Healthcare industry in GCC set for V-shaped recovery

Covid- 19 has created significant challenges for the GCC healthcare industry, but once the crisis abates, a V-shaped recovery is likely as demand for care soars, according to a new report by Alpen Capital.

Healthcare systems struggled to cope with the surge in demand for Covid-19-related services, which strained revenue streams as elective and non- urgent surgeries were cancelled, the investment bank said. However, demand for remote services such as telehealth and remote patient monitoring helped to cushion the blow, it added.

The pandemic has led to healthcare providers ramping up investments in digitalisation to drive future growth. It has also underlined the need to upgrade existing infrastructure to better prepare for potential future health outbreaks, the report said.

“GCC governments are encouraging the involvement of private players through [the] public- private partnership model to ease the burden of healthcare expenditure,” said Krishna Dhanak, Alpen Capital executive director.

“Consequently, the sector has [ experienced] robust merger and acquisition activity over the past two years, specifically in the UAE and Saudi Arabia.”

Investment in the Gulf’s healthcare market so far has been driven by governments, with the public sector contributing 75 per cent of the GCC’s 106,500 beds in 2017.

The GCC’s current health expenditure per capita stands at $1,147.80, which is higher than the global average of $1,059, but substantially lower than other developed countries such as the US ($10,000), Germany ($5,000) and the UK ($4,000), the report said. The region also has an average of 5.7 nurses per 1,000 people, which is below the average of developed countries of 8.2 in the UK, 12 in Germany and 15 in the US.

The report highlights areas of investment focus, most notably in acquiring stakes in companies delivering home healthcare and longterm and post- acute care services. These are gaining popularity as a less expensive method for treating older patients, or those with chronic conditions.

Regional governments are also focusing on preventive care to ease the burden on hospitals, the report said.

“Covid-19 has made us take [another] look at business models and service delivery mechanisms and that gives rise to investment opportunities,” said Steve Barnett, executive director of business development at Abu Dhabi Global Market, during a webinar organised by Alpen Capital.

“We are seeing new technologies being developed to help make this shift more effective and efficient.”