By Santhosh V Perumal/Business Reporter The Gulf private healthcare providers, which are increasingly creating capacity for their growing markets, should consider raising capital through initial public offers (IPOs) as the healthcare expenditure as a proportion to the region's gross domestic product (GDP) still remains low, according to Ernst and Young (EY). "The recent IPO of several healthcare facilities have set a precedent and more are to follow in the coming years. Not only this, numerous new facilities are planned in almost all the GCC countries," EY said in a report. Healthcare spending in the Gulf Cooperation Council (GCC), which has the potential to become a hub for medical tourism, is expected to grow 11.4% until 2015 on demographic and macroeconomic factors, it added. With programmes such as mandatory insurance, there is an increasing reliance on the private healthcare sector and most well-established facilities are focusing to expand rapidly to create capacity for their growing markets, it said. "One way of doing this is by way of an IPO and raising capital for expansion," the report said. Healthcare in general is now a major topic for private investors, as it weathered the recent financial crisis. Its inclusion as part of the overall investment strategy for major institutions has become vital, according to Imad U Bokhari, Middle East and North Africa Transaction Advisory Services Healthcare Leader, EY, said. "We are at the dawn of a major expansion in the healthcare sector in the region, even if only few of the many planned facilities come to fruition. Some of these healthcare developments are so large that they can only be called medical cities," he said. The main growth drivers of the industry include the region's fast-growing population, rising income levels, increased prevalence of lifestyle diseases, growing demand for quality healthcare and mandatory health insurance policies, EY said. Several GCC countries have announced plans to ramp up infrastructure to cater to rising demand, with major healthcare projects across the region being planned to accommodate the ever growing demand," it said, adding as the GCC governments continue to invest in healthcare. "We should see health expenditure as a percentage of GDP increase in the future." Although the GCC governments continue to lead in healthcare expenditure, there is an increased participation by private players in the healthcare industry, it said. "The healthcare industry is driven by positive growth prospects and increased purchasing power. The growing demand for healthcare services, coupled with regulatory changes and emphasis on quality healthcare makes the GCC an important destination for both domestic and international investors," Andrea Longhi , MENA Advisory Healthcare Leader, EY, said. However, the GCC healthcare sector also faces considerable shortage of local physicians and qualified allied healthcare staff. "The region will need to invest in training their local talent to help build a larger pool of physicians to cater to the growing demand," Bokhari said. The new healthcare projects will help to attract people to the region as a medical tourism destination. Additionally, establishing research and clinical trial centres will have significant impact on retention of talent," he added. Healthcare infrastructure in the GCC also continues to lag international standards which restrains the market from expanding, given GCC's strong demand and high income per capita, he observed.
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