“Huge” strides have been made in healthcare reform in Saudi Arabia over a very short period, consultancy firm Colliers International said in a report on Monday.
“Likewise, the institutional and regulatory architecture to enable private sector investment has also made significant progress,” the report said.
Developing the healthcare sector is one of the aims of Saudi Arabia’s wide-ranging reform plan Vision 2030, which was initiated in 2016.
With the introduction of legal reforms and economic incentives, including 100 percent foreign ownership, the healthcare sector is now amongst the most attractive to the private sector, Colliers said.
Expenditure on health and social development has more than doubled to 172 billion riyals ($45.9 billion) in 2019, from levels seen in 2011. “This highlights that the healthcare and education sectors are prioritized by the Saudi government,” the report said.
Saudi Arabia put in place Mandatory Healthcare Insurance (MHI) in early 2000. Within five years, all expatriates working under the private sector were covered.
In 2016 and 2017, a Unified Health Insurance was implemented in four phases, and currently there are around 11.5 million beneficiaries including Saudi Arabian nationals and expatriates.
“Further implementation of mandatory health insurance will eventually reduce the burden on public sector healthcare facilities and create opportunities for the private sector,” Colliers said.
“The emergence and potential dominance of the insurance market may also drive, as seen in many other markets, the need for more cost-effective practices and greater efficiencies in the sector,” it added.
More beds needed
Despite Saudi Arabia’s progress in the healthcare sector, the country will require 29,000 to 47,500 additional hospital beds by 2030, according to the report.
This will translate to an additional investment of $16.2 billion to $26.3 billion, said the consultant, which expects most of this money to come from the private sector or public private partnerships (PPP).
Another option could be unlocking the investment in healthcare real estate by creating REIT funds, Colliers said.
Earlier this month, Knight Frank Middle East said there was room for improvement in Saudi Arabia’s Long-Term Care (LTC) sector and estimated that at least 7,000 beds are required to meet current demand levels.