Government expenditure on health and social care in Saudi Arabia has more than doubled in the last five years. In 2014 the state health sector will receive SR108bn ($28.8bn), as compared to the SR52.3bn ($13.94bn) earmarked for 2009. The year-on-year increase in budget allocation is 8%, the second highest of any sector reported, and its share of total government spending is 12.9%. From 2008 to 2012 there was also a 24.7% rise in the number of private hospital beds in the Kingdom. In line with a 10-year plan launched in 2009, Saudi Arabia’s aim is to ensure its health care offering meets the growing and changing needs of its citizens. Its challenge is to serve a young population, which is expanding at a rate of 2.7% a year, according to the Central Department of Statistics and Information (CDSI), and one that increasingly suffers from non-communicable lifestyle-related diseases.
MARKET STRUCTURE: With the exception of emergency admissions or life-threatening illnesses, the state sector in Saudi Arabia provides free care exclusively for the country’s 20m citizens. According to the latest figures from the CDSI, there are 9.35m foreigners living in the Kingdom, and they are required to have company health insurance to cover treatment in the private sector. The majority of state hospitals and primary care centres are run by the Ministry of Health (MoH), but there are several other state medical institutions associated with universities or government departments and larger state-owned enterprises such as the Saudi Arabian Oil Company and the Saline Water Conversion Corporation, which provide hospitals and treatment for employees and their dependants. In 2012 59.5% of hospitals were MoH, 31.5% were private and 9% were run by other state institutions. The government is encouraging the private sector to play its part in ambitious expansion plans, but firms must be partly Saudi-owned and insurers cannot own hospitals or clinics.
HEALTH INFRASTRUCTURE: The latest official MoH figures covering 2012 show there were 435 hospitals, including 259 run by the MoH, 39 other government infirmaries and 137 in the private sector. There were 61,036 hospital beds, of which 35,828 were MoH, 11,043 were other state and 14,165 were private. According to the Ministry of Finance, an additional 16 state hospitals were completed in 2013, which meant there were 3700 more beds at the start of 2014. The 2012 figures showed an overall bed rate of 20.9 per 10,000 people, a slight improvement on the 20.68 recorded a year before and still below the figure of 22.1 from 2007. At the end of 2012 there were also 2259 primary health care centres, 2168 private polyclinics or dispensaries and 198 private clinics.
Given the investments being made in the public health sector of late, there should be noticeable improvements in the next two years. Ongoing construction projects will see a 93% increase in state hospital bed provision from 46,871 beds at the end of 2012 to 90,521 when building work on current hospital sites ends. From 2008 to 2012 the number of private sector beds grew by 24.7% and 297 new private health dispensaries were opened, a rise of 16%.
DOCTORS & NURSES: At the end of 2012 there were 71,158 physicians working in the Kingdom, 35,841 them for the MoH, 13,198 in other state facilities and 22,479 in the private sector, including 333 in private clinics. There were 24.4 doctors per 10,000 people.
There has been a steady rise in the number of family doctors and practice nurses as a proportion of population. Of the total number of physicians, 15% or 10,666 were general practitioners at the end of 2012. In primary health care centres there were 2.9 doctors per 10,000, up from 2.3 in 2008, and 5.59 nurses, up from 5.2 in 2008. Across all sectors, the number of physicians increased by 33.9% and the number of nurses by 37.9% from 2008 to 2012, according to MoH figures. Human capital is at a premium as the nation’s health infrastructure expands. “The biggest challenge facing the sector is how to secure enough skilled manpower,” Saleh Al Tamimi, CEO of King Saud Medical City, told OBG. “We can build as many hospitals as we need, but this requires maximum efficiency in how the sector’s human resources are utilised. Hospitals have to share their skilled manpower, especially physicians.”
While the principle concern for state sector management may be recruitment of high quality staff for its rapidly expanding hospitals, the individual cost of each staff member has also risen in line with government pay increases, and the impact has been felt keenly in the private sector. “Physicians have seen their pay go up by 20-35% since 2011 and other medical staff have seen rises of 15-20%,” Othman Abahussein, CEO of National Medical Care, a private hospital firm, told OBG. “This affects the profitability of private hospitals. In 2013 our revenue increased, but our profits went down.”
SAUDI STAFF: As health service administrators look to fill vacancies at new and expanding hospitals, they are also making some headway in employing more Saudi nationals. From 2008 to 2012 the proportion of Saudi doctors rose from 20.8% to 23.8%, an increase of 14.4%. Among nurses there was a 24.4% rise from 29.1% in 2008 to 36.6% in 2012. For other health care professionals, there has been a significant increase of 18%, from 61.2% to 72%. “It is strategic to invest in young Saudi physicians and health professionals and provide them with the best training, especially those willing to work outside of the three big cities,” said Al Tamimi.
NURSING CONFERENCE: Efforts are being made to encourage more young Saudis to enter the nursing profession via events such as the second Saudi Health Nursing Conference held at the Riyadh International Convention and Exhibition Centre in May 2014. Its chairperson, Jane Wilshaw, the executive director of nursing services at King Fahad Medical City (KFMC), told local media that the aim of the conference was to help young people adopt the profession and overcome societal concerns. “In KFMC, we have embarked upon a Saudiisation programme to motivate more nationals to join our nursing team,” said Wilshaw. “Under the programme, we send qualified undergraduates abroad so that they can obtain an international bachelor’s degree in nursing,” with KFMC’s goal being to achieve a 30% Saudiisation ratio in its nursing faculty by 2020, she explained.
MEDICAL SCHOOLS: To meet this demand for local talent, the country’s universities, medical, dental and nursing schools have an increasing supply of newly qualified doctors, dentists and nurses, 99% of whom are Saudis. MoH figures show a 100% increase in numbers of graduates with a health or health-related major between 2008 and 2012. In 2012 the country’s 28 colleges of medicine, of which six are private, graduated 1772 people, while its 19 dental colleges, including seven private institutions, produced 369 graduates, and there were 454 graduates from nursing colleges.
In 2011 19,062 were also studying for medical qualifications abroad under the King Abdullah Scholarship Programme. While many Saudi medical staff may spend part of their career working in another country to gain experience, the opportunities to study under leading Saudi specialists are increasing, both at medical schools and in hospitals, according to Khaled Manaa Al Kattan, the dean of the College of Medicine and professor of surgery at Alfaisal University. “Now it is possible to study here and qualify as a surgeon in a specialty, but you may travel abroad to learn a specific aspect of that specialty,” said Al Kattan. “We are close to reaching that level, but exposure to different systems is also important in your career. Our programmes here are now recognised internationally.” Alfaisal University, which is funded by the King Faisal Foundation, is associated with Partners Healthcare International and aims to compete with the best medical schools in the world. Its students work in the King Faisal Special Hospital and the Security Services Hospital, which are both state-owned facilities but operate outside of the MoH’s control.
However, despite a healthy supply of new Saudi graduates, nationals are still outnumbered by foreign doctors in all sectors. Indeed, in both MoH hospitals and the private sector there are more female non-Saudi doctors than male Saudi doctors. In 2012 graduates from local medical schools were 61% male Saudis and 37% female Saudis, while male and female foreigners each made up around 1%. This contrasts with the employment of doctors in hospitals, where across all sectors there were 40,023 foreign male doctors (equal to 56% of the total), 14,219 foreign female doctors (20%), 11,710 Saudi male doctors (16%) and 5566 Saudi female doctors (8%). Female Saudi doctors work in nearly all disciplines in state hospitals, but only 304 of them are recorded as working in the private sector. Expansion of hospitals and medical facilities across the Kingdom means many new positions will have to go to expatriate staff, at least in the short to medium term.
“Serious attempts are being made to investment in human capital, but human capital is a scarce resource,” Mostafa Youssef, executive director of medical affairs and consultant interventional cardiologist at KFMC, told OBG. “We are seeing progress in every area, but we recognise that there are some areas that might take decades, for example nursing.”
PATIENT NUMBERS: Health professionals saw 3.2m patient admissions, up from 3.03m in 2011, with 55% of patients receiving treatment in MoH infirmaries, 17% in other state hospitals and 28% in private hospitals. There were 134m outpatient visits, 49% of which were in private hospitals. In terms of operations, 451,180 people had surgery in MoH hospitals, 364,870 in private hospitals and 186,424 in other state hospitals. From 2008 to 2012 there was a 15.4% rise in the number of operations carried out, from 868,838 to 1m.
INSURANCE POLICIES: In essence, state hospitals cater to Saudi nationals while expatriates are expected to take out medical insurance to cover their private medical bills. For highly skilled expatriates, this is certainly true and private employers are required by law to provide medical insurance for expatriate staff. Indeed, the law has recently been extended to cover Saudi employees of private firms, although the impact of this change is mitigated by the fact that Saudis constitute around 13% of private sector employees. According to the Saudi Arabian Monetary Agency, private health premiums totalled SR11.3bn ($3bn) in 2012, up from SR4.8bn ($1.3bn) in 2008. Dubai-based Arqaam Capital estimates that expatriates account for 83% of Saudi Arabia’s 8.4m private health insurance holders. However, more than 80% of expatriates are low-skilled, low-wage earners in the private sector and many fall out of the insurance system. In emergencies, uninsured expatriates are treated in state hospitals.
“One of the most difficult things for us is to find ways of collecting medical insurance from our clients,” said Ibrahim Al Rashed, responsible for investment at King Saud Medical City’s Self Resources Department. “When people first come to reside in the country, they must have medical insurance for a year, but some of these people are on very low salaries and so after that year they let their insurance lapse.”
In the private sector, hospitals often treat Saudi patients, but many of these pay for treatment out of pocket. “We focus on the service we provide and this is why people come to us,” Abahussein said. “We see Saudis with medical insurance, expats with medical insurance and Saudis who are prepared to pay cash.” Saudi Arabia’s authorities have discussed the possibility of offering state-funded private health insurance as a free perk to government employees, enabling them to receive treatment in private sector hospitals as a way of relieving pressure on the state sector. As of mid-2014 there had been no official announcement regarding this, but Arqaam Capital estimated it could affect 1m government employees and 5m of their dependents and give private hospitals and health care providers clear incentives to increase their offerings.
Some leading public health care administrators see other ways in which private medical services could complement an expanding public health sector. “It’s very difficult for a country to maintain a fully supported and financed medical care system with the highest standards, so there has to be some association with private providers,” Youssef said. “One area is the long-term care patients. If we have a patient who requires long-term care, then it’s much more efficient to outsource his or her care. Home care is another possibility. Some of these things could be provided by private practice.”
AFFLUENZA: Wealth and health do not necessarily go hand-in-hand, and in Saudi Arabia the evidence of the toll that non-communicable diseases associated with affluent societies is taking on the population is striking. According to the World Health Organisation’s (WHO) assessment of the Kingdom, chronic cardiovascular conditions, diabetes and smoking-related illnesses are increasingly prevalent; based on 2008 estimates, noncommunicable diseases accounted for 44.6% of deaths among men and 34.5% of deaths among women under the age of 60. Its analysis of the cause of deaths in the Kingdom shows that injuries and communicable diseases together accounted for just 28% of the total.
In a country where the death toll from road accidents is five times higher than Germany or Australia and eight times higher than the UK, death from all injuries accounted for just 15% of the total. By way of comparison, respiratory diseases caused 3% of deaths, diabetes 6% and cancers 9%. But by far the biggest killer in the Kingdom was cardiovascular disease, responsible for 42% of deaths. Non-communicable lifestyle diseases led to 71% of all deaths, according to the WHO. This is all the more striking when Saudi Arabia’s age profile is taken into consideration. In 2012 approximately 30% of the population was under the age of 15, 67% were aged 15-64 and just 2.73% of people were over 65. The WHO also noted that 69% of the population was classed as overweight, 66.8% was physically inactive and 33% of Saudis were obese. A report by consultancy strategy& (formerly Booz & Company) published in December 2013 estimated the total direct and indirect cost of noncommunicable diseases at $36bn in 2013, and it forecast this would increase to $68bn by 2022.
NATIONAL HEALTH SURVEY: These figures were further underlined in a national health survey conducted by the University of Washington’s Institute of Health Metrics and Evaluation (IHME) for the MoH, which was published in March 2014. The Saudi Health Interview Survey was carried out across all of the Kingdom’s 13 provinces with a representative sample of men and women above age 15. It found that obesity, diabetes, high blood pressure, high cholesterol and smoking were among the leading issues affecting a growing number of people in Saudi Arabia. The prevalence of obesity, as measured by the body mass index (BMI), was 28.7%. The survey found 33.5% of females and 24.1% of males were obese. The prevalence increased by age and was highest among those aged 55 to 64, with levels of 48%. Morbid obesity was found in 4.7% of women and 2.5% of men. According to the survey, almost half of women are physically inactive, while 29% had low levels of physical activity. For men, 23% are physically inactive, and the same percentage had low levels of activity. Diet was also a concern as only 7.6% of adults consumed more than five daily servings of fruits or vegetables.
The total prevalence of diabetes was 14.8% for males and 11.7% for females in 2013. It increased with age and ranged from 7.8% among those aged 25 to 34 to 50.4% among those aged 65 and older. Borderline diabetes was present in 17% (1.17m) of men and 15.5% (950,000) of women. Among Saudi men, 1m are diabetic, 583,000 are on medication for diabetes, and 230,000 have uncontrolled diabetes. For women, 720,000 are diabetic, and 367,000 are on medication, while 167,000 have uncontrolled diabetes.
The prevalence of hypertension was 17.7% for males and 12.5% for females. It increased with age and was highest among those aged 65 or older (65.2%). Borderline hypertension was noted in 46.5% (3.04m) of men and 34.3% (2.18m) of women. Roughly 1.16m Saudi men and 795,000 Saudi women, or 15.1% combined, are hypertensive, according to the survey. About 500,000 men and 415,000 women have been diagnosed with hypertension, with 383,000 men and 335,000 women on medication. However, 220,000 men and 170,000 women had uncontrolled blood pressure.
The survey also found a high incidence of people with elevated cholesterol levels. The prevalence of hypercholesterolemia was 9.5% for males and 7.3% for females. It rose by age and was highest among those aged 65 or older (28.7%). About 658,000 Saudi men and 448,000 Saudi women are hypercholesterolemic. Borderline hypercholesterolemia was found in 19.5% (1.25m) of men and 20.6% (1.18m) of women. Almost 215,000 men and 116,000 women are on medication, but only 7.4% of them have uncontrolled hypercholesterolemia.
PREVENTION: Smoking is also on the rise among men. Overall 21.5% of men currently smoke, while 20.9% of Saudi males smoke shisha, or water pipe. Despite the increase in chronic disease and smoking, the survey found that three-quarters of Saudis reported never having a routine medical check-up. “It’s surprising in a country with free and widely accessible health care that people don’t take advantage of preventive care and only see their doctors when they’re ill,” said Ali Mokdad, professor of global health at IHME. “In the US, there is an ongoing debate about providing universal health coverage, but Saudi Arabia has it.”
As a result of the survey and its collaboration with the University of Washington, the MoH announced it would establish a centre of excellence in health metrics and create a census for each health clinic area to assess community health needs. “The survey findings will help guide our planning for better control of preventable risk factors,” Ziad A Memish, deputy minister for public health, told OBG. “Improving diet and increasing physical activity will be critical to these efforts.”
GLOBAL COMPARISONS: Given planned health care and social services spending of SR108bn ($28.8bn) and estimated 2013 GDP of SR2.8trn ($746.5bn), public health expenditure in Saudi Arabia accounts for around 3.9% of GDP. According to the World Bank’s latest figures – which include both public and private spending as a percentage of GDP – GCC countries, with relatively small populations and comparatively high GDP, score poorly. Saudi Arabia’s ratio was 3.7%, below Bahrain on 4.3%, but above the UAE with 3.3%, Kuwait with 2.7%, Oman with 2.3%, while Qatar, with just 1.9%, was the second-lowest worldwide. Near the top of the table, the US spent 17.9%, while the UK’s rate was 9.3% and Germany spent 11.1%. Thus, although health care expenditure has been growing significantly year-on-year in Saudi Arabia, according to the World Bank, it is starting from a relatively low level in GDP terms.
RESPIRATORY SYNDROME: The WHO has been working closely with Saudi Arabia in 2014 as its medical specialists search for fresh insights into Middle East Respiratory System (MERS), a coronavirus first identified in the Kingdom in 2012. The MoH and experts in a range of medical fields have found themselves at the forefront of an effort to treat patients with this life-threatening new illness while simultaneously trying to understand how it spreads and how to prevent further infections within the population. The MoH has also invited experts from the WHO to visit, and provided them with regular epidemiological updates. The ministry has issued preventive advice to people in Saudi Arabia along with regular bulletins charting the spread of the illness and the toll it has taken. On April 20, 2014 the ministry announced there had been 244 cases across the country since September 2012. By the end of April 2014 more than 100 people had died from the illness with symptoms including pneumonia, fever and kidney failure. Many of those who died were elderly or children, and increasing numbers of those infected are medical staff. In April 2013, the acting minister of health, Adel M Fakeih, appointed a 10-member council of medical experts to work under Professor Tariq Ahmed Madani, the MoH’s special advisor, to monitor the status and severity of current cases and to help contain the virus and the risk to public health. The group includes experts in virology, pulmonary conditions, critical care, intensive care, infectious diseases and veterinary medicine. “Their advice and support will undeniably enhance the ministry’s ability to understand, analyse and report on the virus. As we continue to gather new information, we look forward to the council’s ideas on how to prevent the spread of the virus across the country and internationally,” Minister Fakeih said. The minister also ordered the creation of three medical centres to combat the virus: King Abdullah Medical Centre in Jeddah, Prince Mohammed bin Abdulaziz Hospital in Riyadh and Dammam Medical Centre in the Eastern region. The minister said he was committed to a policy of openness and transparency and that daily updates on the condition would be posted on the ministry’s website. He warned citizens to be wary of contact with camels, and people developing respiratory symptoms like the common cold and runny nose. “If necessary, however, the person must wear a gown, mask, gloves and protective eyewear when dealing with camels,” Fakeih said, adding that extra care should be taken when handling raw camel meat and that camel milk should be boiled.
HAJJ ADVICE: Recognising the potential for the MERS virus to spread, Saudi Arabia advised the elderly, children, pregnant women and those with chronic illnesses to postpone their Hajj in 2013. In April 2014, the MoH issued a similar warning for the 2014 Hajj, due to take place on October 1-6, 2014. The Saudi health authorities regularly consult with the WHO before the Hajj to ensure that measures are taken to prevent severe illnesses from being brought into the country. In 2013, the WHO published a feature praising Saudi Arabia’s work in caring for the sick among the 2m-3m pilgrims that perform the Hajj and Umrah each year. It noted that in 2012 health authorities assisted 372,000 pilgrims, and that in 2013 22,500 health workers from across the Kingdom staffed 25 hospitals with 5250 beds and 141 health centres at four main pilgrimage areas. The hospital at Mena, which treats between 10,000 and 12,000 patients a day during the Hajj, has 190 beds. In 2013, 95 ambulances described as mobile intensive care units, each staffed by a doctor, were stationed in areas that are prone to crowding to offer swift assistance to anyone who fell ill.
PHARMACEUTICALS: A ban on foreign ownership of hospitals and clinics and strict regulation on ownership in the pharmaceuticals market present some challenges for firms interested in investing in Saudi Arabia’s health care market. However, it is possible to work with national distribution companies and to form joint ventures with businesses in the Kingdom. The biggest local distribution companies include the Arabian Healthcare Supply Company, Tamer Group, Salehiya, El-Ajou Group, Ejada Systems and Al Faisaliah Medical, according to Dubai-based business information group Naseba. “The health care infrastructure programme that the government has initiated will not only bring quality health care closer to the doorstep of patients but will also result in more demand for quality medicines. This makes Saudi Arabia an attractive market for both local and global companies,” Masood Jaffery, the general manager of GlaxoSmithKline Saudi Arabia, told OBG. “Saudi Arabia is also in a unique situation as there is a high incidence of acute diseases, like infections, and chronic disorders like diabetes and cardiovascular problems associated with lifestyle changes in society. The government takes prevention of disease very seriously as it employs a successful paediatric immunisation programme.”
All medical products and devices, pharmaceuticals and foodstuffs are regulated by Saudi Arabia’s Food and Drug Administration (SFDA), which has also published ethical guidelines on the marketing of pharmaceuticals, 85% of which are imported into the Kingdom.
According to data from global health services firm IMS Health, the Saudi Arabian retail pharmaceuticals market in 2013 was worth SR11.8bn ($3.15bn) by value, and by volume 476,314 units were sold during the year. This was up 11.2% compared to 2012, and the market is expected to continue expanding. “A high GDP and growth across all sectors will lead to a doubling of the pharmaceuticals market over the next 15 years,” Hussein El Hakim, country manager for Pfizer Saudi Arabia, told OBG. The top four product categories, which together accounted for SR2.26bn ($602.5m) in sales, were penicillin, anti-rheumatics, infant milks and acid pump inhibitors. According to the MoH, there are 15,590 pharmacists, including 11,583 working in the private sector, either in hospitals, polyclinics or in 6947 private pharmacies. “It’s a reasonably big market without many big local players and prices offer reasonable margins. The hardest part is entering, but once you are in, you can operate quite successfully,” Ahmad Tabbaa, CEO of Avalon Pharma, told OBG.
NEW FACILITIES: In Hail, a city in the country’s north, German engineers from Glatt Ingenieurtechnik are building a brand new, SR230m ($61.3m) pharmaceuticals factory. The facility is for AJA Pharma, which was created by SITCO, a Saudi company that already works as a distributor in the Kingdom for GlaxoSmithKline, Eli Lilly and other multinational pharmaceuticals firms. The plant is seeking licences from the SFDA, the US Food and Drug Administration, and the European Medical Agency and aims to begin production in the first quarter of 2015. “At full capacity, working three shifts, the factory’s four production lines will be able to produce 1.29bn units a year,” said Faisal Bindail, deputy general manager for business development at AJA Pharma. “We will be active in all three sales channels: tenders, institutions and private, and business-to-business sectors like contract manufacturing and licensing.” The firm will produce and distribute pharmaceuticals for leading brands and manufacture its own generics.
American pharmaceuticals giant Pfizer, which has been in the Kingdom since the 1960s, began construction work on a factory in King Abdullah Economic City and plans to open additional facilities to produce medicine for non-communicable illnesses, such as diabetes and coronary heart disease. It laid the foundation stone for its new solid-dose factory in March 2013 and says construction should take 21 months. The factory will have a capacity of 18m packs a year when it begins production in 2015. The firm has pledged to prioritise hiring Saudi workers, including women, for its production facility. “Companies that locally package or manufacture can avoid having price reductions by SFDA for five years. This has encouraged many foreign companies to open up more significant operations within the Kingdom, thereby creating new jobs in the local economy,” Mohamed Makhlouf, country president of AstraZeneca Saudi Arabia, told OBG.
OUTLOOK: The health care sector in Saudi Arabia faces challenges. However, government spending on infrastructure, human capital and resources suggests the sector is growing in both size and quality, and is eager to draw on international expertise to train its medical staff and equip new facilities. Rising government expenditure and the expansion and ageing of the population are expected to drive demand for health care in the Kingdom, and this is likely to generate a host of opportunities for investors, although some segments will doubtless remain the exclusive preserve of the state.