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Harnessing PPPs to deliver new healthcare projects in the Middle East

Across the Middle East a growing demand for access to healthcare services, provides a stronger case than ever to accelerate the role of public-private partnerships (PPP).

Yasser Khan

Business Director - Qatar +974 3316 5671 Ask me a question

According to a 2016 report from Alpen Capital, the GCC healthcare market is projected to grow at a 12.1% compound annual growth rate (CAGR), from around US$40.3 billion in 2015 to $71.3 billion in 2020. The outpatient and inpatient markets are also anticipated to jump to $42.4 billion (from $24 billion in 2015) and $28.9 billion (from $16.4 billion) during the same period.

Population growth, a greater incidence of lifestyle diseases such as obesity and diabetes, as well as higher life expectancy rates, are all driving a greater demand for healthcare facilities across the GCC. Plans were put in place to build a number of new healthcare facilities in the region to meet this demand, but several factors – including a sustained low oil price – have curbed government spending and resulted in many projects being put on hold.

The supply and demand gap offers an opportunity for the private sector to participate in the development of new healthcare facilities and services, and to play a role in influencing government visions and strategies around healthcare. While the benefits of PPP are well-rehearsed and policy makers maintain an interest in the model, the legal and regulatory framework for healthcare projects are still developing. This often leads to hesitation and a degree of risk aversion before operators and investors will bid on a project.

The United Kingdom, Australia, Canada, and other countries in Europe have successfully used PPP for healthcare projects. For GCC countries to catch up and use the concept beyond sectors like water and power, there is a need to develop the right approach as well as avoid unnecessary intricacies given the stakeholders’ first-time exposure to this procurement model.

In crafting a solid framework to support PPP projects in healthcare, it’s worth considering the following tips:

1. Be familiar with local market conditions – understand the legal and regulatory issues related to PPP projects in health, and ways that these can be best addressed in order to attract investment.

2. Pursue smaller, low-complexity pathfinder projects at the start – this ‘test’ approach will help to build the needed framework and commercial environment.

3. Identify the key risks – once known, it then becomes possible to map out a strong risk management programme to properly mitigate these risks.

4. Assess what risks should be passed on to the private sector – this must be judged carefully and in a way that adds value, not just added costs, to the project.

5. Learn from other international health PPPs – adopting best-practice examples will help to build confidence with investors and lenders alike.

6. Seek the right advice – work with a consultant with a deep understanding of the PPP procurement structure in various regions, but who also has deep local market expertise.

Providing evidence to investors and operators that there’s a clear and long-term commitment to healthcare projects will help to inspire confidence and increase the likelihood of securing private investment. This will enable countries across the GCC to build health systems that can offer a world-class level of patient care and improve the quality of life for communities across the region.

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Yasser Khan

Business Director - Qatar +974 3316 5671 Ask me a question
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