The scale at which the pandemic changed things in healthcare and other industries across the world has never been witnessed before. The fast-evolving global economic scenario and the regional business environment will have an impact on how healthcare shapes up this year.
As some of the short-lived changes wear off, a clear picture of what will stay back is emerging:
Accessibility to healthcare services
One notable change that will continue to evolve further is the accessibility to services and products. Consumers of healthcare have a significantly lower resistance to ordering healthcare online and consuming it without leaving their homes. This is a major reason why many pharmacy players have taken to e-commerce in the last couple of years, and the value and volume of online pharmacy orders will certainly grow this year. According to an estimate, the online pharmacy delivery market in the UAE alone has reached US$250 million in 2022. This number will continue to grow at a fast pace in 2023 too.
In addition to traditional healthcare providers who are now adding online delivery to their models, we will also witness leading brands from other industries trying their hand at healthcare digital delivery and e-commerce.
Vivek Shukla, Senior Advisor to Healthcare Boards and CEOs
Care delivery at homes will also flourish further. With numerous companies that sprung up, mostly to provide PCR at-home services, the segment has many new players that are now looking to innovate and stay in the game. We have already seen the erstwhile ‘nurse at home’ companies adding more services to their portfolios. It is currently at a place where even dialysis at home or remote ICU setup at home is being offered.
The biggest opportunity in this is that the leadership position is up for grabs across various markets in the GCC.
As more and more economists talk about the global recession, we can see healthcare bracing itself in 2023. Further, as employers look to downgrade the insurance networks, access to premium facilities gets reduced as well. This can result in a lop-sided demand surge for mid- and lower-end facilities for consuming healthcare, and for generic medicines instead of branded ones. This is something that has happened in some of the markets in the last few years and is expected in 2023 as well. Hence, business efficiency in terms of cost drivers will be an important factor for healthcare companies.
Cost optimising is a function of two major areas — manpower and inventory. Healthcare providers are already experimenting with innovative ways to engage physicians and other manpower to keep costs in check. More players will start managing their inventory levels and cash flows aggressively this year. A tighter grip on receivables can be expected too, thus putting additional pressure on the insurance companies and payors. The year 2023 can easily be a year of efficiency when it comes to hospitals.
In the UAE, the introduction of Corporate Tax in 2023 will result in an added focus on cost efficiencies.
It is a given that significantly more people will have health insurance in 2023 than in 2022. KSA and Oman are already on the way to having mandatory insurance for everyone and so are the Northern Emirates in the UAE. Saudi Arabia has 9.8 million people with insurance coverage, and it is estimated that this number will continue to grow, owing to the Vision 2030 reforms.
Higher insured population means pressure on providers to keep working capital flowing as credit billing increases, whereas on one hand, we have increased access to healthcare results in higher patient volumes for the facilities, and on the other, per-patient revenue takes a dip as insurance penetration increases.
Higher patient volumes will create a marginal demand for employing more manpower. This, in turn, will continue to create demand for health education and training in the region.More mature insurance markets like Abu Dhabi and Dubai in UAE that have a DRG system of reimbursement will continue to underpin the necessity for cost efficiencies, as described earlier.
As the governments in the region work more towards building non-oil economies, medical tourism will see support from them. There has been some success in the UAE already over the past few years.
According to an estimate, 630,000 medical tourists visited the UAE in 2021 and this trend will continue to grow. We will also see initial attempts in the KSA for medical tourism in 2023, given the rapid changes taking place in the overall business environment of the country.
As tertiary care facilities increase in each region, governments and regulators will empower citizens to get treated within the country as much as possible.
The pandemic has been a tremendous accelerator for digital innovation in healthcare. The year 2023 will see its fruits and progress. As we know, AI and ML are fast becoming a part of diagnostic radiology and other modalities in healthcare. This will continue to sustain and grow this year. More and more healthcare providers are trying newer digital ways to acquire and retain patients. Patient-friendly apps, digital CRM, use of third-party aggregators, and more such interventions can be expected in 2023.
In addition, cybersecurity in healthcare will see a renewed focus. There has been a surge in cyber-attacks on more vulnerable players, thus crippling their operations and earnings for a short period. This has compelled more and more players to upgrade and innovate the existing security protocols.
Buzzwords of sustainability
Every year, there are some buzzwords that do the rounds in an industry. Not all buzzwords graduate into a sustainable trend though. However, it is worthwhile to keep an eye on what new trends may be on the horizon that may have the capacity to shape the industry.
Metaverse is one such word. The initial entry of this word into healthcare has been welcomed by many. It remains to be seen if and how quickly this gets accepted and infused into the ecosystem.
Environmental, Social, and Governance (ESG) is another initial movement that is in its infancy. There will certainly be more awareness among healthcare providers about the environmental impact they make. The extent of these efforts may although depend on numerous factors, including the regulatory framework for monitoring carbon emissions.
Consolidation and growth
Different geographies in the GCC are at different levels when it comes to the lifecycle of the industry. The more mature markets where the sector has already grown and is heading towards maturity will see consolidation and acquisitions. We saw a decent amount of activity in 2022 in the UAE and there is likely to be more consolidation in 2023 too.
In the markets where the industry is still on the growth curve, we will see new healthcare facilities emerging. The Kingdom of Saudi Arabia, for example, will see several new hospitals coming up in various cities. Healthcare groups from other countries have already been planning and setting up facilities in cities like Jeddah.
Overall, the healthcare industry is on the threshold of an exciting post-pandemic journey. With a new mindset and lower resistance to change, we can all look forward to a promising future in 2023 and beyond.
This article appears in the Daily Dose 2023. Read the full issue online today.