Sunday , November 19 2017

Healthcare operator seeks a change in Abu Dhabi health insurance rules – Firms face regulatory risks in era of cheap oil

ABU DHABI, March 2, (RTRS): International healthcare operator Mediclinic is lobbying the Abu Dhabi government to rethink a change in medical insurance rules that has damaged its business after it bet big on acquiring Al Noor Hospitals, its regional CEO told Reuters. At least two other healthcare companies operating in Abu Dhabi are also in talks with authorities, seeking a reversal or amendment to the reform that reduces state insurance coverage for citizens using private hospitals, according to two industry sources who declined to be named due to the sensitivity of the matter.

Abu Dhabi has cut insurance coverage under its Thiqa plan to 80 percent from 100 percent, meaning patients have to pay 20 percent of bills if they seek treatment at private hospitals. The rule, which does not apply to government hospitals, was introduced last July — at the worst possible time for Mediclinic as it had just bought Abu Dhabi private hospital group Al Noor for about $1.7 billion.

The London and Johannesburglisted company’s experience illustrates the business risks in the Gulf’s oil-exporting countries as low crude prices dampen economies and strain state finances. The firm has begun lobbying the state Health Authority of Abu Dhabi over the Thiqa change, David Hadley, chief executive of Mediclinic Middle East, told Reuters in an interview. “Other providers have done the same,” said Hadley, adding that the reform had channelled patients to government hospitals. “We don’t have a problem with the policy on co-payments as long as it applies to the entire industry.” One of the industry sources said that although authorities did not want to be seen as giving in to pressure in any way, the policy might be adjusted again around the end of this year — partly because reduced Thiqa coverage had led to higher costs at state hospitals, hitting the government’s budget.

Discontent
The Health Authority of Abu Dhabi did not respond to requests for comment about the private sector’s discontent with the Thiqa change or whether it planned to scrap the reform or extend it to all hospitals. It has previously said that the rule change would contribute to its efforts to increase efficiency, standardise operations and increase the sector’s financial viability for the benefit of patients and the healthcare system as a whole.

By many measures, the Gulf is an attractive destination for foreign healthcare providers; incomes are high and growing populations are burdened with some of the world’s highest levels of lifestyle diseases, such as diabetes. Encouraged by such trends, Mediclinic, which has 73 hospitals and 43 clinics across South Africa, Namibia, Switzerland and the UAE, bought Al Noor last year. But since the Thiqa change, Al Noor’s in-patient volumes have dropped 38 percent and out-patient volumes by 43 percent, Hadley said.

To compound Mediclinic’s problems, at around the same time as the reform, competition intensified in Abu Dhabi with three new players entering the sector, while thousands of expatriates and their families left because of job losses in a slowing economy. Also, 147 doctors out of 600 left Al Noor, many to join new hospitals in the area, and new doctors had to be hired. “We were hit by a multitude of headwinds. I think it was the timing – we couldn’t have predicted. It is going to be a challenging year,” said Hadley.

Mediclinic’s London-listed shares have dropped 8 percent since the company issued a profit warning for its Middle East business last week. While timing played its part, other factors might also have contributed to the company’s struggles in the region, however. “In the long-term it will probably be clear that Mediclinic overpaid for the Al Noor acquisition,” said Neil Brown, analyst at Electus, a South Africa-Discontent The Health Authority of Abu Dhabi did not respond to requests for comment about the private sector’s discontent with the Thiqa change or whether it planned to scrap the reform or extend it to all hospitals. It has previously said that the rule change would contribute to its efforts to increase efficiency, standardise operations and increase the sector’s financial viability for the benefit of patients and the healthcare system as a whole. By many measures, the Gulf is an attractive destination for foreign healthcare providers; incomes are high and growing populations are burdened with some of the world’s highest levels of lifestyle diseases, such as diabetes.

Encouraged by such trends, Mediclinic, which has 73 hospitals and 43 clinics across South Africa, Namibia, Switzerland and the UAE, bought Al Noor last year. But since the Thiqa change, Al Noor’s in-patient volumes have dropped 38 percent and out-patient volumes by 43 percent, Hadley said. To compound Mediclinic’s problems, at around the same time as the reform, competition intensified in Abu Dhabi with three new players entering the sector, while thousands of expatriates and their families left because of job losses in a slowing economy. Also, 147 doctors out of 600 left Al Noor, many to join new hospitals in the area, and new doctors had to be hired. “We were hit by a multitude of headwinds. I think it was the timing – we couldn’t have predicted. It is going to be a challenging year,” said Hadley.

Mediclinic’s London-listed shares have dropped 8 percent since the company issued a profit warning for its Middle East business last week. While timing played its part, other factors might also have contributed to the company’s struggles in the region, however. “In the long-term it will probably be clear that Mediclinic overpaid for the Al Noor acquisition,” said Neil Brown, analyst at Electus, a South Africa-

Check Also

Children of Zayed, I salute you

I am writing to you from the skies, aboard an airplane, headed for the United …

Translate »