Demand for healthcare services in Saudi Arabia will continue to rise, backed by rapid population growth, a growing aging segment, and the prevalence of long-term non-communicable diseases. While the Ministry of Health (MoH) will continue to dominate the market as a main financier, opportunities for private players will continue to emerge in all three tiers of medical care, the National Commercial Bank said in its report.
As the government shifts its focus to providing primary healthcare services through a network of over 2000 Primary Healthcare Centers, greater revenue drivers for the private sector will be in secondary and tertiary care.
The anticipated all comprehensive health insurance scheme will also act as a catalyst in propelling private sector participation forward. By end 2011, health insurance, including both compulsory and non-compulsory lines, accounted for 53 percent of the gross written premiums representing SR9.71 billion.
The NCB report said pressure within public care, such as overburdened emergency rooms and hospital beds, will continue to boost demand for private care, buoyed by higher efficiency of medical care delivery at private hospitals and the lack of specialized centers within most rural areas in the Kingdom. These factors, especially capacity saturation, will place added pressure on the market and can be met by private investment.
"While the government will continue to actively partake in the growth of the market, we foresee health expenditure for the public sector to decline to 74 percent in 2015, from its current share of 76 percent of total health expenditure, thus the Kingdom's healthcare GDP is expected to expand to SR96 billion," the bank said.
Using a likely attainable target rate of 2.50 hospital beds per 1,000 population, it is estimated an increment of 36 percent or 20,526 beds to be installed over the forecast period. The private sector is forecast to contribute 38 percent of total installed beds, or an equivalent of 7,890, representing an annual outlay of SR1.6 billion until then.
Some critical success factors of private healthcare providers are sustainable growth in key financial indicators and incentivizing and retaining skilled medical manpower. The availability of long-term financing and adequate staffing will continue to be a challenge.
Existing friction between health providers and insurance companies will continue to increase, resulting in transactional delays. Other concerns are built-in rejection quotas by insurance companies, the NCB report said.