Saudi health care: Where are the opportunities?
Following my article last week on the Saudi health care sector, many readers approached me wanting me to tackle the sector’s various subtopics since health care is one of the main focus areas of Vision 2030 and will undergo big changes. Here is part two of my health care series which will continue for several weeks.
Saudi Arabia has one of the fastest-growing populations in the region, indicating a spiraling future demand for health care facilities. Despite huge government spending, health care infrastructure needs to be elevated to match international standards. In terms of efficiency of health care systems around the world (based on life expectancy, health care expenditure as a proportion of GDP, and health care costs per capita), Saudi Arabia is ranked 29th, lagging behind countries such as the US, UK and Singapore.
From 2014, free health care in government hospitals has no longer been available to Saudi nationals working in the private sector. The growing population coupled with these new restrictions highlights the potential for rapid growth in the Kingdom’s health care market.
Significant deficiencies exist in the availability of many medical departments, such as cancer treatment, transplants, autism services and many more. Many Saudi patients travel for treatment abroad as their diseases cannot be treated in the Kingdom.
The four most typical motives identified for why patients travel abroad to receive medical treatment were affordability (costly in home country), accessibility (waiting period is long), better quality (care and support services are better) and availability (not available in the home country).
Saudi Arabia’s National Transformation Plan will reduce outbound medical tourism. It plans to substantially privatize the health care sector, establish public-private partnerships, develop new domestic health care programs, and incentivize the Kingdom’s partners abroad to invest in domestic health care.
The government is encouraging private players in health care, and as new facilities are built, reasons for going overseas will reduce. The man behind the National Transformation Plan, Crown Prince Mohammed bin Salman, has said that treatment programs abroad will be replaced by local ones.
Out of total allocations of SR890 billion ($237.3 billion) in the 2017 budget, released at the end of 2016, health and “social development” account for SR120 billion ($32 billion), an increase of 15 percent on the previous year.
Much of this spending is aimed at boosting infrastructure, including plans for 38 new health centers with 9,100 hospital beds. This comes on top of 23 new hospitals and 4,250 beds added last year.
Witnessing the rising demand for health care services coupled with the Saudi government’s initiatives for private-sector participation, I believe that the business climate is ready to drive expansion in the sector and will open new doors for local and international investors. Being in the investment banking arena, I can see my clients’ growing appetite for the Saudi health care investments.
Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.