JEDDAH – In the years to come, growing healthcare spending will impose a hefty burden on Gulf Cooperation Council (GCC) governments, management consulting firm Booz & Company said Sunday. Healthcare costs continue to increase in the region – partly due to the high prevalence of chronic diseases. Today, thanks to systemic transformation, strategic planning, and population screening programs, GCC governments recognize that the current model – in which the state shoulders most of the direct healthcare costs – is unsustainable over the long term. In light of this, Booz & Company found that these governments must use a Public-Private Partnership (PPP) approach in order to tame expenditure, improve quality of service, and provide further access to expertise. In recent years, GCC healthcare systems have achieved myriad accomplishments, including widespread provision, rising professional standards and regulation, generous funding, and growing levels of investment. Population screening programs, impressively rapid system-wide transformation programs and long-range strategic planning efforts have also placed these countries at the forefront of the healthcare industry. Furthermore, as part of their national development programs, GCC governments are currently engaged in major efforts to improve accessibility and quality of care. In effect, major expansions in care provision are occurring across the region. These state-funded investments aim to close the supply-demand gap for inpatient and outpatient services as well as reinforce trust in local healthcare provision and reduce outbound medical tourism. GCC countries have also recently begun to introduce mandatory health insurance. “Yet, the truth remains that these forward-looking initiatives will be most effective if the region can find a new way to pay for its future healthcare needs and build its health systems' capabilities,” said Gabriel Chahine, a Partner with Booz & Company. “Their goals can only be reached if adequate and long-term strategic plans are formulated. After all, GCC healthcare systems are still struggling with capacity gaps and inconsistent quality of care. In addition, there is a shortage of healthcare professionals, limited availability of competent specialized services and an elevated rate of non-communicable diseases.” These ongoing healthcare challenges, and in particular the aging of the current young generation, will force governments to spend more on healthcare services. “While expenditure is currently below international benchmarks when compared to developed countries on a per capita basis, this will undoubtedly change,” explained Jad Bitar, a Principal with Booz & Company. “As a result, governments will logically seek more private-sector participation, but this must be introduced in a controlled manner.” – SGWithout proper regulation, private companies will compete with each other and the government for manpower in a market with a limited supply of skilled labor – thereby escalating costs. To avoid such situations, governments must take a regulated, multidimensional, multi-stakeholder approach that will ensure that the private sector brings complementary capabilities to the table. “Given the complexity of the GCC's healthcare challenge, and how it differs among the six countries, it is important to recognize that there is no silver bullet,” said Dr. Nikhil Idnani, a Senior Associate with Booz & Company. “Instead, the careful and targeted use of partnerships between public and private stakeholders can begin to address the core issues of accessibility, quality, and affordability.” The most effective method for combining the complementary capabilities of public- and private-sector players is through PPPs. GCC countries can use PPPs as a means of managing rising healthcare costs, as a mechanism to enhance the capabilities of the healthcare system, and as part of a program of systemic transformation of the sector. The public and private sector each bring different strengths to the table. As the licensors of the health sector, governments can identify healthcare gaps from the perspectives of accessibility and quality. More importantly, they have the power to regulate the market, introduce incentives, and sometimes simply enforce reform. “From its side, the private sector can improve the efficiency and effectiveness of health operations by leveraging its expertise in fields such as clinical, administrative, or support services,” added Chahine. “Moreover, the private sector can call on financial resources to inject capital into profitable opportunities, and mobilize entrepreneurship to spur innovation.” The nature of the collaboration between the private and public sector can range from service delivery to full ownership of healthcare assets. “On the lighter end of the spectrum – in terms of what PPPs encompass – are management contracts,” said Bitar. “At the other end of the spectrum, the private partner takes on the financing, building, operating, and ownership of the facility, gradually selling it to the government over the long term. This PPP model allows the government to avoid the large up-front capital costs involved in healthcare investment.” GCC governments should take an approach that customizes PPPs, according to their particular economic circumstances. “They should be careful to ensure that their interests are protected while at the same time consider the privatization of public healthcare facilities,” said Idnani. “PPPs need to be tailored to the specific requirements of the particular GCC member state and its healthcare system.” A healthcare sector model indicates that the public sector is responsible for regulation, licensing, and monitoring. In turn, the private sector can provide services with commercial value such as cardiac surgeries and medical equipment manufacturing. Services that are the furthest from patient contact and with the greatest commercial value are well suited for PPPs. Services with mostly social value, such as health education for the population, should be retained in the public sector. In terms of healthcare subsectors, opportunities lie in provision, payment, supplies, and education spaces in individual GCC countries rather than across the whole GCC. — SG
