Gulf Nations Are in Pole Position for the Health AI Race – Here’s Why the UK Has Fallen Behind

Healthtech startups are being stifled by red tape, rising compliance costs, and outdated National Health Service (NHS) infrastructure. Without urgent investment in AI, the UK risks losing a generation of healthtech talent to faster-moving markets like the UAE and Qatar.

Last year alone, investors poured $443m into UK AI healthtechs last year — nearly a quarter of all European AI startup funding. Founders can also tap-in to world-leading universities, research centres, and a globally respected health system.

At the same time, generative AI tools and LLMs are rapidly advancing, unlocking new ways for UK healthtechs to enhance healthcare outcomes for patients. Even in the last year, we’ve seen huge leaps in LLM capabilities that make our clinical AI tools more effective. And the buoyant funding market gives UK startups more resources to test new products and ideas.

On paper, the UK should be the ideal place to build and scale AI-driven healthtech. But the reality is different.

AI firms have hit a ceiling

Across the UK, AI founders are hitting a ceiling. Complex data frameworks, slow procurement, and outdated digital infrastructure are blocking progress. Even the NHS’s own AI ambitions are stumbling. The Foresight AI project, designed to predict patient outcomes, was recently paused after 57 million records were accessed without proper consent.

I’ve seen both sides. At Rhazes AI, we operate in both the UK and the Gulf. In the Gulf, we face fewer bureaucratic hurdles and benefit from coordinated, well-funded health innovation strategies. Deploying our tools in Doha was faster, cheaper, and better supported by government and public health partners than our rollout in the UK. The difference in speed and ease is like night and day.

Infrastructure holds us back

Despite ranking third globally in healthcare delivery, the NHS simply isn’t equipped for modern AI deployment. One of the UK’s top scientists recently remarked that NHS IT systems are ”slow, unreliable and devastatingly user-unfriendly”, with data trapped in siloed, hospital-by-hospital databases.

This fragmented approach to data storage creates problems elsewhere in the system. Every hospital uses a different electronic health record system and has its own set of bureaucratic hurdles. Even basic tasks like integrating AI decision making software can turn into multi-year slogs. For startups, that means burning through capital on workaround solutions instead of building scalable products.

Britain risks becoming merely an incubator for promising healthtech companies that scale up here, then relocate overseas to thrive. Consider Hinge Health, founded in London in 2015 but relocated to San Francisco shortly after. Hinge Health went on to gain a $2.5 billion valuation, employ more than 1,000 people, and generate nearly half a billion dollars in annualised revenue. The UK incubated the innovation, but the rewards are being reaped elsewhere.

A broken regulatory environment

But even with the right infrastructure, regulation is a massive blocker for companies. Take Oxford Medical Simulation, a once UK-based VR firm training doctors, which recently relocated to the US due to slow approvals.

Of course, data compliance and patient safety should never be optional. But the current UK system pushes founders to raise oversized funding rounds just to cover compliance costs and navigate complex rules. Instead of investing in R&D or hiring, startups are spending heavily on consultants to decode fragmented regulations.

Yet rather than clearing the path for innovation, officials keep piling on rules. NHS England recently ruled that all AI scribes that generate clinical notes must be registered as at least Class I medical devices. This effectively forbids doctors from using GPT-4-based digital assistants for notetaking unless the tools undergo certification – and it sent startups scrambling.

It’s a paradox: ChatGPT itself isn’t classified as a medical device even though it is used daily by around 1 in 5 doctors, yet the moment its technology is commercially packaged for clinical use in the UK, it’s treated as a medical device. This of course, encourages doctors to use suboptimal tools not built for their use case. The UK’s contradictory and catch-all approach to regulation is discouraging innovation for tools that could save clinicians time and improve patient care.

After all, if the NHS struggles to green-light its own AI projects like Foresight, how can it expect startups to deploy transformative solutions?

Why the Gulf is pulling ahead

While the UK retrofits legacy systems, the Gulf is building futureproof healthcare from scratch. The UAE alone has committed $150 million to new digital health infrastructure. Across the region, sovereign wealth funds and VC firms are backing diagnostic imaging, AI scribing, surgical robotics, and wearable tech.

Critically, the regulatory frameworks are clearer and less fragmented. In the UAE, 42% of businesses already employ AI solutions, under existing, streamlined data laws designed for agility. The nation is on a mission to adopt AI where it adds value. Rhazes AI is not the only company looking East. Proximie is rolling out its surgical platform in Saudi hospitals, and Microsoft is piloting Hayat, an AI-powered personal wellness app in Dubai.

Looking at AI rules alone, Qatar sits somewhere in the middle of the UK and other Gulf nations. It actively applies EU- and US-style AI regulations – but has paired this with enormous investment in AI infrastructure. It’s forged healthy supplies of semiconductors, built new data centres, and accelerated its cloud computing services. But importantly, the nation will fast-track healthcare projects through regulatory barriers if, ultimately, it equals better outcomes for its people.

I think this is quite telling. Qatar’s position demonstrates that the UK too can create a robust regulatory environment for AI to thrive – while also protecting the privacy of its patients.  The Gulf’s vision is clear. AI will underpin next-generation healthcare. If the UK doesn’t act fast, it will fall from leader to laggard.

I know what you’re thinking – you've kept awfully quiet about the US. Don’t get me wrong, the US has ideal market conditions to scale a health AI company. I won’t ignore the fact that last year, 57% of global venture capital went to American startups, while the UK received just 4.8%. The funding firepower and “move fast” mindset in the States are real draws. But the Gulf is on the cusp on an AI goldrush, and if I could have my life again, I would still choose Doha or Dubai over Silicon Valley.

What must happen now

There’s still time to course correct. The UK’s chancellor recently pledged increased investment for digital transformation in the NHS. But AI can’t be a footnote, it must be the foundation. This means a dedicated AI healthtech strategy by 2026, regulatory reform to accelerate safe deployment, and a national data framework that unlocks, not obstructs, innovation.

In practice, this should include mandates to make different NHS systems interoperable with one another, clearer pathways for approving AI tools, and new sandbox environments where NHS clinicians can experiment with new tech.

The UK has implemented financial incentives, innovation initiatives, and tax credits, but it's barely scratching the surface. It has just become a founding member of an international health AI consortium, and I worry this will become a virtue-signalling exercise. Instead of making strong intentions, the UK needs to make AI a priority investment – not an afterthought.

Over the next decade, AI will decentralise care, shifting the power from national health services to local care providers. The countries that get the infrastructure and incentives right today will reap the rewards tomorrow. The UK can lead, but it has to stop assuming it always will.