Growth opportunities in specialised sectors of Saudi ArabiaGrowth opportunities in specialised sectors of Saudi Arabia

With an estimated population of approximately 32.2 million (based on the KSA census 2022 issued in May 2023), the Kingdom of Saudi Arabia is the largest country in the GCC. Under Vision 2030, the country is going through fundamental structural changes in all sectors including healthcare.

The healthcare sector in KSA is undergoing an evolution on the back of rapid advancements in technology and research and development (R&D) in line with global and regional trends. However, COVID-19 has also exposed the vastly diverse structure of healthcare systems and increased the importance of R&D and the provision of specialised services within generalised healthcare.

Related: Saudi Arabia navigates new frontiers in healthcare

Long-term care (LTC), rehabilitation and home care (HC) are among the main focal points for the diversification and enhancement of the healthcare system in KSA. A key driver is the changing demographic profile through a decreased fertility rate and increased life expectancy. As a result, the population above 60 years is expected to increase from 4.5 per cent in 2020 to 10.4 per cent by 2030.

This shift will have a significant impact on disease patterns and the type of healthcare services required. As almost 80 per cent of a person’s healthcare requirements typically occur after the age of 60, this will increase the demand for LTC, rehab and HC. This is especially true in the case of KSA with its high prevalence of lifestyle-related diseases including diabetes, coronary and obesity-related illnesses. These are in addition to existing demand from disabilities which also require LTC, rehab and HC.

Public Private Partnership (PPP)

Public Private Partnership (PPP), is one of the cornerstone policies of Vision 2030. A part of the Saudi government’s strategy for transforming and growing the economy by developing the overall healthcare system including LTC, rehab, and HC is through PPP.

The Saudi Ministry of Health’s (MoH) Private Sector Participation (PSP) initiatives aim to increase the share of the private sector in healthcare delivery via public-private partnership (PPP). This is focused on enhancing extended care by improving the overall provision and quality of the services. Improvement in the provision of quality long-term care is expected to not only optimise and better utilise the capacity of tertiary care hospital beds but also enhance the quality of post-acute care and home care treatments.

Development of the long-term care, rehabilitation, and home care sectors in KSA can act as a change catalyst to the healthcare sector from elderly to acute care. Though a gradual shifting of bed-bound patients from hospitals to specialised LTC and rehab facilities and ultimately treating them at home, thus reducing the pressure on both acute care, LTC and rehabilitation hospitals.

Rising interest in Riyadh and the Eastern Region

Upon the announcement of three PPP projects launched by the Saudi Ministry of Health (MoH) in cooperation with the National Center for Privatization & PPP (NCP), 200 local and international companies submitted 424 EOI for three privatisation projects for the Ministry of Health.

The projects are based in the “Second Health Cluster” in the Riyadh region, and the “First Health Cluster” in the Eastern region in Dammam. Submissions totalled 424 for all three projects, which is a considerably large number and indicative of the appeal of investment opportunities in healthcare and trust in the overall ecosystem and regulations in the Kingdom.

The response is from companies from 21 countries from Asia, Europe, Australia and North America; however, Saudi companies represented the majority of submissions reaching about 70 per cent. Around 139 companies are from 16 countries, including Saudi Arabia, the UAE, Bahrain, Kuwait, the US, Canada, the UK, Portugal, Italy, Saint Lucia, Turkey, India, South Korea, Singapore, Thailand and Australia. All expressed their interest in the first project, which includes the design, development, financing, maintenance and operation (medical and non-medical) of long-term care and skilled nursing homes with a capacity of 200 beds, and nursing care centres with a capacity of 100 beds (for each health group).

Around 131 companies from 17 countries, including Saudi Arabia, the UAE, Bahrain, the US, the UK, Canada, Kuwait, South Korea, Switzerland, Singapore, Australia, Italy, India, Portugal, Turkey, Thailand and Germany, expressed their interest to invest in the second project, which includes the design, development, financing, maintenance and operation (medical and non-medical) of medical rehabilitation hospitals with a capacity of 150 beds and 120 thousand therapy session for outpatients (for each health group).

The third project of home healthcare is in the form of a contract for the provision of medical services, for 5,000 active patients (for each health group), to which 154 Saudi and international companies from 14 countries showed interest. These countries include Saudi Arabia, the UAE, Bahrain, the US, Canada, the UK, Portugal, Italy, France, Turkey, India, South Korea, Thailand and Australia.

Gap analysis and conclusions

Due to the shortage of long-term care, rehabilitation and home care services in KSA, patients in need of long-term care utilise acute care facilities, creating a burden on acute care facilities. Based on various reports and discussions with hospital operators, patients who could be better served in LTC and rehab facilities occupy an estimated 20 per cent to 30 per cent of public hospital beds in KSA.

The cost of patients who need LTC and rehab, but are instead treated in general hospitals, is significantly higher compared to a long-term care facility. This is a crucial issue; all government budgets are under pressure while demand for healthcare continues to rise.

Related: Embracing the future: Saudi Arabia's digital healthcare revolution

Capital and operating costs of setting up LTC and rehab facilities are up to 30 per cent or less when compared to an acute care hospital. The need for infrastructure to support the provision of LTC and rehab facilities is one of the main policy drivers for various governments in the GCC. For example, Dubai has prioritised investments in setting up LTC and rehab patient services under its latest investment guide. As part of the privatisation process in KSA, the Ministry of Health is seeking to engage operators for LTC and rehab facilities and home care.

Based on Colliers' estimates using the age-standardised OECD average, KSA would require an additional 21,300 to 40,200 long-term care (LTC) and rehabilitation beds by 2035, which will require an additional investment of approximately US$11.6 billion to US$22.5 billion by 2035.

An important aspect will be improving home care (HC) services; presently, the capabilities, resources, and efficiency in home care vary across regions with limited services provided.

Due to a lack of efficient operational procedures and proper information systems, the utilisation of home care personnel remains low. An improved home care provision will reduce the pressure on both acute care and LTC and rehabilitation hospitals. The target under the PSP initiative is to increase home care coverage annually from 35,000 in 2019 to 133,000 and 145,000 by 2030.

In November 2020, the Ministry of Human Resources and Social Development (MHRSD) announced the implementation of a uniform model for elderly care in KSA in collaboration with the private and non-profit sectors. In Colliers’ opinion, this initiative is expected to improve the efficiency and quality of services provided to the elderly in the Kingdom with better utilisation of tertiary care, LTC and rehab facilities.

In 2023, the Ministry of Health Saudi Arabia, in collaboration with the National Center for Privatization & PPP, launched the Expressions of Interest (EOI) for long-term care, medical rehabilitation and home healthcare projects in the Riyadh and Eastern Region. The details of the projects are as follows:

These projects will be the first across the second health cluster (Riyadh), in the central regions and in the first health cluster (Dammam), in the eastern region. The projects aim to contribute to a key objective of Vision 2030, by increasing private sector participation in the healthcare sector. MoH and NCP announced in May 2023, that a record number of 200 companies submitted 424 expressions of interest in three healthcare Public Private Partnership (PPP) projects in Riyadh and Eastern regions.

The rise of new markets in Saudi Arabia

The greatest challenge lies in the shortage of manpower as the number of physicians and specialised nurses, and allied healthcare personnel for rehabilitation is insufficient. With new hospital developments underway, the competition to hire experienced and skilled physicians, nurses and allied workforce is further set to intensify.

Currently, the market is in its nascent stage, and many existing LTC, rehab and HC facilities lack advanced medical capabilities. As the market matures, more centres providing specialised comprehensive rehabilitation, such as neurorehabilitation, cardiopulmonary, paediatric and musculoskeletal rehabilitation, will enter the market.

Mansoor Ahmed is the Executive Director (Advisory & Valuation), Middle East & Africa (MEA) region and Head of Development Solutions — Healthcare I Education I PPP at Colliers

This article appears in the latest issue of the Omnia Health Magazine, read more here