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Arabian Gulf Bucks Trend with $14 Billion Hospital Construction Investment

Ben Cole, for HealthLeaders Media, March 10, 2009

Staff cutbacks, closings, trimming services—it seems every day the news is filled with another healthcare provider that is facing problems due to the state of the economy. But it isn't all doom and gloom. At least one area of the world continues to see a hospital building boom—$14 billion worth.

That much is being spent in Arabian Gulf countries on new hospital and healthcare facilities in various stages of construction, according to research findings presented by the Institute for International Research Middle East.

John Wallace, Group Marketing Manager for IIR Middle East, says the trend is simply a matter of supply and demand. A sustained growth in populations across the region, coupled with an accelerated rise in chronic disease, is forcing government leaders in this region to be focused and pragmatic when looking for health-related solutions.

"Governments are stepping up to the challenge of meeting this demand," Wallace said in an email interview last week. "I think the growth in healthcare is a strong indicator that this is the case, and governments understand the problems facing them."

Despite the extensive plans, Wallace admits it may be too early to tell if the healthcare facility construction trend will be deterred by the global economic crisis. But he is optimistic that it will not, given the necessity of quality healthcare as the Middle East region evolves.

The state of the economy, however, may force flexibility in the plans, Wallace says, and stakeholders will have to stay on top of market trends and any policy changes.

"The healthcare industry remains strong, and there is no question that the growth being witnessed will be sustained, but I think we should be aware that not all projects will necessarily encompass what they originally set out to do," Wallace said. "By this I mean you may see mission statements change with respect to what some individual projects' services will offer."

In addition, the support from governments across the region to develop their hospital infrastructure no doubt helps when it comes to acquiring and sustaining funding even in the face of a troubling economy.

"That's a massive draw for international companies looking to win contracts because they will come to the region with confidence knowing the project will proceed to completion and they will be paid for work done," Wallace says. Healthcare giants in the U.S. are noticing the trend as well—Cleveland Clinic has partnered with development firm Mubadala Healthcare on the Cleveland Clinic Al Suwwa Island development. The $1.9 billion first phase of the project is currently under way in Abu Dhabi. In many of these countries, as much as 80% of the population consists of expatriates, Wallace says, so it is logical that total funding would not come entirely from the public realm.

While some critics contend these tie-ins are simply marketing gimmicks, Wallace says there are innumerable benefits for both sides. By expanding their brand into the global market, these organizations can not only tap into patients that are in these regions, but also see some business from the medical tourism boom as well.

"I don't think Cleveland or Harvard would lend their name to anything that could have a negative impact on their reputation," Wallace says. "For the projects in this region, it offers fantastic opportunities for training and puts patients' minds at ease when they know a medical institution has the support of a reputable organization."

U.S.-based healthcare organizations may also be concerned that facilities such as those under construction in the UAE will soon be competitors. In the Gulf, the governments are careful that their healthcare facilities cater to medical travelers, and that all major projects have components built in to attract these types of visitors.

For example, several planned hospitals in the region have five-star amenities designed to specifically cater to medical tourists and their families, Wallace says.

"If the quality of healthcare is good, and the services on offer are cheaper than North America or Europe, then why shouldn't patients travel to the Middle East for treatment?" Wallace asks.

He says the hospital building boom is likely to continue in the future as well, especially as the region continues to develop and the population expands dramatically. With healthcare as an industry constantly evolving, a region such as the Middle East that is expanding just as quickly will continue to look for ways to grow quality healthcare for its people.

"This isn't simply a trend; it's a long term policy that will improve the quality of life of millions of people across the region," Wallace says. "Whether it's building a 600-bed hospital, a specialist centre of excellence or an R&D facility, the medical building boom in the Middle East is set to continue well into the future."


Ben Cole is an associate online editor with HealthLeaders Media. He can be reached at bcole@healthleadersmedia.com.
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