When Dr Kassem Alom arrived in Abu Dhabi in 1978, he immediately started to question whether the UAE really was the right spot for a young doctor looking to start up his own business.
“There was nothing here,” he recalls. “There was one hospital - called Central Hospital - which consisted of a group of caravans. When it rained, the water just flooded inside.”
Alom’s decision to stay and carve out a niche for himself in the UAE capital was vindicated last year when Al Noor Hospitals Group, the company he founded in 1985, and which is now Abu Dhabi’s largest private healthcare provider by far, listed on the London Stock Exchange. The initial public offering (IPO) netted $342m, valuing the company at $1bn.
Along the way, Alom treated Sheikh Zayed Bin Sultan Al Nahyan, the late President of the UAE, has been appointed to the Supreme Council of the Ministry of Health, and is one of the few expatriates to be voted onto the board of the Abu Dhabi Chamber of Commerce and Industry. Al Noor Hospitals has three hospitals and nine medical centres in Abu Dhabi and is looking at expanding its offering into the rest of the Gulf.
But IPOs were very far from Alom’s mind when he first landed in Abu Dhabi 35 years ago. As the emirate’s first specialist, and only the 90th registered doctor in the entire country, the landscape couldn’t be more different from the medical universities in Seville and Madrid, where he had studied, and Charing Cross Hospital, in London, where he had practised. Among the problems the local medical profession faced at that time were the difficulty of accessing medicines and the need to attract qualified staff to come and live in the UAE.
Still, Alom persevered and decided to set up his own polyclinic in 1985, which was followed by inpatient facilities a year later. His practice achieved a number of landmarks; it was the first to offer laparoscopic (keyhole) surgery, in-vitro fertilisation (IVF), plastic surgery and liposuction in Abu Dhabi during the 1990s. The chief executive also says it was the first to bring in continuing medical education (CME) for its staff, and adds that there’s a lot more to come.
“I think we have to place an emphasis on paediatric hospitals and on maternity as well; the standard is good but we still need to fill that gap,” Alom says. “These are two areas the private sector needs to invest in. We also need to invest in nursing homes, so elderly people don’t occupy hospital beds, and to invest in homecare, which exists in the west, and is much more efficient and economical than sending a doctor to different people.
“[There’s also] infertility, and we still don’t have good sports medicine in the country, and [we need to look at] rehabilitation centres. We have nuclear medicine, but this is not enough because oncology is not served well. The country is investing heavily in technology, but we still lack professional people to cope with this technology, bearing in mind most of our staff are expatriates.”
Al Noor Hospitals has certainly benefitted from the introduction of compulsory health insurance in Abu Dhabi in 2007. The scheme, which is being rolled out in Dubai this year, now covers 98 percent of the emirate’s inhabitants. UAE nationals are covered by the government’s Thiqa programme (many of whom are treated by Al Noor Hospitals), while expatriates are covered via a subsidised basic plan provided by Daman, or by an enhanced insurance plan. Whereas previously healthcare was provided free of charge for all, compulsory insurance - plus direct incentives from the government to allow the private sector to invest in healthcare infrastructure - has spurred competition.
“Healthcare has boomed between 2007 and now,” says Alom. “Now you can say that the market has already matured, and the trend until now has been [the development] of many general hospitals in the private sector. But I think there is room for quality centres of excellence, so I think it’s still attractive to invest in healthcare in the coming years.
“There are still some patients travelling to Europe for certain services, and the private sector is trying to fill this gap by bringing more expertise and more facilities, and the government is encouraging that investment.”
But the government also needs to invest more in its own right. Recent trends show that while populations in the Gulf are living longer, they have also become far more susceptible to non-communicable and lifestyle diseases. All six Gulf countries are in the global top ten in terms of diabetes prevalence. In a study published by the British medical journal The Lancet in January, several doctors from Qatar University claimed that while the Arab region stood to benefit from the economic benefits of its young demographic “the human burden and economic burden of non-communicable diseases might well derail this prospect”. Can Gulf governments win this battle?
“The government has plans in place, and they require that you screen the whole population,” says Alom. “They have done all the locals and many of the expatriates. The government has done a lot… and I think it will succeed, but it will take time.”
In its first set of disclosed results after the firm went public, Al Noor Hospitals said it had posted $179.5m in revenues during the first half (up by 10.9 percent), and $24.8m in profits (down by 24.4 percent). The revenue increase is in line with Alom’s plan to achieve annual double-digit growth - a target he says he has managed to achieve for much of the company’s 28-year history.
So why did Al Noor Hospitals choose to list in London, rather than Abu Dhabi? UAE bourses have seen precious little action in terms of companies going public locally over the last five years, with many firms deciding to list abroad. Another Abu Dhabi-based medical services provider, NMC Healthcare also listed in London in 2012, raising just over half the sum garnered by Al Noor Hospitals. Last year, NMC was the sixth-best performing stock on the London Stock Exchange.
“We were studying different places, including Abu Dhabi, Singapore and London,” says Alom. “But we found that the London market was most appropriate for this part of the world, which is well regulated.
“Of course it went very well. We had to improve our governance dramatically to cope with the London market regulations.”
Given the strength of its position in Abu Dhabi, with more than twice the market share of its nearest competitor, Al Noor Hospitals is now on an aggressive expansion path, looking to gain a foothold in other lucrative markets in the Gulf. The London listing has provided the fuel for that expansion, and the firm has already bought 75 percent of Manchester Clinic in Dubai. In December, it acquired the Gulf International Cancer Centre, also in Dubai, in an initial deal worth $21.8m.
Alom says that further acquisitions are in the pipeline. “Our strategy is to go to the other emirates and replicate the same model that we have in Abu Dhabi,” he says. “I believe that we have succeeded well… and we can do the same in Dubai and Sharjah and the other emirates.”
“We have the ability to start our own facilities; now we have ten centres [in Abu Dhabi] and it does not take much effort from Al Noor, because everything is ready. Also we are looking to buy existing facilities, and this is what we are doing now - this is the fastest way to get into a new market.”
“We are now in negotiations with hospitals as well as clinics. We go now for polyclinics or hospitals - that was what the IPO was for.”
Alom declines to state how much the company will be spending on its expansion plans in the rest of the UAE, but a statement from Al Noor Hospitals post-IPO indicated that $159m of the money raised would be set aside for the firm’s future expansion.
Also in the pipeline is a move into the wider GCC. In 2012, the firm bought the Abu Dhabi Medical Centre (now the Al Noor Hospital Family Care Clinic) in Muscat.
“We have already started there [in Oman],” Alom says. “We are going to open more centres, depending on the areas and services needed. Also, in the GCC countries, we are considering Saudi Arabia. There are more places to study, but we will start here.”
Alom does not provide a timeline for the rollout of further services across the Gulf, saying instead that the company’s current focus remains on the UAE. In its home market of Abu Dhabi, it already has its hands full with expansion plans at existing locations. Al Noor Hospitals will double capacity at its Airport Road facility, while adding a mediclinic nearby. The firm’s initial site, on Khalifa Street, was originally only took up five floors of a 12-storey block. Now that site is being completely taken over by the company, adding 50 percent more capacity. In addition, expansion work is also being undertaken at a third hospital, in Abu Dhabi.
Alom’s long-term vision for the company is simple; to be the top private healthcare company in the Gulf, providing quality services through well-qualified staff, and to serve the community wherever possible. He also hints that he’d like to set up an academy or teaching college to help introduce more locals into the medical field (there are 20 Emirati doctors currently working at the company).
“The standard care in the UAE is good - really good - and has improved a lot in the last ten years in both the public and private sectors if you compare it to the US and Europe,” he says. “But we still have gaps, and certain services that need to be improved.
“The price of insurance is the same relative to the US, but there’s a bit of a gap in premiums - still, the market is not as mature. In Europe, they spend 9 or 10 percent of their GDP on healthcare. In the States it’s 17 percent. Here, we need to invest more.”
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