JEDDAH, 7 August 2006 — The health care services in the Kingdom are mainly provided by three agencies; the Ministry of Health (MOH), other governmental agencies, and the private sector. The most recent official data reveal the combine size of the Kingdom’s health care sector comprising 350 hospitals with 49,184 hospital beds in 2004. The MOH is the largest provider of health care services, followed by other governmental agencies, and private sector. In terms of hospital beds, the MOH and government agencies accounted for nearly 79.4 percent of the total capacity and the remaining 20.6 percent by the private sector.
Although the Kingdom’s health care sector saw a substantial structural expansion in the last five year, the growth in hospital beds capacity has remained at 1.43 percent annually, significantly below the 2.4 percent growth in the total population in the same period. The wide gap between the supply of hospital beds and the population growth rate deteriorated the hospital bed dependency ratio by 4.7 percent in the last four years, from 2.34 hospital beds for 1,000 persons in 2000 to 2.23 beds per 1,000 persons in 2004. This situation necessitates mobilization of more investment in the Kingdom’s health care sector.
Traditionally, the Saudi government moves forward every year with higher budgetary allocations for expanding the sector’s capacity while providing better health care services in the country. The Kingdom’s 2006 budget sought 34.2 percent increase in the state health care spending with total outlays of SR31 billion, from SR23.1 billion in the year before. The government’s firm resolve to provide better health care services to its citizen reflects from the level of higher budgetary allocations, which represented nearly 9.3 percent of the total outlays in 2006, stepped up from 8.3 percent in the year before. In order to extend access to health care services for all population centers in the country, the MOH this year has initiated 30 developments projects across various regions of the country. These include the construction of 9 general and specialized hospitals and 2 health science colleges. In addition, the MOH has finalized the designs and plans for construction of a huge health care complex in the Holy city of Makkah, which will have a modern hospital with a capacity of 500 beds, and two separate buildings for health science colleges for males & females.
Moreover, the 2006 Saudi budgetary allocations seek establishing 440 primary health care centers in all the 13 regions of the Kingdom. The cost of these projects is initially appropriated to reach more than SR1 billion.
The long-term prospects of the Kingdom’s health care sector are clearly defined in the current five year Development Plan.
The ongoing 8th five-year Development Plan (2005-2010) seeks to expand bed capacity at 54 hospitals with installation of 6,200 additional beds, besides building of 42 new hospitals with combined capacity of 9,200 new beds across various regions of the country. The Plan also seeks to build 1,250 MOH new primary health care centers in all the regions in the country including the up gradation of 15 existing hospitals currently having capacity in the range between 50 and 500 beds.
The MOH’s portion of the Saudi budget has been increasing by 11.6 percent a year from 1999 to 2006, reaching SR23.1 billion in 2005, a 28 percent increase from the previous year. This reflects the Saudi government’s firm commitment for providing better and adequate health care services free of charge for Saudis and eligible expatriates. The MOH and Red Crescent Society together would receive around 80 percent of the total expenditures allocated for the health care and social development sector, about SR24.8 billion .
After the industrial sector, the Kingdom’s health care sector is the largest job provider, employing both Saudis and nonnatives. Health care manpower consists of physicians, nurses, pharmacists, allied health personnel, and administrative staff workers. Total numbers of physicians in the country was 38,496 to serve 22.67 million people, which gives Kingdom’s average physician-population ratio of 17 per 10,000 people in 2004. Nearly 22 percent of the total strength of physicians in 2004 was Saudi nationals and the remaining non-nationals originating from several countries.
The MOH provided employment to 17,623 physicians, which represented nearly 46 percent of the total number of physicians working in the country. Saudi native physicians with the MOH health care sector represented nearly 20 percent of the total physicians employed by MOH in 2004. Nursing staff is the second most important group of health care services employees. Of the 74,114 nurses only 21.5 percent were Saudis while the concentration of Saudis was highest 49.1 percent in the area of allied health services staff in 2004. Again MOH hired the largest number of nurses in the country, representing nearly 51.3 percent of the country’s total nursing staff in 2004. There were nearly two nurses for each physician serving in the health care sector in Saudi Arabia.
Saudization in the health sector remains extremely difficult with only 26 health institutions available in the Kingdom, and with the low quality training programs for medical staff either in the private or the government institutions. The nationality composition of the private sector health care staff is more skewed toward hiring of non-Saudis, representing nearly 95 percent for physician, nurses 97.4 percent and allied health care services personnel about 88.5 percent in 2004. The high dependency ratio of non-Saudis for health sector employees in the private sector is due to the low cost of non-Saudis employees.
MOH is the major provider of health care services with aggregate capacity of 28,751 hospital beds, representing nearly 58.45 percent of the Kingdom in 2004. The major center of MOH services activities is the Western Region including Jeddah, Makkah and Madinah with the combined total capacity of 9,501 beds (33.1 percent) in 2004, followed by Central Region 7,368 hospital beds and represented 25.6 percent, and Eastern Region with 3,288 beds accounting for 11.4 percent of the MOH total in the Kingdom. Chart 3 exhibits the concentration of MOH hospitals by the Kingdom’s regions.
The Kingdom’s total hospital capacity has been mainly located in the Western Region with 14,048 beds, represented 36.1 percent of the total, followed by Central Region 23.9 percent and Eastern Region 15.9 percent of MOH and Private Sector’s total.
The private sector, with aggregate capacity of 10,133 hospital beds in 2004, shares nearly 21 percent of the Kingdom total capacity. The prime concentration of the private sector hospital bed capacity is the Western Region, with a total of 4,547 beds and represented nearly 45 percent of the private sector’s total capacity in the Kingdom. In aggregate, excluding the other government hospitals due to their restrictive health care services, health care services are primarily concentrated in the Western Region.
The Kingdom’s average sickness rate or morbidity ratio was 4.93 percent, compared with 4.69 percent in 2000. Giving that the hospital beds dependency is equal to 2.23 beds per 1,000 people (1 bed available for 447 people), Hospital Admission Rate (HAR) is 10.32 percent and the average days stay at health facilities is 7.7 days. Based on the current HAR and the average days stays in the Kingdom’s hospitals, the country would require a total hospital bed capacity of 74,000 beds by 2010, suggesting an incremental demand for new hospital beds of around 25,000 between 2005 and 2010.
Ongoing MOH plans dim to enhance the existing capacity from 28,751 beds to 55,000 hospital beds by end 2010. This would necessitate mobilization of investments for new hospitals with combined incremental capacity of 26,250 new beds between 2005 and 2010. Based on an average investment of SR850,000 per hospital beds, total capital investment for the planned expansion is estimated at SR22.3 billion between 2005 and 2010. This gives average investment of around SR4.5 billion annually .
A new Cooperative Health Insurance Scheme laid out by the Health Insurance Council on entire Saudis and expatriates have created new investment opportunities. The three-phase implantations program is set to start from this month. In the first phase, companies with 500 or more employee workers will implement the scheme for their expatriate’s staff. In the second phase, the coverage will be extended to those companies having minimum employment size of at least 100 workers and less than 500 workers. In the third stage, the mandatory health insurance scheme will be applicable to all companies operating in the Kingdom, which is further extended to individual families having domestic servants.
The Cooperative Health Insurance Scheme is expected to fetch SR30 billion worth investments and would provide jobs for a large number of Saudis in the categories of secretary, accountant and various medical jobs. The Saudi Arabia or the Kingdom’s health insurance market is currently estimated at SR8 billion, and is expected to cross SR18 billion in the next five years. The private sector can take advantage of this incentive policy by expanding its existing capacity to meet increasing demand for health care services.
(Dr. Said Al-Shaikh is chief economist at the National Commercial Bank, Jeddah.)