Saudi health care sector: Where are the opportunities?
A few years ago, when one of the main Saudi health care providers went public, we were not sure if the offering would be covered. Not because of the quality of the issuer but because the timing for any offering at that time was not the best. Once the offering closed successfully, we realized that the Saudi health care sector was very promising.
A year later, my firm, BMG Financial Group, was mandated to advise on a consolidation of private clinics in the Central Region area. Apparently, there are hundreds of polyclinics across the country seeking consolidations. These clinics are profitable but not efficiently managed, hence they are looking to merge.
Saudi’s health care system comprises three service providers; the Ministry of Health hospitals, government hospitals and private hospitals. However, gaps are evident in the services offered to the public. By end of this year, Saudi Arabia is projected to require 15,888 beds. The Health Ministry has commissioned few projects to bridge the gap in health care infrastructure so, given the increase in demand, it is vital that private players’ participation is highly encouraged.
The Saudi vision is pushing for greater participation of the private sector in health care and one obvious opportunity there is the privatization of the Ministry of Health hospitals.
Basil M.K. Al-Ghalayini
Vision 2030 is aiming to optimize and better utilize the capacity of hospitals and health care centers, and to enhance the quality of preventive and therapeutic health care services. The Saudi vision is pushing for greater participation of the private sector in health care. One obvious opportunity there is the privatization of the Ministry of Health hospitals. It is stated in the National Transformation Plan to increase private health care expenditure from the current 25 percent to 35 percent of total expenditure by 2020. This represents a projected increase in revenue generated from SR3 billion ($800,000 million) to SR4 billion. In addition, the Ministry of Health plans to spend more than SR23 billion on new initiatives over the next five years.
Moving to technology in health care, recent developments in information and communication technology (ICT) have changed business models in all industries, including health care. Saudi Arabia, with its well-established ICT infrastructure, offers an excellent meeting place for IT solutions to enhance health care services offered. Saudi’s e-health policy aims to implement a program to achieve its vision of a “safe, efficient health system, based on the care centered on a patient, standard-oriented, and supported by the e-health system.”
The current situation presents a need as well as an opportunity for the development of private health care in Saudi Arabia but ensuring the smooth transition and functioning lies with the policymakers. There is a long way to go for the Saudi health care sector to mature. From creating new hospitals and privatizing public ones to consolidating fragmented polyclinics while exploring the unlimited e-health potential, I strongly believe that health care is one of the most promising sectors in Saudi Arabia.
• Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.