Nov. 28, 2016


David Hadley

UAE, Dubai

David Hadley

CEO, Mediclinic

“We used to be listed in Johannesburg, but the capital markets are a lot more fluid in London.”

BIO

A recognized leader within the healthcare field, David Hadley is the CEO of Mediclinic Middle East, which is owned by Mediclinic International, one of the top-10 largest listed private hospital groups in the world. He has worked for Mediclinic International since 1993, and has enjoyed many positions throughout the company which have enabled him to successfully command positions in human resources, finance, operations, and hospital management. After moving to Dubai in 2007 to complete the Mediclinic City Hospital Project and oversee the opening of the company’s first “offshore” facility in Dubai Healthcare City, he completed his B.Comm undergraduate education in South Africa, dividing his time between work and school. He also holds a Master’s in business administration.

What have been the major lessons learned from the acquisition of Al Noor up to now?

Firstly, Abu Dhabi is a very different business environment from Dubai. We could not just go into Abu Dhabi and implement what we do in Dubai. The differences are vast in terms of the economic situation, the regulatory environment, government involvement, and the medical insurance market. We anticipated most of this beforehand, but the impact on the business has been greater than we expected. A major challenge has been the integration of the people and the distinct cultures of the two companies. We have retrenched over 400 people from the Al Noor campus in this integration and removed a lot of duplicate roles. Many of the facilities that we acquired need upgrading, the company was partially owned by a private equity company, which often results in delayed spending when they are going to sell it. We have also been working hard to get the right people in place in the right positions, which naturally takes time.

The Health Authority Abu Dhabi has reduced insurance coverage for Emiratis under the Thiqa plan and for expatriates and their families under Daman Insurance's Abu Dhabi Basic Plan. What effect has this had?

It has had a very significant impact on our business and has made us reconsider future investments. Regarding Thiqa coverage specifically, which was announced on July 1, 2016, for all Thiqa members, there would be 20% co-payment in the Abu Dhabi private sector and a 50% co-payment in Dubai. It is basically a directive to use government and semi-government (Mubadala) hospitals, which could be viewed as an anti-private move. We think that whilst a co-payment is an effective mechanism to manage utilization, it needs to be applied to the entire healthcare industry, needs to be enforced and it should exclude certain uncontrollable services (such as oncology). The only providers currently exempt from collecting the co-payments are the Cleveland Clinic and Mubadala facilities, which obviously does not allow for a level playing field within the private sector.

What initiatives could be taken to achieve a more sustainable healthcare system?

There needs to be more of a focus on ethics and quality. To manage quality you need a proper ethical framework and environment, this should be the biggest focus of the regulators in my view. There is a lot of corruption and fraud in the Abu Dhabi and Dubai healthcare market amongst certain providers, such as payment for referrals, payment for tests, non-collection of co-payments etc., which Mediclinic does not tolerate or advocate. This is causing big problems in terms of quality and in terms of cost. Incorrectly aligned incentives such as payment for referrals and test results in overutilization and thus inflates the cost. The second issue is price. Prices are too low in the Abu Dhabi market and people need to realize that if they want quality healthcare they will have to pay for it at a correctly-pitched price. If there was a stronger focus on ethics, the utilzation and costs would come down and this would allow for a better price. That is why only correctly-priced medical insurance networks support patients visiting Mediclinic facilities in Dubai. You cannot get to Mediclinic if you are on a AED600 a year health insurance premium, it is quite simple to calculate that those metrics will never stack up.

In what ways did the acquisition of Al Noor create more value for your shareholders?

It actually lost value for our shareholders in the short term because we paid a high price for Al Noor, but that is what you pay for healthcare companies these days. What the acquisition did do was to give us the ability to list in London and to grow the business. We used to be listed in Johannesburg, but the capital markets are a lot more fluid in London. Secondly, we were looking to grow in Abu Dhabi, and Al Noor was looking to grow in Dubai, so it made sense from a geographic point of view. It takes a long time to build a hospital, so if you can acquire a facility, upgrade it, and change it this would only take one or two years instead of five.

What are your predictions for the healthcare sector in the UAE?

You need to look at each emirate in isolation. In Dubai things will continue the way they have. Good progress has been made by the government, the regulatory environment is strong, and there are a lot of positive changes that the government is initiating. It will take longer than they reported to effect many of the changes as it is a massive challenge, the DRGs that were supposed to roll out in January 2017 has again been delayed, which is good because we need to do it properly and the regulators realize this. The UAE is also looking at a unified health record, which will take a long time, but it is a positive step in the right direction. From a healthcare perspective, the Dubai framework is good and is competitive, with no one medical insurance scheme dominating. There are a lot of new players entering the market, so there will be mergers and consolidations and the positive competition between providers and funders will ensure an increase in the quality. The Abu Dhabi healthcare market on the other hand is completely different, being dominated by government funding. Daman as an example is about 80% owned by the government, and they are the sole contributor accounting for 75% of all payments in Abu Dhabi. The funding landscape would improve significantly if it supported a more competitive environment, as is the case in Dubai. There are also too many facilities and there will thus be further consolidation required in this regard.

ADVERTISEMENT