Introduction
As per the latest report UAE healthcare market was valued at USD 22 billion in 2024 with an approximated annual growth of 3% from 2024-2030 and continued to grow with steady government support and an emphasis on strengthening medical services. This has attracted strong interest from investors and private equity firms exploring opportunities in hospital acquisitions.
Hospital acquisitions in the UAE involve understanding how the facility operates on a day-to-day basis and how well it aligns with the requirements of the country’s healthcare regulators. Investors need clarity on licensing, clinical standards, staffing structures, compliance history, and any operational issues that could affect the value or future performance of the hospitals.
Due diligence brings these issues into focus by evaluating regulatory exposure, financial stability, operational risks, and the legal standing of the facility. Because a single gap in licensing, governance, or contractual obligations can affect the entire transaction.
What Is Hospital Acquisition Due Diligence?
Hospital acquisition due diligence is a detailed, multi-disciplinary review carried out before mergers, acquisitions or strategic partnerships in the healthcare sector. It evaluates the hospital from financial, operational, legal and clinical perspectives, allowing stakeholders to make informed decisions and reduce potential risks.
What is the Checklist for Hospital Acquisition Due Diligence?
A hospital acquisition due diligence checklist generally comprises the following:
Legal and Regulatory Due Diligence
Legal due diligence confirms that the hospital adheres to the UAE laws that any medical facility should have proper licenses granted by the Dubai Health Authority (DHA), the Department of Health, Abu Dhabi (DOH), or the Ministry of Health and Prevention (MOHAP).
The main areas consist of:
- The verification of trade license, fire NOC, biomedical waste permit, and radiation safety approvals.
- The ownership structure and shareholder agreements, as well as documentation of the free zone and mainland registration.
- The records of court cases, malpractice claims, and inspection reports of the regulatory authorities.
- Intellectual property rights, for example, the hospital’s name, brand, and digital assets.
Healthcare Financial Due Diligence
Due diligence checks if the hospital's revenues, debts, and future forecasts correspond to true market value.
This consideration list includes:
- Financial statements that have been audited for the last three to five years.
- The breakdown of the hospital revenue sources such as inpatient and outpatient services, diagnostics, and pharmacy.
- The authentication of accounts receivable and accounts payable, especially concerning outstanding insurance claims.
- Performing the tax compliance review under the UAE corporate tax regime.
- The examination of the hospital’s loan agreements, lease contracts, and their ability to repay debts.
Operational and Infrastructure Due Diligence
The operational assessment is about the hospital’s performance, potential, as well as compliance with safety regulations. The following may be considered:
- Metrics that measure bed occupancy, department utilization, and patient flow efficiency.
- The maintenance of hospital equipment through the records of breakdowns, repair contracts, and calibration certificates.
- Building infrastructure compliance, such as the local air conditioning system, power backup, and emergency facilities.
Clinical Governance and Quality Assurance
Clinical governance represents the core of patient safety and the trust of the institution.
Main review points:
- Accreditation certificates, such as Joint Commission International (JCI) or National Accreditation Board for Hospitals (NABH).
- Internal audits covering areas like mortality rates, infection trends, and clinical outcomes.
- Credentialing records for medical staff, nurses and allied health professionals.
Crucial Point: Those hospitals which are dual-accredited, for example by JCI and ISO, usually have a higher level of patient confidence and a greater brand value when being assessed for acquisition.
Human Resources and Workforce Compliance
Human resources are the factor that decides both the quality of services and the continuation of the hospital’s operations.
Due diligence work should extend to:
- The terms of employment, visa status, and conformity with the UAE Labor Law (Federal Decree-Law No. 33 of 2021).
- Distribution of employees, doctor-to-nurse ratios, and training or continuous education programs.
- The liabilities of gratuities, payroll records, and professional indemnity insurance.
Best Practices for Successful Healthcare Due Diligence in UAE
To make sure that hospital or clinic takeovers go well, investors need to be stepwise, transparent, and documentation-based in their approach which should also involve different disciplines.
- Establish a Multi-Disciplinary Review Team: Have a panel of experts from different areas such as legal, financial, medical, and regulatory to deal with issues related to licensing, tax, and clinical aspects, which, in turn, require the precise and in-depth examination of a specialist.
- Verify Financial Integrity Early: Before the negotiation starts, it is also a good idea to ask for audited statements, tax returns, and records of debt.
- Prioritize Compliance and Accreditation: Ensure that the hospital is up to the standards set by local regulatory bodies such as MOHAP, DHA, or DOH, and holds legitimate accreditations like JCI or NABH.
Important Note: The gaps in compliance may result in delaying the handover of ownership or even attracting penalty fees.
- Safeguard Data and Technology Integration: Assess the hospital digital setup, patient record methods, and the cybersecurity systems to check if they are in line with the UAE Data Protection Law and health information exchanges like Malaffi and NABIDH.
- Plan Post-Acquisition Integration: Thinking through the changeover of personnel, brand, and technology aspects is part of getting ready for the takeover as integration is very important in continuity not only of patient care but also of hospital business operations.
How Kayrouz & Associates Provides Due Diligence Support for Hospital Acquisitions?
Hospital acquisition requires a detailed review of the hospital’s legal, financial, and operational position before finalising the transaction. With more than 24 years of experience, our Corporate and Commercial, Mergers and Acquisitions team at Kayrouz & Associates carries out complete due diligence for hospital acquisition and guides clients one-to-one through every stage of the acquisition.
Our team will assist you with hospital due diligence through the following services
- Reviewing hospital licences, permits, and regulatory compliance
- Examining financial statements, liabilities, and ongoing obligations
- Assessing key contracts, supplier agreements, and essential commitments
- Reviewing staffing structure, employment terms, and clinical obligations
- Identifying pending disputes, claims, and insurance matters
- Preparing clear due diligence findings to support acquisition decisions
Frequently Asked Questions
Are foreign investors allowed to purchase hospitals in the UAE?
Yes. In the UAE, foreign investors are permitted to have full ownership of hospitals and medical facilities in registered free zones like Dubai Healthcare City (DHCC), Abu Dhabi Global Market (ADGM), and Dubai International Financial Centre (DIFC).
What is the duration of the healthcare due diligence process?
The length of time depends on the size and the structure of the hospital, as well as on the complexity of the regulations. The progress of work might also be hindered by the incomplete financial or licensing records and the necessity of additional audits performed by regulatory authorities.
What are the important aspects of healthcare financial due diligence?
The most important points are revenue verification, cash flow assessment, liability evaluation, and capital expenditure analysis. The process helps to find out whether the hospital is profitable and financially viable before the purchase.
What is the purpose of commercial due diligence in hospital investment?
By performing commercial due diligence in hospital investment, it is ascertained that the transaction is consistent with the demand in the market, the competitive positioning, and the expected return on investment (ROI) in the long run. The study covers patient demographics, insurance coverage trends, and competitor benchmarks to provide evidence that the hospital is the right strategic partner in the UAE healthcare industry, which is growing rapidly.
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