Saudi Arabia's health care privatisation plan sees strong interest from local and foreign providers

In February 2018 the Ministry of Health (MoH) announced plans to establish a holding company and five regional subsidiaries to enable privatisation of the sector. Under the plan, the MoH would transition to becoming a regulator rather than a direct provider of health services. The aim of the restructuring was initially to have 15 hospitals and 100 primary health care centres operating in a competitive market. Once the new structure is in place, this would position the government to transfer ownership of the hospitals to private companies. In the longer term a total of 290 hospitals and 2300 primary health centres are planned to be privatised by 2030. Officials also spoke of the possibility of forming clusters of regional hospitals that could each come under the supervision of a single operator. In early 2018 Tawfiq Al Rabiah, minister of health, issued an order to establish one such unit, grouping four hospitals and 11 health centres under the supervision of a consultative council at King Abdullah Medical City in Makkah. “Patients are now able to use medical cities located outside their place of residence. This will encourage the implementation of high-quality technology and training among clusters of hospitals and health centres, allowing them to cater to a larger number of patients,” Dr Mahmoud Al Yamany, CEO of King Fahad Medical City in Riyadh, told OBG.

Plan of Action

The MoH also announced plans to create an electronic health information system, which will link all primary health centres, pharmacies, and public and private hospitals. In April 2018 the MoH confirmed that under the privatisation plan, citizens would continue to receive free health care, and private operators would also have to meet minimum standards of service quality and efficiency. It is hoped that the combination of restructuring, privatisation and competition could increase overall efficiency by 25% by 2021.

As of early 2019 the exact timing of the sector privatisation programme had not yet been defined. In December 2018 Mohammed Al Tuwaijri, the minister of economy and planning, said that the first raft of privatisation projects, ranging from grain storage to health care and water desalination, would eventually be worth a total of $200bn and will be finalised over a six-month time scale. Although he did not specify which, the minister reported that the government had received expressions of interest from Asian and European companies. The health sector is one of the most attractive areas for privatisation opportunities under the Vision 2030 programme. As part of the Kingdom’s efforts to increase foreign investment, foreign investors will be allowed 100% ownership of hospitals and other entities, and current restrictions – such as those preventing hospital owners from investing in other health care institutions – will be relaxed.

Private Interest

Many private sector providers see Saudi Arabia as an attractive market. Prasat Manghat, CEO of UAE-based NMC Health, told local media in late 2018 that the company aims to increase its presence in the Kingdom. It entered a joint venture with Hassana Investment, a subsidiary of the Saudi state-owned General Organisation for Social Insurance (GOSI), to provide medical facilities, aiming to increase the number of beds from 1500 to 6000 over the next five to seven years.

NMC and GOSI are planning to invest SR6bn ($1.6bn) and create 10,000 jobs over the next five years. According to Manghat, the Gulf region offers significant opportunity for private health providers, but Saudi Arabia – the region’s largest market – is particularly ripe for investment. Within the region, health insurance is set to expand from a very low base. Manghat attributed this to the large population under the age of 20, who may soon be interested in parenthood, as well as the ageing population created by rising life expectancy rates. In 2018, 8% of the region’s population was over 65 years of age. “From any health care perspective, whether it is ageing, changing lifestyles and their associated disorders, or reproduction, there is likely to be a big uptake in health care and medical services,” he said.