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Opportunities in the Extended Healthcare Sector in MENA

The provision of adequate extended care services in MENA region provides opportunities for real estate investors and developers who are looking for growth sectors outside of the traditional assets classes.

prosince 03, 2020

The COVID19 pandemic is placing an immense strain on the healthcare industry globally, highlighting a critical shortage of hospital beds and other facilities in many countries. While the scale of the problem is less acute in MENA than in other parts of the world, the regions healthcare infrastructure is facing pressures not only from COVID 19 but also from longer term demographic changes.

While the COVID19 pandemic has understandably grabbed most of the healthcare headlines in recent months, there is also an emerging recognition of the need for longer term structural reforms to the healthcare sector to increase the level of ‘extended care’ services across all segments of the population and not just those within the older demographics. 

There are significant opportunities for real estate investors and developers in the extended care sector, but the realization of these opportunities requires greater collaboration and integration of services between the various industry stakeholders, including healthcare providers, payors (insurance providers) and most importantly, the regulators.

Defining extended care

Extended care is not only defined by the number of clinics or hospital beds. it also requires attention to be given to areas such as outpatient rehabilitation, home care and telemedicine.

The medical needs of patients vary during their lifecycle, starting with preventive care, medical interventions on a need basis as well as various other services like rehabilitation, long term care, elder care and end of life care.

While traditionally, the majority of health care has been provided in hospitals, medical centers or clinics, other formats focusing on the targeted treatment of patients to serve their needs as per their medical lifecycle have emerged in recent times. These new formats have focused on the continuum of patient care to ensure overall health and wellbeing, while simultaneously allowing for better use of acute care within the traditional healthcare setups.

Extended care forms an important component of the overall patient care continuum. Some elements of the extended care service offer require physical premises (e.g. long term care facilities and rehabilitation centres), while others are less spatial in nature and do not necessarily require the provision of additional real estate (e.g. home care and telemedicine).

There are currently relatively few specialist facilities proving extended care in most cities across MENA, with these services being delivered from within traditional hospitals, medical centres and clinics. Over time, a range of more specialist facilities are likely to emerge including rehabilitation centres and long-term care facilities. These facilities will providing post-acute rehabilitation and extended care to patients who have been hospitalized for acute situations such as major surgery and may require prolonged monitoring and supervision. Other specialist extended care facilities may include slow stream rehabilitation (a model of service delivery provided to individuals whose recovery is slow or prolonged) Treatments such as speech therapy, occupational therapy and physiotherapy, are commonly utilized in this process. 

Long term care services provide various levels of care for patients starting from primary nursing care for patients who require maintenance medications, nutritional support, and infrequent physician intervention. This may also extend to patients who require acute care, mechanical ventilation support, and intensive medical care requiring continuous monitoring. 

Underlying both the traditional healthcare model and these more recent extended healthcare model is the need for a robust home care system. This refers to the various healthcare services now being offered to patients at their homes and includes diagnostics, physician consultations, nursing care, rehabilitation and critical care at home. Also, and keeping up with the rapid dissemination of technology, telemedicine, or the provision of healthcare services and information using information and communication technologies (ICT) is emerging as a complementary sector.

Opportunities and challenges for the real estate industry

As with any new social or technological trend, the emergence of extended healthcare provides a range of opportunities for real estate developers and investors. 

Opportunities
  • Extended care facilities typically have a lower built up area (BUA) per bed than traditional healthcare facilities, which can contribute to a higher return on investment (ROI).

  • Lower capital costs also means a shorter payback period can be expected as compared to usual hospital investments.

Challenges
  • The lack of institutional grade product in the extended care sector remains the major challenge for investors

  • The ability to deliver more product is dependent upon changes to the regulatory system to further promote the development of extended care. While there is a clear case economically and socially for extended care facilities to become a central component of the community infrastructure, this potential is currently being inhibited by legal and regulatory constraints.

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Implications for different stakeholders

Healthcare providers. Provision of extended care services in the region will allow for hospitals to free up acute care bed capacity and at the same time retain complex cases locally, with the promise of continuity of care post-hospital discharge.

Payers (insurance providers) . The costs of treating patients in extended care facilities should be lower than treating them in traditional hospitals and clinics. The expansion of this sector will therefore lessen the burden on insurance companies and healthcare providers. Moreover, the provision of adequate extended care facilities should result in a reduction in the overall disease burden across any given population, which will in turn reduce insurance costs over the longer term.

Patients. Access to a comprehensive care continuum including extended care services supports patients in their transition through their comprehensive treatment, in a more suitable setting surrounded by the supportive network of family and friends. 

Regulators. Regulators across the region are actively working to improve and standardize patient pathways, focus efforts on preventive and secondary care, and enhancing the utilization of existing infrastructure by streamlining acute and non-acute modalities of care.

Regulators across the region are seeking to attract additional investment and redistribute the costs of providing healthcare by partnering with the private sector. The Saudi Ministry of Health (MOH), has clearly identified private sector participation as a key theme for their Vision 2030 transformation program. The envisioned business model includes an increased focus on developing extended care facilities outside of traditional hospitals (refer to exhibit).

Society. The availability of adequate home care, hospice care, palliative care and long term and rehabilitative care facilities lessens the financial and emotional burden on families and the wider community.

In summary

The provision of adequate extended care services in the region provides opportunities for real estate investors and developers who are looking for growth sectors outside of the traditional assets classes such as residential, offices, retail and hospitality. 

The growth of this sector of the market will be dependent upon the extent to which the various public and private stakeholders involved are able to partner and collaborate to create an ecosystem that could potentially benefit the overall health and wellbeing of the local population. 

Contact Sandeep Sinha

Head of Healthcare, Strategic Consulting

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