Presentation_Mark_Tsunami - 1505

Tsunami of change coming to UAE

Healthcare

Mark Adams, CEO of Anglo Arabian Healthcare

16/17 MAY 2016

MENA HEALTH INSURANCE CONGRESS

PRESENTATION TITLE

www.angloarabian-healthcare.com 2

UAE Healthcare in 2016

Dramatic improvement in last ten years in facilities, specialties and control and regulation of standards

• International operators bringing disruptive strategies to challenge incumbents

• Mandatory health insurance providing a safety net for all and boosting funding

• Market consolidation seeing small entrepreneurial facilities being replaced by corporate institutions

• Insurers and Employers facing huge rise in healthcare costs

• Investors Building too many new facilities and targeting the wrong demographic

PRESENTATION TITLE


Inevitable Drivers for Change post 2016• Insurer Networks• Employer chosen 'Preferred Providers'• Regulator led benchmarking of clinics based upon measurable outcomes• New competition• New delivery models • Telemedicine• Chronic medical conditions• Population growth and health tourism• Consumerism • Drive to control fraud and abuse of the system

PRESENTATION TITLE


Issue 1: Bubble Bursting in Healthcare supply - Dubai

High Mid-to-high mid-to-low -

200 400 600 800

1,000 1,200 1,400 1,600 1,800

888

548

1,111

1,598 1,543 1,681

2016 2021

35% - 33%

22% - 32%

44% - 35%

%age of total (2015 – 2016)

• Massive over supply expected in 2021• Expected occupancy to go down from 65% to 49%• Majority of the expansion is targeting mid-high and high income population and undersupply

for Mid-to-low

15% 35% 50%%age of Total population

6 11

10

17

14

17

No of Hospitals 2016 – 2021

No of Beds

Population:

2016 – 2.5m

2021 – 4.0m

Expected bed gap of >700 for low-mid market

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Issue 1-a: Corruption in the Diagnostics

Incentivized to over prescribe

Investigations

Incentivized to prescribe Branded

Drugs

Medical care is not just another marketplace commodity. Physicians should never have an incentive to override the best interests of their patients. -

anonymous

In UAE, yearly c. AED 350m – AED 400m is paid as incentives to the doctor for Labs and Radiology

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Issue 1-b: Use of Branded Medications

Prescription as tradable

commodity by patients

Do not stock Generics and swap

with high value Branded

Case Study: Prescription Pattern in Hospital in

Abu Dhabi

Total Prescriptions (Sample) 1,190

Total Drugs Prescribed 2,659

Mean Drug encounter per prescription 2.2

Generics Prescribed 4.4%

Branded Prescribed 95.6%

Use of branded medications over generics increases the cost of medication by 40%-50%

Total Pharmaceuticals spend (2015; AED 7.7b) could be reduced by c. 30%

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Heart Disease and

Stroke

CancerDiabetes

Hypertension RespiratoryDisease

MD

Issue 2: Population – Disease Burden

• UAE ranks among the top 10 most obese countries in the MENA region. Amongst UAE Nationals, 66 percent of men and 60 percent of women are overweight.

• Poor diet, High availability of rich, fatty and convenient foods and Smoking (25-30% of males in UAE) are the reasons for increase in needs

MD = Multi-skeletal Diseases

Chronic conditions are expensive, rarely reversed and include an extensive multi-disciplinary team

approach

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Issue 3: Market growing at fast pace• UAE healthcare fast growing and consolidated in to larger groups with c. $ 3.5 bn value of transactions

in last 3 years• 15 new hospitals are under construction in Dubai alone, DHA is licencing 1.5 new facilities per work day• Enlightened operators are building ‘feeder clinics’ to secure their referral base into Secondary Care – 2-

4% outpatient to inpatient referrals• Quality, Pricing and Customer Experience are all being challenged as the market starts to see brands

emerging • Consolidation already started with Mediclinic merging with Alnoor and NMC acquiring the bulk• VPS and DM Healthcare are soon to be listed

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Issue 4: Insurance Companies

• 60 insurers and >100 brokers competing for 6.5 million insured lives• Insurer and TPA’s are not big enough to negotiate or cut down abuse in Dubai and

N.E.• Switching of the Insurance Company by Corporates leads to lack of innovation and

interest• Study revels 28% - 30% of spending is being misused currently

2010 2011 2012 2013 2014 2015e -

2.0 4.0 6.0 8.0

10.0 12.0 14.0 16.0

72%74%76%78%80%82%84%86%88%90%92%

78%

81%

85% 85%88%

90%Insurance Premium & Loss Ratios

Tota

l Ins

uran

ce P

rem

ium

(A

ED B

n)

Loss

Rat

io (

%)

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Solution: Change to Survive (1 of 2)

• Cleaner, accountably patient centric system• Promote use of Generic Drugs• Channelize volumes to ethical providers

with no commission based • Disease management for chronic patients• Wellness initiatives• Occupational Health Support• Different funding structure

o Capitationo Risk sharing with floor and caps

Increasing loss ratios Increase costs of health insurance

Oversupply

Prov

ider

s Insurer

Corporate

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Solution: Change to Survive (2 of 2)

No profit sharing

physicians

No money back to doctor on laboratory or

radiology

Prescription of Generic

Medications

Ethical, cost

effective treatment

Wellness Initiatives

Occupational Health Support

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Branded vs Generic

• Medications comprise of 40% - 50% of total claim fund

• 80%-90% drugs prescribed in UAE are branded which can be replaced by replacing Generic Medication

• Growth in usage of generic drugs are becoming popular these days in Developed Countries such as US, UK etc.

• Promotes usage of Generic Medications:• Prices are lower in the range of 20% - 64%• Gross Margins are higher for generic medication

compared to branded• Preferred rates to the insurance companies in

channelizing the volumes• Delivery of medication can further reduce the risk

of overwriting

Medication

Branded(AED)

Generic(AED)

Saving(%)

Augmentin 122.5 84 31%

Panadol 7.95 4 50%

Voltaren 51 23.5 54%

Glucophage

(diabetes)14 5 64%

Price Comparison (Generic v Branded)

Savings of 30% - 60% can be achieved in the various drugs by using Generic Medications

PRESENTATION TITLE


Technology/ Telemedicine

Clean, Cost-effective and Convenient

• More than half of all U.S. hospitals currently have a telemedicine program.

• The global telemedicine technologies market, including hardware, software, and services, was valued at $17.8 billion in 2014 and is predicted to grow at a compound annual growth rate of 18.4% from 2014 to 2020.

• There were around 800,000 online consultations in the U.S. in 2015,

• Telemedicine makes up nearly one-fourth of the health IT market, which was valued at $15.6 billion in 2014 and is expected to increase to nearly $20 billion by 2019 with a compound annual growth rate of 4.8%.

• Companies trying to build the contact with patients through virtual means - Doctors on Demand - Babylon Health

- Hello MD - HelathTap

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Case study 1: Aviation Industry

5.4 m, 0.2

12.3 m, 0.4

11.5 m, 0.4

1.6 m, 0.1

2015 - Total Claim Fund (AED 30.8m)

5.40874212181551m, 22%

9.84258865134499m, 40%

8.01622366836946m, 32%

1.58597225204688m, 6%

2016 – Est Total Claim Fund(AED 24.9m)

IP OP Pharmacy Dental

Channelizing volumes through preferred ethical providero No co-pay OP services to the staff other providers 20% copayo Chronic Disease Management through CoE of Diabeteso Pharmacy delivery for Chronic Medicationso Monthly Health & Wellness Campaign

Total Staff – 5,700

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Case study 2: Engineering Firm

0.874297913333349; 15%

1.42581572000002; 25%3.4177776159

9995; 60%

2016e Total Claim Fund - AED 5.7m

OP Consultation DiagnosticPharmacy

0.874297913333349; 10%1.42581572000

002; 16%

6.83555523199989; 75%

2015 Total Claim Fund - AED 9.1m

OP Consultation DiagnosticPharmacy

Total Staff – 4,700

Channelizing volumes through primary care In-house Clinics o 60% reduction in the sick noteso 40% - 50% reduction in the cost of Pharmacy through Generic Medicationso Wellness campaigns for the staffo Referrals for specialist consultation and diagnostics through ethical providers

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Summary

• Providers will continue to consolidate

• Payers need to consolidate

• Funding models need to evolve to allow preferred partners to share the risk

• There is no longer room for Diagnostic fraud or ignoring the savings for generic medications

• Standards are going to get higher

• The evolution of the UAE healthcare system is just started

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Change is inevitable and it brings opportunities for renewal, improvement and innovation.

To try and resist change will leave operators, like the dinosaurs as footnotes in history

[email protected]

www.angloarabian-healthcare.com

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

Thank You

Presentation_Mark_Tsunami - 1505

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