Investment in Regional Healthcare: Evaluating Business Models

The Gulf Cooperation Council (GCC) region is experiencing significant demographic shifts, marked by an aging population and increasing prevalence of chronic and non-communicable diseases (NCDs). The GCC countries also face unique demographic and health challenges. For instance, in the UAE, the population of individuals aged 45+ is expected to increase six-fold to 2 million or 19.7% of the total population by 2050. This surge necessitates specialized healthcare services to manage lifestyle-related health issues and non-communicable diseases. Similarly, KSA, despite having a younger population, sees a high incidence of non-communicable diseases, with coronary heart disease as the leading cause of death.

Centers of excellence, known for pioneering new treatments and technologies, are ideally positioned in strategic locations near key medical hubs and research centers. Since the first half of 2023, 45-50% of hospital infrastructure projects have focused on specialty areas or have been developed as centers of excellence. Their success depends on availability of specialized personnel, economies of scale, and collaboration with top healthcare professionals, academic institutions, and industry partners.

Extended care facilities also represent a burgeoning segment in the healthcare landscape, offering long-term care solutions for aging populations and patients with chronic conditions. These facilities are becoming increasingly vital as part of the broader healthcare network, providing continuous care and meeting the complex needs of patients over extended periods. Governments are increasingly steering long-term patients away from tertiary systems into specialized extended care facilities, to optimize resources and manage healthcare costs. Some established players in the market are thus contemplating setting up centers of excellence focused on extended care services, either on their own or through strategic partnerships.

As the region addresses traditional healthcare needs, there is also a parallel shift towards wellness, emphasizing preventive care and medical wellness programs. These initiatives are crucial for reducing long-term healthcare costs and enhancing quality of life by fostering healthier lifestyles and facilitating early detection of health issues. Wellness centers, offering services such as nutritional counseling, fitness programs, and preventive screenings, are thus becoming integral to the healthcare landscape, underscoring the shift from treating illness to maintaining and enhancing health. These emerging wellness trends, along with traditional and extended care models, represent the diverse options that investors are currently evaluating. By investing in these varied healthcare services, investors not only meet growing healthcare demands but also contribute to a more sustainable and preventive healthcare ecosystem.

The governments have also taken measures to drive growth in the healthcare sector, catered to population demands. The region has been witnessing a growing interest among governments to structure Public Private Partnerships (PPPs). For example in the UAE, PPPs are addressing capacity and quality gaps in healthcare priorities, stimulating private investment in infrastructure and service improvements. KSA has seen an increase in PPPs structured around renal dialysis, imaging services, women and children’s hospitals, primary health centers, LTC and rehab centers, and home-based care, aligning with national health priorities.

As the GCC’s healthcare market value continues to grow, the financial viability and potential return on investment of a chosen model should guide decision-making on the ideal operational model. Success in these endeavors will depend on the availability of skilled healthcare professionals, medical equipment, and robust infrastructure.

The ongoing expansion of healthcare projects in the GCC, particularly in specialized healthcare formats and centers of excellence, highlights the critical need for a comprehensive evaluation of each business model's strengths and weaknesses. This analysis will empower the private sector to devise investment strategies that not only improve health outcomes, but advance the region’s healthcare ecosystem, and launch GCC players on the global healthcare map.