UAE’s hospital operators and insurers tussle over medical bills
Healthcare practice has two major operating costs namely CAPEX (Capital Expenditure) and OPEX (Operating Expenditure), it’s a highly technology and capital intensive industry where extremely skilled manpower is required.
Internationally and for the region, the cost of manpower ranges from 40-50% of the service provider cost while 25-30% is the material cost plus the overheads and expenses. Hence the net profits are not more than 5-7%, while the general perception is that healthcare is a very lucrative business. We must understand that healthcare is both CAPEX and OPEX intensive industry with thin margins.
We also cannot afford to compromise on overheads for running the hospital with compromised standards so if insurance companies start being tough this will have disastrous effects on the entire healthcare ecosystem.
As a result, the healthcare industry which has come up so well in the region providing international quality healthcare not only to local people but also to medical tourists will get compromised and may lead to healthcare providers shutting down the shops simply because they don’t have that much margin to sustain. So insurance companies must support the ecosystem for the healthcare systems to thrive and continue providing the quality care.
Additionally, there is also a situation which insurance companies are facing as business went down and corporates also had to cut cost they switched to lower premium policies for their staff. Expectation from healthcare providers is that we must provide quality care at lower costs, how can that happen as we cannot compromise on quality of care as there is a price for that.
Therefore, everybody has to look at it in the interest of the ecosystem because in healthcare you cannot function in isolation.