area calculated is approximately 30.000 m excluding parking. The cost per square metre depends on labour costs and material costs. These are higher in Germany however the MHMC expects use of best quality material and the costs are comparatively higher. To compare, construction cost (without medical and non-medical equipment) in Bahrain is approximately 850 USD per m. The recommended construction cost (all areas confounded) is between 1400 to 1700 USD per m. To summarise, the hospital with project costs of $200 million is not feasible. On the basis of the very basic and rapid market analysis, it is estimated that a hospital with max 160 beds is feasible in terms of patient volumes, competitive service pricing, and project costs within a
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given range. It is recommended that the overall MHMC project components (Hospital, Rehabilitation and Wellness) should be developed and managed in an integrated concept to maximise market

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positioning, quality services provision and client satisfaction. Further more, integration of commissioning activities with project development / construction is essential for timely completion of the project. Finally highly qualified professionals and strong operations management is essential for the success of the organisation.

Feasibility Study and Business Plan Review of the MHMC

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2
2.1

Introduction
Project Background

Kuwait Commercial Real Estate Center (KCREC) along with its sister-concern company Mubarak Abdulaziz Al-Hassawi Medical Company LLC. is currently in the final stage of planning for the proposed Mubarak Al Hassawi Medical Institute to be located in Sharjah in the United Arab Emirates. A Feasibility Study for Main Hospital, Rehabilitation Centre and Wellness & Diet Centre was carried out by the Jordanian Consulting Company Universal Hospital Management Services (UHMS) in 2009. This study was built on Demand Assessment and Analysis conducted by The Advisory Group (TAG) in September 2006, complemented by Inter-Health Canada (IHC) in July 2007. In order to proceed to the Implementation Phase, a review of the feasibility study primarily for the Main Hospital is required to validate the operational and financial projections including the demand for hospital services and beds. Secondly the architectural planning, project management and engineering team need medical inputs in order to proceed with the implementation phase.

2.2

Project Partners and their Roles


Projacs: Project Management NBBJ: Architectural Design and Planning of eth Main Hospital Syntax: Architectural Design and Planning of the Rehabilitation and the Wellnes and Diet Centres AECOM: Construction Engineering KLMK Group, and Stroudwater Associates: Reviewing Staffing Models and Space Program EPOS Health Management: Health Facility and Services Planning, Developing and Operations Management

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2.3

Scope of Work and Project Goal

Although it is known that there is a sufficient number of hospital beds available for the region
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mostly located in Dubai, the project is expected to be implemented as it was the desire of Late Mubarak Al Hassawi. The basic idea of and motivation for the project is to establish a state of the art, highly specialized (tertiary level) healthcare centre (the Mubarak Al Hassawi Medical Complex - MHMC) for the indigenous and expatriate population in Sharjah (and the UAE and GCC region). As such a centre does not exist in Sharjah, patients in need for such services are currently being referred to Dubai, Saudi-Arabia, Europe, and the US.

Feasibility Study and Business Plan Review of the MHMC

Acronyms

The project planning is in process of finalising architectural plans and the client wanted to validate the recommendations of the Feasibility Study and support to the design planning from the healthcare viewpoint. Hence EPOS Health Management was given the tasks of: Review of Feasibility Study - Operational Analysis and Business Plan Review: This is to be done with the view to comment on plausibility and applicability of major assumptions of the study; Rapid Market & Competitor Analysis with a view to get a broad overview of the current market scenario; Support to the Architectural Design Planning of the MHMC (except Wellness and Diet Centre): This is with the view to contribute medical planning insights in the ongoing planning an designing initiative. It was understood by the MHMC Client Team that the provision of alternative estimates on return on investment, profit and loss data, and breakeven analysis is based on reliable data that contribute to development of a strong business case. However, EPOS would also like to use this opportunity to go beyond a simple summary of the study results and to propose some changes to the concept, where appropriate, aiming at a more rational use of resources in terms of space, equipment, and staff, and a more efficient and effective organisation of services, thus reducing the financial burden for investments and current costs, and allowing for continuous and sustainable development of the hospital and its services.

2.4

Methodology

Steps of Review Identification of Major Assumptions in the Study Plausibility Check of the Major Assumptions Conclusion and Recommendations

Basis for Review


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Analysis of available statistical data (MOH) Meetings with Doctors and Hospital Managers from the primary Catchment Area Assumptions on the current utilisation trends of competitor hospitals Assumptions on the speciality-wise average workload Expert experience from other comparable projects within and outside GCC region

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Up until the date of the first draft submission, the information gathered for this report comes from the following sources:

Feasibility Study and Business Plan Review of the MHMC

Acronyms

Table 1 Meetings and Organisational Visits for Rapid Market Analysis

Sr. No.

Meetings / Visits

Designatio n

Organisation

Date 21st Dec 2010

Time 0900 to 1130

1 Meeting in London EPOS/NBBJ/ AECOM/ Syntax/Proja cs/Client Top Zulekha Manageme Hospital, nt Dubai Cardiologis t Endocrinol ogist Polyclinic, Dubai

2 Architectural Planning Workshop

20-21 0900 to Jan 2010 1700

3 Meeting and Hospital Tour 4 Senior Clinician/estd 1st Cathlab in Dubai

21 Jan 2010 28 Jan 2010 27th Jan 2010

11 to 3 pm 5 -6 pm

5 Owner of Polyclinic

7-9 pm

6 Doctor at clinic owned by Indian Group

General Polyclinic, Practitioner Duabi

27 Jan 2010

7-9 pm

7 Senior Clinician

Welcare Ophthalmo Hospital, logist Dubai

28th Jan

11 am

8 Arab Health Congress

26 to 28th Jan

9 Cardiologist

Cardiologis Sharjah t Endocrinol ogist

26th Jan 2010

10 Endocrinologist

Sharjah

11 Oncologist
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Oncologist

Sharjah American Hospital, Dubai

25th Jan 2010


th 26 Jan 2010

12 International Patient Coordinator


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13 Meeting and Visit Hospital

Top International Manageme Modern nt Hospital IT American Hospital, Dubai Welcare Hospital, Dubai

26 Jan 2010 7th Feb 2010

th

14

Meeting with person responsible for medical coordination (IT side)

15 Meeting

Neonatolo gist

Feasibility Study and Business Plan Review of the MHMC

Acronyms

Sr. No.

Meetings / Visits

Designatio n CTVS

Organisation American Hospital, Dubai

Date

Time

16 Meeting

17 Meeting

Orthopaedi Reputed c/ Hospital, Replaceme Dubai nt Surgeon ENT American Hospital, Dubai

18 Meeting

19 Meeting

American Paediatrics Hospital, Dubai Manager Materials Neonatolo gist Reputed Hospital, Dubai Sharjah

20 Meeting

21 Meeting

22 Meeting

Paediatric Tawam Gastroente Hospital, Al rologist Ain Neurosurg eon Intensive Care Tawam Hospital, Al Ain Al Ain Hospital, Al ain

23 Meeting

24 Meeting

Also see References at the end of document

The list of documents gathered and referred to in this study is included in the Reference Section at the end of this report. For the purpose of detailing out the next steps for the MHMC Main Hospital Project, the following information will be, among others, required:
Table 2 Required Information for Next Step of Project Progress EPOS Health Management

Sr. No.

Information Required

Source Prevalence Data, focused Doctor and Manager data collection Private Hospital Private Hospital

Purpose Detailed estimation of patient volumes and finetuning of services under each speciality Detailed Business Model development Detailed Business Model development

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1 Speciality wise Market Demand

2 Schedule of Charges 3 Staff Salaries

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Acronyms

Sr. No.

Information Required

Source

Purpose

List of Insurance companies and their existinf and future policies, 4 Corporate Houses, Industries, Expatriates 5 Potential partners for service provision

Ministry of Commerce, others

Detailed Business Model development Selection of visiting consultants and establishing international affiliations Feasibility Study: To benchmark and compare services currently being offered

European countries

Visit to similar projects in the region

GCC countries

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Feasibility Study and Business Plan Review of the MHMC

Acronyms

Plausibility check of the Market Analysis vis--vis Brief Market & Competitor Analysis

3.1

Major Assumptions

The Market Analysis for MHMC project is based on three reports by TAG (2006), Inter Health Canada (2007) and UHMS (2009). TAG made detailed Demand Assessment and Analysis in 2006, while Inter-Health Canada made assumptions based on their experiences and minimum operational volumes required to maintain standards and expertise while UHMS assumed the number of beds as estimated by Inter-Health Canada and inputs from other doctors and made assumptions for revenue and expenses on the basis of bed strength.

3.1.1 TAG Report


The calculation of inpatient cases were based on the MoH / Health authorities statistics concerning the UAE population and the ratio of discharges per 1000 inhabitants. The market population demand for medical services was assessed by TAG in year 2006 based on data of 2004 and this was categorised into primary, secondary, tertiary and quaternary service areas. For each of the service areas (except quaternary) three-way market share scenarios (Best, Most Likely, and Worst Case Scenarios) was projected over a 10 year period. TAG estimated market share in most likely case scenario from 10% to 12.5% for primary service area and 7.5% to 10% in secondary service area. These assumptions were made for the following: Plastic and Reconstructive Surgery Circualtory System Nervous System Musculo-skeletal System Rehabilitation

The estimated ALOS was between 2.7 to 4 days for plastic and reconstructive surgery. The
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ALOS for other systems was not found in the TAG report. The ALOS was estimated taking into consideration that the ALOS in GCC is higher by 40% compared to international standard ALOS.

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The TAG Study estimated 135 hospital beds and 40 Rehabilitation beds. TAG wrote that they collected prices for medical services from several private facilities in the UAE. The prices were shown in the Appendix of the TAG report. The reliability of data could not be validated in the duration available for the study.

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3.1.2 Inter Health Canada Report


IHCs scope of work was to develop healthcare data for the financial model to be developed by PWC. IHC added the following disciplines to the scope of services suggested by TAG: General Surgery and Endoscopy

There was no mention about the market study or patient volumes for these specialties. IHC further excluded the Neurosciences from their model. IHC provides the figures requested by the client to populate the financial model to be prepared by PricewaterhouseCoopers and mentions in its report It is by no means a guarantee of the viability or the profitability of the MHMI project and only reflect the experience on Inter-Health Canada. IHC populated the healthcare data on the basis of TAG demand assessment inputs but also on the basis of Canadian and UK standard guidelines for each speciality governing the minimum workload assumptions for a successful tertiary care service provision. This led to the change in the projected admission numbers from 8,370 per year at year 10 to 11,900 per year (at Year 5 excluding Rehab). The total of 175 beds (135+40 Rehab) increased to 196 beds (130 + 66 Rehab). Inter-Health Canada also estimated additional 18 beds for Day-care which are not included in the total of 130 hospital beds.

3.1.3 UHMS Report


There is no mention about market study conducted by UHMS or estimations of patient volumes. UHMS assumed the number of beds as estimated by Inter-Health Canada and added, on the basis of inputs from other doctors involved in the MHMC project, a total of 118 beds 24 beds for Obstetrics, 24 beds for Gynaecology, 24 beds in Paediatrics, 27 beds for Day Care and other 18 beds in various disciplines (kindly note that usually day-care beds are not estimated as in-patient beds). This led to a total of 248 beds including day-care beds.

3.2

Plausibility Check of the Major Assumptions

The plausibility check was carried out in comparison with international and regional experiEPOS Health Management

ences from comparable projects as well as on the basis of a rapid market analysis consisting of interviews with reputable clinicians and managers in Sharjah, Dubai, Abu Dhabi and Al Ain. This also includes visits to existing comparable hospitals in the region. In addition vari-

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ous publications, reports and reference material were used where appropriate.

3.2.1 TAG Report


The data enlisted in the TAG report was reviewed and compared with our experiences as well as with some broad data available to us.

Feasibility Study and Business Plan Review of the MHMC

Acronyms

3.2.2 IHC Report


The patient volumes as estimated by IHC was reviewed and compared with market demand. The comparisons were with the TAG Report and international prevalence experiences e.g. Germany and experiences from comparable projects in the region.

3.2.3 UHMS Report


The hospital beds requirement was checked in relation to the patient volume estimations made by TAG and IHC. The need for 118 additional hospital beds (which were added by UHMS) was compared with the results of the rapid market analysis.

3.3

Conclusion of Plausibility Check

3.3.1 TAG Report


The data collected was found largely reliable given the availability of data in the region. The methodology for estimating the potential discharges / patient volumes is good and in practice is one of the best ways. However these estimations were true based on market conditions before 2006. The market has changed from 2006 to 2009, wherein more hospital providers with good quality services and technology have established themselves. Hence these patient volumes are no longer at 100% applicable and plausible. UAE in general, and Dubai in particular, recently went through a financial crisis between October 2008 till recently which has led to decreased immigration and increased return of expatriates. It is hard to predict the character of structural change that is currently happening in the economy and its effect on the number of expatriates inflow or outflow. However, this factor obvious has direct relation with patient volume estimates. The projections of patient volumes continue to increase (e.g. plastic surgery volumes increase by 180% from yr 3 to yr 12) over a period of 12 years. From experience, service volumes and related projections can most accurately be done for a maximum of 3-4 years. This is the number of years during which new projects can take shape; the market supply and demand, costs and prices, macro-economic changes ad well as changes in resources, manEPOS Health Management

power and technology, all these factors are foreseen and included in the calculation. Projections over 6-12 years however, are subject to high volatility.

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3.3.2 IHC Report


IHC has a reasonable methodology in calculating patient volumes and market estimations for all specialties. However IHC estimated patient volumes for some specialties on the basis of TAG Report (which uses data from 2006 and earlier) and the patient volumes are already questioned as per reasons given in the above section. The Auditor could not identify other elements that suggest that these estimates are not plausible.

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Acronyms

3.3.3 UHMS Report


IHC assumed the estimates for patient volume / hospital beds on the basis of TAG and IHC. The patient volumes from TAG are already questioned in above section. Hence the estimates are not 100% applicable. In relation to the 118 additional beds, there was no sound basis in terms of market demand or patient volume projections made. Hence the estimated additional 118 beds are not demand based and their needs assessment is not plausible.
Table 3 Summary Box of TAG Report Review

Summary Box: TAG Report Basis: Ratio of discharges per 1000 inhabitants Market: Primary, secondary, tertiary and quaternary service areas Market Share: 10 to 12.5% for primary and 7.5 to 10% in secondary service area Specialties Considered: Plastic and Reconstructive Surgery Circulatory System Nervous System Musculo-skeletal System Rehabilitation

Results Full Occupancy Reached: Year 10 In-Patient numbers per year: 8,370 at Year 10 (without Rehab) Hospital Beds: 135 (without Rehab)


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Data collected was found reliable Good methodology for estimating the potential discharges / patient volumes Applicability Time Gap from 2006 to 2010 More Providers / Competitors in market Financial Crisis Projections over 10 yrs subject to high volatility after year 4

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Result: Patient volumes are not 100% applicable

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Table 4 Summary Box of IHC Report Review

Summary Box: IHC Report Basis: TAG Report and own projections Specialties Considered: Added to TAG: General Surgery and Endoscopy Deleted from TAG: Nervous System

Results: Full Occupancy Reached: Year 5 In-Patient Nos. Per Year: 11,900 at Year 5 (without Rehab) Hospital Beds: 130 (without Rehab) Day-care of 18 Beds ICU: 16; CCU: 11; VIP/Presidential 9

Table 5 Summary Box of UHMS Report Review

Summary Box: UHMS Report Basis: TAG and IHC Reports Specialties Considered: Added: Obstetrics and Gynaecology, Paediatrics

Results: Full Occupancy Reached: Year 10 In-Patient numbers per year: 23,997 (calculated from patient-days) at Year 10 (without Rehab) Hospital Beds: 248 (including 27 beds for Day-care) ICU/HDU: 18; CCU: 13; NICU 4; VIP 9 and VVIP 4

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Acronyms

4
4.1

Rapid Market Analysis Summary


Gulf Cooperation Council Countries Healthcare Outlook

4.1.1 Factors driving health-care demand and projections in the GCC


Population growth As per WHO estimates and also confirmed in the McKinsey report, the growth of populations will increase at a compound annual growth rate (CAGR) of around 3.0 percent, one of the highest in the world until 2015 and in long term come down to 1.8 percent CAGR. This means the population will double by 2025. Aging population As the life expectancy in GCC rose from 60.5 years in 1978 to 73 years in 2004; in the same period, infant mortality fell from 69 deaths per 1,000 live births to 18.1, there are more elderly people in GCC requiring medical care and have more expensive health profiles than younger people. This demographic segment will continue to grow in the years ahead and it is estimated that Saudi Arabia will have seven times the current old population (>65yrs) after 25 years. Health-risk factors A joint study between the UAE Ministry of Health and the World Health Organization in 2001 estimates 25 percent of UAE citizens suffering from diabetes (as compared with an average of 5 to 7 percent globally). This figure rises to an unprecedented level of 40 percent for those aged 60 or above. This prevalence has been described as being of crisis proportions. In addition, the obesity rate for GCC nationals stands at 40 percent, one of the highest in the world. The health complications of both diabetes and obesity will correlate with much higher medical costs in the coming years. McKinsey & Company constructed a proprietary model of health-care demand covering each of the six GCC countries across 20 specialties and five age brackets (Figure 1). This model
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is solid because of the depth of the data used and thereby offers a comprehensive healthcare profile. The model projects a substantial increase in health-care costs, as well as in the number of inpatient and outpatient treatments and hospital beds, over the next 20 years. The

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model takes into account five drivers of changing demand: population growth, the demographic profile, the development of risk factors, treatment patterns, and medical inflation. The model projects the following by 2025: Treatment demand (see Figure 1): 240 percent rise in treatment demand in 20 years Steep rise of 419 percent in cardiovascular disease

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Acronyms

Steep rise of 323 percent in diabetes related ailments

Hospital beds (see Figure 2) Require more than double the beds by 2025 162,000 beds Saudi Arabia & UAE will see the greatest increase

Cost Cost for healthcare delivery to increase fivefold i.e. US$60 billion by 2025 Cardiovascular expenditure burden will be twice that for healthcare as a whole by 2025

Patient expectations: The McKinsey survey of GCC patient satisfaction shows that higher expectations do not merely reflect generalized discontent, but rather are the result of direct patient experience. Public hospitals come under substantially more patient criticism than do private hospitals. Survey respondents reported that public hospitals have limited appointment hours, long waiting times, and unattractive and uncomfortable facilities.

Figure 1: Projected Increase in Treatment Demand in the GCC by 2025 (percent)

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Acronyms

Figure 2: Projected Demand for Hospital Beds in GCC countries by 2025 (percent)

Figure 3: GCC Chronic Disease Burden by Country

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February 2010 (Source: McKinsey Clinical Planning Model)

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Acronyms

4.1.2 Implications for Private Healthcare providers


Health-care delivery GCC governments need to focus on policy and regulatory role, and seek more increased role of private players in healthcare for provision as well managing of public healthcare facilities. Given the GCCs unusual risk factors, there are opportunities in managing chronic diseases like diabetes, obesity at primary level and cardiovascular diseases / complications. Some GCC countries are actively seeking managing of primary healthcare facilities, as well as hospitals for improving service delivery. High demand for Cardiology and Cancer by 2025, presents a significant profit opportunity for those ready to make large capital investments. Physiotherapy, renal dialysis, acute rehabilitation, elderly care, home care, occupational therapy, and speech therapy are among the areas in which capital investment is relatively low and potential returns to private providers are high. Finally, outpatient surgery centres (for example, day-cases) are likely to become an important mechanism for reducing the average length of hospital stay and increasing patient turnover. Health Insurance See section 5.4.3 in this report: Currently most of the GCC governments are providing for 75% of the healthcare delivery costs, and hence are currently in process to decrease this by means of promoting health insurance. Saudi Arabia and Abu Dhabi have passed legislation stating employers to provide for health insurance for their employees. Support Services Opportunity exists in provision of services like IT and management of healthcare facilities either by means of outsourcing or direct provision. Challenges for Private players
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Continuous patient inflow due to lack of referral system in GCC; Availability of trained clinical and nursing staff; Agreeing on adequate reimbursement from payers (governments, insurance companies, and individuals), because of the lack of clear pricing systems, free public care for citizens, and complex contracting rules between government and private players;

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Differentiating from competitors in an environment where quality standards are not transparent to patients; and Contracting with government to manage public facilities.

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Acronyms

4.2

UAE Healthcare Outlook

4.2.1 Summary Market Analysis


The following chapter summarises the information received during meetings with doctors and hospital managers from the MHMC wider catchment area General UAE Population dynamics are unstable and impact the patient volumes Many Hospital porjects are on hold because of financial crisis but does not neccesarily mean that they will not re-start. Dubai Healthcare City is not price competitive; patients could not relate to doctors in DHCC as they were not known to the local population, although the doctors were highly qualified; Moorefiled Eye Hospital is yet to see returns on their investments. Dubai and Abu Dhabi require are their hospitals to be accredited, Sharjah does not have such a rule yet, but Al Zahra is accredited. It is difficult to sustain a hospital catering to high-end clientele especially when people living in Sharjah live there because of high costs in Dubai. 60% of Dubai workers live in Sharjah as cost of living is lower than Dubai. Dubai requires all companies to provide health insurance. Canadian Hospital has revenue sharing basis arrangement with doctors, most other hospitals have full time doctors. Hospital Related American Hospital Duabi: Approx 170 million Dhms cost for OP building of American Hospital which houses Outpatient clinics, HR, Training facilities, Marketing and materials departments.; EPOS Health Management

Existing Building od AHD has 120 beds with 20 ICU and 5 OT and 5 NICU. AHD: 450 million Dhms for additional 200 beds with 42 ICU and 7 OTs Existing 5 7 dialysis machines plus 2-3 portable machines.

Al Zahra Expansion from 120 beds to 300 beds New Hospital in Dubai currently on hold Good Joint Replacement: Surgeon and surgeries

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New Hospital Projects: International Modern Hospital building a orthopaedic hospital in DHCC of 42 beds with comprehensive rehabilitation facilities, physiotherapy and stroke, spinal cord injuries cardiac rehab etc.

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Tawam Hospital Managed by John Hopkins with advanced IT system (almost paperless with only consents and other documents in paper). Focus on Padiatrics: Paediatric Neurology, Paediatric Gastroenterology and Paediatric Oncology; 35 bed Paediatric Oncology Ward, nearly fullly occupied; Paediatric ER is separate from Adult ER

Market Demand Demand for Cancer / Radiotherapy, Renal Transplant, followed by Neurosurgery, Joint Replacement and cardiac sciences High for Urology, Endocrinology, Obesity, Obstertics Demand for comprehensive provision of Diabetes Care (Endocrinolgy / Obesity / Diet, Renal, Ophthalmpological and other related complications Oncology and radiotherapy as most patients from Dubai are sent to Tawam; government is currently outsourcing to other countries, Cyber Knife availability can attract patients; No market for limb reconstructive surgery; oversupply of Plastic-Cosmetic Surgery in Dubai. Regulatory Certification of doctors and nurses is a long process IVF facility has strong regulatory requirements

Inpatients, Services, and Prices In Sharjah: Insurance to Private Payor ration is 40:60; in Dubai it is 50:50 (Zulekha hospital); Welcare Hospital gets 70% insurance patients, 20% self payors, and 10 corporate payers. Cancer Care EPOS Health Management

Only one hospital (government) in Dubai providing Radiotherapy Expatriates with cancer mostly get treatment in home country Only oncology clinic in Sharjah, no other in rest of northern emirates, provides chemotherapy in his clinic

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Only one radiation therapy service in Oman and no Bone Marrow Transplant in UAE

PET CT charges in American Hospital is 18,000 and in Gulf Diagnostics it is 20,000 Dhms; Imperial cancer centre in Abu Dhabi has PET Scan

Dialysis Al Zhara has 5 machines, with full utilisation

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Zulekha, Dubai charges 800 per cycle Government charges approx half of private sector Additional demand for Dialysis Nephrology services good in First Gulf Centre

Urology High demand for urology

Trauma and Orthopaedics Rashid Hospital recognised as trauma referral centre. Al Quassemiya Hospital (320) beds is largest govt hospital in Sharjah Neurospinal Centre in Dubai seems not like a institution/organisation / more like a small shopital-clinic; Neurologists not available Welcare Hospital: Approx 600 consultations per month for leading doctor Ratio of Knee to Hip Replaements is 80:20

Neurosurgery Tawam Hospital: 500 Surgeries per year; 6000 OP visits; Patients come from Sharjah, Ras Al Khaima and other northern emirates because services not available in the region; Spine surgery is major contributor to 500 cases.

Obstetrics LSCS approx 10,000 Dhms (Zulekha Dubai) Normal Deliveries : 2,500 per year in Al Zahra ; 1,200 in Zulekha, Sharjah

Neonatology Welcare Hospital expanded its NICU to 16 beds in October 2009 9-11 beds are occupied 6 Ventilators (4 are high frequency); acquiring additional high frequency oscillator ventilator in coming month. 2 Part time Paediatric Surgeons available; approx 300 consults per month; 10 beds for PICU Cases are lost because of financial constraints of patients Al Zhara, Sharja expanded its NICU to 20 beds, but operationalised only 7 beds due to lack of qualified nursing staff availability Zulekha Hospital also expanded, City hospital also has 10 NICU beds, American hospital has 4 -6 beds Al Wasl Hospital, Dubai Dr. Fatima is the only doctor in the region receiving referrals for Metabolic disorders Tawam Hospital also has strong neonatology and paediatric specialty services ENT

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Outpatients: 25 40 per day per ENT surgeon i.e. 7200 per year Surgical cases: 10 per week per ENT surgeon i.e. 480 per year Average surgery price of 12000 Dhms in AHD

Insurance companies are keeping the prices very low American Hospital is only listed with few insurance companies American Hospital Charges ICU: 6000 Dhm per day; Basic Room: 2800 per day Normal Delivery: 10000 Dhm; LSCS: 20000 Dhms

Welcare Hospital, Dubai Charges Outpatient consult: 500; Room: 1600 Dhms Approx per Day consumable charge per day of 200 Dhms plus medicine, total cost of patient per day approx 2800 Dhms Normal Delivery: 14000 Dhms - Approx 120 deliveries per month; 4 obstetricians plus two new, total 6. Paediatric Neurologist in Welcare comes from India on visiting basis (May, Aug, Nov 2009 for 3 days) and sees approx 60 patients in each visit.

International Hospital, Dubai Charges ICU: 2500 per day Normal Delivery: 6000 Dhms LSCS: 10000 Dhms Room: 800 to 1200 Dhms

Zulekha Dubai charges 250 Dhm for Consultation, others charging 500 Dhm Cardiology Angioplasty: Zulekha Dubai charging 25000 Dhm with one stent Approx 7 9 CathLabs in Dubai; one is al Zahra Sharjah, Ras Al Khaima, and Qusis Approx 5- 6 procedures a month per cathlab; Best case scenario max. of 60 angiographies + angioplasties per month in Dubai City Hospital, NMC, Zulekha, International Modern are doing reasonable.

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Cardiac Surgery Not performed in Al Zahra Hospital Govt performs for 10,000 Dhms Expatriates go back to home country for surgery (non-urgent) 75,000 Dhms for 7 days stay in American Hospital; plus 5,000 Dhms for Valve; 15,000 Dhms in other private hospitals in Dubai.

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Approx 120 cases from Oman per year reffered to Tawam and Al Ain Hospital as they are on border of Oman

Best Case Scenario: max of 12 cases per month in Dubai; American Hospital does 3 cases per week max. Zulekha has tie up with American Hospital for CTVS.

Belhaul and City Hospital probale doing well Mafraq Hospital and SKMC, Abu Dhabi has Paediatric CTVS services Cardiac Rehabilitation is yet to be developed in AHD, SKMC has good rehab program

Need for Elecrophsiology Services.

ICU Charges: 2000 Dhm per day at Zulekha, Dubai Staffing for 14 bed ICU and 10 bed HDU: 1 plus 11 registrar level doctors. Many Pakistanis come for cardiac services to Zulekha Dubai Dentistry:Lot of Dental centres in Dubai including dental implants

Costs (Staff) Specialists approx 50,000 Dhms per month and Junior Doctors approx 15,000 to 20,000 Dhm (Zuekha, Dubai) Nurses 4,500 plus accomodation, food allowance, etc; Physiotherapists 6,000 minimum; Specialists 50 to 60000 plus accomodation, etc.; Junior Doctors 15-20,000 Dhms per month The above rapid market analysis provides certain level of insight into the utlisation of existing hospitals and also workload assumptions on the speciality-wise average workload per doctor. Howere being a rapid survey, covering all the services and specialties was beyond the scope of this rapid market analysis. Hence for estimating more reliable speciality wise patient volumes a detailed market analysis will be needed. Currently this analysis is just enough to get a broad feel of the healthcare market and very loose estimations on patient volumes.

4.2.2 Population
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As per United Nations Economic and Social Commission for Western Asia, the population in the Gulf Cooperation Council (GCC) gained more than 1.7 million from 2006 to 2008, peaking at 38.5 million at the end of 2008. The following table gives a detailed insight into the

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population dynamics.

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Acronyms

Table 6 Registered Biostatistics of UAE (MoH 2007 Data)

Data Population in thousands Population increase Annual rate of increase Natural population increase rate Annual national population increase rate Crude birth rate General fertility rate/1000 Ratio of children to females (15 49) Still birth rate Still birth rate (citizen) Still birth rate (non-citizen) Crude death rate Infant mortality rate Neonatal mortality rate Child mortality rate (1 5) Child mortality rate/1000 live birth Child mortality rate/1000 population bellows

1998 2759 135000 5.14 44456 1.61 18 95 0.5 8.35 8.7 8.1 1.85 8.62 6.16 0.56 10.76 2.19

1999 2938 179000 6.49 46619 1.59 17.7 95 0.5 7.08 5.91 7.99 1.8 9.75 6.57 0.61 11.8 2.36

2000 3108 170000 5.79 49395 1.59 17.6 95 0.5 7.8 8.9 7.1 1.75 8.08 5.62 0.63 10.27 1.62

2001 3290 182000 5.85 50125 1.53 17 92 0.5 8.92 9.83 8.41 1.75 8.92 6 0.57 11.22 2.17

2002 3754 464000 14.1 52245 1.39 15.48 88.3 0.5 7.14 7.31 7.11 1.56 8.12 5.51 0.53 10.19 1.84

2003 4041 287000 7.65 55163 1.37 15.14 81.8 0.46 6.76 7.25 6.4 1.49 7.8 4.46 0.58 9.9 1.77

2004 4320 279000 6.9 56990 1.32 14.6 78.5 0.46 7.25 6.19 8.05 1.42 8.71 5.93 0.39 10.58 1.81

2005 4106 213573 - 4.9 58262 1.42 15.8 76.5 0.33 6.87 6.73 6.97 1.55 7.74 5.37 0.63 9.87 2.26

2006 4229 122573 2.98 56477 1.34 14.88 72.61 0.33 6.81 5.46 7.89 1.53 7.09 4.75 0.43 8.66 1.88

2007 4488 259000 6.12 60253 1.34 15 74 0.33 7.77 6.84 8.46 1,65 7.8 5.15 0.5 9.57 2.12

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UAE had population growth of 4.4 per cent taking the population to 4.86 million at end of 2008. Saudi Arabia had growth rate of 4.8 percent with population of 25.194 million; Kuwait growht rate of 5.2 and population of 2.765 million; Oman at 4.6 percent and population of 2.73 million; Bahrain with 3.6 percent growth and population of 765,000 residents; and Qatar with 3.3 percent growth had population of 868,000 by 2008. The Economist Intelligence Unit Report from November 2009 estimated that the population of GCC will grow by 30 percent in 11 years taking the total population to 53 million by 2020. Accordingly the GCC will require in excess of 25,000 additional beds to address the growing demand. A report from Alpen Capital states that the Gulf healthcare sector will grow at about 9 percent annually, to reach $47 to $56 billion by 2020. Population Characteristic: The population is broadly divided into Local with 15% and Expatriate Population (85%). The demographic characteristic of expatriate is as follows: Mostly between the age group of 25 to 45 yrs (74% of population is in the 15-49 yrs age group MoH 2007 Data) Mostly belonging to working class or professional category Except for short term medical problems and emergencies, they tend to go back to their respective countries for long term treatments Expected mortality cause in expatriates could be because of accidents and emergencies. Employers only partially cover the medical insurance (Dubai, Abu Dhabi)

Table 7 Population by Sex Nationality and District (MoH 2007 Statistics)

Sex District Abu Dhabi Western Alain Dubai Sharja


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Male 578000 85000 315000 1121000 581000 144000 32000 138000 86000 3084000

Female 319000 24000 168000 357000 301000 80000 2000 84000 51000 1404000

Total 897000 113000 483000 1478000 882000 224000 52000 222000 137000 4488000

Ajman U. A. Q. R. A. K.

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Fujeira Total

The local population numbers and the average life expetance is growing, giving rise to need for elderly care as well as medical problems of elderly age group like Heart Disease, Stroke, Osteoarthritis, Cataracts, and others. The fast changing lifestyle is leading to increase in diabetes, obesity, cancer, and congenital problems because of consangunous marriages.

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Acronyms

4.2.3 Hospital Beds


This section provides understanding of the existing hospital beds in UAE in general and Sharjah in particular. Then international comparison of hospital beds per 10,000 population is done in order to reach the additional market need for hospital beds after considering regional context. The understanding of local, regional and international issues related to healthcare and hospital business is imperative to reach a logical and pragmatic approach for deciding the requirement of hospital beds for MHMC project. This has been concisely elaborated and compiled into seven major considerations as follows: 1. Client Catchment Area: Hospital Client Volumes are primarily from the local or primary catchment area i.e. radius of 30 km, depending on the region/context. Only when a hospital becomes a centre of excellence for the region, the hospital attracts patients from outside the primary area except when other regions do not have the required services. The overall addition of client volumes can be maximum 20% of hospital primary catchment area client volumes. DHCC, American Hospital and others in the region demonstrate this fact. 2. Medical Value Travel: The client volumes from Medical Value Travel worldwide remain only a certain percentage of total hospital volumes as mentioned above. Joint Replacements, Dental Treatment and other non-life threatening / nonemergency conditions attract such patients. In GCC, Dubai has become an international city with already established hospitals attracting medical value travel clients which are not as high as was expected by DHCC during planning. Countries like India and Singapore are providing better quality healthcare at comparative or lower costs hence attracting the already small medical value travel clients. Hence it is expected that Sharjah should only consider client volumes primarily from the primary catchment area. 3.
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Client Segments: Majority of population is expatriates (up to 80%) and they primarily belong to working class, labourers and other succinct vocations. The expatriates mostly go back to their respective countries for chronic diseases or elective procedures. The insurance coverage for expatriates is of lowest level and hence does not cover complex conditions or those that cost more. The high end of the

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client segment, which can afford western hospitals, continue and will continue to go to Germany, UK, America and other countries. Hence the client volumes for hospitals need to be considered much less than the actual population figures for the UAE or Sharjah 4. Healthcare Prices and Insurance Coverage: The healthcare costs are decreasing in GCC over the last decade as the private healthcare providers increased.

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Acronyms

The cost competition is also contributed by regional providers, especially from India where provision of quality care and lower costs is driving patients from GCC. 5. Human Resources Availability and increasing costs: Majority of expatriates including doctors and nurses come from the Indian sub continent. As the economy of India including quality healthcare infrastructure and salaries are increasing, it is getting difficult to recruit and retain qualified manpower from India. Many specialties like Neonatology, Neurosurgery, Intensive Care Units, and Operating Theatre Nurses are facing shortage worldwide including GCC. The result is ever increasing salaries to retain the staff. 6. Abu Dhabi, Dubai and Centres of Excellence: Abu Dhabi has made major strides in establishing a sound healthcare system through SEHA and its partners John Hopkins, Cleveland Clinic, Bumrungrad, VAMED and other international healthcare players. Dubai however has not been as successful as Abu Dhabi although it has got excellent infrastructure in place and some good quality services providers. Currently UAE has centres of excellence in Joint Replacement (American Hospital, Dubai); Cancer Care (Tawam Hospital, Al Ain); Cardiac Sciences (SKMC, Abu Dhabi); Trauma Care (Rashid Hospital, Dubai); and Paediatrics & Neonatology (Tawam Hospital, Al Ain). 7. Sharjah Hospitals: Al Zahra Hospital is well established attracting patients from all segments of the population. The infrastructure is not the best as a hotel building was converted to a hospital. Furthermore a new building has been built and nearing finalisation. Zulekha Hospital caters to the middle class segment and provides reasonable quality of care. Royal Hospital targeting the high socioeconomic segment due to reasons of lack of management and vision is not doing well.

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Table 8 Beds by Hospital Speciality and District (MoH 2007 Statistics)

District Hospital

Sharjah

Dubai

U. A. Q.

Ajman

Fujeira

R. A. K. Ibrahim Obeid.

Al Quasemi

Khorfatan

Al Baraha

Al Amal

U. A. Q.

Al Zaid

Khalifa

Kuwait

Fujeira

Shaam

Saqer

Kalba

Deba

Totla

Ttoal

Total

Total

Total

Total

Total

Speciality Medicine Chest Cardiology Nephrology Neuralogy Psychiatry Dermato. Paed. Med General Surgery. Thoracic S. Cardiac S. Neuro S. Urology Paed S. Orthop.

22 0 15 0 5 0 0 0 18 0 0 4 2 0 22

43 0 20 9 8 0 2 24 18 0 0 10 18 0 29

45 0 0 0 0 0 0 17 45 0 0 0 0 0 0

20 0 0 0 0 0 0 14 10 0 0 0 2 0 2

13 0 0 0 0 0 1 7 10 0 0 2 0 0 6

143 0 35 9 13 0 3 62 101 0 0 16 22 0 59

21 3 6 0 0 0 2 20 32 0 0 0 8 0 18

0 0 0 0 0 80 0 0 0 0 0 0 0 0 0

21 3 6 0 0 80 2 20 32 0 0 0 8 0 18

33 0 0 4 0 0 0 23 16 0 0 0 5 0 12

33 0 0 4 0 0 0 23 16 0 0 0 5 0 12

28 0 0 0 0 0 2 29 30 0 0 0 5 0 20

28 0 0 0 0 0 2 29 30 0 0 0 5 0 20

40 0 0 0 0 0 0 36 40 0 0 0 0 0 10

36 0 0 0 0 0 0 17 21 0 0 0 0 0 0

76 0 0 0 0 0 0 53 61 0 0 0 0 0 10

0 0 0 0 0 0 0 20 27 0 0 4 8 0 27

125 0 26 8 0 20 2 0 0 0 0 0 0 0 0

17 0 0 0 0 0 0 0 0 0 0 0 0 0 0

142 0 26 8 0 20 2 20 27 0 0 4 8 0 27

443 3 67 21 13 100 9 207 267 0 0 20 48 0 146

20.78

0.14

3.14

0.98

0.61

4.69

0.42

9.71

12.52

0.00

0.00

0.94

2.25

0.00

6.85

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Acronyms

District Hospital

Sharjah

Dubai

U. A. Q.

Ajman

Fujeira

R. A. K. Ibrahim Obeid.

Al Quasemi

Khorfatan

Al Baraha

Al Amal

U. A. Q.

Al Zaid

Khalifa

Kuwait

Fujeira

Shaam

Saqer

Kalba

Deba

Totla

Ttoal

Total

Total

Total

Total

Total

Speciality Plastic S. Ophthalmo E. N. T. Gynae. Obst. An Obst. Pn Cardiovas Malignant General Geriatries Rihabil Dental S.C.B.U. Others Total

6 2 3 0 0 0 0 0 0 0 0 0 0 7 106

9 7 11 20 37 30 0 0 4 0 0 2 12 20 333

0 0 0 25 0 0 0 0 0 0 0 0 8 3 143

0 2 2 20 0 0 0 0 4 0 0 0 0 4 80

0 1 1 10 5 4 0 0 0 0 0 0 5 4 69

15 12 17 75 42 34 0 0 8 0 0 2 25 38 731

0 7 12 4 26 0 0 0 0 0 0 6 8 5 178

0 0 0 0 0 0 0 0 0 0 0 0 0 0 80

0 7 12 4 26 0 0 0 0 0 0 6 8 5 258

0 3 5 15 17 0 0 0 4 12 0 0 8 8 165

0 3 5 15 17 0 0 0 4 12 0 0 8 8 165

0 5 4 22 11 11 0 0 4 0 0 0 6 6 183

0 5 4 22 11 11 0 0 4 0 0 0 6 6 183

0 18 0 35 0 0 0 0 4 0 0 0 10 12 205

0 0 0 24 0 0 0 0 2 0 0 0 10 0 110

0 18 0 59 0 0 0 0 6 0 0 0 20 12 315

3 6 12 21 19 52 4 0 0 0 0 4 16 9 232

0 0 0 0 0 0 0 0 0 0 0 0 0 0 181

0 0 0 0 0 0 0 0 0 50 0 0 0 0 67

3 6 12 21 19 52 4 0 0 50 0 4 16 9 480

18 51 50 196 115 97 4 0 22 62 0 12 83 78 2132

0.84

2.39

2.35

9.19

5.39

4.55

0.19

0.00

1.03

2.91

0.00

0.56

3.89

3.66

100.00

Note: The above hospital beds are those under the MoH and does not include bed strength of non-MoH providers (e.g. SEHA, Dubai Health Authority, private sector beds, etc).

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Acronyms

Figure 4: Country Comparison of Hospital Beds Per 10000 Population

Beds per 10,000 population


160 140 120 100 80 60 OECD Avg. 40 41 20 0
Ba hr a Ca in ( na 200 da 6) Eg ( 2 yp 005 Fr t (2 ) a 0 G nce 05) er (2 m an 005 y (2 ) Ira 00 6) n (2 Ira 0 0 5) q Ja (2 pa 00 5 Jo n (2 ) rd 00 an 5) ( KS 2 0 A 06 Ku (2 ) wa 0 0 5 O it (2 ) m 00 an 5) Q (20 at 0 Si ng ar ( 6) ap 20 06 or e ) Sy (2 r ia 006 ) ( UA 20 0 6) E (2 UK 00 5) US ( 20 A 04 ) (2 00 5)

Source: UN- Data Report 2009 Currently in UAE, assuming that there are maximum of 10,000 total hospital beds, the hospital beds per 10,000 population is 20.57. This number compared to the OECD (Organisation for Economic Cooperation and Development) countries average is 41 beds per 10000 population. This means that UAE needs additional hospital beds to cater to the existing population. Assuming conservatively that the ratio of private providers remains at 30%, there is additional need of 1,374 beds for private hospitals. Assuming there are currently 3,000 private hospital beds (including planned expansions of existing hospitals) MHMC may cover about 8.3% of the required beds i.e. about 250 beds (including REHAB and Wellness / Diet). Finally, as most of expatriates receive healthcare in their respective countries, it is assumed that up to 60% of these beds may not be utilised, leaving the scope of 140 beds for MHMC in
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the current scenario. The cumulative total of beds available for MHMC till 2015 is 177 and till 2020 is 220. Table 9 Potential Bed Share for MHMC on the basis of Sharjah Client Volume

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If we consider Sharjah as the catchment population there is an additional requirement of 339 hospital beds (after assuming for expansion of existing hospitals) and we assume that MHMC covers 50% of the market share (as there is no other hospital project envisaged) i.e. 169 beds. We again reduce 60% bed capacity in lieu of expatriates seeking healthcare outside Sharjah, leaving a potential bed share of 68 beds in existing scenario, 82 beds by 2015 and 98 beds by 2020.

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Acronyms

On the basis of UAE Client Volumes the MHMC would need approximately 220 hospitals beds by 2020 while on the basis of Sharjah Client Volumes the MHMC would need approx 100 hospital beds. Firstly these are conservative assumptions both for UAE and secondly the mandatory insurance should be in place in coming 2-4 year thereby facilitating shift of patients from public to private sector. Thirdly MHMC Hospital has been conceptualised to be a referral centre for the region and provided that this objective is achieved, higher client volumes from outside the local/primary catchment are expected (20% maximum) and hence a bed capacity of 150-160 beds is recommended for MHMC. Estimation of Hospital Beds using TAG Study Assumptions: The Demand Assessment and Analysis conducted by TAG was a detailed study for Plastic Surgery, Reconstructive Surgery, Circulatory System, Nervous System, Orthoapedics and Rehabilitation. We used the same estimations as that of TAG in reaching bed numbers although with following changes to two main assumptions as follows: 1. The market has changed from 2006 to 2009 and hence the market share available for the MHMC project has decreased (consider market shares used for Worst-Case Scenario of TAG) 2. Hospital volumes and related projections can most accurately be done for a maximum of 4 years. This is the number of years during which new projects can take shape and market supply and demand, costs and prices as well as macroeconomic changes and changes in resources manpower and technology, are foreseen and can be controlled. Hence the estimates till year 4 are considered as full capacity for the project or at least for the phase I. On the basis of the above assumptions, the following discharges and no. of beds are estimated for the mentioned specialties.
Table 10 Discharges estimated for RCPS, Nervous System, Orthopaedics and Circulatory System

Discharges Plastic
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Yr 1 475 97 572

Yr 2 535 104 639

Yr 3 602 112 714

Yr 10 1690 205 1895

Reconstructive Subtotal Circulatory

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Nervous Orthopaedics Rehabilitation Subtotal Total 70 98 139 270 4981 6876 6606

1275 1795 2530 1847 2434 3244

Total excl. Rehab 1777 2336 3105

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Kindly note that the ALOS for Plastic Surgery is taken as 2.5 days; for Reconstructive Surgery is 3.8 days and for Circlulatory, Nervous and Orthopaedics combined is taken as 4.5 days.
Table 11 Hospitals Beds estimated for RCPS, Nervous System, Orthopaedics and Circulatory System

Beds Plastic Reconstructive Subtotal Circulatory Nervous Orthopaedics Rehabilitation Subtotal Total Total excl. Rehab

Yr 1 3 1 4

Yr 2 4 1 4

Yr 3 4 1 5

Yr 10 12 1 13

7 25 29 22

9 35 39 30

13 49 54 41

26 97 110 84

The above gives us a total of 41 occupied beds by end of 3 years which means 50 beds are required. However as secondary care specialties (Medicine, Surgery, Obs-Gynae, ENT, Opthalmology, Dental) tertiary care specialties - cancer care and Paediatrics and Neonatology is also recommended for which additional beds will be required. Additionally certain other super-spcialties like Pulmonology, Endocrinology will be required to support the Tertiary care patients. A rough estimate of additional 90 beds (15 for cancer care, 20 for Paediatrics & Neonataology and 50 for secondary care specialties) is recommended taking the total number of hospital beds to maximum of 175 beds. Patient Volumes Per Unit Approach On the basis of utilisation of hospital services in a comparable private hospital, this model estimates patient numbers seen in each specialty taking into consideration major procedures or admissions. On the basis of this the business plan is developed which estimates a total of 120 beds. Kindly note, that cardiac surgery is not considered, nor a strong paediatrics / neoEPOS Health Management

natology department. Hence a total of 150 beds can be reached. The Business Plan is developed as a bottom-up approach by elaborating on profit centre

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model. Each profit centre (clinical or non clinical department/centre) analysis also called centre-wise business plan, was developed by projecting service workload and the required resources. International benchmarks adapted to the country are included for costs and workloads. This approach provides costs of each clinical case along with the required volume and cost of investigations, human resources, drugs & consumables.

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The advantages of this approach are: Speciality wise or centre wise independent business plans Business Plan can be easily adapted for changes in projections Business Plan can be used during implementation phase Forms the basis for developing the hospitals Schedule of Charges Projects required workload for Diagnostics (Laboratory & Radiology) Overall Project Cost/Budget can be determined to achieve targeted returns Human Resource Requirement can be determined

The Business Plan projections on service workloads are on the basis of average patient load per speciality with considerations given to available incidence-prevalence data for the given clinical service. The individual business plans needs to be screened by clinical experts of the country to validate the plans wherever possible. However as this is a generic business plan which has not been optimised for MHMC project, it is estimated that there could be changes of up to 30% higher or lower both in terms of patient volumes and also in terms of financials. It is highly recommended that this business plan should be validated i.e. estimation of the market need for each speciality through a detailed market demand assessment should lead the development of patient volumes for each speciality. Then only the volatility of the estimations will be minimised leading to a more reliable business plan. A very rough estimate of patient volumes is made in later section on the above basis.

4.2.4 Major Challenges


Mortality The top causes for mortality in UAE as per WHO is as follows:
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Heart Disease Accidents Respiratory Diseases Cancer Diabetes Congenital Disorders

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Acronyms

Table 12 Registered Biosstatistics of UAE (MoH 2007 Data) Data Maternal Mortality Rate % of deaths with cardiovascular D. % of deaths with accidents, poisoning & violence % of deaths with respiratory D. % of deaths with tumours % of deaths with prenatal, natal & postnatal % of deaths with perinatal Rate of cadiovasculer D. deaths / 100,000 Rate of accidents, poisoning & violence deaths / 100,000 Rate of respiratory D. deaths / 100,000 Rate of tumours deaths / 100,000 EPOS Health Management Rate of prenatal, natal & postnatal deaths / 100,000 (Female 15 49) % of not stated deaths 1998 1999 2000 2001 2001 2003 2004 2005 2006 2007

0.01

23.86

24.23

25.4

26.71

28.69

27.99

25.04

23.24

21.86

22

16.68

17.87

16

17.35

17.35

17.63

17.48

17.2

15.87

19

2.74

2.89

3.47

3.37

3.92

4.49

5.95

6.96

7.39

8.25

8.42

8.6

7.69

8.31

8.81

8.59

8.65

8.92

9.09

0.04

0.02

0.05

0.03

0.07

2.39

2.49

2.44

2.1

1.83

2.72

2.38

2.26

2.5

2.34

44.11

43.7

44.5

46.75

44.7

41.57

35.49

36

33.51

36.36

30.84

32.23

28.02

30.36

27.04

26.18

24.77

26.66

24.33

31.39

5.07

5.21

6.08

5.9

6.1

5.94

6.37

9.23

10.66

21.21

15.26

15.18

15.06

13.47

12.95

13.09

12.18

13.4

13.66

15

0.01

February 2010 20.15 10.7 11.02 11.67 15.93 9.33 8.53 11.6 13.71 13.64

The other major challenges are as follows: Healthcare Sector Management and Regulation Shortage of qualified medical professionals

Feasibility Study and Business Plan Review of the MHMC

32

Acronyms

Low private sector participationand Poor health infrastructure

Currently GCC has approx 2 physicians per 1,000 population, higher than the global average is 1.3 but lower than the US and Europe average of 2.6 and 3.2 respectively. The Nursing & Midwifery staffing ratios per 1000 population 6.1 in Bahrain, 3.7 in Kuwait, Oman has 3.7, Qatar has 6, Saudi Arabia has 3, and UAE has 3.5. These are lower than the US and European ratios of 7.9 and 9.4 respectively. Utilisation of Services The following table gives insight into the existing utilisation of public healthcare services. This in turn gives an insight into healthcare seeking beaviour for certain specialties.

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February 2010

Feasibility Study and Business Plan Review of the MHMC

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Acronyms

Tabelle 13: Hospital Services to inpatients by specialty

Services Natio. Deaths Citizen Speciality Medicine Chest Cardiology Nephrology Nervus Psychiatry Dermatology Paediatric Med. General S. Vas. Thora. Surgery Cardiac S. Neoros Urology Paediatric S. Orthopaedic Plastic S. Ophthalogy E. N. T. Gynaecology 490 0 71 20 17 0 0 33 36 2 0 35 1 0 4 4 0 0 2 60739 195 5401 777 383 23052 109 25545 19456 0 0 2364 3333 0 31935 637 1985 3738 22456

Days of Stay

Admission Beds Total

Non-Citizen

Total

Citizen

NonCitizen

39368 797 10922 1013 2383 7996 24 18713 33742 0 0 7038 3839 15 21852 2910 1835 2088 13383

100107 992 16323 1790 2766 31048 133 44258 53198 0 0 9402 7172 15 33787 3547 3820 5826 25839

10994 25 1464 116 71 445 27 9049 5343 0 0 340 810 0 2225 125 559 1284 4636

7444 45 2866 131 479 385 10 5640 7283 0 0 656 895 0 3418 196 436 677 4553

18438 70 4330 247 550 830 37 14689 12726 0 0 596 1705 0 5643 321 995 1961 9189

443 3 67 21 13 100 9 207 267 0 0 20 48 0 146 18 51 50 196

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Acronyms

Services Natio. Deaths Citizen Speciality Obstetric Cardio Vas. Malignant General Geriatires Rahabil Dental S.C.B.U. Other Total New Born Emergency Total 6 0 3 0 4 0 3 77 336 1143 21 424 1588 30122 153 0 596 34734 0 491 7422 4602 230225 0 0 230225

Days of Stay

Admission Beds Total

Non-Citizen

Total

Citizen

NonCitizen

21888 339 0 0 4628 0 748 6673 5483 207677 0 0 207677

52010 492 0 596 19362 0 1239 14095 10085 437902 0 0 437902

10601 41 0 84 756 0 126 988 1054 51163 0 0 51163

7319 59 0 0 8 0 215 795 1243 44753 0 0 44753

17920 100 0 84 764 0 241 1783 2297 95916 0 0 95916

212 101 0 22 62 0 12 83 78 2132 226 159 2517

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Acronyms

Table 14 Overseas Treatment sponsored by MoH 2007

Name of Country Germany United Kingdom U. S. A. A. R. E. India Others Total 158 27 14 16 28 69 312

Patients Citizen Non-Citizen 0 0 0 0 0 0 0

Total 158 27 14 16 28 69 312

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February 2010

Feasibility Study and Business Plan Review of the MHMC

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Acronyms

Table 15 Hospital Services to Outpatients by Nationality and Specialty (MoH 2007 Data)

Citizen Specialty Medicine Chest Cardiology Nephrology Nervus Psychiatry Dermatology Paediatric Med. General S. Vas. Thora. Surgery Cardiac S. Neoros Urology Paediatric S. Orthopaedic Plastic S. Ophthalogy E. N. T. MS 22449 2 739 72 101 568 5186 16867 5266 39 3 285 2268 0 12495 93 7879 12305 F1 26420 3 665 88 183 588 8343 15526 4255 56 5 405 1079 0 9737 120 9327 13996

Non-Citizen MS 3999 20 693 51 159 420 1278 1768 2234 47 2 236 1570 0 6468 235 6325 2847 F1 2477 8 406 35 150 234 1382 2327 1099 15 1 132 408 0 1840 56 1675 1571

Citizen MS F1 103162 17 10362 729 1516 9749 34964 29754 11483 277 62 1375 3807 0 21016 604 2518 19765

Non-Citizen MS 96466 33 4876 358 1206 4143 2254 4430 4486 130 42 663 3399 0 9299 540 3842 2748 F1 9033 29 2104 179 949 3442 2925 3892 2587 80 14 317 965 0 3370 188 2629 2037

55345 33 2503 246 593 1810 16189 36488 12854 157 11 1058 5325 0 30540 504 25206 30719

59539 11 10651 620 1084 7435 18243 33561 11317 226 91 1059 9025 0 17840 496 19357 16581

181200 90 28193 1886 4755 24769 58386 71637 29873 713 209 3414 17190 0 51525 1828 51046 41131

236545 123 30696 2132 5348 26579 74575 108125 42727 870 220 4472 22515 0 82065 2332 76252 71850

Feasibility Study and Business Plan Review of the MHMC

Visit/Pers on 4.27 3.73 12.26 8.67 9.02 14.68 4.61 2.96 3.32 5.54 20.00 4.23 4.23 0.00 2.69 4.63 3.03 2.34

Data

View Cases Total

Repeat Cases Total Total

37

Acronyms

Citizen Specialty Gynaecology Obstetric Cardio Vas. Malignant General Geriatires Rahabil Dental S.C.B.U. Other Total MS 0 0 1 0 231170 20488 78 4967 4216 0 347537 F1 4299 5580 3 0 189881 18073 74 5642 5886 0 320234

Non-Citizen MS 0 0 0 0 290501 5769 74 947 821 0 326464 F1 1466 5580 0 0 147668 4046 48 608 588 0 173828

Citizen MS F1 0 0 59 0 882 33800 9734 38521 8478 0 298810 22043 46236 94 0 864 37630 8898 36954 17063 0 443636

Non-Citizen MS 0 0 2 0 234 2293 8963 7714 1181 0 72302 F1 6706 23606 40 0 88 1755 5036 5258 1104 0 78333

5765 11168 4 0 859220 48376 274 12164 11511 0 1168063

28749 69842 195 0 2068 75478 32631 88447 27826 0 893081

34514 81010 199 0 861288 123854 32905 100611 39337 0 2061144

Feasibility Study and Business Plan Review of the MHMC

Visit/Pers on 5.99 7.25 49.75 0.00 1.00 2.56 112 8.27 3.42 0.00 1.76

Data

View Cases Total

Repeat Cases Total Total

38

Rapid Market Analysis Summary

Table 16 Operations by Speciality and District (MoH 2007)

District Speciality General S. Orthopaedic Urology Plastic S. Paediatric S. Neurology S. Oncology Cardiovascu. Thoracic S. Cardiac S. Ophthalogoy E. N. T. Dermatology Gynai & Obst Dental Others Total

Dubai 506 231 101 0 0 0 0 0 0 0 13 197 0 508 92 58 1706

Sharja 4354 1578 394 487 0 168 0 6 66 97 388 549 0 1991 229 14 10321

Ajman 934 1049 142 0 251 22 10 0 4 0 409 315 439 879 1 0 4455

U. A. Q. 268 299 43 0 0 13 0 0 0 0 91 176 0 258 0 92 1240

R. A. K. 1684 3172 569 95 48 25 0 86 0 0 732 505 0 2396 608 76 9996

Fujeira 867 733 129 5 227 29 9 0 0 0 228 164 7 737 10 321 3466

Total 8613 7062 1378 587 526 257 19 92 70 97 1861 1906 446 6769 940 561 31184

4.2.5 Existing Healthcare Providers


There are currently three major categories of health service providers in the country: 1. 2. 3.
EPOS Health Management

MoH Hospitals Non-MoH Hospitals but Governmental (Ministry of Defence and others) Private Hospitals

Sheikh Khalifa Medical City being considered as the premier healthcare organisation in the UAE, although a public provider is considered for comparison as it is comparable with a quality private healthcare provider like the proposed MHMC Main Hospital.
February 2010

The following statistics of SKMC are the latest that are available of any hospital in UAE and serve as excellent benchmarking / comparison for MHMC operations at its full occupancy levels (Year 4), although with adaptations as required considering it is a public provider with strong integration with primary healthcare facilities.

Feasibility Study and Business Plan Review of the MHMC

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Rapid Market Analysis Summary

Table 17 Shiekh Khalifa Medical City Statistics 1st Jan 2009 till 31 Dec 2009

Outpatients Speicality Clinics Visits (14 clinics) Inpatient Admissions (Medical and Surgical Pavilions only) Short and Day-stay visits Emergency Department Visits (Triaged-in) Adult and Paediatric Cardiac Surgeries Adult and Paediatric Surgeries (minor and major) Day Care Surgeries Haemodialysis and Peritoneal Dialysis runs (adult and paediatrics)
Table 18 Statistics of Medical and Surgical Institute (Pavilions) of SKMC

160,524 16,183 6051 91423 311 & 346 7154 1182 40580

2008 MEDICAL INSTITUTE Inpatient Admissions Outpatients Dermatology Diabetes and Endocrinology Gastroenterology Haematology Internal Medicine Nephrology Respirology Endoscopy Procedures Bronchoscopy Colonoscopy ERCP Oesophagoscopy Respiratory Diagnostic Services Blood Gas Analysis
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2009*

3835

4686

10280 14271 5128 6673 3372 4490 1736

13400 14562 5296 7772 4010 4495 2304

143 501 61 773

210 515 63 892

47471 139 1102 36

54212 175 1194 77

Polysomnography Studies Pulmonary Function Test Six Minute Walk Test

February 2010

SURGERY INSTITUTE Inpatient Admissions Outpatient Visits Dentistry General/Thoracic Surgery Maxillofacial Surgery 2456 4081 1984 2103 4299 2143 3388 3246

Feasibility Study and Business Plan Review of the MHMC

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Rapid Market Analysis Summary

2008 Neurosurgery Ophthalmology Orthopaedic Surgery Otolaryngology/Head and Neck Surgery Paediatric Surgery and Paediatric Urology Plastic Surgery Transplant and Hepatobiliary Surgery Urology Vascular Surgery OR Visits OR Visits Surgical Day Care Surgical Case Classification Major Minor Transfers to ICU-Post-operative 5085 1380 815 6465 715 2628 9632 13279 11909 1958 5244 501 3465 976

2009* 2660 8732 13830 10820 2115 8248 788 3698 1254

7355 1163

5867 1488 1017

* Annualised on the basis of the figures for the first 10 months)

Table 19 Salient Features of SKMC Surgical Institute Services

Speciality Neurosurgery

Salient Feastures and Patient Volumes Operating Room Volumes: 250 in 2007; 260 in 2008 and projected total of 290 in 2009 95% cases are major OR Volume: In 20 months 535 cases; i.e. 26 per month; 312 per year. 8-% were major cases 240 were Trauma (45%); 138 were Dento-alveolar (26%); 86 were Orthognathic (16%); 45 were Reconstructive (8%); 15 were drainage of infection (3%) and 11 were cleft lip and palate (2%). OR Volume: 420 in 2007; 520 in 2008 and 420 in 2009 (projected) OR Volume: 100- in 2007; 1350 in 2008 and 1650 in 2009 projected OR Volume: 740 in 2007; 750 in 2008 and projected 800 in 2009. Paediatric were 56% and adult were 44% OR Volume:650 in 2007; 610 in 2008 and projected of 650 in 2009 60% General Paediatric; 18% Minimal invasive; 16% Paediatric Urology and 6 % Neonatal Surgery OR Volume:520 in 2007, 550 in 2008 and projected 600 in 2009 70% cases were major cases Plastic Surgery Clinic: Average of approx. 400 visits per month in outpatients in 2008 i.e. approx 4800 visits in year 2008. OR Volume: 350 in 2007, 330 in 2008 and projected of 470 in 2009 50% were major cases.

Maxillofacial Surgery

Ophthalmology Orthopaedic
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ENT Paediatric Surgery

February 2010

Plastic Surgery

Urology

Feasibility Study and Business Plan Review of the MHMC

41

Rapid Market Analysis Summary

Vascular Surgery -

In 18 months, 515 cases were performed; i.e. avg. of 28 cases per month; ie. 336 per year. Total of 515 cases: 259 were Endovascular Cases and 286 were open cases Open Cases: 124 were Diaysis Access (24%); 111 were others (21%); 10 were Diabetic Ischemis Foot Bypass (2%); 7 were carotid Access (1.5%) and 4 were Aortic Cases (1%) Endovascular Cases: 217 were Others; 30 were diabetic Ischemis Foot; 5 were thoracic; 4 were Hand Ischemia; 2 were carotid and 1 was aorta.

Table 20 Salient Features of SKMC Medical Institute Services

Speciality Dermatology

Salient Feastures and Patient Volumes Diagnosis Breakdown: 36% Acne; 26% Atopic Dermatitis; 12% Warts; 9 % Vitiligo; 7% Psoriasis; 5% Alppecia; and 5% Molluscum contagiosum. Guildelines: American Association of Clinical Endocrinologists; American Diabetes Association; American Thyroid Association and the Endocrine Society. Diabetes constituted 50% of cases treated by the division Diagnosis Breakdown: 55% Diabetes Mellitus; 35% Thyroid Disease and 10% Endocrine Disorders. Insulin Pump Program: 200 patient in Last three years have enrolled with significant patients acceptance of the pump therapy 2 outpatient and 1 patient units equipped with total of 45 haemodialysis machines Outpatient units with highest haemodialysis runs with 88% followed by 10% runs in inpatient settings and only 2% in ICU/CCU. No. of patients: approx 3080 in 2007; 3400 in 2008 and 3420 in 2009 (annualisedon 10 mths). Nephrology Outpatients: 4490 in 2008 and 2009 Enodoscopy Volume: 1220 in 2007; 1400 in 2008 and 1750 in 2009 (annualised). GI Endoscopies Breakdown: 60% Gastroscopy; 35% Colonoscopy; 4% ERCP and 1% Sigmoidoscopy. USP: Capsule Endoscopy; Endoscopic Ulrasound Anticoagulation Clinic, Infusion Center, Thalassemia Program and Therapeutic Apheresis Infusion Centre: Approx 2000 visits in 2008; Services include Blood Exchange Transfusion, Central line catheter care, cheotherapy, Infusion Therapies, Lumab puncture and bone marrow smapling, targeted therapies, therapeutic phlebotomies, therapeutic plasma exchange, transfusion of blood products, transfusion of sickle cell disease, haemoglobinopathies and thalassemia. Infusion Centre Visits: 54% Haematology; 21% Oncology; 13% Rheumatology; 4% Neurology; 3% Gastroenterology; 3% Others and 2% Dermatology Infusion Centre Diagnosis Breakdown: 19% Thallasemia; 11% parenterla Irol Therapy; 10% Breast Cancer; 7% Colon Cance; 5% Multiple Myeloma; 4% Lymphomas and 44% others.

Diabetes and Endocrinology

Nephrology Renal Dialysis Program

Gastroenterology (Endoscopy, Gastroenterology and Hepatology)

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Haematology -

February 2010

Feasibility Study and Business Plan Review of the MHMC

42

Rapid Market Analysis Summary

Speciality

Salient Feastures and Patient Volumes Most Commonly treated disorders (in order): Pneumonia; Cerebrovascular Accident; Diabete Mellitus; Congestive Heart Failure; Tuberculosis and Solid Cancer Subspeciality Breakdown: 27% Infectious Disease; 14% Haematology; 14% Others; 11% Neurology; 9% Respirology; 7% Diabetes/Endocrinology; 7% Gastroenterology; 6% Cardiology and 5% Nephrology. ALOS: Significantly affected due to comorbidity and lasck of nursing home facilities. Jul 08 ALOS of 6.6 days and Sept 09 ALOS of 6.6 days; ALOS (jul 08 to Sep 09) approx 6.6 days Guidelines: International Headache Society, American Academy of Neurology Diagnosis Breakdown: 35% Headache; 30% Seizure; 15% Other Neurological Conditions; 10% Multiple Sclerosis and 10% Painful Neuropathy Epilepsy Clinic, Neurophsyilogy Lab Breast Cancer Clinic; Colon Cancer Clinic; Gynaecological Cancer Clinic; Head and Neck Cancer Clinic and Lung Cancer Clinic Inpatient Consultations in 2009 were 540; Total of 210 Bronchoscopies Bronchoscopy Locations: 48% in Endoscopy suite; 43% in ICU and 9% in OR. Diagnosis Breakdown: 26% Osteoarthritis; 25% Others; 20% Rheumatoid Arthritis; 11% SLE; 4% Fibromyalgia; 3% DegenrativeSpondylosis; 3% Osteoporosis; 3% Psoriatic Arthritis; 3% Undifferentiated Polyarthritis and 2% Ankylosing Spondylitis.

Internal Medicine -

Neurology Oncology Rheumatology

Respirology

4.2.6 Competitor Analysis


American Hospital, Dubai American Hospital, Dubai has completed 10 years of operations. The existing infrastructure includes 145 beds in total including 20 beds for ICU, 5 NICU beds, and 5 OTs. A new building is nearing completion which comprises of additional 200 beds, 40 ICU beds and 7 OTs. The Hospital has a Life Training Centre for Doctors and Nurses which conducts AHA (American Heart Association) certified courses BLS, ACLS and others. They have a strong continuing medical education program for Doctors and Nurses including incentives for attending external conferences. The Human Resources selection is regulated by guidelines / credenEPOS Health Management

tialing system ensuring availability of well trained professionals. The prices of American Hospital are double that of hospitals like Zulekha. AHD is recognised a centre of excellence for Joint Replacements in the region and has a strategic partnership with Zimmer.

February 2010

Welcare Hospital Welcare Hospital, Dubai was one of the first few private hospitals which established strong cardiac sciences specialties. Their decision of relocating the complete cardiac sciences services to their sister hospital City Hospital in the DHCC, led to human resources issues and weakening of their cardiac market share and brand. Welcare Hospital today enjoys confidence of majority of residents of Dubai due to its good quality services in nearly all spe-

Feasibility Study and Business Plan Review of the MHMC

43

Rapid Market Analysis Summary

cialties. They are facing problems as they cannot expand their existing facility (hotel converted into hospital) but their City Hospital after initial problems is getting more patients. Welcare has recently expanded their NICU to 20 beds with a reasonable occupancy of 65% as it is still developing. The human resources are well selected and well trained with continuous training programs in place. Welcare Hospital comes next in line for joint replacements after American Hospital with approximately 300 Joint replacement procedures. Al Zahra Hospital, Sharjah: The hospital is providing good quality services for more than 25 yrs in Sharjah. The infrastructure has been the main limiting factor having converted a hotel into hospital; however, with the new building nearing completion this limitation will be overcome. They are also preparing for JCI accreditation. The hospital is known for its services in all specialties, and caters to nearly middle and higher socio economic status. They have recently expanded their NICU to 20 bedded are facing shortage of trained nurses and hence have operationalised only 7-10 NICU beds. Zulekha Hospitals (Dubai and Sharjah) Zulekha Hospital, Dubai is located on the border of Dubai and Sharjah catering to both districts. Their target client is the middle socio-economic segment and they are JCI accredited providing good quality care at reasonable prices which is the reason for their fast growth. The infrastructure can be stated as basic compared to that of American Hospital and Welcare Hospitals. Patients Treatment Abroad DOHMS 2003 data shows that 47% of patient treatments abroad are in Germany, followed by 33% in the United Kingdom, USA, Australia and others.

4.3

Rough Estimations of Patient Volumes

Presumption for interpreting the table: The Feasibility Study projects continuous growth in patient volumes till end of 10th year but we assume that the hospital reaches its market share
EPOS Health Management

after year 3 and the patient volumes are assumed to be constant till year 10. The rationale for this argument is that after year 3 the volume projections are subject to high volatility.

February 2010

Feasibility Study and Business Plan Review of the MHMC

44

Rapid Market Analysis Summary

Table 21 Rough Estimation of Patient Volumes and Comparison with TAG, IHC and UHMS Volumes TAG IP Volumes (IP Discarges Nos.) Change in Patient Volume (%age) Recommended Patient Volumes tille Yr 4 (IP Discharge Nos.) Recommended Patient Volumes till Yr 10 [Yr 4 Volumes + 36%]

Speciality

IHC IP Volumes

UHMS

Basis and Rationale of Revision

1. High Increase in Providers esp. in Dubai resulting in decrease of market share assumption from 10% to 3 percent Plastic Surgery and Reconstructive 2108 1600 - 80% of TAG 422 573 2. Increase of 300% is not realistic from 2004 to 2018 3. Utilisation is dependant on economy and lifetyles trends but not life threatening. 1. SKMC Abu Dhabi, Welcare, Belhaul, American Hospital, Zulekha have established themselves leaving less market share for MHMC 2. Dubai has approx 9 cathlabs with low utilisation (5-7 plasties per cathlab per month) 1. SKMC Abu Dhabi, Welcare, Belhaul, American Hospital, Zulekha are well established in last 3 years and there is currently overcapacity in the market 2. American Hospital is currently doing only 7-10 cardiac surgeries (CABG) per month. 1. Governement Rashid Hospital and Neurospinal Centre, Dubai are well established alongwith other hospitals providing Neurosciences. 2. Trauma cases continue to go to the government hospital inspite of private providers providing the services. 917 1247 1. American Hospital has established as a centre of excellence in Joint Re-

Cardiology

1969

2300

- 50% of TAG

985

1339

Cardiac Surgery and Vascular Surgery

653 and 295

600 and 200

- 50% of TAG

327 and 148

444 and 201

Neurology and Neurosurgery

811 and 700

NOT CONSIDERED

40% of TAG

324 and 280

441 and 381

Orthopaedics

1834

1300

- 50%

Feasibility Study and Business Plan Review of the MHMC

45

Rapid Market Analysis Summary

Speciality

TAG IP Volumes (IP Discarges Nos.)

IHC IP Volumes

UHMS

Change in Patient Volume (%age)

Recommended Patient Volumes tille Yr 4 (IP Discharge Nos.)

Recommended Patient Volumes till Yr 10 [Yr 4 Volumes + 36%]

Basis and Rationale of Revision placements with 800 replacements; Welcare hospital does approx 300 replacements and Al Zahra has a well etablished Joint Replacement program in place 2. All other private hospitals are providing orthopaedic services. 1. Many private hospitals are provingd these basic services in cluding laproscopic procedures. 2. Basis for reaching patient volumes by IHC not present. 1. No strong basis for estimating patient volumes by IHC

General Surgery

NOT CONSIDERED

1500

50% of IHC

850 (including Minimal Invasive)

1156

Endoscopy

NOT CONSIDERED

2000

- 50%

1000

1360

2. Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects. Guesstimate of 44 visits per day in ER by IHC; 5% get admissions i.e 1000 IP; 50% as medical urgent case admissions. Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects. Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects. Estimated as per existing patient volumes of a usual hospital on the basis of

Internal Medicine Urgent Cases

NOT CONSIDERED

500

NOT CONSIDERED; Volumes from ER admissions already considered in respective specialty Volumes considered in terms of bed nos. of 24 Volumes considered in terms of bed nos. of 48 NOT CONSIDERED

Paediatrics and Neonatology

NOT CONSIDERED

NOT CONSIDERED NOT CONSIDERED NOT CONSID-

NA

1200

1632

Obstetrics and Gynaecology

NOT CONSIDERED NOT CONSIDERED

NA

1400

1904

ENT

NA

500

680

Feasibility Study and Business Plan Review of the MHMC

46

Rapid Market Analysis Summary

Speciality

TAG IP Volumes (IP Discarges Nos.)

IHC IP Volumes ERED

UHMS

Change in Patient Volume (%age)

Recommended Patient Volumes tille Yr 4 (IP Discharge Nos.)

Recommended Patient Volumes till Yr 10 [Yr 4 Volumes + 36%]

Basis and Rationale of Revision doctor interview and other expereince from comparable projects.

Internal Medicine and Pulmonology Endocrinology (Diabetes and Obesity) and Nephrology

NOT CONSIDERED

NOT CONSIDERED

NOT CONSIDERED

NA

1100

1496

Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects.

Ophthalomology

NOT CONSIDERED

NOT CONSIDERED NOT CONSIDERED NOT CONSIDERED NOT CONSIDERED

NOT CONSIDERED

NA

700

952

Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects Estimated as per existing patient volumes of a usual hospital on the basis of doctor interview and other expereince from comparable projects On the basis of regional prevalence (data from Syrian Cancer registry) adapted to UAE-Sharjah

Urology and Renal Transplant Nephrology

NOT CONSIDERED

NOT CONSIDERED

NA

1000

1360

Dialysis

NOT CONSIDERED

NOT CONSIDERED

NA

4000

5440

Cancer Centre

NOT CONSIDERED

NOT CONSIDERED

NA

1000

1360

Feasibility Study and Business Plan Review of the MHMC

47

Rapid Market Analysis Summary

Table 22 Summary Box of Results of Rough Estimations of Patient Volumes

Summary Box: Hospital Beds and Patient Volume Results on the basis of Rapid Market Analysis Total IP Volumes: - Year 4: 10,302 cases - Year 10:14,010 cases (+ 36% based on growth model) Total Hospital Beds in Yr 4: 156 - 28 Beds ICU/CCU/HDU/NICU/PICU - 112 Beds standard wards and VIP - 16 Beds Day-care

Scope of Services Considering the market analysis which takes into consideration - the current availability of hospital beds; the health seeking characteristics of expatriates; the established centres of excellence in the country; the availability of human resources; the coming era of insurance coverage; the price competition; and the requirement for keeping healthcare cost at the minimum the following recommendations are made: A) Tertiary Care Centre: The development of a tertiary care centre requires an integrated healthcare system in place integrated with public and private providers. In the absence of this, provsion of secondary care services can support the development of a tertiary care centre by providing patient numbers as well as developing trust in the market due to more treatments. Hence provision of secondary care services is highly recommended. B) Selection of Tertiary Care Speciality: The selection of tertiary care specialty depends on the non-availability of the service in the region; the availability of patient load to justify establishment of the specialty centre; the capacity and vision to develop such a centre; the availability of qualified human resources; the availability of infrastructure and equipment and ease of establishing a referral system. EPOS Health Management

Cancer Centre: Tawam Hospital, Al Ain is currently the public provider and referral centre for the country, which is managed by John Hopkins, USA. It has four divisions: Oncology, Hematology, Radiotherapy and Palliative Care, with total of 39 beds and additional 32 bed sit flats on campus to

February 2010

accommodate those patients who have to travel long distances for ongoing daily outpatient treatment. They have Linear Accelerators but do not have the latest cancer treatment equipment like Cyber Knife, Trilogy System or other such advanced equipment. Tawam Hospital is also planning a new hospital building which may at least take 2 years for completion if construction starts. The public sector of Dubai has Linear Accelerator but does not have any advanced equiments. There are no major private hospitals providing

Feasibility Study and Business Plan Review of the MHMC

48

Rapid Market Analysis Summary

Radiotherapy but only provide Chemotherapy. Special areas of focus should be advanced equipments, comfortable Daycare Chemotherapy, Palliative Care Unit/Hospice, Oncology Rehabilitation and home care. This overall situation offers a scope for future development of cancer care provided initial feedback from insurance companies for their future policies in relation to cancer and advanced treatment options is taken. Cardiac Sciences: Sheikha Khalifa Medical Centre, Abu Dhabi and Mafraq Hospital are the referral centre for cardiac sciences. In Dubai City Hospital, Belhaul Hospital provides CTVS services. There are around 7-10 Cathlabs in Dubai with average of 7-10 angioplasties per cathlab per month. Sharjah does not have a state of art infrastructure for CTVS and Cardiology and if properly executed there is a scope for establishing a center of excellence. Special focus areas should be the Cardiac Rehabilitation, Minimal Invasive Cardiac Surgery and Electro-Physiology Services. Trauma Care: Rashid Hospital, Dubai has established itself as centre of excellence for Trauma care and Neurosurgery. Sharjah does not have a we ll established trauma care centre but it is difficult to substantiate a need without a thorough market demand. Also in general all patients in UAE usually got to the public hospitals and from experience from other regional country if good trauma care is provided, patients will move from public to the provate setup. Although insurance coverage remains an issue to be addressed ot reach a final decision. Respiratory Sciences: Pulmonology diseases are on the rise with changes in the environment including lifesyle factors like smoking and pollution. Allergies, COPD, Asthma and other occupational diseases especially in the lower middle socioeconimc segment is on the rise. These patients usually require intensive care once they develop infections / pneumonia. Provision and treatment of critical patients leads to development of trust from the population and helps estbalishment of a hospital. Patients from other specialty also require these services and hence these services should be
EPOS Health Management

provided for supporting the hospital services. Plastic Surgery and Reconstructive Surgery: In UAE, Dubai has estalished its name in provision of Cosmetic and Aesthetic services with

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availability of many small and big clinics. Sharjah does not have a well know centre providing these services. Paediatrics and Neonatology: Tawam Hospital and SKMC have well estbalished Paediatrics and Neonatology Services. Dubai and Sharjah do not have a comprehensive centre providing sub specialties of Paediatrics and Neonatology Paediatric Neurology, Paediatric Gastroenterology,

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Rapid Market Analysis Summary

Paediatric Urology, Paediatric Oncology, and others. UAE is the third country in the region with highest number of congenital disorders and only Al Wasl Hospital provides services including that for metabolic disorders. It should be noted that major voume of patients are from middle to lower socioeconoimic status, but there is definitel a need for paediatric centre and currently Dubais royal family is keen to establish Paediatric Hospital. Currently patients get their treatment protocols from GOSH (Great Ormond Street Hospital, London) and these therapies are administered in reputed hospitals of Dubai. Obstetrics and Gynaecology: Obstetrics is one specialty which always gives scope for establishing better infrastructure labour delivery suites / apartments where families can celebrate the newborn arrival. Secondly the region requires international standards IVF facilities. Gynaecology problems are rising and more awareness is leading to more patients. Renal Sciences (Urology and Nephrology): The region does not have a well established name for Nephrology, Dialysis and Kidney Transplant (given the regulatory issues). The region also lacks well qualified Nephrologists. A well equipped centre with well trained doctor and nursing staff will be succesfull and is recommended. Other Specialties: As stated above it is imperative in the region for a private hospital to start with provision of secondary care specialties as it builds the footfalls to the hospital and therby establishing the hospital in the community. Hence it is recommended to establish all specialty services.

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Review of Operational and Financial Analysis

5
5.1

Review of Operational and Financial Analysis


Gross Revenue

5.1.1 Major Assumptions


Concerning the assumptions of the volume of inpatient and outpatient cases we refer to the comments on pg. 6 and onwards (Plausibility check of the Market Analysis vis--vis Brief Market & Competitor Analysis. For the calculation of prices for medical services a detailed list was developed by UHMS.

5.1.2 Plausibility Check of the Major Assumptions


Concerning the plausibility check of the assumptions we refer to relevant section above of our report. We compared the prices for medical services with our experiences as well as with some broad datas available with us.

5.1.3 Conclusion of Plausbility Check


As described on pg. 9 the calculation of patient volume and occupancy rate is not100% applicable. The estimations concerning the prices for medical services are plausible.

5.2

Operating Expenses: Medical Staff

5.2.1 Major Assumptions


The estimated number of consultants and specialists is based on the number of clinics operating during every phase (outpatients clinics assumption, pg. 474). For example, in years 1 in Urology Clinics 2 consultants and no specialists were calculated, and for Pediatric Clinic 2 consultants and 4 specialists were assumed though this is not evident from the report. A total of 50 doctors were estimated in years 1 through 2 (30 consultants + 20 specialists).

5.2.2 Plausibility Check of the Major Assumptions


For the auditor it was not obvious, how the different numbers for consultants and specialists
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per clinic were calculated.There were no calculations or explanations concerning the method that led to the results of the number of consultants and specialists needed. The workload for the doctors were not estimated and did not become part of the calculation. There were no

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calculations which led to the conclusion, how many doctors / time of doctors are needed for the treatment of inpatients or for outpatients. Therefore the auditor calculated the number of doctors needed by listing all activities on ward, OT, and outpatient departments following standard Clinical Pathways. Salary estimates were compared with those derived from our experience with comparable projects.

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Review of Operational and Financial Analysis

5.2.3 Conclusion of Plausbility Check


In conclusion, the assumptions for the number of medical staff needed are not plausible. The assumed wages however, were in line with EPOS estimations.

5.2.4 Recommendation
We recommend to calculate the necessary medical staff on the base of planned inpatient and outpatient procedures and other activities.

5.3

Operating Expenses: Non-Medical Staff

5.3.1 Major Assumptions


There was a detailed listing concernig non-medical staff on pg. 651 ff. of the report. It led to the conclusion that 498 non-medial staff are needed in year 1.

5.3.2 Plausibility Check


The way, how the needed staff was calculated was not described. The methodology used therefore was not reviewable. The auditor calculated the number of non-medical staff needed by referring to Standard Operating Procedures and international benchmarks. The estimated salaries were compared with those used in similar projects.

5.3.3 Conclusion
The assumptions for the number of non-medical staff needed are not plausible. The assumed wages were in line with our estimations.

5.3.4 Recommendation
We recommend calculating the necessary number of non-medical staff on base of international Benchmarks.

5.4

Operating Expenses: Consumables and other

5.4.1 Major Assumptions


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There were detailed calculations for the departments of Radiology and Laboratory, as well as for medical supply, food supply, utilities, insurance, depreciation etc.

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These calculations were based on cost per unit and the numbers of planned units, benchmarks concerning costs per procedure and inpatient day, cost per meal x planned number of meals and benchmark data.

5.4.2 Plausibility Check


The methods used to estimate resources were described very clearly.

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Review of Operational and Financial Analysis

We compared the used benchmarks with our experience from similar projects and checked quantities with regard to their plausibility by comparing them with the envisaged medical and non-medical services of the hospital.

5.4.3 Conclusion
The Auditor could not identify any element that suggests that these estimates are not plausible.

5.5

Investment Costs: Main Hospital Buildings and Parking Area

5.5.1 Major Assumptions


On pg. 753 a number of 51,502 sqm for hospital buildings and wards were assumed. The constuction costs were estimated with 2,095.89 $ per sqm. Based on 248 planned beds a total number of 51,502 sqm equals 208 sqm per bed. This led to total costs for investment for main hospital buildings of 106,999,397.26 $. The price for construction of parking area was estimated with 739.73 $ per sqm. The space needed of 27,375 sqm refers to a number of 2,5 required parking space per bed.

5.5.2 Plausibility Check


We compared the space needed and the price per m with data from comparable projects and with international benchmarks. In countries like Germany, patients are accommodated in rooms with two beds; a gross floor area of 80 m per bed is common. However, this includes only small OPD units (outpatient consults in hospitals in GCC are around 10 to 15 times higher than in German Hospitals). The price per m is related to the costs for labour and material. In countries with low costs of labour, like in certain countries of the Gulf region, construction costs of 850 per m are achievable (for standard buildings).

5.5.3 Conclusion
The costs for construction, as well as the surface area should be decreased without compromising with the quality of medical services for patients.
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5.5.4 Recommendation
We recommend 90 m per bed with a range of 80 to 95. Based on 90 sqm per bed and esti-

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mated need of 160 beds for MHMC Main Hospital, the total area for inpatient services is approximately 18000 sqm. For outpatient services (based on average consultation time of 15 minutes and approximately 150,000 visits per year) additional 9,000 m would be needed. This leads to a maximum total of approximately 27,000 m for the hospital (inpatient and outpatient services) - plus areas for communications and floor plant areas.

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Review of Operational and Financial Analysis

The price for construction is dependant on labour cost and material cost. Although the labour cost in GCC is lower than the European level, the MHMC Project is targeted to utilise high quality material (fixtures) and hence the average price per sqm could be higher. The cost per sqm for hospital projects in Bahrain is approximately 850 USD (without medical & nonmedical equipment), while it is 2,600 USD in Germany. In view of the price competition in healthcare market and to achieve project financial feasibility a price of 1,600 USD per sqm and a range of 1,400 to 1,700 USD per sqm seems to be recommendable. Based on 160 beds, 2.5 bays per bed, and 15 sqm per bay, a total of 6.000 m and 400 bays for parking area is recommended. However the number of bays and areas can increase considering other health facilities of the MHM Complex.

5.6

Investment Costs: Medical Equipment, Furniture Costs, Medical Instruments, & IT

5.6.1 Major Assumptions


On pg. 755 a number of 38,100,000 $ for phase 1 for medical equipment, furniture costs, medical instruments, and IT is required. The report does not explain, how these figures were calculated. The assumptions of the estimations are not clear.

5.6.2 Plausibility Check


Following international benchmarks, a lump sum of 800 $ per sqm for medical equipment, 265 $ for non-medical equipment/IT, and 200 $ for others is needed.

5.6.3 Conclusion
The investment costs for medical equipment, furniture costs, medical instruments, and IT seem to be overestimated.

5.6.4 Recommendation
We recommend to develope a detailed calculation concerning the equipment needed referring to the planned scope of services.
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5.7

Investment Costs: Total Design and Supervision Fees for Construction

5.7.1 Major Assumptions


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On pg. 756 the total design and supervision fees for construction were estimated with 9 % of the total cost of construction and equipping.

5.7.2 Plausibility Check


We compared the estimation with our experience, where these costs were in a range from 7% to 15 % of the costs for construction and equipment.

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Review of Operational and Financial Analysis

5.7.3 Conclusion
The estimated total design and supervision fees for construction are plausible.

5.8

Financing Costs

5.8.1 Major Assumptions


The company plans to finance 50% of the investment with equity, and the other 50% through loans. On pg. 867 the financing details are described. For the loans for long-term financing (construction) and short-term financing (equipment) interest rates of 7% are assumed. A rate of 11.5 % opportunity costs for the equity fund for investors is also assumed.

5.8.2 Plausibility Check


We compared the estimated interest rates with our experience from similar projects.

5.8.3 Conclusion
The estimations for financing costs are plausible.

The following table gives a comparison of Project Costs of UHMS Study and the recommended scenario.
Table 23 Comparison of UHMS, Current and Recommended Project Costs

Investment costs Land for Main Hospital in sqm Land for women/children in sqm Land for Concourse/linked elements Landscape Total land Costs per sqm Land costs
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UHMS 9,131 2,938 1,250 5,000 18,319 225.53 4,131,484 36,393 7,836 4,000 2,823 51,052 2,095.89 106,999,376 100 500,000

Recommendation 9,131 1,250 5,000 15,381 225.53 3,468,877 22,736 22,736 1,600.00 36,377,600 100 500,000

Construction area - hospital Construction area - women /children Construction area - concourse/linked elements

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Construction area - not known Constructed area in sqm Costs per sqm Total construction costs Landscaping costs per sqm Total landscaping costs

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Review of Operational and Financial Analysis

Parking bays Parking area in sqm Costs per sqm Total construction costs Total costs Medical Equipment, Furniture, Medical Instruments, IT (excl. Additional Operational Beds) - Y1 (150 beds) - Y6 (248 beds) Sub-Total Design and supervision fees in % of construction costs Design and supervision fees Working capital Pre-opening expenses Contingency in % of medical equipment and construction Contingency Grand Total 14,851,556 5,249,802 5,574,233 6.00% 9,901,037 204,725,401 38,100,000 43,000,000 169,148,773 9% 5,753,721 4,000,000 5,137,000 6.00% 3,835,814 86,125,642 67,399,107 9% 19,798,098 26,250 739.73 19,417,913 126,917,289 9,807 740 7,254,532 44,132,132

5.9

Review of the Scenarios (Sensitivity Analysis)

The following scenarios ar presented in the UHMS Report:


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A 1.5 decrease in occupancy B 1.5% decrease in construction C 1.5% in cost of equipment D 1.5% in total amount of loan E 1.5% increase in interest rate F 4.5% increase in cost of equipment and furniture G 1.5% increase in amount of loan H 50% increase in amount of loan I No loan is taken J 1.5 decrease in occpuancy rate and 3.5% increase in variable rates K 10% decrease in occpuancy rate and 7.7% increase in rates after 5 years L 20% increase in cost of construction and 6.61% increase in rates in year 5

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There were no explantions for the selected percentages.

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Review of Operational and Financial Analysis

5.9.1 Plausibility Check


We compared the details of the sensitivy analysis with our experiences in similar projects.

5.9.2 Conclusion
The components of the sensitivity analysis provided by UHMS (occupancy, costs of construction and equipment, loan ratios and interest-rates) are very important concerning the feasibility of the project. However, important figures like the number of inpatient and outpatient cases were not part of the sensitivity analysis. The chosen percentages of mainly 1.5% are too low to show an impact of changing of market determinations, or other major decisions on the profitability of the project.

5.9.3 Recommendation
We recommend calculating possible changes with percentages between 10% and 20%. Changes in case loads should be part of the sensitivity analysis.

5.10 Overall Conclusion and Recommendations


A hospital project with 248 beds might not be feasible for the following reasons: Patient Volumes Less people utilising services (expatriates) Limited target client population (patients with high socio-economic status)

Increasing Competition New Hospitals and expansion of existing hospitals Close proximity to Dubai

We recommend planning a hospital which will contain a maximum of 160 beds, to be operationalised in two phases: Phase I of about 90 beds and Phase two of about 70 beds. This recommendation is primarily based on the experience that a hospital beds with less than 80 beds is generally not feasible and the rapid market analysis broadly indicated need for additional beds in the region.
EPOS Health Management

The project cost estimated by UHMS is too high and the future operator of the MHMC would face problems in financing and repaying the loans and equity because the projected patient

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volumes and revenues wont be achievable. In our opinion a hospital which is built on the basis of 90 m per hospital bed plus additional outpatient services area and the construction cost of 1600 USD per m is feasible.

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Review of Operational and Financial Analysis

5.11 Recalculation of Financial Projection


The profit and loss statement, break even analysis, return on investment etc. provided by UHMS are based on assumptions (patient numbers), which are not plausible. Therefore a valid financial projection out of these data is not possible. In order to show however, the potential profitability of an investment in healthcare services, a more accurate estimate of inpatient and outpatient cases is a basic foundation. Our rapid market analysis shows figures concerning possible number of patients, if the hospital would be able to provide secondary service for the following specialities: Internal Medicine and Cardiology / Endocrinology General Surgery, Minimal Invasive Surgery, and Orthopaedics Gynaecology / Obstetrics, and Pediatrics, ENT, Ophtalmology Oncology Neurology, Neurosurgery Urology / Nephrology

Furthermore there should be facilities for Daycare ICU Emergency Intermediate Care

Our estimations of the possible number of cases for the above mentioned specialities are based on the rapid market analysis and show a high voltality, which can exceed 30 % in either direction. For this reason, we advise not to publish the figures of the draft of the profit and loss statement, break even analysis, return on investment etc. unless a validation concerning the demand and supply structure of the catchment area was provided.

5.12 Risk Evaluation and Risk Mitigation Measures


EPOS Health Management

There are two major risky fields that could target the feasibility of the project: Costs of investments Number of patients

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Total costs of more than 200 million USD for investments will lead to a high burden for the managment of the hospital. For coverage of interests and opportunity costs, 18 million USD per year or 1.5 million USD per month have to be earned by revenues. Considering an average income of 3,000 USD per case, every month a number of 500 inpatients have to be discharged in order to cover the costs of financing, before the admission of additional patients wil enable the hospital to pay for other operational costs (HR, consumables, etc.)

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Review of Operational and Financial Analysis

In order to minimize the risks it is necessaary to reduce the costs for construction to a limit, which enables the hospital to provide outstanding quality of medical services and worldclass ambiance for the areas, which are visible to the patient. To run the hospital with high profitability on a long term base, the following presumptions have to be secured: Professional Management High specialized medical dotors Economic efficient organisational structures Strong controlling and risk management systems Excellent Quality management

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Final Recommendation and Next Steps

6
6.1

Final Recommendation and Next Steps


Development of Mubarak Al Hassawi Medical Complex

This section provides with the overview, integration aspects, organisation of the MHMC components and the details about the Main Hospital. The Wellness and Diet Centre (WDC) is reffered to as Health and Lifestyle Insitute while the Rehabilitation Centre is referred to as Rehabilitation Institute.

6.1.1 Overview of Mubarak Al Hassawi Medical Complex


The MHMC concept has a comprehensive outlook towards healthcare as it covers the complete spectrum (refer Figure 5 below) as follows: MHMC Main Hospital: Providing Diagnostics Services and Treatment MHMC Rehabilitation Institute: Providing Rehabilitation Services MHMC Health and Lifestyle Institute: Providing Wellness and Preventive Services Furthermore the concept is consolidated by provding retail services. The tenants of retail facilities will be selected under the aspect that their products shall meet the demand of our MHMC clients which should provide medical related retail (pharmacy, health and nutrition supplements, optometry products, dermatologic products, Healthy Food, medical appliances, mother and child care stores and others). The addition of healthcare science institue (wither Nursing College, Physiotherpay College or others) will add considerable reputation to the overall project. Human resources for health are in a very short supply worldwide and will always be in high demand, although the availability of students in this region compared to cost-effective education in countries like India needs to be considered. The final addition of Hotel / Resort would further enhance the appeal of the project. Following the demand of the achieved group of target clients for the MHMC, the hotel may be utilised by relatives of inpatient cases, outpatient cases, who prefer to stay close to the medical faEPOS Health Management

cilities, as well as for customers of outpatient rehabilitation services. Although concept of hotel and healthcare services needs to be further analysed for its success. Alternatively provi-

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sion of staff and doctors accomodation will also add value to the project.

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Final Recommendation and Next Steps

Figure 5: Spectrum of Healthcare Services

Source: McKinsey 2009

6.1.2 Implementation and Integration of Service Provision


The success of the overall MHMC project and its components is dependant on the follwing major considerations: A) Individual Business Plans Dependent on Project Cost Estimation and Client Volume Estimation B) Timing of completion Completion of all components and commissioing of services as soon as possible will provide an edge over other projects which are currently on hold and those which are in planning. C) Integrated Management Approach The clients will need service overlap from the MHMC components and the client satisfaction will depend on seamless integration of services withing the Main Hospital, Rehabilitation Institute and the Health and Lifestyle Insitute.
EPOS Health Management

D) Highly Qualified Professionals, High Quality Services: The achievement of these will certify the success of the MHMC project. The MHMC will be run by in-

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ternational professionals with expieriences in planning, organisation and management of healthcare facilities worldwide. E) Controlling, Risk Management and Quality Management: A stong IT-based Controlling, Risk Management and Quaility Management System will ensure a sustainable structure for the delivery of high quailty and economic efficient organisations in order to achieve high satisfactoion of customers as well as high profitabiliy of services.

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Final Recommendation and Next Steps

6.1.3 Organisation of Main Hospital


The Hospital will have 160 beds in two phases 90 beds in Phase I and 70 beds in Phase II. It will also have ICU, CCU, HDU, NICU and PICU. The detailed organisation of services is described in the Medical Brief document.

6.1.4 Organisation of Rehabilitation Institute


The institute shall provide services in the follwing: I. Cardiac Rehabilitation Services II. Neuro Rehabilitation Services III. Orthopaedic Rehabilitation Services IV. Paediatric Rehabilitation Services V. Palliative Services

6.2

Next Steps for Development of Main Hospital

The following are the key steps in developing the MHMC Main Hospital: Group I Project Initiation Bankable Business Plan and simulatneously Identifying highly qualified local and international doctors plus Developing Strageic Alliances and Partnerships for proposedCentres of Excellence Equipment Planning and Procurement Project Management Support Component Detailed Commissioing Plan for Main Hospital

Group II - Commissioning Recruitment Defining Organisation (Vision/Mission), Standards, Policies & Procedures (aligning with accepted Accreditation System)

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Human Resources Training Facility and Equipment Management Plans Developing Schedule of Charges, Brand Concept, Marketing Strategy, Sales Strategy and Pre-Launch Marketing

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Developing Operational Business Strategy

Group II - Operations Management Soft Launch of Hospital Establish Finance and Accounts System (integration in IT) Finalise Sales and Marketing Products and initiate activities

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Final Recommendation and Next Steps

Finalise Schedule of Charges - including packages, and other service schemes

Finalise Performance Assessment Formats and Monthly Departmental Reports

Establish Functional Committees and Hospital Sanctioned Teams Human Resources on-job Training

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