From volume to value

The future of healthcare financing

As Dubai accelerates its ambitions for a more efficient, equitable and future-ready healthcare system, the conversation around financing reform is becoming increasingly urgent. The second Healthcare World forum brought together regulators, insurers, hospital leaders, clinicians, lawyers and advisers for an open discussion on how healthcare in Dubai is financed, how risk is shared, and what ‘value-based care’ might realistically mean in a complex, consumer-led system

Senior policymakers, payers, providers and legal specialists examined how the emirate’s payment architecture must evolve to support better outcomes, greater sustainability and a more sophisticated integration of technology. Their discussion revealed not only the complexity of shifting from volume-based to value-based care, but also the structural barriers and demographic pressures reshaping
the system’s priorities.

The conversation ranged from diagnosis-related groups (DRGs) and outpatient reimbursement to robotics, mental health, ageing populations and the ethics of data. It kept coming back to the same issue of how to change a system built on volume and activity to one that rewards outcomes and focusses on prevention and sustainability.

Changing the system

Dubai’s healthcare system has long been admired for its access, speed and breadth of services. Patients can see specialists quickly, hospitals invest early in new technologies, and private provision has expanded rapidly alongside mandatory insurance. But those same strengths are now creating pressure. Healthcare spending remains relatively low as a percentage of GDP compared with Europe or the US, yet usage is increasingly fast.

Current issues:
• Employers are increasingly focused on containing premiums.
• Insurers operate on thin margins.
• Providers face growing costs from technology, staffing and infrastructure.
• Regulators must balance affordability, quality and access in a market that is far from uniform.

As one hospital CEO explained, there are effectively two healthcare systems operating side by side – one serving high-end, well-insured patients demanding the latest care, and the other operating on extremely low tariffs. Regulating both in the same way, participants agreed, is becoming harder by the year.

Several panellists emphasised that Dubai’s healthcare spend remains heavily concentrated on curative care. One senior provider leader noted that prevention accounts for only around one per cent of national health expenditure – far below the 10-12 per cent seen in
many other countries – while more than half of spending still goes towards treating disease rather than maintaining health. Against this backdrop, there is a fresh drive to refine and extend Dubai’s DRG framework, bringing it into closer alignment with value-based care principles.

Updating DRGs

In the UAE, Diagnosis-Related Groups (DRGs) are a classification system used to group hospital cases with similar clinical characteristics and expected resource use, helping standardise how inpatient care is priced and reimbursed. They are intended to shift payment away from open-ended fee-for-service toward more predictable, activity-based funding tied to diagnosis and complexity. While adoption is still evolving, DRGs are seen as an important step in improving cost control, transparency, and consistency across providers and insurers.

DRGs are often seen as a stepping stone toward value-based healthcare, rather than value-based care itself. By paying a fixed amount for a defined episode of care, they encourage providers to manage resources more efficiently and reduce unnecessary variation. However, without quality and outcome measures layered on top, DRGs primarily reward cost control. Value-based healthcare only emerges when payment is also linked to outcomes, safety and patient experience.

Updating the CPT codes to 2024 standards, refreshing inpatient and day-care DRGs, and reviewing base rates and relative weights are therefore essential. So too is the introduction of outpatient DRGs which might take place by early 2026.

The current misalignment creates a fundamental structural problem. Providers deliver care that the system neither clearly recognises nor properly measures, while payers and regulators operate with a lack of visibility of real activity and cost. As a result, investment decisions rely on outdated signals, and policy debates occur without a full picture of what the system actually funds. Participants emphasised that payment reform cannot be treated as a one-off exercise, as medicine is constantly evolving and fixed frameworks rapidly fall out of date. The DHA is addressing this issue by beginning with a shadow phase, testing how outpatient DRGs might work in practice before making binding changes. Providers and insurers are being engaged throughout, with time built in for system adjustments and contract negotiations.

The discussion converged around the need for predictable and regular updates to coding systems, alignment with newer clinical standards and phased implementation through shadow testing so that reforms reflect actual utilisation before triggering financial exposure. The aim is not to push risk unilaterally onto providers, but to modernise the framework so it keeps pace with how care is actually delivered in Dubai today

Risks and incentives

From the provider side, several leaders emphasised that DRGs are, by design, a risk-sharing mechanism. Moving away from fee-forservice can drive efficiency and reduce unnecessary activity, but it also shifts financial risk onto hospitals, increasingly concentrating that risk at the point of care delivery. Participants acknowledged that diagnosis-based payments can improve efficiency and reduce unwarranted variation, yet they repeatedly highlighted how fixed rates can fail to reflect severity or complexity.

One Chief Commercial Officer noted that while DRGs can encourage efficiency, they can also make it harder to justify investment in new technologies that improve outcomes but increase upfront costs. Robotics was cited frequently as an example: these technologies can shorten length of stay, speed recovery and improve patient experience, but incur higher consumable and capital costs that are not always reflected in reimbursement.

The CEO of a major healthcare chain reinforced this point, arguing that healthcare spending is too often viewed in isolation. When a robotic procedure enables faster recovery and an earlier return to work, the economic benefit extends beyond the hospital bill, yet those wider gains are rarely captured in funding models. There was also concern about behaviour at the margins. Several speakers, particularly clinicians, warned that if base rates and severity adjustments are not calibrated carefully, providers may face difficult decisions about which cases they can afford to treat, raising concerns about cherry-picking and access when complex cases consume more resources than reimbursement allows.

From a regulatory perspective, DHA acknowledged these risks. While dispute mechanisms exist when care is refused or claims are rejected, participants agreed that stronger policies and clearer incentives would be needed as reimbursement models evolve. Participants did not reject risk sharing in principle, but emphasised that risk must sit with those able to manage it. The recommendations that emerged focused on improving risk adjustment, refining severity weighting, recognising advanced technology within payment models, and allowing gradual transitions so that contracts, systems and clinical behaviour can adapt without destabilising care delivery.

Data transparency

Participants agreed with just a few exceptions that none of these reforms will work without better data. Insurers emphasised that moving from volume to value requires shared visibility of outcomes, utilisation patterns and patient journeys, not just within a single provider but across the system. One panellist argued that only when payers and providers are looking at the same metrics can incentives truly align. DRGs alone will not prevent manipulation of the system; they must be backed by agreed KPIs, transparent benchmarking, and shared definitions.

From the provider side, leaders pointed out that hospitals typically see only a fragment of a patient’s journey, while insurers can see where else a patient has sought care, how often they present and at what cost. This imbalance limits providers’ ability to understand total cost of care, improve pathways or manage outcomes holistically, and it reinforces defensive behaviour during negotiations. Participants also acknowledged that data can be selectively presented or manipulated by both insurers and providers when incentives are poorly designed, whether through coding practices or claims reporting. Experts noted that forensic analytics can detect unusual patterns, but only when governance frameworks are strong, transparent and consistently enforced.

For the DHA, governance and transparency are the foundation stones of reform, as without them trust erodes and collaboration breaks down. The discussion highlighted the need for shared data, common outcome measures, and benchmarking across providers, with transparency treated as a collective foundation rather than a competitive tool.

Investing in prevention

Prevention and mental health emerged as areas where misaligned incentives produce the clearest long-term consequences. Participants repeatedly noted that only a small fraction of total healthcare spending in the UAE – less than 2 per cent – is directed toward prevention, while the vast majority flows into treating disease once it appears. This imbalance persists even as chronic conditions continue to rise, such as diabetes rates which are around 21 per cent of the population. For a young country with high-quality acute care to face such a chronic disease burden more typical of much older societies requires urgent addressing. Several participants argued that underinvestment in prevention today inevitably drives higher costs tomorrow.

Mental health illustrated this imbalance particularly sharply. Coverage has improved and new requirements are being introduced, but the amount of care insurers will pay for is still limited, medicines are often reimbursed inconsistently or not at all and past data is in short
supply, partly because stigma previously kept demand out of sight. Participants described a system that in theory acknowledges mental
health while underfunding it structurally, limiting provider investment and reinforcing stigma. From a provider perspective, confidentiality remains a major concern, with employees often reluctant to access services through employer-sponsored insurance for fear of disclosure or discrimination. From a payer perspective, mental health sits uneasily within existing reimbursement models; without DRGs or robust outcomes data, pricing and planning remain difficult. DHA confirmed that mental health budgets have been set conservatively due to limited data, but that this situation would evolve as utilisation becomes clearer.

Across both prevention and mental health, insurers acknowledged the structural constraints they face. Employers work within fixed budgets and often focus on keeping insurance costs down in the short term, rather than investing in long-term employee health, while providers are reimbursed for treating disease rather than keeping people well. The panellists agreed that without guaranteed funding, services will remain patchy and underdeveloped. Recommendations therefore centred on embedding prevention and mental health into core benefit structures, mandating minimum coverage levels, supporting wellness and education initiatives, and creating predictable funding signals that allow providers to expand capacity with confidence rather than relying on optional add-ons.

Ageing and longevity

Demographic change provided a unifying backdrop to many of the concerns raised, as participants described a population that no longer fits the assumptions underlying earlier insurance models. Dubai is no longer dominated by young, single expatriates; families are settling, parents and grandparents are arriving, and chronic illness and multi-morbidity are becoming more common. This shift is increasing demand for chronic care, elderly services and continuity of treatment, while exposing coverage gaps for older populations, affordability pressures on families and sustainability challenges for providers operating within fixed reimbursement structures. Participants emphasised that insurance products designed for a young, mobile workforce are poorly suited to an ageing and more stable population, requiring a fundamental rethink of coverage design. While speakers acknowledged the political and economic sensitivity of addressing elderly coverage within a largely privately funded system, they warned that failing to respond to demographic realities will only amplify future strain. Regulators confirmed that
work is underway to explore elderly coverage solutions, recognising that this issue cannot be ignored if Dubai is to remain attractive as a long-term home. Recommendations focused on developing tailored elderly coverage options, improving population risk management,
aligning insurance eligibility more closely with residency patterns and designing reforms with long-term horizons rather than shortterm market cycles.

Governance and innovation

The discussion returned repeatedly to governance, ethics and market behaviour, framing health financing reform not as a purely technical exercise but as a series of choices about risk, incentives and values. Participants spoke about system manipulation, aggressive
undercutting and short-term contracting cycles – including annual tendering – that undermine investment in prevention, quality,
innovation and workforce development. Several speakers argued that technical reforms alone will not succeed unless the system actively reinforces ethical behaviour and discourages practices that extract short-term gains at collective cost. While competition remains a defining feature of the market, participants called for clearer boundaries that distinguish competition on service quality from competition driven purely by price distortion, alongside longer contracting horizons, greater scrutiny of abnormal pricing, broker reform and clearer standards for intermediary behaviour. Regulatory gaps were also highlight, including the limited ability of individuals to top up employer-provided insurance to access additional benefits, despite such models being used internationally to balance employer burden with individual choice.

Within this broader governance context, many speakers challenged the assumption that innovation and affordability are mutually exclusive. Dubai’s outcomes already compare favourably with global benchmarks: life expectancy is high, access is fast and
technology adoption is early. However, participants cautioned that life expectancy alone is a blunt measure. Quality of life, speed of recovery, pain reduction and patient experience also matter, and they require investment. While overall healthcare spending may appear lower than in Europe or the US, participants noted that this partly reflects market structure, where basic insurance plans with minimal coverage reduce averages and higher-end care is crosssubsidised in less visible ways. The central challenge, participants agreed, is to make explicit choices about what the system is paying for and recognising that inaction carries its own cost as outdated payment systems gradually erode trust and discourage innovation. The discussion therefore emphasised incremental reform grounded in data, transparency and collaboration, with patients positioned not as abstract beneficiaries but as the ultimate measure of whether the system succeeds.

Finally, participants were asked to identify the single most important next step to make the move from volume to value. While answers varied from data sharing and governance to mental health mandates, elderly coverage, technology recognition and KPI standardisation, they shared a common theme: alignment. Alignment between payers and providers, between regulation and market reality, between short-term affordability and long-term sustainability, and, critically, alignment around the patient. From a regulatory perspective, participants emphasised that transparency and governance are the levers that make everything else possible. With them, problems can be identified and addressed; without them, even the best-designed models will fail. The forum made clear that the next phase of moving from volume to value will depend less on imported solutions and more on honest dialogue, shared data and a collective willingness to accept that there are no perfect answers, only better ones.

Hill Dickinson is working with Healthcare World to produce a white paper to develop ideas from this forum and create a roadmap to propose how Dubai may look to shift to a high-value health system