current challenges and future outlook of the private healthcare sectors: The case of Bahrain
By Professor Mukhtar Al-Hashimi / ahlia university – bahrain
The healthcare ecosystem and delivery model in Bahrain are presently one of the most challenging service sectors in the country. It is, however, changing rapidly due to the growing healthcare costs. To remain viable, while providing excellent services to the patients, both government and private healthcare organizations need to operate at greater economies of scale, which demands increased efficiency and effectiveness as a means to achieve optimal profitability.
Consequently, healthcare professionals need to be aware of these trends and challenges and develop healthcare strategic frameworks for creating sustainable medical facilities. These strategic frameworks must focus on Patient-Centric Quality Service indicators, which can serve as a measure of the level of competitiveness and sustainability of each healthcare organization. This ambitious strategy can be viewed as an effort to disrupt status quo in order to build sustainable healthcare services for the future.
When reflecting on the healthcare model in Bahrain, one has to appreciate the government contributions and effort in building one of the most widely appraised integrated healthcare delivery models worldwide. Since the 1970s in particular, significant investments have been made in the healthcare infrastructure, facilities, and skills of the professionals working within the healthcare sector. As access to healthcare services is often seen as universal right, the government is usually responsible for establishing, financing and training the healthcare professionals to meet the healthcare needs of the nation’s population.
When reflecting on the status of the healthcare in Bahrain, it is important to recognize that the country’s population has increased by 63.5% in the last 25 years. Presently, more than 1.5 million individuals (about 50% of whom are Bahraini nationals) are served by seven government hospitals, with 28 healthcare centers that provide both inpatient and outpatient services. Official statistics reveal that, in the 2000−2012 period, the government has spent approximately BD 1.677 billion (including projects) on healthcare. In 2013, the healthcare budget (including projects) for Ministry of Health comprised 7.6% of the total government budget. In 2015, the health spending reached 1.82 USD bn and it is estimated that it will increase to 2.269 USD bn in 2018. In addition, the government healthcare is facing considerable pressure in terms of rising costs and limited resources, as the national and non-national population is rapidly aging, while the occurrence of Noncommunicable diseases (NCD) is expected to increase.
Since the early 1990s, the government has facilitated alternative access to healthcare providers by introducing the Limited Private Practices within the Ministry of Health facilities. This initiative was followed by the opening of independent private clinics operated by qualified Bahraini healthcare professionals. Positive results yielded by these strategies have encouraged a group of Bahraini healthcare professionals to form private healthcare centers, while some opened private hospitals.
A comparison of the government and private facilities portfolios has revealed that most of the Bahraini residents are served by the government sector, as these healthcare facilities have superior capacities in terms of a number of hospital beds and healthcare professionals, as well as the wider scope of specialties, in highly specialized medical areas in particular. Although the aforementioned measures did yield better access to health providers, the government remains the primary contributor to the healthcare sector. Consequently, this situation still poses a significant economic burden on government healthcare expenditure, especially when there are issues related to appropriate utilization of resources, efficiency and effectiveness of the government delivery model.
On the other hand, it is worth mentioning that, during the last 15 years, the Bahraini government has encountered difficulties in accommodating the escalating healthcare expenditure experienced by many nations due to the aging population, and has decided to introduce national healthcare insurance. Implementing the national healthcare insurance will change the healthcare financing model from the government being solely responsible, to the one that offers more health financing options, which will lead to more efficient and effective utilization of resources. Moreover, this more competitive model will decrease the burden on the Ministry of Health, while providing greater choice to patients in selecting their healthcare provider.
Assessment of the national private healthcare infrastructure has revealed that it is unable to accommodate patient needs and demands, while the private sector is still not ready to adopt healthcare insurance in terms of capacity, service quality, and coverage of medical specialties that the government is offering. In reaction to this finding, the government has decided to open the healthcare market to foreign investors and encourage them to fill the existing gap in an effort to set the pace for implementing the healthcare reform.
This has resulted in a marked increase in the number of foreign healthcare investors, associated with the adoption of globalization, free trade agreement and pressure from the World Bank to encourage healthcare privatization. This phenomenon has resulted in an increase in the number of healthcare facilities at all levels, but has also led to a price war among the healthcare providers, and thus a reduction in revenue. In addition, many of the foreign healthcare investments are similar in terms of medical services and specialties and are not highly specialized, which has led to saturation or duplication of the private services in the country.
This rapid expansion in the number of healthcare providers and facilities has resulted in the segmentation of national private healthcare sector into (1) small independent clinics and medical centers and (2) national healthcare providers forming hospitals, even though they are in minority. Most of the time, the national healthcare providers are directly involved in the daily operational activities of their facilities, while ignoring their strategic vision, because they lack the skills necessary for long-term strategic planning.
In contrast, international healthcare investors are more aware of the importance of strategic planning and are developing their healthcare models to ensure that they capture greater market share. They are also better prepared to meet the requirements of healthcare regulators.
When assessing the current healthcare competition, several issues emerge, namely: (1) local healthcare establishments are facing growing competition from the large incoming international cooperate healthcare investors; (2) the government needs to restructure its healthcare delivery model; (3) healthcare regulators must enforce regulations; (4) increase in overhead operating and taxation fees; (5) external environment (including economic factors); (6) internal environment (including corporate culture); (7) operating outpatient vs. inpatient costs; (8) compliance and quality,; and (9) professional retention. Owing to the poor economic performance of the country, most patients have weak purchasing power, which leads to further revenue reduction.
Moreover, in the last two years, the government has rapidly increased the energy utility fees, as well as government and regulation fees, which has resulted in high operating expenses for the private healthcare facilities. Today, many healthcare facilities, especially the national healthcare providers, are facing higher operating costs that, when combined with lower patient purchasing power, make their survival questionable due to the unplanned expansion and price war strategy by the new healthcare investors. Faced with this situation, many will find it difficult to cover their operating costs and meet all financial commitments.
More recently, additional compliance requirements were imposed by the healthcare regulator in different areas, such as accreditation and contracts with other bodies, such as hospitals, emergency ambulance services, medical equipment providers, maintenance, utility providers, and many others. These costs are compounded by the increased cost of salaries due to the changes in labor market regulations.
Today, private healthcare facilities have additional financial commitments and expenses due to the requirement by healthcare regulators that all healthcare facilities obtain the accreditation or be otherwise subject to closure. Typically, additional costs could be associated with the accreditation process, which includes quality management consultancy, information technologies, medical equipment, modifications in the infrastructure, and necessary training and adjustments to meet the accreditation certificate.
It is important to point out that the healthcare regulators have demonstrated an outstanding effort in ensuring and forcing quality healthcare standards not only at the facilities levels but also at the professional development level, by mandating that every healthcare professional continues medical education. Without a doubt, this will enhance the knowledge and skills of the healthcare professionals and expose them to the latest trends and knowledge.
Today, for private healthcare facilities to remain competitive, they need to develop or reassess their strategic planning to become more aware of the internal and external forces. They also need to be more creative and innovative in reducing their operating costs and maximizing the utilization of their resources while improving on the quality of service they offer, in accordance with the healthcare regulatory requirements and accreditation. It is important to track the costs of their services and benchmark them against the competitors.
When developing strategic plans, it is necessary to address different dimensions, such as corporate culture, strategic planning, core competencies and competitive analysis, environmental evaluation, strategic choices, and strategy to develop a competitive advantage. The strategic framework has to incorporate performance measurement and control mechanisms, such as balanced scorecards.
The future outlook
It will be more promising, as the implementation of the accreditation and other healthcare regulatory requirements, along with the classification of healthcare facilities, will reduce the size of the existing private healthcare market, while making room for the highly qualified and accredited healthcare facilities to regain their market position and recover revenue. Within the next three years, mergers, acquisitions or joint ventures between the facilities will also likely be prominent.
In sum, in the future, the private healthcare will look promising for those healthcare facilities that maintain strong reputation and overcome the current difficulties by enhancing their innovation and management skills in maintaining and developing strategy to encourage small healthcare providers to join under their facilities as joint venture or merger, resulting in building healthcare provider groups under preferred healthcare provider facility. In the future, small clinics and medical centers will mostly disappear, and some international investors will not be able to sustain the operating costs of the new healthcare model. As a result, their market share will become available to others that meet the accreditation requirements and overcome the current transitional period.
Today’s healthcare organizations need to operate at greater economies of scale, which can result in increased profitability. At this time, the healthcare facilities need to gain the trust and support of their current partners, as this will get them through this transitional period, ensuring that they position themselves strongly in the market.
Finally, healthcare strategists may consider different models of ownership in order to remain competitive in the market, while building quality service branding through creativity and innovation.