70% of UAE health treatments paid 'out of pocket'

More than 70 percent of healthcare treatments in the UAE are funded out-of-pocket, according to one of the country’s first healthcare financing firms.

Pre-launch data sourced by Hayati Healthcare, which offers loans exclusively for medical procedures, revealed that more than two thirds of patients pay their health costs directly, rather than through private or employer-sponsored insurance plans, and in the absence of a national healthcare system.  

Since its launch in March, the firm has funded a string of procedures including gastric banding, maternity costs and dental procedures for patients unable to claim through insurance, said its CEO and chairman Dr Michael Matly.

“Patient demand is building, we’ve processed 15 loans and more than 50 people have registered,” he said.

“When people are tight for cash or liquidity, they don’t necessarily want to pour their life savings into healthcare, but they do still want the procedure. We offer pay-as-you-go healthcare.”

The firm offers extended monthly payment plans for patients requiring elective and non-elective – such as cosmetic – procedures. Loans range from AED14,000 to AED150,000, and can be paid back over a period of 12 to 48 months.

Interest rates range from between 1 and 1.2 percent, with an average APR of 19 percent, said Matly.

“These are unsecured loans and the rates reflect that. We try to be lower than credit cards, but obviously higher than secured loans.”

A survey by business intelligence firm Datamonitor, that polled 6,000 residents in 19 countries, showed that UAE and Saudi Arabia residents were far more willing than the global average – around twice as much so - to use credit cards to fund their lifestyle.

“We also found that residents in the UAE were half as likely to cut back on cosmetic surgery as a result of the downturn,” said Imran Ahmed, head of strategy & consulting, Datamonitor MENA.

“This shows that the local market fundamentals are solid for an entrant like Hayati.”

Hayati has sidestepped the squeeze on Gulf credit markets, which has caused a steep drop in the number of mortgage and car loans issued, largely because healthcare is seen to have a lower default rate than other loan classes.

“Data from the US has shown healthcare loans to be one of the safest [areas],” Matly said. “Even though interest is high because the loan is unsecured, people seem to default less than on loans for cars or mortgages.”

The firm is backed by Gulf Finance and is the bank’s only consumer product, he added.

“They have quite a lot of cash and they’re happy to spend it in healthcare. There are [default; but that’s what financing is all about. Not everyone gets a loan approved – there are standards in place.”

In the US, some $2bn worth of healthcare loans were issued last year.

Matly is keen to expand the Hayati model across the Gulf, and Saudi is earmarked as a potential second location for the firm.

“Once the UAE has firmed up, we are looking to expand regionally,” he said. “Healthcare is an attractive investment area, and we’re looking strongly at Saudi, Lebanon, Jordan and Egypt.”

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