A new report suggests the MENA region’s five major cities will need 10,500 new hospital beds over the next five years – the equivalent of 70 new hospitals. Healthcare Nova speaks to the report author and to a government adviser who thinks he is wrong.

According to report author, Craig Plumb at JLL, there are going to be major opportunities around Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo over the next five years. He sees huge growth. But a consultant who advises governments across the region strongly believes what is needed in MENA is better run hospitals – not more.

He told Healthcare Nova: ” Do you need those hospitals on the basis of current practice? If you continue with inefficiency, very long length of stay and inappropriate admissions then yes, population growth will have an effect. But you could see this as an opportunity to improve your practise, and productivity, going from say 6 days the average length of stay in Qatar on insurance to something more like the European average would be a good first step. (They should ask) if you moved to the bottom of the European average, or the mid-point of the NHS, what would that give you? Or American levels of productivity? On a mediocre basis, you wouldn’t need nearly as many hospitals as has been suggested. That would make a big difference.”

Report author Plumb explained the basis of his report to Healthcare Nova, saying: “What we are seeing, with the lower oil price and lower government revenues, is the burden of funding of social infrastructure, things like hospitals and schools, shifting to the private sector. The government are budgeting for lower oil prices, remaining between $50 and $60 a barrel which is obviously a lot lower than the last few years.”

Who will be best placed to take advantage of this? Plumb says: “I think we will find, as we have with the physical infrastructure, consortiums put together of three parties – funding, construction, and an operator who will be the long-term tenants of the project.

“The three groups will come together and we are already seeing a number of the hospital operators coming to do JV with developers and financiers, and we might see more funding from property trusts or REITS, a new avenue that’s not currently in this healthcare sector.”

The report, entitled Healthy Returns, states the number of people aged over 65 years in MENA is forecast to increase by 4.4% pa over the next five years, more than twice the increase in the overall population (1.9% pa). As a result, the number of people over 65 years will increase from 21 million to 26 million by 2020.

The per capita spending on healthcare in the UAE alone is only 17 per cent of what is being spent in Switzerland, and MENA has an average of only 1.9 beds per 1,000 population in comparison to an OECD average of 4.8 beds.

“While hospitals are extremely specialist real estate assets and are not likely to appeal to all real estate investors, clinics and other less specialist medical facilities can be successfully incorporated into more generic forms of real estate such as office buildings and retail malls,”  says Plumb.

“The strong demand and current shortage of hospitals, clinics and other healthcare facilities makes this one of the most attractive sectors of the MENA real estate market for investors, developers and contractors to consider over the next five years.”

You can obtain a copy of the report here.

Our Analysis: The point our anonymous consultant makes a good one. A lot of the acute sector in the GCC is corrupt. It will treat a patient not to get him better but in order to max out his cover. It is against this background, and with this understanding, that capacity should be considered in the region!