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Deloitte: Private sector investments needed for healthcare in Saudi Arabia

-Deloitte: Middle East healthcare sector evolving to address growing demand with Saudi Arabia leading the way

10 July, 2013 – Private sector contributions and investments are increasingly needed to respond to a growing healthcare demand, Deloitte healthcare experts say. As the official Knowledge Partner for the Hospital Build and Infrastructure Middle East Exhibition & Congress in Dubai this month, Deloitte healthcare advisors shared a series of presentations which took a closer look at the healthcare market and identified the need for further private sector contributions.

Deloitte healthcare experts discussed the challenges and opportunities facing the Saudi healthcare sector with in-depth focus on the key areas such as the demand drivers fuelling growth, the mega projects and medical cities in development across the Kingdom, the incentives being offered to private investors, as well as new opportunities for additional private sector investments. They further shared their analysis of the market identifying Saudi provinces that are most undersupplied in terms of beds and facilities and consequently offer attractive opportunities for additional private sector investments.

 “We find that the healthcare sector across the Middle East is evolving to meet growing demand, and Saudi Arabia is leading the way. The Saudi government is heavily subsidizing the healthcare sector which will yield considerable results,” said Dr. Hassib Jaber, regional healthcare consulting leader at Deloitte in the Middle East. With healthcare expenditures per capita in Saudi Arabia expected to grow at CAGR of 6.9% between 2012 and 2016, to reach SAR  4,000, the need for private sector investment becomes all the more apparent.”

The Deloitte presentation of the healthcare infrastructure across main Saudi Arabian provinces revealed the following shortages:

• In terms of physicians per 1,000 population working in private medical centers/dispensaries, Jazan is significantly below the national Saudi Arabia average indicating insufficient provision of primary healthcare services by the private sector
• In terms of private hospital beds per 1,000 population, the Northern border, Jazan and Al Jouf regions are significantly below the country average indicating insufficient provision of secondary healthcare services by the private sector.
• Private sector contribution in the primary and secondary healthcare markets is heavily concentrated in 3 main provinces: Riyadh, Makkah and the Eastern regions. These make up approximately 66% of the population.

The increasing demand for quality healthcare and the rising expenditures associated with it should provide many opportunities for increased private sector investments. However, the Deloitte presentation finds that private contributions to mega projects and new hospitals remains relatively low, with only 9 private healthcare projects announced publicly out of an estimated 125 upcoming projects.

Deloitte experts predict that the private healthcare industry will move from its current “Emerging” stage – where private sector contribution is increasing although it remains quite small as compared to public sector contribution – to an “Evolving” stage – where private sector contribution will overtake the same share of the public sector and where there will be growing interest in secondary and tertiary healthcare provision.

“The move from an Emerging stage to an Evolving one comes with many challenges, namely the shortage of healthcare professionals, with private and public sector competing to retain talented resources” added Jaber. “Further challenges include a shortage of Saudi health professionals leading to the hiring of expatriates, and the difficulty in creating a supporting legal, operational, and financial environment to encourage public-private partnerships”.

The Saudi government is encouraging private sector contribution in the healthcare industry through several means, including the implementation of strategic initiatives in order to drive the industry to the desired levels and reduce the financial burden on the public sector. The following incentives were identified in the Deloitte analysis:

• Conducting studies to assess the feasibility of privatization initiatives for enhanced quality healthcare provision by the private sector
• Encouraging private sector participation via offering attractive incentives especially for Saudi investors, such as granting them interest-free loans for healthcare projects (hospital projects up to USD 53.3 million) to be repaid over 20 years with a grace period of 5 years
• Implementing a patient-centered health care system aiming to meet patients' quality expectations
• Enforcing mandatory private health insurance to achieve high health care quality level for all insured parties
• Introducing awareness subjects on preventive care, nutrition, and health behavior among the youth
• Proceeding with the 9th development plan allocating SR 273.9 billion for various health initiatives and encouraging private sector participation in the provision of healthcare services

Posted by : Dubai PR Network Editorial Team
Viewed 18349 times
PR Category : Banking & Investments
Posted on : Wednesday, July 10, 2013  4:27:00 PM UAE local time (GMT+4)
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