Regional governments have made no secret of the fact that they want to reduce the amount of money they spend on healthcare provision. Telling expatriates you’re no longer going to give them free healthcare, and making their employers buy health insurance for them, is one clear way. An altogether more radical step, and one that GCC governments now appear to be embracing, is to tell hospitals that they have a certain period of time in which to become self funding.
Ahmad Ali Oboud, director of finance at the Dubai Department of Health and Medical Services, says that four public hospitals in Dubai currently cover only 20% of their expenditure from revenues. Rashid Hospital, Al Wasl Hospital, Maktoum Hospital and Dubai Hospital now have an unspecified period of time in which to generate enough revenue to cover their outgoings.
Saudi Arabia has a similar idea. Government hospitals there will soon be restructured and run by independent boards of directors in a bid to balance the books and improve services.
The plan will affect 200 hospitals operating under the Saudi Ministry of Health and will cost a reported SR10 billion (US $2.67 billion) to implement. Dr. Khaled Al-Mirghalani, a spokesman for the health ministry, says: “These corporations will be given wide powers to recruit qualified personnel and control revenues and expenditures.”
Taking hospitals out of government control and making them run their own affairs is a controversial policy that is often met with resistance. In many parts of the world, particularly Europe, ‘corporatisation’ of healthcare is automatically seen as a quick route to compromised patient care. In reality, there is a lot to be potentially gained by injecting private sector principles into government institutions. One obvious advantage is the greater freedom to hire and fire, and the ability to recognise and reward genuine talent. Freedom to set one’s own pay structures, in order to attract the most needed people, is another potential benefit that is particularly needed in the healthcare sector.
Reducing the number of overseas visits that patients have to make is a key objective for government health bodies in the region. Giving hospitals greater decision making power will allow individual institutions to start developing areas of specialisation, reducing the need for those expensive foreign trips. The biggest potential benefit, of course, is the ability for hospitals to set market rates for services, rather than giving them away at massively subsidised rates.
However, in order for the benefits of corporatisation to be realised, independence will really have to mean independence. Hospitals will have to be able to make their own hiring and technology purchasing decisions, set their own budgets and charge market rates for services – with no exceptions. That means that if a national is receiving treatment, governments will have to reimburse the cost of treatment in full. If done right, corporatisation of government hospitals should mean that services improve and healthcare becomes less of a drain on the public purse.
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