Healthcare Overview

Sourced from Colliers.com
With an estimated population of 26 million residents with an annual growth rate of 2.2%, the Saudi Arabian healthcare sector caters to a rapidly growing population and the concurrent increasing demand on the healthcare sector. 

Overall the supply of healthcare facilities struggles to keep pace with the burgeoning population, a situation recognised by the Government who have recently introduced initiatives to encourage the private sector to match the shortfall and benefit from this potentially lucrative sector. The Healthcare sector in the Kingdom of Saudi Arabia is primarily managed by the Government through the Ministry of Health (MOH) and number of semi public organisation who specifically operate hospitals and medical services for their employees. In addition, private sector operators are also playing a key role in providing quality healthcare services in the Kingdom.

The Saudi Healthcare sector is structured to provide a basic platform of healthcare services to all, with specialised treatment facilities offered at some private and public hospitals. Colliers International Healthcare Overview provides a brief snapshot of the key factors impacting the Saudi Healthcare sector and the future outlook.

Demographic Overview of the Kingdom of Saudi Arabia

• KSA has the largest and fastest growing population in the GCC. The Central Department of Statistics and Information (“CDSI”) estimates the total KSA population will reach 31.6 million by 2016, of which 22.8 million will be Saudi nationals (Colliers estimation for 2016 is 30 million out of which an estimated 22 million will be Saudi). The expanding population, coupled with rising average income, will continue to feed demand for infrastructure and services, particularly in energy, water, telecoms and technology, housing, health, education, and financial services (Refer to Exhibit 1).

• Males in Saudi Arabia constitute 55% of the total population, the majority of which belong to the 30-34 years of age category, a category between Generation X (1965-1980) and Generation Y (1981 and thereafter). The population below the age of 34 years accounts for close to 60% of the total population in the Kingdom.

• The rapidly growing young population is one of the key factors driving demand for the real estate/ healthcare sectors and the reduction in the average family household size.

• As of 2009 (the latest available governmental statistics), the labour force comprises 53% of Non-Saudi and 47% Saudi Nationals. The multiplier effect of Saudization will likely improve Saudi employment statistics
Key Players Ministry of Health (“MOH”): Approximately 60% of all hospitals within the Kingdom are owned and operated by the MOH (Refer to Exhibit 2). These hospitals provide basic healthcare services, as well as, in certain cases, specialised facility centres. MOH facilities are increasingly being made available mostly to Saudi Nationals only with accessibility to expatriates in majority of cases restricted to specialised treatments except in rural areas where private sector facilities are not present. With MOH facilities slowly being restricted to only Saudi Nationals, the 5.5 million of expatiates (half of which are concentrated in Riyadh and Jeddah) within the
Kingdom are being forced towards the private healthcare sector.

Other Governmental Organizations: Health treatment in other government and quasi organizations is effectively free for employees, typical organizations would include The National Guard, Ministries of Defence and Aviation and the Royal Commission.

Private Sector: Historically most of the outpatient treatments were provided by the private sector. However, increasingly inpatient treatments are also being provided by the private sector due to the high demand and the restrictions placed on entry to MOH facilities. With access increasingly limited to MOH hospitals, most of the expatriates seek treatments at the growing number of private hospitals.

Conclusions
• The Government of Saudi Arabia continues to allocate a large pool of funds towards the development of the healthcare sector along with providing initiatives for the private sector operators to enter the healthcare market in the Kingdom.
• The surge in population, which shows no sign of slowing down, further contributes towards strong fundamentals for growth and the evident supply gap.
• Private hospitals will continue to play an even more important and crucial role within the Kingdom. Emergence of lifestyle related diseases such as diabetes, hypertension, obesity, heart (cardiovascular) and kidney (dialyses) has created new opportunities for growth and the private sector is gradually expected to play the role of main providers for these segments.
• The delivery of healthcare in the Kingdom and around the world continues to evolve as the needs of healthcare provider become increasingly complex. Trends and industry changes requires investors and operators of healthcare facilities to make challenging decisions. Despite improvements in healthcare systems across the Kingdom, the healthcare sector still offers significant opportunities for investors / operators. We believe that
due to strong growth fundamentals coupled with the increasing population and regulatory changes the sector is expected to experience robust growth in the foreseeable future.

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