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UAE: Healthcare spending to increase by one-third in coming years

GCC healthcare market set to reach half-a-trillion-dirham mark by 2027, says Alpen Capital

Healthcare spending by UAE residents is set to grow by nearly one-third in the coming years due to a rise in the ageing population and more people suffering from lifestyle diseases.

According to Alpen Capital’s latest report on GCC healthcare, the per capita healthcare spending in the UAE stood at $1,992.1 (Dh 7,300) in 2020, the second highest in the GCC.

“The country’s healthcare spending is projected to outpace its GCC peers at 7.4 per cent CAGR to reach $30.7 billion by 2027 from $21.5 billion in 2022. As per IMF, UAE’s population base is expected to rise at a CAGR of 1.6 per cent between 2022 and 2027. Therefore, per capita healthcare spending is expected to grow from $2,041.3 (Dh7,500) in 2022 to $2,689.4 (Dh9,870) in 2027,” said Krishna Dhanak, managing director, Alpen Capital.

As a result of the growing demand for healthcare services, Dhanak told Khaleej Times that the density of physicians (including dentists) and nurses in the UAE has improved over the years.

“UAE had more than 3.4 physicians and nearly 6.0 nurses per 1,000 people as of 2020. The private sector accounted for 93.6 per cent of the physicians and 88.4 per cent of the nurses’ population in 2020,” he said.

The Gulf region had 5.7 nurses and 3.2 physicians and dentists per 1,000 population as of 2019. While physicians (including dentists) density was higher than in developed nations such as the US, Japan, and Singapore. But nurses' density in the region was significantly lower.

“In order to build and develop the necessary healthcare workforce, the GCC governments have started undertaking initiatives such as promoting exchange programmes for training, introducing post-graduate programmes, providing career advancement opportunities and varied training courses in medical, science, technical and specialised healthcare services for the nationals,” said Dhanak.

The study projected that the rise in the ageing population will be one of the key drivers of the healthcare sector in the UAE and Gulf as the number of older people aged 50 and above will increase to 32 per cent in the region.

It said the UAE recorded the highest improvement in bed density during the four years, moving from 1.4 beds per 1,000 people in 2016 to 2.2 beds per 1,000 people in 2020.

GCC: A half-a-trillion-dirham market

Alpen Capital projected healthcare expenditure in the region to reach $135.5 billion (nearly (Dh500 billion) in 2027, implying an annualised growth rate of 5.4 per cent from $104.1 billion (Dh382 billion) in 2022.

“The GCC healthcare industry is expected to grow at a healthy pace owing to a rise in ageing population, improving economic activity, increased focus on preventive care and mandatory health insurance. While digitization and public-private collaborations have made a progressive impact, the resurgence in demand for elective surgeries, a burgeoning medical tourism industry, and an intrinsic demand for treatment of non-communicable diseases (NCDs) are likely to support growth,” said Sameena Ahmad, managing director, Alpen Capital.

Alpen said the UAE healthcare sector is likely to witness the highest growth rate of 7.4 per cent compared to its GCC peers in anticipation of a fast-growing population, increased and wider coverage of mandatory health insurance and a high medical inflation rate.

Between 2020 and 2022, the GCC is estimated to have added 1,846 hospital beds. In view of the anticipated rise in population, the region is likely to require 12,207 new hospital beds by 2027. This translates into an estimated annual average growth of 1.9% since 2022 to reach a collective bed capacity of 133,731, the report said.

The report added that Saudi Arabia and UAE are likely to witness a demand of over 8,197 and 1,584 new hospital beds. While most of the GCC countries are likely to experience demand for new beds, the requirement for beds in Qatar is expected to remain flat amid lower-than-average population growth.

“Increasing life expectancy at birth, improvements in infant mortality rate and an ageing population are the key demographics driving the region’s healthcare system,” it said, adding that GCC governments are encouraging the involvement of private players through PPP model as part of their long-term strategies aimed at capacity expansion, and enhancing the delivery system.

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