Building up: New facilities fortify the health care infrastructure

The public health sector has a budget of SR108bn ($28.8bn) for 2014, and across the country new medical facilities are being built. In the budget, the Saudi government announced that 16 new hospitals had been completed in 2013. Construction of another 132 facilities is already under way, and work will start on 11 new hospitals, two medical complexes, 11 medical centres and 10 comprehensive clinics in 2014.

NATIONAL PLAN: Saudi Arabia’s health care system has been criticised in the past for concentrating too much on facilities located in Jeddah and Riyadh, leaving behind more remote parts of the Kingdom. A 10-year development plan running from 2010 to 2020 aims to create five tertiary or quaternary hospital hubs, with Riyadh in the centre, Makkah in the west, Asir in the south, Dammam in the east and Al Jouf in the north. Radiating out from these medical cities will be networks of smaller hospitals and primary care practices. These five medical cities are meant to operate on a “wheel and spokes” model for the tertiary medical sector in terms of both medical outreach and education. “The idea of the spokes is that they have been planned to cover the different areas of the Kingdom with as little duplication as possible to reduce wastage of resources. There are some exceptions, such as trauma surgery, where life and death treatment needs to be available. Decisions on services are made using the best epidemiological data that we have and taking into account age variation,” Mahmoud Al Yamany, CEO of King Fahad Medical City (KFMC) in Riyadh, told OBG.

MEGA-PROJECTS: Translating the medical imperatives into bricks and mortar is a multibillion-riyal exercise built around hundreds of smaller construction projects. However, the five medical cities being spearheaded by the Ministry of Health (MoH) are mega-projects. The King Abdullah Medical City in Makkah contract is worth SR4bn ($1.1bn) and four firms were tendering for it: Al Rajhi Holding, China State, Construction El Seif and Saudi Binladin. The scheme includes a 150-bed cardiac centre, a 100-bed centre specialising in surgery and organ transplants, and a 200-bed cancer treatment and surgery unit. At KFMC in Riyadh contractors have been work on two 12-storey buildings and two fourstorey buildings to house a 50,000-sq-metre National Neurosciences Institute, a 55,000-sq-metre cancer centre, a cardiac centre and a central services building. The SR1.6bn ($426.6m) contract is being carried out under a joint venture between Habtoor Leighton, the Middle East and North Africa arm of Australian project management firm Leighton Group, and the Saudi construction firm Latifia Trading. In a separate contract at KFMC, Habtoor Leighton is also building a SR278m ($74.1m) proton therapy centre to give Saudi Arabia access to the most advanced cancer treatment therapy in the region.

REGIONAL SPREAD: In the south-west of the country, a SR1.9bn ($506.54m), two-phase scheme is being carried out to build the King Faisal Medical City in Asir. Phase one of the project, a 500-bed hospital, is already being built by Al Fouzan Trading and General Construction, while the remainder of the contract, for a 850-bed hospital building and associated facilities, is in the design phase. Al Fouzan Trading and General Construction has also been commissioned to build a 500-bed SR720m ($191.95m) specialist hospital in Jizan.

King Khaled Medical City in Dammam in the east is a SR4.5bn ($1.2bn) project to build a city with a 1500-bed hospital, research centre, staff accommodation, conference centre, mosque, administrative building, car parking structures and community centre. Global US engineering firm Aecom is working on the architecture, engineering and design for the project.

In Al Jouf, in the north-west of the country, Al Fouzan Trading and Construction is undertaking the first part of a two-phase, SR1.18bn ($314.6m) contract to build two 500-bed hospitals that will form the Prince Mohammad bin Abdulaziz Medical City, a complex that will employ 6000 people on a 200-ha site.

However, the biggest mega-project currently under way in the GCC is split between Riyadh and Jeddah, where the Ministry of Interior is funding construction of two medical cities, both known as King Abdullah bin Abdulaziz Medical City, each with a 1000-bed capacity for security forces and their families. ABV Rock, with sub-contractors Saudi Canadian, Bin Dayel Metwali Khalia and Hassan Alla, won the construction contract for the SR25bn ($6.7bn) scheme for both complexes.

INTEGRATION: Although these major construction projects, as well as hundreds of smaller ones, will increase the quantity of beds and hopefully improve the quality of care, coordinating MoH hospitals with those such as the new Ministry of Interior complexes will be a challenge. “The Kingdom’s medical treatment facilities need to work in closer coordination to create an integrated health system. By having hospitals specialise in specific areas, we can minimise redundancies, thereby reducing overall health costs,” Saleh Al Tamimi, CEO of King Saud Medical City, told OBG.

MORE BEDS: According to MoH figures for 2012, there were 435 hospitals in the Kingdom, including 259 run by the MoH, 39 government infirmaries and 137 in the private sector. This represented a total increase of 42 new hospitals, up 10.7% from 2008 to 2012. There were 61,036 hospital beds, of which 35,828 were MoH, 11,043 were managed by other state entities and 14,165 were private. From 2008 to 2012 7148 beds were added. The 2014 budget reveals that at the start of the year 132 hospital construction projects were under way with a capacity of 33,750 beds, while work on the medical cities was set to provide another 6200 beds. In addition, 16 new hospitals were completed during 2013, providing 3700 more beds. Looking ahead, 11 new hospitals, two medical complexes, 11 medical centres and 10 comprehensive clinics are planned for 2014.

PRIVATE HOSPITALS: While the government is funding the surge in public health spending, some private hospital groups in Saudi Arabia have turned to the stock market to finance expansion. According to Reuters, Sulaiman Al Habib Medical Group and Almana General Hospitals are planning initial public offerings (IPOs) for 2014 or 2015. Dallah Health raised SR540m ($144m) in an IPO at the end of 2012, while National Medical Care’s March 2013 IPO raised SR175m ($46.7m). The health complications that are being caused by the high incidence of non-communicable diseases, coupled with the country’s growing population, suggest that financial prospects for private hospitals should be healthy. These firms would clearly be helped if the country’s 1m public servants and their dependants were given free health insurance, as has been suggested by the government. However, in the meantime, joint ventures with international health sector businesses may also help expansion plans. “We are always interested in hearing from outside investors, but we are not interested in venture capitalists,” Othman Abahussein, the CEO of National Care, told OBG. “We want people who can bring knowledge and expertise, and in return we can offer knowledge of the market and a local presence.”

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The Report: Saudi Arabia 2014

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