From expanding primary care to providing more beds and establishing medical cities throughout the country, the private sector is set to play an important role in Saudi Arabia’s ambitious plans to transform health care provision.

As set out in its Vision Realization Program, one of the Kingdom’s key health care priorities is to activate private sector participation by advancing the public-private partnership model. It aims to shift the role of the Ministry of Health from the provider of health care to regulator while increasing private sector contribution to total health care spending from 25 percent currently to 35 percent by the end of this decade.

The growing appetite for private sector investment and expertise also reflects the government’s goal to increase health care capacity and introduce a new model of care in response to pressing demographic and economic challenges.

With the elderly population expected to double by 2030, there is a likelihood of an increase in noncommunicable diseases. 

Expanding mandatory insurance coverage will also intensify pressure on service delivery in the coming years. The Kingdom is rapidly transforming its health care system as part of Vision 2030, the country’s long-term economic and social program to reduce its dependence on oil revenues.

It strives to promote public health and prevent diseases by implementing modern health care practices while ensuring transparency and financial sustainability.

In light of this, the government recognizes the potential to pursue expenditure efficiency and rebalance spending in strategic public-to-private initiatives that will enhance the quality of services provided to the population.

The private sector’s capability to drive operational efficiency and expertise in innovative, value-based care models are seen as one of the pathways to achieve that.

Unlocking the opportunity

In recent years, the Saudi government has strived to put the institutional and regulatory framework in place to enable investment in health care and accelerate privatization.

The Kingdom introduced legislation such as a reform in 2017 that allowed 100 percent foreign ownership of health care institutions.

In 2021, a long-awaited Public Sector Participation Law set out changes to the regulatory environment in which PPP and privatization are undertaken.

By positioning the health care industry as an attractive sector for PSP, these measures support another objective of the government’s Vision 2030 plan, which is to increase the inflow of foreign direct investment to 6 percent of the country’s gross domestic product by 2030 while diversifying its economy.

However, despite these welcoming efforts, there are still opportunities to unlock the potential for private sector participation in the Kingdom’s health care system. These include focusing on market visibility in the system’s current and future health care assets and the scale of each commercial opportunity, which remains scarce.

Transparency in commercial processes must be fostered to enable a consistent and reliable investment process that drives investors’ interests.

There is also a need to improve the accessibility of the existing ecosystem, which includes multiple structures and bodies with often duplicating roles, making it complex and challenging for investors to navigate.

Accountability is another area that needs attention. P2P needs to be managed frictionless and transparently to avoid causing concerns in the population, requiring flexibility from the private sector.

Identifying digital transformation priorities is critical to attracting the private sector players that will take health care provision to the next level.

There is also a need to streamline and simplify existing processes to respond to the sector’s changing needs besides adapting to deal dynamics while creating and capturing value.

The way forward

One proposed approach to address those challenges and further activate private sector investment in health care in the Kingdom is introducing a health care investment platform.

The platform, which the government authority would leverage, is designed to function as a hub for regional and foreign investors looking to invest in the sector, helping evaluate the opportunity and guide them through the deal lifecycle and

investment process from start to finish. The platform’s potential lies in allowing a better understanding of investment assets to enable realistic capital budgeting and accurate valuations of each asset.

In addition, it can help mitigate the risk of failure in one specific region or operation. As investments materialize, the hub could provide other services such as ongoing monitoring of investments, performance improvement or technology support services.

Another feature of the proposed platform is its ability to connect government decision-makers, investors and assets such as hospitals, departments within hospitals or public health centers on the ground, creating more transparency and trust for all the involved parties. The dialogue between external and internal stakeholders within the structure should also help motivate performance and the collection and analysis of data.

Potential benefits of the platform, including valuation and marketing of the assets, would be enhanced to a great extent due to the novelty of the investment platform. In addition, it will attract regional and foreign investors by creating transparency and mutual trust through a consistent, clear and reliable investment process and support the Ministry of Health in accelerating the transition toward a regulatory role.

Facilitating private involvement through a dedicated platform could impact care provision in the Saudi health care ecosystem — all while providing long-term growth prospects for investors and attracting foreign investment to the country.

• Karim Benhameurlaine is managing director of Alvarez & Marsal.

• Ali Ayach is senior director of Alvarez & Marsal.