UAE Sharjah MHMC Feasibility Study Review Report v10

Sharjah

MHMC

Feasibility Study Review

Technical and Financial Audit

Draft Report

February 28, 2010

Content

Feasibility Study and Business Plan Review of the MHMC I

EPOS Health Management February 2010

Content

1 Executive Summary.......................................................................................................1

2 Introduction....................................................................................................................3

2.1 Project Background ............................................................................................3 2.2 Project Partners and their Roles.........................................................................3 2.3 Scope of Work and Project Goal ........................................................................3 2.4 Methodology .......................................................................................................4

3 Plausibility check of the Market Analysis vis-à-vis Brief Market & Competitor Analysis8

3.1 Major Assumptions .............................................................................................8

3.1.1 TAG Report ..............................................................................................8 3.1.2 Inter Health Canada Report .....................................................................9 3.1.3 UHMS Report...........................................................................................9

3.2 Plausibility Check of the Major Assumptions ......................................................9

3.2.1 TAG Report ..............................................................................................9 3.2.2 IHC Report .............................................................................................10 3.2.3 UHMS Report.........................................................................................10

3.3 Conclusion of Plausibility Check.......................................................................10

3.3.1 TAG Report ............................................................................................10 3.3.2 IHC Report .............................................................................................10 3.3.3 UHMS Report.........................................................................................11

4 Rapid Market Analysis Summary ................................................................................13

4.1 Gulf Cooperation Council Countries Healthcare Outlook .................................13

4.1.1 Factors driving health-care demand and projections in the GCC ..........13 4.1.2 Implications for Private Healthcare providers ........................................16

4.2 UAE Healthcare Outlook...................................................................................17

4.2.1 Summary Market Analysis .....................................................................17 4.2.2 Population ..............................................................................................21 4.2.3 Hospital Beds.........................................................................................24 4.2.4 Major Challenges ...................................................................................31 4.2.5 Existing Healthcare Providers................................................................39 4.2.6 Competitor Analysis ...............................................................................43

4.3 Rough Estimations of Patient Volumes ............................................................44

5 Review of Operational and Financial Analysis ............................................................51

Content

Feasibility Study and Business Plan Review of the MHMC II


5.1 Gross Revenue.................................................................................................51

5.1.1 Major Assumptions ................................................................................51 5.1.2 Plausibility Check of the Major Assumptions .........................................51 5.1.3 Conclusion of Plausbility Check.............................................................51

5.2 Operating Expenses: Medical Staff ..................................................................51

5.2.1 Major Assumptions ................................................................................51 5.2.2 Plausibility Check of the Major Assumptions .........................................51 5.2.3 Conclusion of Plausbility Check.............................................................52 5.2.4 Recommendation...................................................................................52

5.3 Operating Expenses: Non-Medical Staff...........................................................52

5.3.1 Major Assumptions ................................................................................52 5.3.2 Plausibility Check...................................................................................52 5.3.3 Conclusion .............................................................................................52 5.3.4 Recommendation...................................................................................52

5.4 Operating Expenses: Consumables and other .................................................52

5.4.1 Major Assumptions ................................................................................52 5.4.2 Plausibility Check...................................................................................52 5.4.3 Conclusion .............................................................................................53

5.5 Investment Costs: Main Hospital Buildings and Parking Area.........................53


5.6 Investment Costs: Medical Equipment, Furniture Costs, Medical Instruments, &

IT.......................................................................................................................54


5.7 Investment Costs: Total Design and Supervision Fees for Construction..........54


5.8 Financing Costs ................................................................................................55

Content

Feasibility Study and Business Plan Review of the MHMC III



5.9 Review of the Scenarios (Sensitivity Analysis) .................................................56

5.9.1 Plausibility Check...................................................................................57 5.9.2 Conclusion .............................................................................................57 5.9.3 Recommendation...................................................................................57

5.10 Overall Conclusion and Recommendations......................................................57 5.11 Recalculation of Financial Projection................................................................58 5.12 Risk Evaluation and Risk Mitigation Measures.................................................58

6 Final Recommendation and Next Steps ......................................................................60

6.1 Development of Mubarak Al Hassawi Medical Complex ..................................60

6.1.1 Overview of Mubarak Al Hassawi Medical Complex..............................60 6.1.2 Implementation and Integration of Service Provision.............................61 6.1.3 Organisation of Main Hospital ................................................................62 6.1.4 Organisation of Rehabilitation Institute ..................................................62

6.2 Next Steps for Development of Main Hospital ..................................................62

List of Figures

Feasibility Study and Business Plan Review of the MHMC IV


List of Figures

Figure 1: Projected Increase in Treatment Demand in the GCC by 2025 (percent) ..............14

Figure 2: Projected Demand for Hospital Beds in GCC countries by 2025 (percent) ............15

Figure 3: GCC Chronic Disease Burden by Country..............................................................15

Figure 4: Country Comparison of Hospital Beds Per 10000 Population ................................28

Figure 5: Spectrum of Healthcare Services............................................................................61

List of Tables

Feasibility Study and Business Plan Review of the MHMC V


List of Tables

Table 1 Meetings and Organisational Visits for Rapid Market Analysis ...................................5

Table 2 Required Information for Next Step of Project Progress .............................................6

Table 3 Summary Box of TAG Report Review.......................................................................11

Table 4 Summary Box of IHC Report Review........................................................................12

Table 5 Summary Box of UHMS Report Review....................................................................12

Table 6 Registered Biostatistics of UAE (MoH 2007 Data) ....................................................22

Table 7 Population by Sex Nationality and District (MoH 2007 Statistics) .............................23

Table 8 Beds by Hospital Speciality and District (MoH 2007 Statistics).................................26

Table 9 Potential Bed Share for MHMC on the basis of Sharjah Client Volume....................28

Table 10 Discharges estimated for RCPS, Nervous System, Orthopaedics and Circulatory

System ...................................................................................................................................29

Table 11 Hospitals Beds estimated for RCPS, Nervous System, Orthopaedics and

Circulatory System .................................................................................................................30

Table 12 Registered Biosstatistics of UAE (MoH 2007 Data) ................................................32

Tabelle 13: Hospital Services to inpatients by specialty ........................................................34

Table 14 Overseas Treatment sponsored by MoH 2007 .......................................................36

Table 15 Hospital Services to Outpatients by Nationality and Specialty (MoH 2007 Data) ...37

Table 16 Operations by Speciality and District (MoH 2007)...................................................39

Table 17 Shiekh Khalifa Medical City Statistics – 1st Jan 2009 till 31 Dec 2009...................40

Table 18 Statistics of Medical and Surgical Institute (Pavilions) of SKMC.............................40

Table 19 Salient Features of SKMC Surgical Institute Services ............................................41

Table 20 Salient Features of SKMC Medical Institute Services.............................................42

Table 21 Rough Estimation of Patient Volumes and Comparison with TAG, IHC and UHMS

Volumes .................................................................................................................................45

Table 22 Summary Box of Results of Rough Estimations of Patient Volumes ......................48

Table 23 Comparison of UHMS, Current and Recommended Project Costs.........................55

Acronyms

Feasibility Study and Business Plan Review of the MHMC VI


Acronyms

AHD American Hospital, Dubai

ALOS Average Length Of Stay

CAGR Compound Annual Growth Rate

CCU Coronary Care Unit

Dhms Dirhams

ER Emergency Room

GCC Gulf Cooperation Council

ICU Intensive Care Unit

HDU High Dependancy Unit

IHC Inter Health Canada

JCI Joint Commission International

KCREC Kuwait Commercial Real Estate Center

MHMC Mubarak Al Hassawi Medical Complex

MoH Ministry of Health

NICU Neonatal Intensive Care Unit

OT Operation Theatre

PWC Price WaterHouse Coopers

TAG The Advisory Group

UAE United Arab Emirates

UHMS Universal Hospital Management Services

UK United Kingdom

USA United States of America

USD United States Dollar

VIP Very Important Person

Acronyms

Feasibility Study and Business Plan Review of the MHMC 1


1 Executive Summary

The Mubarak Al Hassawi Medical Complex Projects intends to be the premier healthcare

service provider in UAE and GCC region in general and Sharjah and Northern Emirates in

particular. In view of this, the Client initiated planning of the project constituting Main Hospi-

tal, Rehabilitation Centre, Wellness and Diet Centre, Hotel, Academic Institutes and Staff

accommodation in 2006 with support of it project partners and technical consultants.

In the interim period the world saw a major financial crisis including the region of GCC – this

combined with the increase in number of healthcare providers in the country led to the need

of review of the previous project feasibility planning – particularly of the Main Hospital.

TAG study in 2006 focussed only on given specialties – Neurology, Neurosurgery, Ortho-

paedics, Cardiac and Vascular surgery, Cardiology, and Plastic and Reconstructive Surgery.

The methodology and data collection of TAG is found to be plausible, although its applicabil-

ity in current scenario after a gap of 4 years is not evident.

Inter-Health Canada (IHC), in June- July 2007, developed operational and financial data with

the reason to feed in Price Waterhouse Coopers financial planning. They added certain spe-

cialties and changed the patient volumes per speciality based on certain assumptions, which

are considered implausible, as they are not based on market demand but more on experi-

ences and international requirements for minimum workload for specialties.

UHMS in June 2009 developed a Feasibility Study and Business Plan on the bases of the

previous two studies and added 118 beds without objective evidence on patient volumes /

market demand. All of the above led to estimation of 248 beds for the Main Hospital.

A Rapid Market Analysis was carried out to estimate need for additional beds in comparison

with the internationally accepted benchmark, OECD average hospital beds per 10,000 popu-

lation. This analysis also included a very basic broad level market demand and supply of

services in certain specialties as well the market dynamics in relation to costs and prices as

well as environmental conditions. The result was estimation of need of approximately 150 to

160 beds for the Main Hospital; need for provision of secondary care specialties in order to

establish tertiary care services; identification of seven major considerations in hospital busi-

ness elaborated in the main report which guides assumptions and/or implications on patient

volumes, pricing, costs, human resource availability and competition. The market analysis

also highlights under supply in areas like Cancer Care – Radiotherapy, Renal transplant (due

to regulatory issues), IVF centres, and Paediatric and Neonatology while certain specialties

are oversupplied (e.g. Dentistry, Plastic and Cosmetic Surgery).

Finally it was concluded that the business plan developed by UHMS was not plausible for the

reasons that the patient volumes are not plausible. However the estimation of costs were

found to be reasonable. The methodology adopted for calculating revenues – unit wise pro-

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jection of occupancy instead of case-wise/speciality wise estimation of occupancy – is a de-

batable issue, as the case based methodology could be considered a better one. The esti-

mation of occupancy growth and projections beyond three to four years is again a disputable

methodology – the reason being that it is difficult to foresee circumstances (market condi-

tions, competition, environment, others). Secondly, a hospital should generally reach full oc-

cupancy (85%) within this time frame if there is market need, quality services provided by

qualified / reputed doctors, and strong management of the facility and its resources.

Total costs of more than 200 million USD for investments lead to high burden for the man-

agement of the hospital. For interests for loans and appropriate covering of opportunity costs

in total 18 million per year or 1.5 million per month have to be earned by revenues. By aver-

age prices of 3,000 $ per case, every month a number of 500 inpatients have to be dis-

charged in order to cover the costs of financing, before the admission of additional patients

wil enable the hospital to get liquidity for financing of human resources, consumables etc.

Finally the area in m² per bed estimated (225) is too high compared to international stan-

dards - in spite of the fact that MHMC project is positioning itself with the likes of SKMC and

American Hospital, Dubai. The German university hospital standard is 110-130 m² but Ger-

man hospitals receive only one tenth of outpatient cases, hence outpatient area has to be

calculated additionally. Secondly German hospitals have double beds, and hence a gross

floor area of 150-160 m² per bed could be recommended for MHMC plus a separate area for

outpatients. The overall area calculated is approximately 30.000 m² excluding parking.

The cost per square metre depends on labour costs and material costs. These are higher in

Germany however the MHMC expects use of best quality material and the costs are com-

paratively higher. To compare, construction cost (without medical and non-medical equip-

ment) in Bahrain is approximately 850 USD per m². The recommended construction cost (all

areas confounded) is between 1400 to 1700 USD per m².

To summarise, the hospital with project costs of $200 million is not feasible. On the basis of

the very basic and rapid market analysis, it is estimated that a hospital with max 160 beds is

feasible in terms of patient volumes, competitive service pricing, and project costs within a

given range.

It is recommended that the overall MHMC project components (Hospital, Rehabilitation and

Wellness) should be developed and managed in an integrated concept to maximise market

positioning, quality services provision and client satisfaction. Further more, integration of

commissioning activities with project development / construction is essential for timely com-

pletion of the project. Finally highly qualified professionals and strong operations manage-

ment is essential for the success of the organisation.

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2 Introduction

2.1 Project Background

Kuwait Commercial Real Estate Center (KCREC) along with its sister-concern company

Mubarak Abdulaziz Al-Hassawi Medical Company LLC. is currently in the final stage of plan-

ning for the proposed Mubarak Al Hassawi Medical Institute to be located in Sharjah in the

United Arab Emirates.

A Feasibility Study for Main Hospital, Rehabilitation Centre and Wellness & Diet Centre was

carried out by the Jordanian Consulting Company Universal Hospital Management Services

(UHMS) in 2009. This study was built on “Demand Assessment and Analysis” conducted by

“The Advisory Group” (TAG) in September 2006, complemented by Inter-Health Canada

(IHC) in July 2007.

In order to proceed to the Implementation Phase, a review of the feasibility study primarily for

the Main Hospital is required to validate the operational and financial projections including

the demand for hospital services and beds. Secondly the architectural planning, project

management and engineering team need medical inputs in order to proceed with the imple-

mentation phase.

2.2 Project Partners and their Roles

Projacs: Project Management

NBBJ: Architectural Design and Planning of eth Main Hospital

Syntax: Architectural Design and Planning of the Rehabilitation and the Wellnes

and Diet Centres

AECOM: Construction Engineering

KLMK Group, and Stroudwater Associates: Reviewing Staffing Models and Space

Program

EPOS Health Management: Health Facility and Services Planning, Developing

and Operations Management

2.3 Scope of Work and Project Goal

Although it is known that there is a sufficient number of hospital beds available for the region

– mostly located in Dubai, the project is expected to be implemented as it was the desire of

Late Mubarak Al Hassawi. The basic idea of and motivation for the project is to establish a

state of the art, highly specialized (tertiary level) healthcare centre (the Mubarak Al Hassawi

Medical Complex - MHMC) for the indigenous and expatriate population in Sharjah (and the

UAE and GCC region). As such a centre does not exist in Sharjah, patients in need for such

services are currently being referred to Dubai, Saudi-Arabia, Europe, and the US.

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The project planning is in process of finalising architectural plans and the client wanted to

validate the recommendations of the Feasibility Study and support to the design planning

from the healthcare viewpoint. Hence EPOS Health Management was given the tasks of:

Review of Feasibility Study - Operational Analysis and Business Plan Review:

This is to be done with the view to comment on plausibility and applicability of

major assumptions of the study;

Rapid Market & Competitor Analysis with a view to get a broad overview of the

current market scenario;

Support to the Architectural Design Planning of the MHMC (except Wellness and

Diet Centre): This is with the view to contribute medical planning insights in the

ongoing planning an designing initiative.

It was understood by the MHMC Client Team that the provision of alternative estimates on

return on investment, profit and loss data, and breakeven analysis is based on reliable data

that contribute to development of a strong business case.

However, EPOS would also like to use this opportunity to go beyond a simple summary of

the study results and to propose some changes to the concept, where appropriate, aiming at

a more rational use of resources in terms of space, equipment, and staff, and a more effi-

cient and effective organisation of services, thus reducing the financial burden for invest-

ments and current costs, and allowing for continuous and sustainable development of the

hospital and its services.

2.4 Methodology

Steps of Review

Identification of Major Assumptions in the Study

Plausibility Check of the Major Assumptions

Conclusion and Recommendations

Basis for Review

Analysis of available statistical data (MOH)

Meetings with Doctors and Hospital Managers from the primary ‘Catchment Area’

Assumptions on the current utilisation trends of competitor hospitals

Assumptions on the speciality-wise average workload

Expert experience from other comparable projects within and outside GCC region

Up until the date of the first draft submission, the information gathered for this report comes

from the following sources:

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Table 1 Meetings and Organisational Visits for Rapid Market Analysis

Sr. No.

Meetings / Visits Designation

Organisation Date Time

1 Meeting in London 21st Dec 2010

0900 to 1130

2 Architectural Planning Workshop

EPOS/NBBJ/AECOM/ Syntax/Projacs/Client

20-21 Jan 2010

0900 to 1700

3 Meeting and Hospital Tour Top Management

Zulekha Hospital, Dubai

21 Jan 2010

11 to 3 pm

4 Senior Clinician/estd 1st Cathlab in DubaiCardiologist

28 Jan 2010

5 -6 pm

5 Owner of Polyclinic Endocrinologist

Polyclinic, Dubai

27th Jan 2010

7-9 pm

6 Doctor at clinic owned by Indian Group General Practitioner

Polyclinic, Duabi

27 Jan 2010

7-9 pm

7 Senior Clinician Ophthalmologist

Welcare Hospital, Dubai

28th Jan 11 am

8 Arab Health Congress 26 to 28th Jan

9 Cardiologist Cardiologist

Sharjah 26th Jan 2010

10 Endocrinologist Endocrinologist

Sharjah

11 Oncologist Oncologist Sharjah 25th Jan 2010

12 International Patient Coordinator American Hospital, Dubai

26th Jan 2010

13 Meeting and Visit Hospital Top Management

International Modern Hospital

26th Jan 2010

14Meeting with person responsible for medical coordination (IT side)

IT American Hospital, Dubai

7th Feb 2010

15 Meeting Neonatologist

Welcare Hospital, Dubai

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Sr. No.

Meetings / Visits Designation

Organisation Date Time

16 Meeting CTVS American Hospital, Dubai

17 Meeting

Orthopaedic/ Replacement Surgeon

Reputed Hospital, Dubai

18 Meeting ENT American Hospital, Dubai

19 Meeting PaediatricsAmerican Hospital, Dubai

20 Meeting Manager Materials

Reputed Hospital, Dubai

21 Meeting Neonatologist

Sharjah

22 Meeting Paediatric Gastroenterologist

Tawam Hospital, Al Ain

23 Meeting Neurosurgeon

Tawam Hospital, Al Ain

24 Meeting Intensive Care

Al Ain Hospital, Al ain

Also see References at the end of document

The list of documents gathered and referred to in this study is included in the Reference Sec-

tion at the end of this report.

For the purpose of detailing out the next steps for the MHMC Main Hospital Project, the fol-

lowing information will be, among others, required:

Table 2 Required Information for Next Step of Project Progress

Sr. No.

Information Required Source Purpose

1 Speciality wise Market Demand

Prevalence Data, focused Doctor and Manager data collection

Detailed estimation of patient volumes and finetuning of services under each speciality

2 Schedule of Charges Private Hospital Detailed Business Model development

3 Staff Salaries Private Hospital Detailed Business Model development

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Sr. No.

Information Required Source Purpose

4

List of Insurance companies and their existinf and future policies, Corporate Houses, Industries, Expatriates

Ministry of Commerce, others

Detailed Business Model development

5Potential partners for service provision

European countries Selection of visiting consultants and establishing international affiliations

6Visit to similar projects in the region

GCC countries

Feasibility Study: To benchmark and compare services currently being offered

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3 Plausibility check of the Market Analysis vis-à-vis

Brief Market & Competitor Analysis

3.1 Major Assumptions

The Market Analysis for MHMC project is based on three reports by TAG (2006), Inter Health

Canada (2007) and UHMS (2009). TAG made detailed ‘Demand Assessment and Analysis’

in 2006, while Inter-Health Canada made assumptions based on their experiences and

minimum operational volumes required to maintain standards and expertise while UHMS

assumed the number of beds as estimated by Inter-Health Canada and inputs from other

doctors and made assumptions for revenue and expenses on the basis of bed strength.

3.1.1 TAG Report

The calculation of inpatient cases were based on the MoH / Health authorities statistics con-

cerning the UAE population and the ratio of discharges per 1000 inhabitants.

The market population demand for medical services was assessed by TAG in year 2006

based on data of 2004 and this was categorised into primary, secondary, tertiary and quater-

nary service areas. For each of the service areas (except quaternary) three-way market

share scenarios (Best, Most Likely, and Worst Case Scenarios) was projected over a 10 year

period. TAG estimated market share in most likely case scenario from 10% to 12.5% for pri-

mary service area and 7.5% to 10% in secondary service area. These assumptions were

made for the following:

Plastic and Reconstructive Surgery

Circualtory System

Nervous System

Musculo-skeletal System

Rehabilitation

The estimated ALOS was between 2.7 to 4 days for plastic and reconstructive surgery. The

ALOS for other systems was not found in the TAG report. The ALOS was estimated taking

into consideration that the ALOS in GCC is higher by 40% compared to international stan-

dard ALOS.

The TAG Study estimated 135 hospital beds and 40 Rehabilitation beds. TAG wrote that

they collected prices for medical services from several private facilities in the UAE. The

prices were shown in the Appendix of the TAG report.

The reliability of data could not be validated in the duration available for the study.

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3.1.2 Inter Health Canada Report

IHC’s scope of work was to develop healthcare data for the financial model to be developed

by PWC. IHC added the following disciplines to the scope of services suggested by TAG:

General Surgery and Endoscopy

There was no mention about the market study or patient volumes for these specialties. IHC

further excluded the Neurosciences from their model.

IHC provides the figures requested by the client to populate the financial model to be pre-

pared by PricewaterhouseCoopers and mentions in its report – ‘It is by no means a guaran-

tee of the viability or the profitability of the MHMI project and only reflect the experience on

Inter-Health Canada.’

IHC populated the healthcare data on the basis of TAG demand assessment inputs but also

on the basis of Canadian and UK standard guidelines for each speciality governing the mini-

mum workload assumptions for a successful tertiary care service provision. This led to the

change in the projected admission numbers from 8,370 per year at year 10 to 11,900 per

year (at Year 5 excluding Rehab). The total of 175 beds (135+40 Rehab) increased to 196

beds (130 + 66 Rehab). Inter-Health Canada also estimated additional 18 beds for Day-care

– which are not included in the total of 130 hospital beds.

3.1.3 UHMS Report

There is no mention about market study conducted by UHMS or estimations of patient vol-

umes. UHMS assumed the number of beds as estimated by Inter-Health Canada and added,

on the basis of inputs from other doctors involved in the MHMC project, a total of 118 beds -

24 beds for Obstetrics, 24 beds for Gynaecology, 24 beds in Paediatrics, 27 beds for Day

Care and other 18 beds in various disciplines (kindly note that usually day-care beds are not

estimated as in-patient beds). This led to a total of 248 beds including day-care beds.

3.2 Plausibility Check of the Major Assumptions

The plausibility check was carried out in comparison with international and regional experi-

ences from comparable projects as well as on the basis of a rapid market analysis consisting

of interviews with reputable clinicians and managers in Sharjah, Dubai, Abu Dhabi and Al

Ain. This also includes visits to existing comparable hospitals in the region. In addition vari-

ous publications, reports and reference material were used where appropriate.

3.2.1 TAG Report

The data enlisted in the TAG report was reviewed and compared with our experiences as

well as with some broad data available to us.

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3.2.2 IHC Report

The patient volumes as estimated by IHC was reviewed and compared with market demand.

The comparisons were with the TAG Report and international prevalence experiences e.g.

Germany and experiences from comparable projects in the region.

3.2.3 UHMS Report

The hospital beds requirement was checked in relation to the patient volume estimations

made by TAG and IHC. The need for 118 additional hospital beds (which were added by

UHMS) was compared with the results of the rapid market analysis.

3.3 Conclusion of Plausibility Check

3.3.1 TAG Report

The data collected was found largely reliable given the availability of data in the region. The

methodology for estimating the potential discharges / patient volumes is good and in practice

is one of the best ways. However these estimations were true based on market conditions

before 2006. The market has changed from 2006 to 2009, wherein more hospital providers

with good quality services and technology have established themselves. Hence these patient

volumes are no longer at 100% applicable and plausible.

UAE in general, and Dubai in particular, recently went through a financial crisis between Oc-

tober 2008 till recently which has led to decreased immigration and increased return of expa-

triates. It is hard to predict the character of structural change that is currently happening in

the economy and its effect on the number of expatriates inflow or outflow. However, this fac-

tor obvious has direct relation with patient volume estimates.

The projections of patient volumes continue to increase (e.g. plastic surgery volumes in-

crease by 180% from yr 3 to yr 12) over a period of 12 years. From experience, service vol-

umes and related projections can most accurately be done for a maximum of 3-4 years. This

is the number of years during which new projects can take shape; the market supply and

demand, costs and prices, macro-economic changes ad well as changes in resources, man-

power and technology, all these factors are foreseen and included in the calculation. Projec-

tions over 6-12 years however, are subject to high volatility.

3.3.2 IHC Report

IHC has a reasonable methodology in calculating patient volumes and market estimations for

all specialties. However IHC estimated patient volumes for some specialties on the basis of

TAG Report (which uses data from 2006 and earlier) and the patient volumes are already

questioned as per reasons given in the above section. The Auditor could not identify other

elements that suggest that these estimates are not plausible.

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3.3.3 UHMS Report

IHC assumed the estimates for patient volume / hospital beds on the basis of TAG and IHC.

The patient volumes from TAG are already questioned in above section. Hence the esti-

mates are not 100% applicable.

In relation to the 118 additional beds, there was no sound basis in terms of market demand

or patient volume projections made. Hence the estimated additional 118 beds are not de-

mand based and their “needs assessment” is not plausible.

Table 3 Summary Box of TAG Report Review

Summary Box: TAG Report

Basis: Ratio of discharges per 1000 inhabitants

Market: Primary, secondary, tertiary and quaternary service areas

Market Share: 10 to 12.5% for primary and 7.5 to 10% in secondary service

area

Specialties Considered:

- Plastic and Reconstructive Surgery

- Circulatory System

- Nervous System

- Musculo-skeletal System

- Rehabilitation

Results

- Full Occupancy Reached: Year 10

- In-Patient numbers per year: 8,370 at Year 10 (without Rehab)

- Hospital Beds: 135 (without Rehab)

Data collected was found reliable

Good methodology for estimating the potential discharges / patient volumes

Applicability

- Time Gap from 2006 to 2010

- More Providers / Competitors in market

- Financial Crisis

- Projections over 10 yrs subject to high volatility after year 4

Result: Patient volumes are not 100% applicable

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Table 4 Summary Box of IHC Report Review

Summary Box: IHC Report

Basis: TAG Report and own projections


- Added to TAG: General Surgery and Endoscopy

- Deleted from TAG: Nervous System

Results:


- In-Patient Nos. Per Year: 11,900 at Year 5 (without Rehab)

- Hospital Beds: 130 (without Rehab)

- Day-care of 18 Beds

- ICU: 16; CCU: 11; VIP/Presidential 9

Table 5 Summary Box of UHMS Report Review

Summary Box: UHMS Report

Basis: TAG and IHC Reports


- Added: Obstetrics and Gynaecology, Paediatrics

Results:


- In-Patient numbers per year: 23,997 (calculated from patient-days) at Year

10 (without Rehab)

- Hospital Beds: 248 (including 27 beds for Day-care)

- ICU/HDU: 18; CCU: 13; NICU 4; VIP 9 and VVIP 4

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4 Rapid Market Analysis Summary

4.1 Gulf Cooperation Council Countries Healthcare Outlook

4.1.1 Factors driving health-care demand and projections in the GCC

Population growth

As per WHO estimates and also confirmed in the McKinsey report, the growth of populations

will increase at a compound annual growth rate (CAGR) of around 3.0 percent, one of the

highest in the world until 2015 and in long term come down to 1.8 percent CAGR. This

means the population will double by 2025.

Aging population

As the life expectancy in GCC rose from 60.5 years in 1978 to 73 years in 2004; in the same

period, infant mortality fell from 69 deaths per 1,000 live births to 18.1, there are more elderly

people in GCC requiring medical care and have more expensive health profiles than younger

people. This demographic segment will continue to grow in the years ahead and it is esti-

mated that Saudi Arabia will have seven times the current old population (>65yrs) after

25 years.

Health-risk factors

A joint study between the UAE Ministry of Health and the World Health Organization in 2001

estimates 25 percent of UAE citizens suffering from diabetes (as compared with an aver-

age of 5 to 7 percent globally). This figure rises to an unprecedented level of 40 percent for

those aged 60 or above. This prevalence has been described as being of crisis proportions.

In addition, the obesity rate for GCC nationals stands at 40 percent, one of the highest in

the world. The health complications of both diabetes and obesity will correlate with much

higher medical costs in the coming years.

McKinsey & Company constructed a proprietary model of health-care demand covering each

of the six GCC countries across 20 specialties and five age brackets (Figure 1). This model

is solid because of the depth of the data used and thereby offers a comprehensive health-

care profile. The model projects a substantial increase in health-care costs, as well as in the

number of inpatient and outpatient treatments and hospital beds, over the next 20 years. The

model takes into account five drivers of changing demand: population growth, the demo-

graphic profile, the development of risk factors, treatment patterns, and medical inflation. The

model projects the following by 2025:

Treatment demand (see Figure 1):

- 240 percent rise in treatment demand in 20 years

- Steep rise of 419 percent in cardiovascular disease

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- Steep rise of 323 percent in diabetes related ailments

Hospital beds (see Figure 2)

- Require more than double the beds by 2025 – 162,000 beds

- Saudi Arabia & UAE will see the greatest increase

Cost

- Cost for healthcare delivery to increase fivefold i.e. US$60 billion by 2025

- Cardiovascular expenditure burden will be twice that for healthcare as a

whole by 2025

Patient expectations:

- The McKinsey survey of GCC patient satisfaction shows that higher

expectations do not merely reflect generalized discontent, but rather are the

result of direct patient experience.

- Public hospitals come under substantially more patient criticism than do

private hospitals.

- Survey respondents reported that public hospitals have limited appointment

hours, long waiting times, and unattractive and uncomfortable facilities.

Figure 1: Projected Increase in Treatment Demand in the GCC by 2025 (percent)

Acronyms



Figure 2: Projected Demand for Hospital Beds in GCC countries by 2025 (percent)

Figure 3: GCC Chronic Disease Burden by Country

(Source: McKinsey Clinical Planning Model)

Acronyms



4.1.2 Implications for Private Healthcare providers

Health-care delivery

GCC governments need to focus on policy and regulatory role, and seek more

increased role of private players in healthcare for provision as well managing of

public healthcare facilities.

Given the GCC’s unusual risk factors, there are opportunities in managing chronic

diseases like diabetes, obesity at primary level and cardiovascular diseases /

complications.

Some GCC countries are actively seeking managing of primary healthcare

facilities, as well as hospitals for improving service delivery.

High demand for Cardiology and Cancer by 2025, presents a significant profit

opportunity for those ready to make large capital investments.

Physiotherapy, renal dialysis, acute rehabilitation, elderly care, home care,

occupational therapy, and speech therapy are among the areas in which capital

investment is relatively low and potential returns to private providers are high.

Finally, outpatient surgery centres (for example, day-cases) are likely to become

an important mechanism for reducing the average length of hospital stay and

increasing patient turnover.

Health Insurance

See section 5.4.3 in this report: Currently most of the GCC governments are providing for

75% of the healthcare delivery costs, and hence are currently in process to decrease this by

means of promoting health insurance. Saudi Arabia and Abu Dhabi have passed legislation

stating employers to provide for health insurance for their employees.

Support Services

Opportunity exists in provision of services like IT and management of healthcare facilities

either by means of outsourcing or direct provision.

Challenges for Private players

Continuous patient inflow due to lack of referral system in GCC;

Availability of trained clinical and nursing staff;

Agreeing on adequate reimbursement from payers (governments, insurance

companies, and individuals), because of the lack of clear pricing systems, free

public care for citizens, and complex contracting rules between government and

private players;

Differentiating from competitors in an environment where quality standards are

not transparent to patients; and

Contracting with government to manage public facilities.

Acronyms



4.2 UAE Healthcare Outlook

4.2.1 Summary Market Analysis

The following chapter summarises the information received during meetings with doctors and

hospital managers from the MHMC wider catchment area

General

UAE Population dynamics are unstable and impact the patient volumes

Many Hospital porjects are on hold because of financial crisis but does not

neccesarily mean that they will not re-start.

Dubai Healthcare City is not price competitive; patients could not relate to doctors

in DHCC as they were not known to the local population, although the doctors

were highly qualified; Moorefiled Eye Hospital is yet to see returns on their

investments.

Dubai and Abu Dhabi require are their hospitals to be accredited, Sharjah does

not have such a rule yet, but Al Zahra is accredited.

It is difficult to sustain a hospital catering to high-end clientele especially when

people living in Sharjah live there because of high costs in Dubai. 60% of Dubai

workers live in Sharjah as cost of living is lower than Dubai.

Dubai requires all companies to provide health insurance.

Canadian Hospital has revenue sharing basis arrangement with doctors, most

other hospitals have full time doctors.

Hospital Related

American Hospital Duabi:

- Approx 170 million Dhms cost for OP building of American Hospital which

houses Outpatient clinics, HR, Training facilities, Marketing and materials

departments.;

- Existing Building od AHD has 120 beds with 20 ICU and 5 OT and 5 NICU.

- AHD: 450 million Dhms for additional 200 beds with 42 ICU and 7 OTs

- Existing 5 – 7 dialysis machines plus 2-3 portable machines.

Al Zahra

- Expansion from 120 beds to 300 beds

- New Hospital in Dubai currently on hold

- Good Joint Replacement: Surgeon and surgeries

New Hospital Projects: International Modern Hospital building a orthopaedic

hospital in DHCC of 42 beds with comprehensive rehabilitation facilities,

physiotherapy and stroke, spinal cord injuries cardiac rehab etc.

Acronyms



Tawam Hospital

- Managed by John Hopkins with advanced IT system (almost paperless with

only consents and other documents in paper).

- Focus on Padiatrics: Paediatric Neurology, Paediatric Gastroenterology and

Paediatric Oncology; 35 bed Paediatric Oncology Ward, nearly fullly

occupied; Paediatric ER is separate from Adult ER

Market Demand

Demand for Cancer / Radiotherapy, Renal Transplant, followed by Neurosurgery,

Joint Replacement and cardiac sciences

High for Urology, Endocrinology, Obesity, Obstertics

Demand for comprehensive provision of Diabetes Care (Endocrinolgy / Obesity /

Diet, Renal, Ophthalmpological and other related complications

Oncology and radiotherapy as most patients from Dubai are sent to Tawam;

government is currently outsourcing to other countries, Cyber Knife availability

can attract patients;

No market for limb reconstructive surgery; oversupply of Plastic-Cosmetic Surgery

in Dubai.

Regulatory

Certification of doctors and nurses is a long process

IVF facility has strong regulatory requirements

Inpatients, Services, and Prices

In Sharjah: Insurance to Private Payor ration is 40:60; in Dubai it is 50:50

(Zulekha hospital); Welcare Hospital gets 70% insurance patients, 20% self

payors, and 10 corporate payers.

Cancer Care

- Only one hospital (government) in Dubai providing Radiotherapy

- Expatriates with cancer mostly get treatment in home country

- Only oncology clinic in Sharjah, no other in rest of northern emirates, provides

chemotherapy in his clinic

- Only one radiation therapy service in Oman and no Bone Marrow Transplant

in UAE

- PET CT charges in American Hospital is 18,000 and in Gulf Diagnostics it is

20,000 Dhms; Imperial cancer centre in Abu Dhabi has PET Scan

Dialysis

- Al Zhara has 5 machines, with full utilisation

Acronyms



- Zulekha, Dubai charges 800 per cycle

- Government charges approx half of private sector

- Additional demand for Dialysis

- Nephrology services good in First Gulf Centre

Urology

- High demand for urology

Trauma and Orthopaedics

- Rashid Hospital recognised as trauma referral centre.

- Al Quassemiya Hospital (320) beds is largest govt hospital in Sharjah

- Neurospinal Centre in Dubai seems not like a institution/organisation / more

like a small shopital-clinic; Neurologists not available

- Welcare Hospital: Approx 600 consultations per month for leading doctor

- Ratio of Knee to Hip Replaements is 80:20

Neurosurgery

- Tawam Hospital: 500 Surgeries per year; 6000 OP visits; Patients come from

Sharjah, Ras Al Khaima and other northern emirates because services not

available in the region; Spine surgery is major contributor to 500 cases.

Obstetrics

- LSCS approx 10,000 Dhms (Zulekha Dubai)

- Normal Deliveries : 2,500 per year in Al Zahra ; 1,200 in Zulekha, Sharjah

Neonatology

- Welcare Hospital expanded its NICU to 16 beds in October 2009 – 9-11 beds

are occupied 6 Ventilators (4 are high frequency); acquiring additional high

frequency oscillator ventilator in coming month. 2 Part time Paediatric

Surgeons available; approx 300 consults per month; 10 beds for PICU

- Cases are lost because of financial constraints of patients

- Al Zhara, Sharja expanded its NICU to 20 beds, but operationalised only 7

beds due to lack of qualified nursing staff availability

- Zulekha Hospital also expanded, City hospital also has 10 NICU beds,

American hospital has 4 -6 beds

- Al Wasl Hospital, Dubai – Dr. Fatima is the only doctor in the region receiving

referrals for Metabolic disorders

- Tawam Hospital also has strong neonatology and paediatric specialty

services

ENT

Acronyms



- Outpatients: 25 – 40 per day per ENT surgeon i.e. 7200 per year

- Surgical cases: 10 per week per ENT surgeon i.e. 480 per year

- Average surgery price of 12000 Dhms in AHD

Insurance companies are keeping the prices very low – American Hospital is only

listed with few insurance companies

American Hospital Charges

- ICU: 6000 Dhm per day; Basic Room: 2800 per day

- Normal Delivery: 10000 Dhm; LSCS: 20000 Dhms

Welcare Hospital, Dubai Charges

- Outpatient consult: 500; Room: 1600 Dhms

- Approx per Day consumable charge per day of 200 Dhms plus medicine, total

cost of patient per day approx 2800 Dhms

- Normal Delivery: 14000 Dhms - Approx 120 deliveries per month; 4

obstetricians plus two new, total 6.

- Paediatric Neurologist in Welcare comes from India on visiting basis (May,

Aug, Nov 2009 for 3 days) and sees approx 60 patients in each visit.

International Hospital, Dubai Charges

- ICU: 2500 per day

- Normal Delivery: 6000 Dhms

- LSCS: 10000 Dhms

- Room: 800 to 1200 Dhms

Zulekha Dubai charges 250 Dhm for Consultation, others charging 500 Dhm

Cardiology

- Angioplasty: Zulekha Dubai charging 25000 Dhm with one stent

- Approx 7 – 9 CathLabs in Dubai; one is al Zahra Sharjah, Ras Al Khaima,

and Qusis

- Approx 5- 6 procedures a month per cathlab; Best case scenario max. of 60

angiographies + angioplasties per month in Dubai

- City Hospital, NMC, Zulekha, International Modern are doing reasonable.

Cardiac Surgery

- Not performed in Al Zahra Hospital

- Govt performs for 10,000 Dhms

- Expatriates go back to home country for surgery (non-urgent)

- 75,000 Dhms for 7 days stay in American Hospital; plus 5,000 Dhms for

Valve; 15,000 Dhms in other private hospitals in Dubai.

Acronyms



- Approx 120 cases from Oman per year reffered to Tawam and Al Ain Hospital

as they are on border of Oman

- Best Case Scenario: max of 12 cases per month in Dubai; American Hospital

does 3 cases per week max. Zulekha has tie up with American Hospital for

CTVS.

- Belhaul and City Hospital probale doing well

- Mafraq Hospital and SKMC, Abu Dhabi has Paediatric CTVS services

- Cardiac Rehabilitation is yet to be developed in AHD, SKMC has good rehab

program

- Need for Elecrophsiology Services.

ICU Charges: 2000 Dhm per day at Zulekha, Dubai

Staffing for 14 bed ICU and 10 bed HDU: 1 plus 11 registrar level doctors.

Many Pakistanis come for cardiac services to Zulekha Dubai

Dentistry:Lot of Dental centres in Dubai including dental implants

Costs (Staff)

- Specialists approx 50,000 Dhms per month and Junior Doctors approx

15,000 to 20,000 Dhm (Zuekha, Dubai)

- Nurses – 4,500 plus accomodation, food allowance, etc; Physiotherapists –

6,000 minimum; Specialists – 50 to 60000 plus accomodation, etc.; Junior

Doctors – 15-20,000 Dhms per month

The above rapid market analysis provides certain level of insight into the utlisation of existing

hospitals and also workload assumptions on the speciality-wise average workload per doc-

tor. Howere being a rapid survey, covering all the services and specialties was beyond the

scope of this rapid market analysis. Hence for estimating more reliable speciality wise patient

volumes a detailed market analysis will be needed. Currently this analysis is just enough to

get a broad feel of the healthcare market and very loose estimations on patient volumes.

4.2.2 Population

As per United Nations Economic and Social Commission for Western Asia, the population in

the Gulf Cooperation Council (GCC) gained more than 1.7 million from 2006 to 2008, peak-

ing at 38.5 million at the end of 2008. The following table gives a detailed insight into the

population dynamics.

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Table 6 Registered Biostatistics of UAE (MoH 2007 Data)

Data 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Population in thousands 2759 2938 3108 3290 3754 4041 4320 4106 4229 4488

Population increase 135000 179000 170000 182000 464000 287000 279000 213573 122573 259000

Annual rate of increase 5.14 6.49 5.79 5.85 14.1 7.65 6.9 - 4.9 2.98 6.12

Natural population increase rate 44456 46619 49395 50125 52245 55163 56990 58262 56477 60253

Annual national population increase rate 1.61 1.59 1.59 1.53 1.39 1.37 1.32 1.42 1.34 1.34

Crude birth rate 18 17.7 17.6 17 15.48 15.14 14.6 15.8 14.88 15

General fertility rate/1000 95 95 95 92 88.3 81.8 78.5 76.5 72.61 74

Ratio of children to females (15 – 49) 0.5 0.5 0.5 0.5 0.5 0.46 0.46 0.33 0.33 0.33

Still birth rate 8.35 7.08 7.8 8.92 7.14 6.76 7.25 6.87 6.81 7.77

Still birth rate (citizen) 8.7 5.91 8.9 9.83 7.31 7.25 6.19 6.73 5.46 6.84

Still birth rate (non-citizen) 8.1 7.99 7.1 8.41 7.11 6.4 8.05 6.97 7.89 8.46

Crude death rate 1.85 1.8 1.75 1.75 1.56 1.49 1.42 1.55 1.53 1,65

Infant mortality rate 8.62 9.75 8.08 8.92 8.12 7.8 8.71 7.74 7.09 7.8

Neonatal mortality rate 6.16 6.57 5.62 6 5.51 4.46 5.93 5.37 4.75 5.15

Child mortality rate (1 – 5) 0.56 0.61 0.63 0.57 0.53 0.58 0.39 0.63 0.43 0.5

Child mortality rate/1000 live birth 10.76 11.8 10.27 11.22 10.19 9.9 10.58 9.87 8.66 9.57

Child mortality rate/1000 population bellows 2.19 2.36 1.62 2.17 1.84 1.77 1.81 2.26 1.88 2.12

Acronyms



UAE had population growth of 4.4 per cent taking the population to 4.86 million at end of

2008. Saudi Arabia had growth rate of 4.8 percent with population of 25.194 million; Kuwait

growht rate of 5.2 and population of 2.765 million; Oman at 4.6 percent and population of

2.73 million; Bahrain with 3.6 percent growth and population of 765,000 residents; and Qatar

with 3.3 percent growth had population of 868,000 by 2008.

The Economist Intelligence Unit Report from November 2009 estimated that the population

of GCC will grow by 30 percent in 11 years taking the total population to 53 million by 2020.

Accordingly the GCC will require in excess of 25,000 additional beds to address the growing

demand. A report from “Alpen Capital” states that the Gulf healthcare sector will grow at

about 9 percent annually, to reach $47 to $56 billion by 2020. Population Characteristic: The

population is broadly divided into Local with 15% and Expatriate Population (85%). The

demographic characteristic of expatriate is as follows:

Mostly between the age group of 25 to 45 yrs (74% of population is in the 15-49

yrs age group – MoH 2007 Data)

Mostly belonging to working class or professional category

Except for short term medical problems and emergencies, they tend to go back to

their respective countries for long term treatments

Expected mortality cause in expatriates could be because of accidents and

emergencies.

Employers only partially cover the medical insurance (Dubai, Abu Dhabi)

Table 7 Population by Sex Nationality and District (MoH 2007 Statistics)

Sex

District Male Female Total

Abu Dhabi 578000 319000 897000

Western 85000 24000 113000

Alain 315000 168000 483000

Dubai 1121000 357000 1478000

Sharja 581000 301000 882000

Ajman 144000 80000 224000

U. A. Q. 32000 2000 52000

R. A. K. 138000 84000 222000

Fujeira 86000 51000 137000

Total 3084000 1404000 4488000

The local population numbers and the average life expetance is growing, giving rise to need

for elderly care as well as medical problems of elderly age group like Heart Disease, Stroke,

Osteoarthritis, Cataracts, and others. The fast changing lifestyle is leading to increase in dia-

betes, obesity, cancer, and congenital problems because of consangunous marriages.

Acronyms



4.2.3 Hospital Beds

This section provides understanding of the existing hospital beds in UAE in general and

Sharjah in particular. Then international comparison of hospital beds per 10,000 population is

done in order to reach the additional market need for hospital beds after considering regional

context.

The understanding of local, regional and international issues related to healthcare and hospi-

tal business is imperative to reach a logical and pragmatic approach for deciding the re-

quirement of hospital beds for MHMC project. This has been concisely elaborated and com-

piled into seven major considerations as follows:

1. Client Catchment Area: Hospital Client Volumes are primarily from the local or

primary catchment area i.e. radius of 30 km, depending on the region/context.

Only when a hospital becomes a centre of excellence for the region, the hospital

attracts patients from outside the primary area except when other regions do not

have the required services. The overall addition of client volumes can be maxi-

mum 20% of hospital primary catchment area client volumes. DHCC, American

Hospital and others in the region demonstrate this fact.

2. Medical Value Travel: The client volumes from Medical Value Travel worldwide

remain only a certain percentage of total hospital volumes as mentioned above.

Joint Replacements, Dental Treatment and other non-life threatening / non-

emergency conditions attract such patients. In GCC, Dubai has become an inter-

national city with already established hospitals attracting medical value travel cli-

ents which are not as high as was expected by DHCC during planning. Countries

like India and Singapore are providing better quality healthcare at comparative or

lower costs hence attracting the already small medical value travel clients. Hence

it is expected that Sharjah should only consider client volumes primarily from the

primary catchment area.

3. Client Segments: Majority of population is expatriates (up to 80%) and they pri-

marily belong to working class, labourers and other succinct vocations. The expa-

triates mostly go back to their respective countries for chronic diseases or elective

procedures. The insurance coverage for expatriates is of lowest level and hence

does not cover complex conditions or those that cost more. The high end of the

client segment, which can afford western hospitals, continue and will continue to

go to Germany, UK, America and other countries. Hence the client volumes for

hospitals need to be considered much less than the actual population figures for

the UAE or Sharjah

4. Healthcare Prices and Insurance Coverage: The healthcare costs are decreas-

ing in GCC over the last decade as the private healthcare providers increased.

Acronyms



The cost competition is also contributed by regional providers, especially from In-

dia where provision of quality care and lower costs is driving patients from GCC.

5. Human Resources Availability and increasing costs: Majority of expatriates

including doctors and nurses come from the Indian sub continent. As the econ-

omy of India including quality healthcare infrastructure and salaries are increas-

ing, it is getting difficult to recruit and retain qualified manpower from India. Many

specialties like Neonatology, Neurosurgery, Intensive Care Units, and Operating

Theatre Nurses are facing shortage worldwide including GCC. The result is ever

increasing salaries to retain the staff.

6. Abu Dhabi, Dubai and Centres of Excellence: Abu Dhabi has made major

strides in establishing a sound healthcare system through SEHA and its partners

– John Hopkins, Cleveland Clinic, Bumrungrad, VAMED and other international

healthcare players. Dubai however has not been as successful as Abu Dhabi al-

though it has got excellent infrastructure in place and some good quality services

providers. Currently UAE has centres of excellence in Joint Replacement (Ameri-

can Hospital, Dubai); Cancer Care (Tawam Hospital, Al Ain); Cardiac Sciences

(SKMC, Abu Dhabi); Trauma Care (Rashid Hospital, Dubai); and Paediatrics &

Neonatology (Tawam Hospital, Al Ain).

7. Sharjah Hospitals: Al Zahra Hospital is well established attracting patients from

all segments of the population. The infrastructure is not the best as a hotel build-

ing was converted to a hospital. Furthermore a new building has been built and

nearing finalisation. Zulekha Hospital caters to the middle class segment and pro-

vides reasonable quality of care. Royal Hospital targeting the high socioeconomic

segment due to reasons of lack of management and vision is not doing well.

Acronyms


Table 8 Beds by Hospital Speciality and District (MoH 2007 Statistics)

District Sharjah Dubai U. A. Q. Ajman Fujeira R. A. K.

Hospital

Speciality Ku

wai

t

Al

Qu

asem

i

Kh

orf

atan

Kal

ba

Al

Zai

d

To

tal

Al B

arah

a

Al A

mal

To

tal

U.

A.

Q.

To

tal

Kh

alif

a

To

tla

Fu

jeir

a

Deb

a

Tto

al

Saq

er

Ibra

him

Ob

eid

.

Sh

aam

To

tal

To

tal

%

Medicine 22 43 45 20 13 143 21 0 21 33 33 28 28 40 36 76 0 125 17 142 443 20.78

Chest 0 0 0 0 0 0 3 0 3 0 0 0 0 0 0 0 0 0 0 0 3 0.14

Cardiology 15 20 0 0 0 35 6 0 6 0 0 0 0 0 0 0 0 26 0 26 67 3.14

Nephrology 0 9 0 0 0 9 0 0 0 4 4 0 0 0 0 0 0 8 0 8 21 0.98

Neuralogy 5 8 0 0 0 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 0.61

Psychiatry 0 0 0 0 0 0 0 80 80 0 0 0 0 0 0 0 0 20 0 20 100 4.69

Dermato. 0 2 0 0 1 3 2 0 2 0 0 2 2 0 0 0 0 2 0 2 9 0.42

Paed. Med 0 24 17 14 7 62 20 0 20 23 23 29 29 36 17 53 20 0 0 20 207 9.71

General Surgery.

18 18 45 10 10 101 32 0 32 16 16 30 30 40 21 61 27 0 0 27 267 12.52

Thoracic S. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00

Cardiac S. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00

Neuro S. 4 10 0 0 2 16 0 0 0 0 0 0 0 0 0 0 4 0 0 4 20 0.94

Urology 2 18 0 2 0 22 8 0 8 5 5 5 5 0 0 0 8 0 0 8 48 2.25

Paed S. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00

Orthop. 22 29 0 2 6 59 18 0 18 12 12 20 20 10 0 10 27 0 0 27 146 6.85

Acronyms


District Sharjah Dubai U. A. Q. Ajman Fujeira R. A. K.

Hospital

Speciality Ku

wai

t

Al

Qu

asem

i

Kh

orf

atan

Kal

ba

Al

Zai

d

To

tal

Al B

arah

a

Al A

mal

To

tal

U.

A.

Q.

To

tal

Kh

alif

a

To

tla

Fu

jeir

a

Deb

a

Tto

al

Saq

er

Ibra

him

Ob

eid

.

Sh

aam

To

tal

To

tal

%

Plastic S. 6 9 0 0 0 15 0 0 0 0 0 0 0 0 0 0 3 0 0 3 18 0.84

Ophthalmo 2 7 0 2 1 12 7 0 7 3 3 5 5 18 0 18 6 0 0 6 51 2.39

E. N. T. 3 11 0 2 1 17 12 0 12 5 5 4 4 0 0 0 12 0 0 12 50 2.35

Gynae. 0 20 25 20 10 75 4 0 4 15 15 22 22 35 24 59 21 0 0 21 196 9.19

Obst. An 0 37 0 0 5 42 26 0 26 17 17 11 11 0 0 0 19 0 0 19 115 5.39

Obst. Pn 0 30 0 0 4 34 0 0 0 0 0 11 11 0 0 0 52 0 0 52 97 4.55

Cardiovas 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 0 0 4 4 0.19

Malignant 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00

General 0 4 0 4 0 8 0 0 0 4 4 4 4 4 2 6 0 0 0 0 22 1.03

Geriatries 0 0 0 0 0 0 0 0 0 12 12 0 0 0 0 0 0 0 50 50 62 2.91

Rihabil 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00

Dental 0 2 0 0 0 2 6 0 6 0 0 0 0 0 0 0 4 0 0 4 12 0.56

S.C.B.U. 0 12 8 0 5 25 8 0 8 8 8 6 6 10 10 20 16 0 0 16 83 3.89

Others 7 20 3 4 4 38 5 0 5 8 8 6 6 12 0 12 9 0 0 9 78 3.66

Total 106 333 143 80 69 731 178 80 258 165 165 183 183 205 110 315 232 181 67 480 2132 100.00

Note: The above hospital beds are those under the MoH and does not include bed strength of non-MoH providers (e.g. SEHA, Dubai Health Authority,

private sector beds, etc).

Acronyms



Figure 4: Country Comparison of Hospital Beds Per 10000 Population

Beds per 10,000 population

0

20

40

60

80

100

120

140

160

Bahra

in (2

006)

Canada

(200

5)

Egypt (

2005)

Franc

e (200

5)

Germ

any (

2006)

Iran

(2005

)

Iraq

(200

5)

Japa

n (200

5)

Jord

an (2

006)

KSA (2005

)

Kuwait (

2005

)

Oman

(20

06)

Qatar

(200

6)

Singap

ore

(200

6)

Syria (

2006

)

UAE (200

5)

UK (20

04)

USA (200

5)

OECD Avg. 41

Source: UN- Data Report 2009

Currently in UAE, assuming that there are maximum of 10,000 total hospital beds, the hospi-

tal beds per 10,000 population is 20.57. This number compared to the OECD (Organisation

for Economic Cooperation and Development) countries average is 41 beds per 10000 popu-

lation. This means that UAE needs additional hospital beds to cater to the existing popula-

tion. Assuming conservatively that the ratio of private providers remains at 30%, there is ad-

ditional need of 1,374 beds for private hospitals. Assuming there are currently 3,000 private

hospital beds (including planned expansions of existing hospitals) MHMC may cover about

8.3% of the required beds i.e. about 250 beds (including REHAB and Wellness / Diet). Fi-

nally, as most of expatriates receive healthcare in their respective countries, it is assumed

that up to 60% of these beds may not be utilised, leaving the scope of 140 beds for MHMC in

the current scenario. The cumulative total of beds available for MHMC till 2015 is 177 and till

2020 is 220.

Table 9 Potential Bed Share for MHMC on the basis of Sharjah Client Volume

If we consider Sharjah as the catchment population there is an additional requirement of 339

hospital beds (after assuming for expansion of existing hospitals) and we assume that

MHMC covers 50% of the market share (as there is no other hospital project envisaged) i.e.

169 beds. We again reduce 60% bed capacity in lieu of expatriates seeking healthcare out-

side Sharjah, leaving a potential bed share of 68 beds in existing scenario, 82 beds by 2015

and 98 beds by 2020.

Acronyms



On the basis of UAE Client Volumes the MHMC would need approximately 220 hospitals

beds by 2020 while on the basis of Sharjah Client Volumes the MHMC would need approx

100 hospital beds. Firstly these are conservative assumptions both for UAE and secondly the

mandatory insurance should be in place in coming 2-4 year thereby facilitating shift of pa-

tients from public to private sector. Thirdly MHMC Hospital has been conceptualised to be a

referral centre for the region and provided that this objective is achieved, higher client vol-

umes from outside the local/primary catchment are expected (20% maximum) and hence a

bed capacity of 150-160 beds is recommended for MHMC.

Estimation of Hospital Beds using TAG Study Assumptions:

The ‘Demand Assessment and Analysis’ conducted by TAG was a detailed study for Plastic

Surgery, Reconstructive Surgery, Circulatory System, Nervous System, Orthoapedics and

Rehabilitation. We used the same estimations as that of TAG in reaching bed numbers al-

though with following changes to two main assumptions as follows:

1. The market has changed from 2006 to 2009 and hence the market share avail-

able for the MHMC project has decreased (consider market shares used for

‘Worst-Case Scenario’ of TAG)

2. Hospital volumes and related projections can most accurately be done for a maxi-

mum of 4 years. This is the number of years during which new projects can take

shape and market supply and demand, costs and prices as well as macro-

economic changes and changes in resources – manpower and technology, are

foreseen and can be controlled. Hence the estimates till year 4 are considered as

full capacity for the project or at least for the phase I.

On the basis of the above assumptions, the following discharges and no. of beds are esti-

mated for the mentioned specialties.

Table 10 Discharges estimated for RCPS, Nervous System, Orthopaedics and Circulatory System

Discharges Yr 1 Yr 2 Yr 3 Yr 10

Plastic 475 535 602 1690

Reconstructive 97 104 112 205

Subtotal 572 639 714 1895

Circulatory

Nervous

Orthopaedics

Rehabilitation 70 98 139 270

Subtotal 1275 1795 2530 4981

Total 1847 2434 3244 6876

Total excl. Rehab 1777 2336 3105 6606

Acronyms



Kindly note that the ALOS for Plastic Surgery is taken as 2.5 days; for Reconstructive Sur-

gery is 3.8 days and for Circlulatory, Nervous and Orthopaedics combined is taken as 4.5

days.

Table 11 Hospitals Beds estimated for RCPS, Nervous System, Orthopaedics and Circulatory System

Beds Yr 1 Yr 2 Yr 3 Yr 10

Plastic 3 4 4 12

Reconstructive 1 1 1 1

Subtotal 4 4 5 13

Circulatory

Nervous

Orthopaedics

Rehabilitation 7 9 13 26

Subtotal 25 35 49 97

Total 29 39 54 110

Total excl. Rehab 22 30 41 84

The above gives us a total of 41 occupied beds by end of 3 years which means 50 beds are

required. However as secondary care specialties (Medicine, Surgery, Obs-Gynae, ENT, Op-

thalmology, Dental) tertiary care specialties - cancer care and Paediatrics and Neonatology

is also recommended – for which additional beds will be required. Additionally certain other

super-spcialties like Pulmonology, Endocrinology will be required to support the Tertiary

care patients. A rough estimate of additional 90 beds (15 for cancer care, 20 for Paediatrics

& Neonataology and 50 for secondary care specialties) is recommended taking the total

number of hospital beds to maximum of 175 beds.

Patient Volumes Per Unit Approach

On the basis of utilisation of hospital services in a comparable private hospital, this model

estimates patient numbers seen in each specialty taking into consideration major procedures

or admissions. On the basis of this the business plan is developed which estimates a total of

120 beds. Kindly note, that cardiac surgery is not considered, nor a strong paediatrics / neo-

natology department. Hence a total of 150 beds can be reached.

The Business Plan is developed as a bottom-up approach by elaborating on profit centre

model. Each profit centre (clinical or non clinical department/centre) analysis also called cen-

tre-wise business plan, was developed by projecting service workload and the required re-

sources. International benchmarks adapted to the country are included for costs and work-

loads. This approach provides costs of each clinical case along with the required volume and

cost of investigations, human resources, drugs & consumables.

Acronyms



The advantages of this approach are:

Speciality wise or centre wise independent business plans

Business Plan can be easily adapted for changes in projections

Business Plan can be used during implementation phase

Forms the basis for developing the hospital’s ‘Schedule of Charges’

Projects required workload for Diagnostics (Laboratory & Radiology)

Overall Project Cost/Budget can be determined to achieve targeted returns

Human Resource Requirement can be determined

The Business Plan projections on service workloads are on the basis of average patient load

per speciality with considerations given to available incidence-prevalence data for the given

clinical service. The individual business plans needs to be screened by clinical experts of the

country to validate the plans wherever possible.

However as this is a generic business plan which has not been optimised for MHMC

project, it is estimated that there could be changes of up to 30% higher or lower – both

in terms of patient volumes and also in terms of financials.

It is highly recommended that this business plan should be validated i.e. estimation of the

market need for each speciality through a detailed market demand assessment should lead

the development of patient volumes for each speciality. Then only the volatility of the estima-

tions will be minimised leading to a more reliable business plan.

A very rough estimate of patient volumes is made in later section on the above basis.

4.2.4 Major Challenges

Mortality

The top causes for mortality in UAE as per WHO is as follows:

Heart Disease

Accidents

Respiratory Diseases

Cancer

Diabetes

Congenital Disorders

Acronyms



Table 12 Registered Biosstatistics of UAE (MoH 2007 Data)

Data 1998 1999 2000 2001 2001 2003 2004 2005 2006 2007

Maternal Mortality Rate

0 0 0 0 0 0.01 0 0 0 0

% of deaths with cardiovascular D.

23.86 24.23 25.4 26.71 28.69 27.99 25.04 23.24 21.86 22

% of deaths with accidents, poisoning & violence

16.68 17.87 16 17.35 17.35 17.63 17.48 17.2 15.87 19

% of deaths with respiratory D.

2.74 2.89 3.47 3.37 3.92 4 4.49 5.95 6.96 7.39

% of deaths with tumours

8.25 8.42 8.6 7.69 8.31 8.81 8.59 8.65 8.92 9.09

% of deaths with prenatal, natal & postnatal

0 0.04 0.02 0.05 0.03 0.07 0 0 0 0

% of deaths with perinatal

2.39 2.49 2.44 2.1 1.83 2.72 2.38 2.26 2.5 2.34

Rate of cadiovasculer D. deaths / 100,000

44.11 43.7 44.5 46.75 44.7 41.57 35.49 36 33.51 36.36

Rate of accidents, poisoning & violence deaths / 100,000

30.84 32.23 28.02 30.36 27.04 26.18 24.77 26.66 24.33 31.39

Rate of respiratory D. deaths / 100,000

5.07 5.21 6.08 5.9 6.1 5.94 6.37 9.23 10.66 21.21

Rate of tumours deaths / 100,000

15.26 15.18 15.06 13.47 12.95 13.09 12.18 13.4 13.66 15

Rate of prenatal, natal & postnatal deaths / 100,000 (Female 15 – 49)

0 0 0 0 0 0.01 0 0 0 0

% of not stated deaths

20.15 10.7 11.02 11.67 15.93 9.33 8.53 11.6 13.71 13.64

The other major challenges are as follows:

Healthcare Sector Management and Regulation

Shortage of qualified medical professionals

Acronyms



Low private sector participationand

Poor health infrastructure

Currently GCC has approx 2 physicians per 1,000 population, higher than the global average

is 1.3 but lower than the US and Europe average of 2.6 and 3.2 respectively.

The Nursing & Midwifery staffing ratios per 1000 population 6.1 in Bahrain, 3.7 in Kuwait,

Oman has 3.7, Qatar has 6, Saudi Arabia has 3, and UAE has 3.5. These are lower than the

US and European ratios of 7.9 and 9.4 respectively.

Utilisation of Services

The following table gives insight into the existing utilisation of public healthcare services.

This in turn gives an insight into healthcare seeking beaviour for certain specialties.

Acronyms


Tabelle 13: Hospital Services to inpatients by specialty

Services Days of Stay Admission

Natio.

Speciality

Deaths Citizen Non-Citizen Total Citizen

Non-Citizen

Total Beds

Medicine 490 60739 39368 100107 10994 7444 18438 443

Chest 0 195 797 992 25 45 70 3

Cardiology 71 5401 10922 16323 1464 2866 4330 67

Nephrology 20 777 1013 1790 116 131 247 21

Nervus 17 383 2383 2766 71 479 550 13

Psychiatry 0 23052 7996 31048 445 385 830 100

Dermatology 0 109 24 133 27 10 37 9

Paediatric Med. 33 25545 18713 44258 9049 5640 14689 207

General S. 36 19456 33742 53198 5343 7283 12726 267

Vas. Thora. Surgery 2 0 0 0 0 0 0 0

Cardiac S. 0 0 0 0 0 0 0 0

Neoros 35 2364 7038 9402 340 656 596 20

Urology 1 3333 3839 7172 810 895 1705 48

Paediatric S. 0 0 15 15 0 0 0 0

Orthopaedic 4 31935 21852 33787 2225 3418 5643 146

Plastic S. 4 637 2910 3547 125 196 321 18

Ophthalogy 0 1985 1835 3820 559 436 995 51

E. N. T. 0 3738 2088 5826 1284 677 1961 50

Gynaecology 2 22456 13383 25839 4636 4553 9189 196

Acronyms


Services Days of Stay Admission

Natio.

Speciality

Deaths Citizen Non-Citizen Total Citizen

Non-Citizen

Total Beds

Obstetric 6 30122 21888 52010 10601 7319 17920 212

Cardio Vas. 0 153 339 492 41 59 100 101

Malignant 3 0 0 0 0 0 0 0

General 0 596 0 596 84 0 84 22

Geriatires 4 34734 4628 19362 756 8 764 62

Rahabil 0 0 0 0 0 0 0 0

Dental 3 491 748 1239 126 215 241 12

S.C.B.U. 77 7422 6673 14095 988 795 1783 83

Other 336 4602 5483 10085 1054 1243 2297 78

Total 1143 230225 207677 437902 51163 44753 95916 2132

New Born 21 0 0 0 0 0 0 226

Emergency 424 0 0 0 0 0 0 159

Total 1588 230225 207677 437902 51163 44753 95916 2517

Acronyms



Table 14 Overseas Treatment sponsored by MoH 2007

Patients Name of Country

Citizen Non-Citizen Total

Germany 158 0 158

United Kingdom 27 0 27

U. S. A. 14 0 14

A. R. E. 16 0 16

India 28 0 28

Others 69 0 69

Total 312 0 312

Acronyms


Table 15 Hospital Services to Outpatients by Nationality and Specialty (MoH 2007 Data)

View Cases Repeat Cases

Citizen Non-Citizen Citizen Non-Citizen

Data

Specialty MS F1 MS F1

To

tal

MS F1 MS F1

To

tal

To

tal

Vis

it/P

ers

on

Medicine 22449 26420 3999 2477 55345 59539 103162 96466 9033 181200 236545 4.27

Chest 2 3 20 8 33 11 17 33 29 90 123 3.73

Cardiology 739 665 693 406 2503 10651 10362 4876 2104 28193 30696 12.26

Nephrology 72 88 51 35 246 620 729 358 179 1886 2132 8.67

Nervus 101 183 159 150 593 1084 1516 1206 949 4755 5348 9.02

Psychiatry 568 588 420 234 1810 7435 9749 4143 3442 24769 26579 14.68

Dermatology 5186 8343 1278 1382 16189 18243 34964 2254 2925 58386 74575 4.61

Paediatric Med.

16867 15526 1768 2327 36488 33561 29754 4430 3892 71637 108125 2.96

General S. 5266 4255 2234 1099 12854 11317 11483 4486 2587 29873 42727 3.32

Vas. Thora. Surgery

39 56 47 15 157 226 277 130 80 713 870 5.54

Cardiac S. 3 5 2 1 11 91 62 42 14 209 220 20.00

Neoros 285 405 236 132 1058 1059 1375 663 317 3414 4472 4.23

Urology 2268 1079 1570 408 5325 9025 3807 3399 965 17190 22515 4.23

Paediatric S. 0 0 0 0 0 0 0 0 0 0 0 0.00

Orthopaedic 12495 9737 6468 1840 30540 17840 21016 9299 3370 51525 82065 2.69

Plastic S. 93 120 235 56 504 496 604 540 188 1828 2332 4.63

Ophthalogy 7879 9327 6325 1675 25206 19357 2518 3842 2629 51046 76252 3.03

E. N. T. 12305 13996 2847 1571 30719 16581 19765 2748 2037 41131 71850 2.34

Acronyms


View Cases Repeat Cases

Citizen Non-Citizen Citizen Non-Citizen

Data

Specialty MS F1 MS F1

To

tal

MS F1 MS F1

To

tal

To

tal

Vis

it/P

ers

on

Gynaecology 0 4299 0 1466 5765 0 22043 0 6706 28749 34514 5.99

Obstetric 0 5580 0 5580 11168 0 46236 0 23606 69842 81010 7.25

Cardio Vas. 1 3 0 0 4 59 94 2 40 195 199 49.75

Malignant 0 0 0 0 0 0 0 0 0 0 0 0.00

General 231170 189881 290501 147668 859220 882 864 234 88 2068 861288 1.00

Geriatires 20488 18073 5769 4046 48376 33800 37630 2293 1755 75478 123854 2.56

Rahabil 78 74 74 48 274 9734 8898 8963 5036 32631 32905 112

Dental 4967 5642 947 608 12164 38521 36954 7714 5258 88447 100611 8.27

S.C.B.U. 4216 5886 821 588 11511 8478 17063 1181 1104 27826 39337 3.42

Other 0 0 0 0 0 0 0 0 0 0 0 0.00

Total 347537 320234 326464 173828 1168063 298810 443636 72302 78333 893081 2061144 1.76

Rapid Market Analysis Summary



Table 16 Operations by Speciality and District (MoH 2007)

District

Speciality Dubai Sharja Ajman U. A. Q. R. A. K. Fujeira Total

General S. 506 4354 934 268 1684 867 8613

Orthopaedic 231 1578 1049 299 3172 733 7062

Urology 101 394 142 43 569 129 1378

Plastic S. 0 487 0 0 95 5 587

Paediatric S. 0 0 251 0 48 227 526

Neurology S. 0 168 22 13 25 29 257

Oncology 0 0 10 0 0 9 19

Cardiovascu. 0 6 0 0 86 0 92

Thoracic S. 0 66 4 0 0 0 70

Cardiac S. 0 97 0 0 0 0 97

Ophthalogoy 13 388 409 91 732 228 1861

E. N. T. 197 549 315 176 505 164 1906

Dermatology 0 0 439 0 0 7 446

Gynai & Obst

508 1991 879 258 2396 737 6769

Dental 92 229 1 0 608 10 940

Others 58 14 0 92 76 321 561

Total 1706 10321 4455 1240 9996 3466 31184

4.2.5 Existing Healthcare Providers

There are currently three major categories of health service providers in the country:

1. MoH Hospitals

2. Non-MoH Hospitals but Governmental (Ministry of Defence and others)

3. Private Hospitals

Sheikh Khalifa Medical City being considered as the premier healthcare organisation in the

UAE, although a public provider is considered for comparison as it is comparable with a qual-

ity private healthcare provider like the proposed MHMC – Main Hospital.

The following statistics of SKMC are the latest that are available of any hospital in UAE and

serve as excellent benchmarking / comparison for MHMC operations at its full occupancy

levels (Year 4), although with adaptations as required considering it is a public provider with

strong integration with primary healthcare facilities.




Table 17 Shiekh Khalifa Medical City Statistics – 1st Jan 2009 till 31 Dec 2009

Outpatients Speicality Clinics Visits (14 clinics) 160,524

Inpatient Admissions (Medical and Surgical Pavilions only) 16,183

Short and Day-stay visits 6051

Emergency Department Visits (Triaged-in) 91423

Adult and Paediatric Cardiac Surgeries 311 & 346

Adult and Paediatric Surgeries (minor and major) 7154

Day Care Surgeries 1182

Haemodialysis and Peritoneal Dialysis runs (adult and paediatrics) 40580

Table 18 Statistics of Medical and Surgical Institute (Pavilions) of SKMC

2008 2009*

MEDICAL INSTITUTE

Inpatient Admissions 3835 4686

Outpatients

Dermatology 10280 13400

Diabetes and Endocrinology 14271 14562

Gastroenterology 5128 5296

Haematology 6673 7772

Internal Medicine 3372 4010

Nephrology 4490 4495

Respirology 1736 2304

Endoscopy Procedures

Bronchoscopy 143 210

Colonoscopy 501 515

ERCP 61 63

Oesophagoscopy 773 892

Respiratory Diagnostic Services

Blood Gas Analysis 47471 54212

Polysomnography Studies 139 175

Pulmonary Function Test 1102 1194

Six Minute Walk Test 36 77

SURGERY INSTITUTE

Inpatient Admissions 3388 3246

Outpatient Visits

Dentistry 2456 2103

General/Thoracic Surgery 4081 4299

Maxillofacial Surgery 1984 2143




2008 2009*

Neurosurgery 2628 2660

Ophthalmology 9632 8732

Orthopaedic Surgery 13279 13830

Otolaryngology/Head and Neck Surgery 11909 10820

Paediatric Surgery and Paediatric Urology 1958 2115

Plastic Surgery 5244 8248

Transplant and Hepatobiliary Surgery 501 788

Urology 3465 3698

Vascular Surgery 976 1254

OR Visits

OR Visits 6465 7355

Surgical Day Care 715 1163

Surgical Case Classification

Major 5085 5867

Minor 1380 1488

Transfers to ICU-Post-operative 815 1017

* Annualised on the basis of the figures for the first 10 months)

Table 19 Salient Features of SKMC Surgical Institute Services

Speciality Salient Feastures and Patient Volumes

Neurosurgery - Operating Room Volumes: 250 in 2007; 260 in 2008 and projected total

of 290 in 2009

- 95% cases are major

Maxillofacial Surgery

- OR Volume: In 20 months 535 cases; i.e. 26 per month; 312 per year.

- 8-% were major cases

- 240 were Trauma (45%); 138 were Dento-alveolar (26%); 86 were Or-thognathic (16%); 45 were Reconstructive (8%); 15 were drainage of in-fection (3%) and 11 were cleft lip and palate (2%).

Ophthalmology - OR Volume: 420 in 2007; 520 in 2008 and 420 in 2009 (projected)

Orthopaedic - OR Volume: 100- in 2007; 1350 in 2008 and 1650 in 2009 projected

ENT - OR Volume: 740 in 2007; 750 in 2008 and projected 800 in 2009.

- Paediatric were 56% and adult were 44%

Paediatric Sur-gery

- OR Volume:650 in 2007; 610 in 2008 and projected of 650 in 2009

- 60% General Paediatric; 18% Minimal invasive; 16% Paediatric Urology and 6 % Neonatal Surgery

Plastic Surgery

- OR Volume:520 in 2007, 550 in 2008 and projected 600 in 2009

- 70% cases were major cases

- Plastic Surgery Clinic: Average of approx. 400 visits per month in outpa-tients in 2008 i.e. approx 4800 visits in year 2008.

Urology - OR Volume: 350 in 2007, 330 in 2008 and projected of 470 in 2009

- 50% were major cases.




Vascular Sur-gery

- In 18 months, 515 cases were performed; i.e. avg. of 28 cases per month; ie. 336 per year.

- Total of 515 cases: 259 were Endovascular Cases and 286 were open cases

- Open Cases: 124 were Diaysis Access (24%); 111 were others (21%); 10 were Diabetic Ischemis Foot Bypass (2%); 7 were carotid Access (1.5%) and 4 were Aortic Cases (1%)

- Endovascular Cases: 217 were Others; 30 were diabetic Ischemis Foot; 5 were thoracic; 4 were Hand Ischemia; 2 were carotid and 1 was aorta.

Table 20 Salient Features of SKMC Medical Institute Services


Dermatology - Diagnosis Breakdown: 36% Acne; 26% Atopic Dermatitis; 12% Warts; 9

% Vitiligo; 7% Psoriasis; 5% Alppecia; and 5% Molluscum contagiosum.

Diabetes and Endocrinology

- Guildelines: American Association of Clinical Endocrinologists; American Diabetes Association; American Thyroid Association and the Endocrine Society.

- Diabetes constituted 50% of cases treated by the division

- Diagnosis Breakdown: 55% Diabetes Mellitus; 35% Thyroid Disease and 10% Endocrine Disorders.

- Insulin Pump Program: 200 patient in Last three years have enrolled with significant patients’ acceptance of the pump therapy

Nephrology – Renal Dialysis Program

- 2 outpatient and 1 patient units equipped with total of 45 haemodialysis machines

- Outpatient units with highest haemodialysis runs with 88% followed by 10% runs in inpatient settings and only 2% in ICU/CCU.

- No. of patients: approx 3080 in 2007; 3400 in 2008 and 3420 in 2009 (annualisedon 10 mths).

- Nephrology Outpatients: 4490 in 2008 and 2009

Gastroenterol-ogy (Endo-scopy, Gastro-enterology and Hepatology)

- Enodoscopy Volume: 1220 in 2007; 1400 in 2008 and 1750 in 2009 (an-nualised).

- GI Endoscopies Breakdown: 60% Gastroscopy; 35% Colonoscopy; 4% ERCP and 1% Sigmoidoscopy.

- USP: Capsule Endoscopy; Endoscopic Ulrasound

Haematology

- Anticoagulation Clinic, Infusion Center, Thalassemia Program and Therapeutic Apheresis

- Infusion Centre: Approx 2000 visits in 2008; Services include Blood Ex-change Transfusion, Central line catheter care, cheotherapy, Infusion Therapies, Lumab puncture and bone marrow smapling, targeted thera-pies, therapeutic phlebotomies, therapeutic plasma exchange, transfu-sion of blood products, transfusion of sickle cell disease, haemoglobi-nopathies and thalassemia.

- Infusion Centre Visits: 54% Haematology; 21% Oncology; 13% Rheu-matology; 4% Neurology; 3% Gastroenterology; 3% Others and 2% Dermatology

- Infusion Centre Diagnosis Breakdown: 19% Thallasemia; 11% par-enterla Irol Therapy; 10% Breast Cancer; 7% Colon Cance; 5% Multiple Myeloma; 4% Lymphomas and 44% others.





Internal Medi-cine

- Most Commonly treated disorders (in order): Pneumonia; Cerebrovascu-lar Accident; Diabete Mellitus; Congestive Heart Failure; Tuberculosis and Solid Cancer

- Subspeciality Breakdown: 27% Infectious Disease; 14% Haematology; 14% Others; 11% Neurology; 9% Respirology; 7% Diabe-tes/Endocrinology; 7% Gastroenterology; 6% Cardiology and 5% Ne-phrology.

- ALOS: Significantly affected due to comorbidity and lasck of nursing home facilities. Jul 08 ALOS of 6.6 days and Sept 09 ALOS of 6.6 days; ALOS (jul 08 to Sep 09) approx 6.6 days

Neurology

- Guidelines: International Headache Society, American Academy of Neu-rology

- Diagnosis Breakdown: 35% Headache; 30% Seizure; 15% Other Neuro-logical Conditions; 10% Multiple Sclerosis and 10% Painful Neuropathy

- Epilepsy Clinic, Neurophsyilogy Lab

Oncology - Breast Cancer Clinic; Colon Cancer Clinic; Gynaecological Cancer

Clinic; Head and Neck Cancer Clinic and Lung Cancer Clinic

Respirology - Inpatient Consultations in 2009 were 540; Total of 210 Bronchoscopies

- Bronchoscopy Locations: 48% in Endoscopy suite; 43% in ICU and 9% in OR.

Rheumatology

- Diagnosis Breakdown: 26% Osteoarthritis; 25% Others; 20% Rheuma-toid Arthritis; 11% SLE; 4% Fibromyalgia; 3% DegenrativeSpondylosis; 3% Osteoporosis; 3% Psoriatic Arthritis; 3% Undifferentiated Polyarthri-tis and 2% Ankylosing Spondylitis.

4.2.6 Competitor Analysis

American Hospital, Dubai

American Hospital, Dubai has completed 10 years of operations. The existing infrastructure

includes 145 beds in total including 20 beds for ICU, 5 NICU beds, and 5 OT’s. A new build-

ing is nearing completion which comprises of additional 200 beds, 40 ICU beds and 7 OTs.

The Hospital has a Life Training Centre for Doctors and Nurses which conducts AHA (Ameri-

can Heart Association) certified courses – BLS, ACLS and others. They have a strong con-

tinuing medical education program for Doctors and Nurses including incentives for attending

external conferences. The Human Resources selection is regulated by guidelines / creden-

tialing system ensuring availability of well trained professionals. The prices of American Hos-

pital are double that of hospitals like Zulekha. AHD is recognised a centre of excellence for

‘Joint Replacements’ in the region and has a strategic partnership with Zimmer.

Welcare Hospital

Welcare Hospital, Dubai was one of the first few private hospitals which established strong

cardiac sciences specialties. Their decision of relocating the complete cardiac sciences ser-

vices to their sister hospital – City Hospital in the DHCC, led to human resources issues and

weakening of their cardiac market share and brand. Welcare Hospital today enjoys confi-

dence of majority of residents of Dubai due to its good quality services in nearly all spe-




cialties. They are facing problems as they cannot expand their existing facility (hotel con-

verted into hospital) but their City Hospital after initial problems is getting more patients. Wel-

care has recently expanded their NICU to 20 beds with a reasonable occupancy of 65% as it

is still developing. The human resources are well selected and well trained with continuous

training programs in place. Welcare Hospital comes next in line for joint replacements after

American Hospital with approximately 300 Joint replacement procedures.

Al Zahra Hospital, Sharjah:

The hospital is providing good quality services for more than 25 yrs in Sharjah. The infra-

structure has been the main limiting factor having converted a hotel into hospital; however,

with the new building nearing completion this limitation will be overcome. They are also pre-

paring for JCI accreditation. The hospital is known for its services in all specialties, and ca-

ters to nearly middle and higher socio economic status. They have recently expanded their

NICU to 20 bedded are facing shortage of trained nurses and hence have operationalised

only 7-10 NICU beds.

Zulekha Hospitals (Dubai and Sharjah)

Zulekha Hospital, Dubai is located on the border of Dubai and Sharjah catering to both dis-

tricts. Their target client is the middle socio-economic segment and they are JCI accredited

providing good quality care at reasonable prices – which is the reason for their fast growth.

The infrastructure can be stated as basic compared to that of American Hospital and Wel-

care Hospitals.

Patients Treatment Abroad

DOHMS 2003 data shows that 47% of patient treatments abroad are in Germany, followed

by 33% in the United Kingdom, USA, Australia and others.

4.3 Rough Estimations of Patient Volumes

Presumption for interpreting the table: The Feasibility Study projects continuous growth in

patient volumes till end of 10th year but we assume that the hospital reaches its market share

after year 3 and the patient volumes are assumed to be constant till year 10. The rationale

for this argument is that after year 3 the volume projections are subject to high volatility.



Table 21 Rough Estimation of Patient Volumes and Comparison with TAG, IHC and UHMS Volumes

Speciality

TAG IP Volumes (IP Discar-ges Nos.)

IHC IP Volumes

UHMS

Change in Patient Volume (%age)

Recommended Pa-tient Volumes tille Yr 4 (IP Discharge Nos.)

Recommended Patient Volumes till Yr 10 [Yr 4 Volumes + 36%]

Basis and Rationale of Revision

Plastic Surgery and Reconstructive

2108 1600 - 80% of TAG

422 573

1. High Increase in Providers esp. in Dubai resulting in decrease of market share assumption from 10% to 3 per-cent

2. Increase of 300% is not realistic from 2004 to 2018

3. Utilisation is dependant on economy and lifetyles trends but not life threat-ening.

Cardiology 1969 2300 - 50% of TAG

985 1339

1. SKMC Abu Dhabi, Welcare, Belhaul, American Hospital, Zulekha have es-tablished themselves leaving less market share for MHMC

2. Dubai has approx 9 cathlabs with low utilisation (5-7 plasties per cathlab per month)

Cardiac Surgery and Vascular Surgery

653 and 295

600 and 200

- 50% of TAG

327 and 148 444 and 201

1. SKMC Abu Dhabi, Welcare, Belhaul, American Hospital, Zulekha are well established in last 3 years and there is currently overcapacity in the market

2. American Hospital is currently doing only 7-10 cardiac surgeries (CABG) per month.

Neurology and Neu-rosurgery

811 and 700 NOT CONSID-ERED

40% of TAG

324 and 280 441 and 381

1. Governement Rashid Hospital and Neurospinal Centre, Dubai are well es-tablished alongwith other hospitals providing Neurosciences.

2. Trauma cases continue to go to the government hospital inspite of private providers providing the services.

Orthopaedics 1834 1300 - 50% 917 1247 1. American Hospital has established as a centre of excellence in Joint Re-



Speciality


IHC IP Volumes

UHMS





placements with 800 replacements; Welcare hospital does approx 300 re-placements and Al Zahra has a well etablished Joint Replacement program in place

2. All other private hospitals are providing orthopaedic services.

General Surgery NOT CON-SIDERED

1500 50% of IHC

850 (including Mini-mal Invasive)

1156

1. Many private hospitals are provingd these basic services in cluding lapro-scopic procedures.

2. Basis for reaching patient volumes by IHC not present.

Endoscopy NOT CON-SIDERED

2000 - 50% 1000 1360

1. No strong basis for estimating patient volumes by IHC

2. Estimated as per existing patient vol-umes of a usual hospital on the basis of doctor interview and other expere-ince from comparable projects.

Internal Medicine Urgent Cases

NOT CON-SIDERED

500

NOT CONSIDERED; Volumes from ER ad-missions already consid-ered in respective spe-cialty

Guesstimate of 44 visits per day in ER by IHC; 5% get admissions i.e 1000 IP; 50% as medical urgent case admissions.

Paediatrics and Neonatology

NOT CON-SIDERED

NOT CONSID-ERED

Volumes considered in terms of bed nos. of 24

NA 1200 1632

Estimated as per existing patient vol-umes of a usual hospital on the basis of doctor interview and other expereince from comparable projects.

Obstetrics and Gy-naecology

NOT CON-SIDERED

NOT CONSID-ERED

Volumes considered in terms of bed nos. of 48

NA 1400 1904


ENT NOT CON-SIDERED

NOT CONSID-

NOT CON-SIDERED

NA 500 680 Estimated as per existing patient vol-umes of a usual hospital on the basis of



Speciality


IHC IP Volumes

UHMS





ERED doctor interview and other expereince from comparable projects.

Internal Medicine and Pulmonology

NOT CON-SIDERED

NOT CONSID-ERED

NOT CON-SIDERED

NA 1100 1496


Endocrinology (Dia-betes and Obesity) and Nephrology

Ophthalomology NOT CON-SIDERED

NOT CONSID-ERED

NOT CON-SIDERED

NA 700 952

Estimated as per existing patient vol-umes of a usual hospital on the basis of doctor interview and other expereince from comparable projects

Urology and Renal Transplant Nephrol-ogy

NOT CON-SIDERED

NOT CONSID-ERED

NOT CON-SIDERED

NA 1000 1360


Dialysis NOT CON-SIDERED

NOT CONSID-ERED

NOT CON-SIDERED

NA 4000 5440


Cancer Centre NOT CON-SIDERED

NOT CONSID-ERED

NOT CON-SIDERED

NA 1000 1360 On the basis of regional prevalence (data from Syrian Cancer registry) adapted to UAE-Sharjah




Table 22 Summary Box of Results of Rough Estimations of Patient Volumes

Summary Box: Hospital Beds and Patient Volume Results on the basis of Rapid Mar-ket Analysis

Total IP Volumes:

- Year 4: 10,302 cases

- Year 10:14,010 cases (+ 36% based on “growth model”)

Total Hospital Beds in Yr 4: 156

- 28 Beds ICU/CCU/HDU/NICU/PICU

- 112 Beds standard wards and VIP

- 16 Beds Day-care

Scope of Services

Considering the market analysis which takes into consideration - the current availability of

hospital beds; the health seeking characteristics of expatriates; the established centres of

excellence in the country; the availability of human resources; the coming era of insurance

coverage; the price competition; and the requirement for keeping healthcare cost at the

minimum – the following recommendations are made:

A) Tertiary Care Centre: The development of a tertiary care centre requires an inte-

grated healthcare system in place – integrated with public and private providers.

In the absence of this, provsion of secondary care services can support the de-

velopment of a tertiary care centre – by providing patient numbers as well as de-

veloping trust in the market due to more treatments. Hence provision of secon-

dary care services is highly recommended.

B) Selection of Tertiary Care Speciality: The selection of tertiary care specialty

depends on the non-availability of the service in the region; the availability of pa-

tient load to justify establishment of the specialty centre; the capacity and vision to

develop such a centre; the availability of qualified human resources; the availabil-

ity of infrastructure and equipment and ease of establishing a referral system.

- Cancer Centre: Tawam Hospital, Al Ain is currently the public provider and

referral centre for the country, which is managed by John Hopkins, USA. It

has four divisions: Oncology, Hematology, Radiotherapy and Palliative Care,

with total of 39 beds and additional 32 bed sit flats on campus to

accommodate those patients who have to travel long distances for ongoing

daily outpatient treatment. They have Linear Accelerators but do not have the

latest cancer treatment equipment like Cyber Knife, Trilogy System or other

such advanced equipment. Tawam Hospital is also planning a new hospital

building which may at least take 2 years for completion if construction starts.

The public sector of Dubai has Linear Accelerator but does not have any

advanced equiments. There are no major private hospitals providing




Radiotherapy but only provide Chemotherapy. Special areas of focus should

be advanced equipments, comfortable Daycare Chemotherapy,

Palliative Care Unit/Hospice, Oncology Rehabilitation and home care.

This overall situation offers a scope for future development of cancer care

provided initial feedback from insurance companies for their future policies in

relation to cancer and advanced treatment options is taken.

- Cardiac Sciences: Sheikha Khalifa Medical Centre, Abu Dhabi and Mafraq

Hospital are the referral centre for cardiac sciences. In Dubai City Hospital,

Belhaul Hospital provides CTVS services. There are around 7-10 Cathlabs in

Dubai with average of 7-10 angioplasties per cathlab per month. Sharjah

does not have a state of art infrastructure for CTVS and Cardiology and if

properly executed there is a scope for establishing a center of excellence.

Special focus areas should be the Cardiac Rehabilitation, Minimal Invasive

Cardiac Surgery and Electro-Physiology Services.

- Trauma Care: Rashid Hospital, Dubai has established itself as centre of

excellence for Trauma care and Neurosurgery. Sharjah does not have a we ll

established trauma care centre but it is difficult to substantiate a need without

a thorough market demand. Also in general all patients in UAE usually got to

the public hospitals and from experience from other regional country if good

trauma care is provided, patients will move from public to the provate setup.

Although insurance coverage remains an issue to be addressed ot reach a

final decision.

- Respiratory Sciences: Pulmonology diseases are on the rise with changes

in the environment including lifesyle factors like smoking and pollution.

Allergies, COPD, Asthma and other occupational diseases especially in the

lower middle socioeconimc segment is on the rise. These patients usually

require intensive care once they develop infections / pneumonia. Provision

and treatment of critical patients leads to development of trust from the

population and helps estbalishment of a hospital. Patients from other

specialty also require these services and hence these services should be

provided for supporting the hospital services.

- Plastic Surgery and Reconstructive Surgery: In UAE, Dubai has

estalished its name in provision of Cosmetic and Aesthetic services with

availability of many small and big clinics. Sharjah does not have a well know

centre providing these services.

- Paediatrics and Neonatology: Tawam Hospital and SKMC have well

estbalished Paediatrics and Neonatology Services. Dubai and Sharjah do not

have a comprehensive centre providing sub specialties of Paediatrics and

Neonatology – Paediatric Neurology, Paediatric Gastroenterology,




Paediatric Urology, Paediatric Oncology, and others. UAE is the third

country in the region with highest number of congenital disorders and only Al

Wasl Hospital provides services including that for metabolic disorders. It

should be noted that major voume of patients are from middle to lower socio-

econoimic status, but there is definitel a need for paediatric centre and

currently Dubai’s royal family is keen to establish Paediatric Hospital.

Currently patients get their treatment protocols from GOSH (Great Ormond

Street Hospital, London) and these therapies are administered in reputed

hospitals of Dubai.

- Obstetrics and Gynaecology: Obstetrics is one specialty which always

gives scope for establishing better infrastructure – labour delivery suites /

apartments – where families can celebrate the newborn arrival. Secondly the

region requires international standards IVF facilities. Gynaecology problems

are rising and more awareness is leading to more patients.

- Renal Sciences (Urology and Nephrology): The region does not have a

well established name for Nephrology, Dialysis and Kidney Transplant (given

the regulatory issues). The region also lacks well qualified Nephrologists. A

well equipped centre with well trained doctor and nursing staff will be

succesfull and is recommended.

- Other Specialties: As stated above it is imperative in the region for a private

hospital to start with provision of secondary care specialties as it builds the

footfalls to the hospital and therby establishing the hospital in the community.

Hence it is recommended to establish all specialty services.

Review of Operational and Financial Analysis



5 Review of Operational and Financial Analysis

5.1 Gross Revenue

5.1.1 Major Assumptions

Concerning the assumptions of the volume of inpatient and outpatient cases we refer to the

comments on pg. 6 and onwards (Plausibility check of the Market Analysis vis-à-vis Brief

Market & Competitor Analysis.

For the calculation of prices for medical services a detailed list was developed by UHMS.

5.1.2 Plausibility Check of the Major Assumptions

Concerning the plausibility check of the assumptions we refer to relevant section above of

our report. We compared the prices for medical services with our experiences as well as with

some broad datas available with us.

5.1.3 Conclusion of Plausbility Check

As described on pg. 9 the calculation of patient volume and occupancy rate is not100% ap-

plicable. The estimations concerning the prices for medical services are plausible.

5.2 Operating Expenses: Medical Staff


The estimated number of consultants and specialists is based on the number of clinics oper-

ating during every phase (outpatients clinics assumption, pg. 474). For example, in years 1 in

Urology Clinics 2 consultants and no specialists were calculated, and for Pediatric Clinic 2

consultants and 4 specialists were assumed though this is not evident from the report. A total

of 50 doctors were estimated in years 1 through 2 (30 consultants + 20 specialists).

5.2.2 Plausibility Check of the Major Assumptions

For the auditor it was not obvious, how the different numbers for consultants and specialists

per clinic were calculated.There were no calculations or explanations concerning the method

that led to the results of the number of consultants and specialists needed. The workload for

the doctors were not estimated and did not become part of the calculation. There were no

calculations which led to the conclusion, how many doctors / time of doctors are needed for

the treatment of inpatients or for outpatients.

Therefore the auditor calculated the number of doctors needed by listing all activities on

ward, OT, and outpatient departments following standard “Clinical Pathways”. Salary esti-

mates were compared with those derived from our experience with comparable projects.




5.2.3 Conclusion of Plausbility Check

In conclusion, the assumptions for the number of medical staff needed are not plausible.

The assumed wages however, were in line with EPOS’ estimations.

5.2.4 Recommendation

We recommend to calculate the necessary medical staff on the base of planned inpatient

and outpatient procedures and other activities.

5.3 Operating Expenses: Non-Medical Staff


There was a detailed listing concernig non-medical staff on pg. 651 ff. of the report. It led to

the conclusion that 498 non-medial staff are needed in year 1.

5.3.2 Plausibility Check

The way, how the needed staff was calculated was not described. The methodology used

therefore was not reviewable. The auditor calculated the number of non-medical staff needed

by referring to Standard Operating Procedures and international benchmarks. The estimated

salaries were compared with those used in similar projects.

5.3.3 Conclusion

The assumptions for the number of non-medical staff needed are not plausible. The as-

sumed wages were in line with our estimations.


We recommend calculating the necessary number of non-medical staff on base of interna-

tional Benchmarks.

5.4 Operating Expenses: Consumables and other


There were detailed calculations for the departments of Radiology and Laboratory, as well as

for medical supply, food supply, utilities, insurance, depreciation etc.

These calculations were based on cost per unit and the numbers of planned units, bench-

marks concerning costs per procedure and inpatient day, cost per meal x planned number of

meals and benchmark data.


The methods used to estimate resources were described very clearly.




We compared the used benchmarks with our experience from similar projects and checked

quantities with regard to their plausibility by comparing them with the envisaged medical and

non-medical services of the hospital.

5.4.3 Conclusion

The Auditor could not identify any element that suggests that these estimates are not plausi-

ble.

5.5 Investment Costs: Main Hospital Buildings and Parking Area


On pg. 753 a number of 51,502 sqm for hospital buildings and wards were assumed. The

constuction costs were estimated with 2,095.89 $ per sqm. Based on 248 planned beds a

total number of 51,502 sqm equals 208 sqm per bed. This led to total costs for investment for

main hospital buildings of 106,999,397.26 $.

The price for construction of parking area was estimated with 739.73 $ per sqm. The space

needed of 27,375 sqm refers to a number of 2,5 required parking space per bed.


We compared the space needed and the price per m² with data from comparable projects

and with international benchmarks. In countries like Germany, patients are accommodated in

rooms with two beds; a gross floor area of 80 m² per bed is common. However, this includes

only small OPD units (outpatient consults in hospitals in GCC are around 10 to 15 times

higher than in German Hospitals). The price per ´m² is related to the costs for labour and ma-

terial. In countries with low costs of labour, like in certain countries of the Gulf region, con-

struction costs of 850 per m² are achievable (for standard buildings).

5.5.3 Conclusion

The costs for construction, as well as the surface area should be decreased without com-

promising with the quality of medical services for patients.


We recommend 90 m² per bed with a range of 80 to 95. Based on 90 sqm per bed and esti-

mated need of 160 beds for MHMC Main Hospital, the total area for inpatient services is ap-

proximately 18000 sqm. For outpatient services (based on average consultation time of 15

minutes and approximately 150,000 visits per year) additional 9,000 m² would be needed.

This leads to a maximum total of approximately 27,000 m² for the hospital (inpatient and out-

patient services) - plus areas for communications and floor plant areas.




The price for construction is dependant on labour cost and material cost. Although the labour

cost in GCC is lower than the European level, the MHMC Project is targeted to utilise high

quality material (fixtures) and hence the average price per sqm could be higher. The cost per

sqm for hospital projects in Bahrain is approximately 850 USD (without medical & non-

medical equipment), while it is 2,600 USD in Germany. In view of the price competition in

healthcare market and to achieve project financial feasibility a price of 1,600 USD per sqm

and a range of 1,400 to 1,700 USD per sqm seems to be recommendable.

Based on 160 beds, 2.5 bays per bed, and 15 sqm per bay, a total of 6.000 m² and 400 bays

for parking area is recommended. However the number of bays and areas can increase con-

sidering other health facilities of the MHM Complex.

5.6 Investment Costs: Medical Equipment, Furniture Costs, Medical

Instruments, & IT


On pg. 755 a number of 38,100,000 $ for phase 1 for medical equipment, furniture costs,

medical instruments, and IT is required. The report does not explain, how these figures were

calculated. The assumptions of the estimations are not clear.


Following international benchmarks, a lump sum of 800 $ per sqm for medical equipment,

265 $ for non-medical equipment/IT, and 200 $ for others is needed.

5.6.3 Conclusion

The investment costs for medical equipment, furniture costs, medical instruments, and IT

seem to be overestimated.


We recommend to develope a detailed calculation concerning the equipment needed refer-

ring to the planned scope of services.

5.7 Investment Costs: Total Design and Supervision Fees for Construction


On pg. 756 the total design and supervision fees for construction were estimated with 9 % of

the total cost of construction and equipping.


We compared the estimation with our experience, where these costs were in a range from

7% to 15 % of the costs for construction and equipment.




5.7.3 Conclusion

The estimated total design and supervision fees for construction are plausible.

5.8 Financing Costs


The company plans to finance 50% of the investment with equity, and the other 50% through

loans. On pg. 867 the financing details are described. For the loans for long-term financing

(construction) and short-term financing (equipment) interest rates of 7% are assumed. A rate

of 11.5 % opportunity costs for the equity fund for investors is also assumed.


We compared the estimated interest rates with our experience from similar projects.

5.8.3 Conclusion

The estimations for financing costs are plausible.

The following table gives a comparison of Project Costs of UHMS Study and the recom-

mended scenario.

Table 23 Comparison of UHMS, Current and Recommended Project Costs

Investment costs UHMS Recommendation

Land for Main Hospital in sqm 9,131 9,131

Land for women/children in sqm 2,938 -

Land for Concourse/linked elements 1,250 1,250

Landscape 5,000 5,000

Total land 18,319 15,381

Costs per sqm 225.53 225.53

Land costs 4,131,484 3,468,877

Construction area - hospital 36,393 22,736

Construction area - women /children 7,836 -

Construction area - concourse/linked ele-ments

4,000 -

Construction area - not known 2,823 -

Constructed area in sqm 51,052 22,736

Costs per sqm 2,095.89 1,600.00

Total construction costs 106,999,376 36,377,600

Landscaping costs per sqm 100 100

Total landscaping costs 500,000 500,000




Parking bays

Parking area in sqm 26,250 9,807

Costs per sqm 739.73 740

Total construction costs 19,417,913 7,254,532

Total costs 126,917,289 44,132,132

Medical Equipment, Furniture, Medical In-struments, IT (excl. Additional Operational Beds)

- Y1 (150 beds) 38,100,000 19,798,098

- Y6 (248 beds) 43,000,000

Sub-Total 169,148,773 67,399,107

Design and supervision fees in % of con-struction costs

9% 9%

Design and supervision fees 14,851,556 5,753,721

Working capital 5,249,802 4,000,000

Pre-opening expenses 5,574,233 5,137,000

Contingency in % of medical equipment and construction

6.00% 6.00%

Contingency 9,901,037 3,835,814

Grand Total 204,725,401 86,125,642

5.9 Review of the Scenarios (Sensitivity Analysis)

The following scenarios ar presented in the UHMS Report:

A 1.5 decrease in occupancy

B 1.5% decrease in construction

C 1.5% in cost of equipment

D 1.5% in total amount of loan

E 1.5% increase in interest rate

F 4.5% increase in cost of equipment and furniture

G 1.5% increase in amount of loan

H 50% increase in amount of loan

I No loan is taken

J 1.5 decrease in occpuancy rate and 3.5% increase in variable rates

K 10% decrease in occpuancy rate and 7.7% increase in rates after 5 years

L 20% increase in cost of construction and 6.61% increase in rates in year 5

There were no explantions for the selected percentages.





We compared the details of the sensitivy analysis with our experiences in similar projects.

5.9.2 Conclusion

The components of the sensitivity analysis provided by UHMS (occupancy, costs of con-

struction and equipment, loan ratios and interest-rates) are very important concerning the

feasibility of the project. However, important figures like the “number of inpatient and outpa-

tient cases” were not part of the sensitivity analysis. The chosen percentages of mainly 1.5%

are too low to show an impact of changing of market determinations, or other major deci-

sions on the profitability of the project.


We recommend calculating possible changes with percentages between 10% and 20%.

Changes in case loads should be part of the sensitivity analysis.

5.10 Overall Conclusion and Recommendations

A hospital project with 248 beds might not be feasible for the following reasons:

Patient Volumes

- Less people utilising services (expatriates)

- Limited target client population (patients with high socio-economic status)

Increasing Competition

- New Hospitals and expansion of existing hospitals

- Close proximity to Dubai

We recommend planning a hospital which will contain a maximum of 160 beds, to be opera-

tionalised in two phases: Phase I of about 90 beds and Phase two of about 70 beds. This

recommendation is primarily based on the experience that a hospital beds with less than 80

beds is generally not feasible and the rapid market analysis broadly indicated need for addi-

tional beds in the region.

The project cost estimated by UHMS is too high and the future operator of the MHMC would

face problems in financing and repaying the loans and equity because the projected patient

volumes and revenues won’t be achievable.

In our opinion a hospital which is built on the basis of 90 m² per hospital bed plus additional

outpatient services area and the construction cost of 1600 USD per m² is feasible.




5.11 Recalculation of Financial Projection

The profit and loss statement, break even analysis, return on investment etc. provided by

UHMS are based on assumptions (patient numbers), which are not plausible. Therefore a

valid financial projection out of these data is not possible. In order to show however, the po-

tential profitability of an investment in healthcare services, a more accurate estimate of inpa-

tient and outpatient cases is a basic foundation.

Our rapid market analysis shows figures concerning possible number of patients, if the hos-

pital would be able to provide secondary service for the following specialities:

Internal Medicine and Cardiology / Endocrinology

General Surgery, Minimal Invasive Surgery, and Orthopaedics

Gynaecology / Obstetrics, and Pediatrics,

ENT, Ophtalmology

Oncology

Neurology, Neurosurgery

Urology / Nephrology

Furthermore there should be facilities for

Daycare

ICU

Emergency

Intermediate Care

Our estimations of the possible number of cases for the above mentioned specialities are

based on the rapid market analysis and show a high voltality, which can exceed 30 % in ei-

ther direction. For this reason, we advise not to publish the figures of the draft of the profit

and loss statement, break even analysis, return on investment etc. unless a validation con-

cerning the demand and supply structure of the catchment area was provided.

5.12 Risk Evaluation and Risk Mitigation Measures

There are two major risky fields that could target the feasibility of the project:

Costs of investments

Number of patients

Total costs of more than 200 million USD for investments will lead to a high burden for the

managment of the hospital. For coverage of interests and opportunity costs, 18 million USD

per year or 1.5 million USD per month have to be earned by revenues. Considering an aver-

age income of 3,000 USD per case, every month a number of 500 inpatients have to be dis-

charged in order to cover the costs of financing, before the admission of additional patients

wil enable the hospital to pay for other operational costs (HR, consumables, etc.)




In order to minimize the risks it is necessaary to reduce the costs for construction to a limit,

which enables the hospital to provide outstanding quality of medical services and worldclass

ambiance for the areas, which are visible to the patient. To run the hospital with high profit-

ability on a long term base, the following presumptions have to be secured:

Professional Management

High specialized medical dotors

Economic efficient organisational structures

Strong controlling and risk management systems

Excellent Quality management

Final Recommendation and Next Steps



6 Final Recommendation and Next Steps

6.1 Development of Mubarak Al Hassawi Medical Complex

This section provides with the overview, integration aspects, organisation of the MHMC

components and the details about the Main Hospital. The Wellness and Diet Centre (WDC)

is reffered to as Health and Lifestyle Insitute while the Rehabilitation Centre is referred to as

Rehabilitation Institute.

6.1.1 Overview of Mubarak Al Hassawi Medical Complex

The MHMC concept has a comprehensive outlook towards healthcare as it covers the com-

plete spectrum (refer Figure 5 below) as follows:

MHMC – Main Hospital: Providing Diagnostics Services and Treatment

MHMC – Rehabilitation Institute: Providing Rehabilitation Services

MHMC – Health and Lifestyle Institute: Providing Wellness and Preventive

Services

Furthermore the concept is consolidated by provding retail services. The tenants of retail

facilities will be selected under the aspect that their products shall meet the demand of our

MHMC clients – which should provide medical related retail (pharmacy, health and nutrition

supplements, optometry products, dermatologic products, Healthy Food, medical appliances,

mother and child care stores and others).

The addition of healthcare science institue (wither Nursing College, Physiotherpay College or

others) will add considerable reputation to the overall project. Human resources for health

are in a very short supply worldwide and will always be in high demand, although the avail-

ability of students in this region compared to cost-effective education in countries like India

needs to be considered.

The final addition of Hotel / Resort would further enhance the appeal of the project. Following

the demand of the achieved group of target clients for the MHMC, the hotel may be utilised

by relatives of inpatient cases, outpatient cases, who prefer to stay close to the medical fa-

cilities, as well as for customers of outpatient rehabilitation services. Although concept of ho-

tel and healthcare services needs to be further analysed for its success. Alternatively provi-

sion of staff and doctors accomodation will also add value to the project.




Figure 5: Spectrum of Healthcare Services

Source: McKinsey 2009

6.1.2 Implementation and Integration of Service Provision

The success of the overall MHMC project and its components is dependant on the follwing

major considerations:

A) Individual Business Plans – Dependent on Project Cost Estimation and Client

Volume Estimation

B) Timing of completion – Completion of all components and commissioing of ser-

vices as soon as possible will provide an edge over other projects which are cur-

rently on hold and those which are in planning.

C) Integrated Management Approach – The clients will need service overlap from

the MHMC components and the client satisfaction will depend on seamless inte-

gration of services withing the Main Hospital, Rehabilitation Institute and the

Health and Lifestyle Insitute.

D) Highly Qualified Professionals, High Quality Services: The achievement of

these will certify the success of the MHMC project. The MHMC will be run by in-

ternational professionals with expieriences in planning, organisation and man-

agement of healthcare facilities worldwide.

E) Controlling, Risk Management and Quality Management: A stong IT-based

Controlling, Risk Management and Quaility Management System will ensure a

sustainable structure for the delivery of high quailty and economic efficient organi-

sations in order to achieve high satisfactoion of customers as well as high profit-

abiliy of services.




6.1.3 Organisation of Main Hospital

The Hospital will have 160 beds in two phases – 90 beds in Phase I and 70 beds in Phase II.

It will also have ICU, CCU, HDU, NICU and PICU. The detailed organisation of services is

described in the Medical Brief document.

6.1.4 Organisation of Rehabilitation Institute

The institute shall provide services in the follwing:

I. Cardiac Rehabilitation Services

II. Neuro Rehabilitation Services

III. Orthopaedic Rehabilitation Services

IV. Paediatric Rehabilitation Services

V. Palliative Services

6.2 Next Steps for Development of Main Hospital

The following are the key steps in developing the MHMC – Main Hospital:

Group I – Project Initiation

- Bankable Business Plan and simulatneously Identifying highly qualified local

and international doctors plus Developing Strageic Alliances and Partnerships

for proposedCentres of Excellence

- Equipment Planning and Procurement

- Project Management Support Component

- Detailed Commissioing Plan for Main Hospital

Group II - Commissioning

- Recruitment

- Defining Organisation (Vision/Mission), Standards, Policies & Procedures

(aligning with accepted Accreditation System)

- Human Resources Training

- Facility and Equipment Management Plans

- Developing Schedule of Charges, Brand Concept, Marketing Strategy, Sales

Strategy and Pre-Launch Marketing

- Developing Operational Business Strategy

Group II - Operations Management

- Soft Launch of Hospital

- Establish Finance and Accounts System (integration in IT)

- Finalise Sales and Marketing Products and initiate activities




- Finalise Schedule of Charges - including packages, and other service

schemes

- Finalise Performance Assessment Formats and Monthly Departmental

Reports

- Establish Functional Committees and Hospital Sanctioned Teams

- Human Resources on-job Training

UAE Sharjah MHMC Feasibility Study Review Report v10

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