MENA Health Insurance Congress - 1st draft

Developing Synergies between payer and provider in a health ecosystem

MENA Health Insurance Congress 2015 Mark Adams, CEO of Anglo Arabian Healthcare

15th Sept 2015

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www.angloarabian-healthcare.com 2

Changing World of Healthcare in the MENA region

Providers: ‘ New competition, regulation, medical inflation, mandatory health insurance and new obligatory systems’

Option 1- AdaptOption 2- SellOption 3- Close

Payers: ‘Cross subsidy of Motor/General lines to be forbidden, capped premiums and mandatory cover, intense competition and continued client churn’

‘Perfect Storm’

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Case Study: Dubai, Population 2.6m- 50% insured

A Blue Collar Income <AED 4000 Population 30% 780,000 people

B Low Mid Income AED 4-9000 Population 35% 910,000 people

C Upper Mid Income AED 9-25,000 Population 25% 650,000 people

D Premium Income >AED25,000 Population 10% 260,000 people

2014- Market split into four sectors:

75% Male 25% Female

2,500 Clinical facilities 1.5 New Facilities being licensed per dayAED 7m Private Sector Outpatient

VisitsAED 155k Private Sector Inpatient

VisitsAED 2.5m Public Sector Outpatient Visits AED 90k Public Sector Inpatient Visits

TOTAL: AED 9.5m TOTAL: AED 245k

98% <60 years old 11% <15 years old

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Dubai: 2015 Market SectorsBlue Collar Low Mid Upper Mid Premium Total

Outpatient Visits per annum 2m 4m 2.8m 1.8m 10.6m

Consultation Fee 20-50 125+ 150-250 250-480

Income per Patient Visit 75 180 350 800

Patients per Doctor per Day 50 35 20 12

Average Doctor Salary 25,000 35,000 45,000 60,000

Conversion to Inpatient 20,000 120,000 84,000 54,000 278,0

00

Main Issues

Quality Ability to pay Limited access to

secondary care Too few clinics

Quality Ability to pay Limited access

to secondary care

Too few clinics

Severe competition

Price freeze from insurers

Retention of doctors

Too many clinics

Competition Price freeze

Retention of doctors

Too many clinics

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Dubai: Projections for 2025

Population to reach 5.4m

7.5% compound growth from 2015

26.9m Outpatient Visits

985k Inpatient Visits

2,600 Bed gap beyond known projects

5% increase in female lives

100% insured patients

Highest demand for new facilities at low-mid sectors

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Dubai: Projections for 2025

Drivers for dramatic increase in Outpatient and Inpatient numbers: Population doubling Insured population doubling Increase in gender mix Continued growth in chronic conditions Improvement in system retaining more patients from Outbound

Health Tourism

Clinical areas of growing high demand by 2025: Obs/Gyn Orthopedics Cardiology Pediatrics Cosmetic Surgery Gastroenterology

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Major Factors for Change

ConsumerExpectation

s

Healthcare

Funding

Technology

NewCompetiti

on

Super Brands

InboundInvestme

nt

Regulation

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Funding Mandatory Health Insurance is slowly being rolled

out across the MENA region Health Insurance companies struggle to have a

positive combined ratio. With low initial premiums and high benefits, Insurers are facing 95-120% combined ratios (administration costs and claims)

Insurers will leave quality concerns to regulators and will push for the lowest possible prices.

With a fragmented Insurer market, more and more will use TPA’s to aggregate their purchasing to drive down prices.

We are already seeing Daman move to halve reimbursement for diagnostic tests in Abu Dhabi in a unilateral move

Next we will see the growth of Networks where patients will only be allowed to go to approved clinics and hospitals

Providers will struggle with CPT coding and the move to electronic HIS systems and possibly DRG bundling ?

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New Competition

There is unprecedented growth in new healthcare facilities across the region – 18 new hospitals are under construction in Dubai alone

45 Health Insurers or TPA’S – lacking scale and fighting providers rather than working with them

The DHA is licencing 1.5 new clinical facilities per day

Enlightened operators are building ‘feeder clinics’ to secure their referral base into Secondary Care – 2-4% outpatient to inpatient referrals

Market is segmenting into four categories of provider: Labour Camp (30%) Low cost (35%) Mid Market (25%) Premium (10%)

Quality, Pricing and Customer Experience are all being challenged as the market starts to see brands emerging

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Super Brands

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RegulationRegulation builds public confidence and allows systems to mature with the right checks and balances, however regulation will also: Increase costs of operating Force some historic facilities to close (Hospitals

in residential buildings, facilities without good access and egress, property without the right HVAC systems etc)

Make it difficult for one man clinics to see patients and cope with the reporting and paperwork involved

Drive out poor practices like referral fees and commissions to Doctors

Needs to look at low level clinics and small hospitals where standards are still poor with some operators

New hospital grading systems will force operators to upgrade or reduce prices

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Technology Technology changes the game: Internet empowers the consumer – researching

their illnesses and treatment options, checking out reputations of Doctors and Providers – Think ‘Trip Advisor’ for healthcare

Surgical procedures are changing; Cataracts, Laparoscopic Procedures, Robotics

Doctors don’t need to be in the room; telemedicine allows access to the best specialist radiologists, geneticists and specialist consultations

Diagnostic capabilities of new equipment, Stem Cell applications and Chromosomal modifications at conception – tackling thalassemia and other conditions – all point to a very different way of applying medicine in the future

Administrative, billing and claim systems will become increasing sophisticated

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Consumerism Patients are increasingly well informed Research about Clinics, Hospitals and even

individual Doctors is available online Commissions are widespread with up to 50% of

diagnostics and must be stopped Patients don’t trust the MENA healthcare system –

yet Health Insurance in the MENA region is often

poor: Biopsy rejections for melanoma, limited palliative care, low limits of cover, employers not being shown the consequence of poor cover

Mandatory Health Insurance in Dubai will not work at low premium levels and quality needs to be owned by Insurers and Providers

Not enough quality indicators Not enough volume for surgeons to maintain skills Obesity and chronic conditions will require

growing specialization from providers and early screening from employers/payors

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Inbound Investment

Ithmar Capital, Farj Capital, Abraaj Capital, AL WAHA Capital are just some of the investors specifically targeting healthcare

Stock market Floatation's have also been successful with Al Noor and NMC and the Dr Moopen Group should list next year. Access to capital markets and Investors wanting to see continued expansion will also increase the consolidation of smaller operators.

Amanat Dh 1.37 bn IPO to target health and education as an underwritten Dubai listing with no existing assets

Private Equity Groups see healthcare as a growing, profitable and defensive area to invest in, they will help to continue market growth and consolidation;

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Adaptive Strategies for Providers

The best provider for each medical condition will prosper.Looking after your patients throughout the healthcare continuum will retain them within the brand.

“Doctors have patients”.. so look after your doctors and make them the heart of your brand

You can work in multiple sectors but the brands need to be separated and focus on either being the lowest price or the best in each niche.Insurance networks and employer choice will dictate the new landscape. Why should they choose you?

The competition is getting fiercer and new entrants are building for the future. Focus on recall, prevention, education and show your customers you care.

SPECIALIZE

BUILD REFERRAL NETWORKS

TIE IN YOUR TOP DOCTORS

FOCUS ON YOUR SEGMENT

BUILD STRONG INSURER AND

EMPLOYER LINKS

COMMUNICATE YOUR BRAND TO YOUR PATIENTS

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Adaptive Strategies for Payor’s

Healthcare must be about clinical outcomes first and taking away the administration headache from patients, is this your culture ?

Take an aggressive stance to build networks across the four demographic segments. Drive quality, price and partnerships with providersWhilst there is a reluctance to invest heavily in ‘occupational health’ because of regional turnover, early diagnosis reduces costs and can be done in partnership with providers

With many providers still operating on paper based systems and seeing 50+ patients per day, help them to use CPT coding and share utilisation and referral rates in a constructive wayDifferent systems encourage different behaviours and capitation for routine primary care encourages efficiency and removes over prescribing, it can also provide certainty of cashflow for providers

Your brand as a payor is as good as the providers you let into your network, help them to specialise and to gather the data which builds confidence and trust

Focus on the patient

Build networks

Encourage screening and early diagnosis

Focus on training your

providersInvestigate hybid capitation models

Encourage your partners to specialise and measure clinical

outcomes

[email protected]

www.angloarabian-healthcare.com

Office 101, 1st Floor, Ibn Rushd, Building 33, Dubai Healthcare CityDubai, United Arab Emirates

Thank You

MENA Health Insurance Congress - 1st draft

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