A modernisation scheme announced by a senior government official has put Saudi Arabia’s state-owned health service on the fast track to commercialisation.
Dr Khaled Al-Mirghalani, spokesman for the Health Ministry, said government hospitals are to be transformed into public corporations in a bid to reduce the Kingdom’s annual expenditure on healthcare.
The move will see state healthcare facilities placed under the control of a new government entity; the General Organisation for Hospitals (GOH). The Organisation plans to increase the financial efficiency of state hospitals, appointing a board of directors to each facility and placing them on a par with private rivals.
“These corporations will be given wide powers to control revenues and expenditures,” Al-Mirghalani told press. “We have already presented the project to higher authorities for approval and it is currently being studied by the Higher Committee for Administrative Reorganisation.”
The announcement is the latest in a series of steps, outlined in last year’s healthcare modernisation plan, designed to make the sector more profitable and to pave the way for private investment. Without it, experts say, the financial viability of Saudi Arabia’s healthcare sector is in doubt.
A recent report by global consultancy firm Booz Allen Hamilton (BAH) predicted the country’s annual healthcare spend would top US $20 billion by 2016. Currently, private investment accounts for less than 25% of the total figure, with the remainder shouldered through state-funded care.
“To manage this burden of cost, Saudi Arabia must make substantial changes to the way it conducts healthcare,” said Mr Ziad Fares, senior associate of Booz Allen Hamilton. “The system is ripe for investment opportunities.”
But to realise the potential of public-private partnerships, the government will need to slash the red tape that dissuades budding investors.
“The government will have to make is far easier for the private sector to come in,” Fares said. “Currently, the experience for investors is horrendous. The government must make licensing, transactions and visas easier to attain.”
As important, Fares continues, is ensuring a level playing field between the public and private sector, which currently operate under different restrictions. As commercialised ventures, public hospitals will be profit driven and so will need to compete on price.
“To date, public sector hospitals have had giant budgest and have priced their services very cheaply,” Fares said. “The private hospitals have protested, saying they cannot compete. We badly need a regulatory framework that ensures fair competition for both sectors.
“A market-driven healthcare system means competing groups providing the best care possible. As public hospitals become commercialised, that should be easier to achieve.”
The overhaul, according to Al-Mirghalani, will cost an estimated $2.67bn. While the government has been quick to reassure staff currently employed in state hospitals that they will be transferred to the new corporations, it is hoped an influx of private investment will go some way towards stemming the Kingdom’s manpower gap, with Al-Mirghalani announcing the GOH will be tasked with “recruiting qualified personnel”.
“For the region, we need something like 100,000 nurses,” said Fares. “A quick way of doing this is by involving the private sector. But first we need to drop the barriers to investment.”
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