Covid-19: A catalyst for the UAE's health sector

Knight Frank examine the development of the pandemic in the UAE and the responses taken to manage risks and limit mortality rates, as well as the potential economic impacts of the pandemic

  

Dubai, UAE: Over recent times, the healthcare sector in the UAE has undergone a considerable number of infrastructure and procedural changes in order to position itself as a leading healthcare provider both for its residents and as a medical tourism destination.

These improvements have been more recently recognised and lauded throughout the on-going COVID-19 pandemic. As a result of the continuous investments which have been made to improve the sector’s hard and soft infrastructure, the UAE has been recognised as being one of the safest locations in the world in the fight against COVID-19.

With many countries beginning to lift lockdown measures and gradually return to some form of normality, the scale of the pandemic’s economic impact will be realised over the coming months, with fundamental structural changes expected to occur in many economies. Alongside this, the COVID-19 pandemic has also raised many questions as to the future structure of the healthcare sector both in the UAE and globally.

Shehzad Jamal, Partner, Head of Healthcare and Education at Knight Frank Middle East stated “2020 has brought with it an unprecedented challenge in the form of COVID-19, challenging global healthcare systems in terms of infrastructure, mode of delivery, financing and much more. However, it has also allowed countries across the globe to carefully examine the infrastructure gaps, consider alternative mediums such as telehealth, and has led to conventional investors to take a closer look at funding this sector.”

ECONOMIC IMPACTS OF COVID-19: THE UAE’S HEALTHCARE SECTOR

Whilst the pandemic has had an almost unfathomable but calculable impact on many individuals’ health and countries’ healthcare resources, the scale of its economic impact is yet to be fully understood. With the global economy stalling, many firms have reacted by reducing headcount, furloughing staff, decreasing remuneration packages or a combination of the three. In a few countries including the UAE, this reduction in employment will have a notable impact on their respective private healthcare sectors.

DEMOGRAPHICS AND GENERAL HEALTH

For the majority of the expatriate population in the UAE, residency is underpinned by employment. Given the scale of the economic fallout anticipated in the UAE, the total population is expected to decline for the first time in five decades.

Whilst it is still too early to predict a precise contraction in population with certainty, initial forecasts indicate that employment will contract by 7.8% in 2020 and is not expected to return to its 2019 level before 2022. This initial decline in employment suggests that population is likely to fall by 5% to 10% in 2020, with recovery ensuing in late 2020 to early 2021.

As a result of this decline in population, we expect that there will be a proportional decline in patient volumes and have a trickle-down effect within the healthcare value chain.

The lockdown and the ensuing breakdown of social norms has led to an increase in requirements and utilisation of certain healthcare services such as preventive care, home healthcare and psychological.

Dr. Shajir Gaffar, CEO VPS Healthcare stated: The anxiety and sedentary lifestyle due to the lockdown has resulted in increased demand for mental health and specialities pertaining to lifestyle diseases, both in the outpatient setting and digital platform. As the situation is getting back to normal, healthcare providers need to focus on these segments with immediate effect to help patients return to their pre-COVID lifestyle.

FINANCIAL IMPLICATIONS

The slowdown in economic activity and resultant cost saving measures employed by firms will mean the UAE’s healthcare sector is likely to face significant headwinds in the short to medium term, despite its status as a defensive sector. 

The slowdown in the sector has and will not only be driven by the weaker economic backdrop, but also as a result of the various measures enacted to slow the spread of the pandemic. First, with elective surgeries and unnecessary hospital visitation being suspended – although this suspension has now been partially lifted – as part of the containment measures enacted, many service providers have and continue to face a marked decline in financial resources.

With demand likely to soften and the financial position of operators likely to deteriorate, we may experience consolidation in the sector with cash-rich firms undertaking M&A activity to strengthen their market position.

DISRUPTIVE TECHNOLOGIES – HERE TO STAY?

Whilst terms such as digital transformation and telehealth have been regularly used for over a decade we have not seen these segments of the market gain any traction. However, COVID-19 has acted as an accelerator where now telehealth , teleradiology and online pharmacy retail are now truly emerging and being adopted by leading healthcare providers in the UAE.

Dr. Ibtesam Al Bastaki – Director of Health Investment & Partnership at Dubai Health Authority commented “Telehealth has been embraced during this crisis situation and it is a great tool to build the rapport between patients and healthcare professionals in various fields to ensure the right quality of services towards the patients”

This concept of remote consultation with a physician has historically not appealed to the vast majority of patients. Even in many developed countries, telehealth has been available for a long time, however due ambiguity in payment mechanisms, it never made it to the mainstream. However, with limited physical access to healthcare facilities during the pandemic, most healthcare facilities and patients have more readily adopted telehealth.

Dr. Gireesh Kumar, Senior Manager for Healthcare & Education at Knight Frank Middle East commented “The adoption of telehealth as a mainstream service, has been beneficial for healthcare providers during the lockdown as they were able to provide services to their patients with minimal disruption. This has also led to patients overcoming their age old reluctances associated with telehealth services. In addition to this, given the wider acceptance of telehealth by insurance providers, this service line is expected to experience greater demand going forward.”

Key factors that have been instrumental in fast-forwarding the introduction and utilisation of this technology include:

1. Patient safety: Given the high probability of contracting nosocomial infections during the lockdown period, telehealth was considered as a preferred service. With growing levels of comfort in such service provisions, this trend is expected to part of the new normal even as mobility returns to pre-COVID levels.

2. Direct billing: With a higher number of insurance providers accepting telehealth  as a paid service, healthcare providers are revisiting the idea of telehealth  as a frontline service to be able to improve their outpatient volumes.

3. Time saving: Typical face-to-face consultation with a doctor could take between 2-3 hours when accounting for travel, registration, waiting and consult times. However, with telehealth , this total time can be reduced to little as 20-30 minutes.

4. Millennial population: Such service provisions suit well with the lifestyle of the millennial generation, which is very comfortable with adopting technological solutions.

Joe Hawayek – Senior Director at vHealth (MEA) stated “Telehealth  is here to stay. We saw the take-up in the region during COVID-19 because people wanted to stay at home but still needed to speak with a doctor. The benefits of telehealth  such as convenience, safety and cost will continue to be recognized even after COVID-19.” 

Although telehealth has its own set of limitations, patients now have first-hand experience of the convenience it offers and it seems that it will be an important medium for delivering care if supported by adequate regulations.

FUTURE OUTLOOK

This pandemic has been unlike any crisis the world has seen in recent times and is the first experience for the relatively adolescent healthcare system of the UAE. However, the government and private stakeholders have pulled together to ensure that the impact of the COVID-19 is as restricted as possible and held human life and health as its utmost priority.

It is important to take stock of the lessons learned from this pandemic, where it will be critical to revisit the current strategy of healthcare provision by both the public and private sectors to factor in operational readiness and allow temporary expansion of the workforce and infrastructure as and when required.

The successful utilisation of telehealth during the lockdown has provided us with an alternate medium of healthcare services delivery. Therefore, this segment should be further supported by a robust regulatory framework and guidance akin to the traditional healthcare delivery model.

More so, increased efforts are required to be fully self-reliant in terms of healthcare related human capital as well as the provision of medical equipment and consumables. This will help insure the nation’s readiness and efficacy against any forthcoming pandemics or similar situations.

For all media & PR enquiries, please contact: Thomas Farmer, Thomas.Farmer@me.knightfrank.com 

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© Press Release 2020

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