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Health industry under pressure to cut costs

The way the healthcare industry accounts for its rising costs is a topic that has received much interest on a global scale. The USA today spends 17-19% of its GDP on healthcare while most countries in the OECD spend 8-9% and the GCC spend 3-4%. In the US, the government sponsored Medicaid and Medicare payment systems are projected to bankrupt the US fiscal system within the next 25-30 years. As the world population swells to just over seven billion, emerging economies along the Silk Road and the ageing economies of the Old World alike are facing the similar challenges of treating more people, for more diseases, with dwindling resources.

Dr Mussaad Al-Razouki , CEO at Kleos Healthcare Corporation in Kuwait, will take part in a plenary session to discuss how higher healthcare costs in the Middle East will affect patient visits to clinics at the upcoming Leaders in Health Conference in Dubai. This topic will be discussed as part of a wider conference programme taking place during the 4th Hospital Build & Infrastructure Middle East Exhibition & Congress from 4-6 June 2012.

According to Dr. Al-Razouki, “As Middle East governments pursue ways in which to increase the welfare and citizen’s access to enhanced quality of life measures, increased spending on healthcare is a top priority. The Kuwaiti Ministry of Health recently announced a record budget of US$4 bn for FY 2012-13, which represents a 100% increase from the US$2 bn budget of FY 2007-8 five years ago; this spending accounts for over 80% of the healthcare spending in the country. In Saudi Arabia, the GCC’s largest health care market, the total Saudi healthcare budget (including government and private investment) comes to about US$21.3 bn for the FY 2012-13. In 2007, McKinsey and Co. calculated the GCC's expenditure on healthcare to reach a total of $60 billion by 2025; this, however, seems a great underestimation looking at how both the Kuwaiti and Saudi healthcare budgets are increasing.”

Indeed, GCC governments continue to build costly cathedrals of care such as the island hospital of Cleveland Clinic Abu Dhabi and the Sidra Medical Research Center in Qatar. While tertiary centres of excellence with a focus on research are greatly needed in the Middle East, a strong focus also needs to be placed on prevention that reduces the need for hefty investments in healthcare infrastructure. Another large proponent of these exponential MoH budget increases is the increasing dependency on overseas healthcare spending by GCC governments.

“In fact, the generosity of most GCC government’s extends beyond the healthcare of their citizens. Using Kuwait again as example, expatriates are only required to pay a very low yearly assurance premium of US$70 to 180 which pales in comparison to the US$1000-1200 annual cost of their care to the Government of Kuwait. Similar examples can be seen across the GCC, where both nationals and expatriates enjoy significantly subsidised specialty care,” says Dr. Al-Razouki.

Dr. Al-Razouki attributed the underlying issue behind these increase in healthcare costs to the unhealthy lifestyle most people in the Middle East choose to live. He also emphasises the link between obesity and diabetes type II as it is estimated that these chronically ill diabetes type II patients are four times more likely to be hospitalised, a further cost burden on GCC health budgets.

However, there are reassuring programs across the GCC to help reduce healthcare costs. Certain clinical centres of excellence in Saudi Arabia are piloting an interesting initiative whereby physicians are actually made aware of the costs of procedures and prescriptions before prescribing their treatment to their patients through a computerised physician order entry (CPOE) system that prints out the associated cost of the procedure or prescription.

“This has a dual effect,” explains Dr. Al-Razouki. “Firstly, physicians are less likely to prescribe useless tests and psychological placebo medications, thereby reducing the cost burden on their respective department and secondly, patients who do not even pay a simple co-payment and are used to receiving both the treatment and prescription for free, are made aware of the ‘value’ of the service the Saudi government is providing them. This is an important segue to more accountable care models; other GCC governments should take note.”

Hospital Build & Infrastructure Middle East is the fastest-growing, global business-to-business platform dedicated to bringing together investors, commissioners, backers and managers of healthcare-related building projects with key players in planning, design, construction, operations, management, supply and refurbishment. As investment in the region's healthcare infrastructure continues to rise, the 2012 event is set to be bigger than ever with more than 130 exhibitors covering 5,000sqm of exhibition floor space, an estimated 4,500 visitors, as well as more than 600 conference delegates.

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