Healthcare expenditure in Oman to reach $4.9 billion
The second-fastest growth in the region is attributable to a rapidly rising population, the rollout of mandatory insurance during the year and rising cost of care, new Alpen Capital report shows.
Times News Service
MUSCAT: From an estimated US$3.2 billion in 2017, current healthcare expenditure in Oman is expected to grow at a compounded annual growth rate (CAGR) of 9.1 per cent to $4.9 billion in 2022, according to the GCC Healthcare Industry report published by investment banking advisory firm Alpen Capital.
The second-fastest growth in the region is attributable to a rapidly rising population, the rollout of mandatory insurance during the year and rising cost of care. Further, treatment of non-communicable diseases and preventive care measures are accounting for a large portion of the healthcare expenditure.
Consequently, current healthcare expenditure on outpatient and inpatient services in Oman is projected to grow at an average annual rate of 10 per cent to $1.5 billion and $2.3 billion, respectively, by 2022.
Expenditure on other healthcare services is expected to grow at a compounded annual average rate of 6.6 per cent during the projected years.
To accommodate the growing base of patients, the bed requirement in Oman is anticipated to grow at a CAGR of 3.2 per cent through 2022, translating into a demand for more than 1,100 new beds to reach a capacity of 7,937 beds. “The Gulf Cooperation Council (GCC) healthcare industry continues to offer a wide gamut of investment opportunities. Though traditionally, regional governments played an instrumental role in building the sector, shrinking oil revenues have slowed spending. At the same time, the role of the private sector is increasing, encouraged by government incentives, mandatory health insurance and other reforms,” said Sameena Ahmad, Managing Director of Alpen Capital. “Given the changing demographic and epidemiologic structure, mandatory health insurance, and government initiatives to encourage private sector participation, we expect to see steady growth in private sector investments in the healthcare industry,” Ahmad added.
“Even though regional governments continue to shoulder a sizeable part of the healthcare expenditure, against the backdrop of budget deficits, the importance of private sector participation is being widely discussed across the GCC nations,” said Krishna Dhanak, Executive Director of Alpen Capital. “With increasing opportunities for the private sector, the healthcare industry is witnessing a surge in mergers and acquisitions. The inorganic route is being adopted by new players to enter the market and by existing providers to expand market share, physician practices and medical capabilities,” he added.
Industry outlook
According to Alpen Capital, the current healthcare expenditure (CHE) in the GCC is projected to reach $104.6 billion in 2022, registering a CAGR of 6.6 per cent from an estimated $76.1 billion in 2017. Expanding population, high prevalence of non communicable diseases (NCDs), rising cost of treatment and increasing penetration of health insurance are the factors auguring growth.
Given the ageing population and an expected increase in the frequency of visits to clinics for treatment and preventive care, the outpatient market size in the region is predicted to grow at an average annual rate of 7.4 per cent to $32.0 billion between 2017 and 2022.
The inpatient market is anticipated to increase at a CAGR of 6.9 per cent to $45.4 billion.
Current health expenditure on “Others” is expected to grow at a compounded annual average rate of 5.2 per cent during the forecast period. Growing size of the population, and rising cost of medicines and ancillary services will be the forces driving the spending on other healthcare services.
Between 2017 and 2022, the country wise current health expenditure is anticipated to expand at annual average growth rates between 2.6 per cent and 9.6 per cent. The growth range is wide due to country-specific projections of population, cost of healthcare and other factors.
The UAE and Oman are likely to witness growth rates of above 9 per cent, in anticipation of a fastgrowing population, implementation of mandatory health insurance and above regional average medical inflation rates.
Saudi Arabia, which is the region’s largest market, is expected to see a 6.1 per cent growth in current health expenditure.
In view of the anticipated rise in the number of patients, the region is expected to require 12,358 new hospital beds by 2022. This translates into an estimated annual average growth of 2.2 per cent from 2017 to reach a collective bed capacity of 118,295.
The high incidence of chronic cases has led to an increase in demand for beds, particularly in specialised areas of care. Although general hospitals are not running at optimal capacity, the need for beds is rising due to limited availability of specialty hospitals, longterm care centres and rehabilitation centres, among others.
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