Expert Speak Raisina Debates
Published on Jul 08, 2024

As part of Vision 2030, Saudi Arabia has prioritised healthcare reform to maximise the healthcare sector's economic potential while also improving public health

Impact of healthcare investments on Saudi Arabia’s economy

A country's economic performance is inextricably linked to its population's well-being, since a healthier population results in a more efficient workforce. Recognising this vital relationship, Saudi Arabia has prioritised healthcare reform as part of its ambitious Vision 2030. The Kingdom is quickly diversifying its economy to minimise its reliance on oil. According to a March 2024 review of the General Authority for Statistics by the Ministry of Economy and Planning, Saudi Arabia's non-oil activities accounted for a historic 50 percent of the country's real GDP in 2023. State-funded programmes have always been a core undertaking. Now, within its diversification strategies, healthcare is a vital component with its ability to generate money, create employment, and drive innovation.

Saudi Arabia is using multiple approaches to achieve its ambitious aims, such as public-private partnerships (PPPs), infrastructure development for medical tourism, and measures to improve digital health. These efforts attempt to maximise the healthcare sector's economic potential while also improving public health.

A country's economic performance is inextricably linked to its population's well-being, since a healthier population results in a more efficient workforce.

Infrastructure and medical tourism

A key component of Saudi Arabia's healthcare strategy is the development of medical cities to establish itself as a leader in healthcare. These cutting-edge institutions, such as King Fahad Medical City in Riyadh and King Abdullah Medical City in Makkah, exemplify the Kingdom's significant infrastructure investments and offer modern technology and extensive medical services.

These medical cities aim to serve both Saudi citizens and international medical tourists. King Abdullah Medical City (KAMC), for example, has successfully delivered life-saving cardiovascular treatments to pilgrims from Russia, Syria, India, and China during the recent Hajj season. In addition, the seamless collaboration within the Medical City aided all cardiac care cases. This cooperation extended to the entire Makkah Health Cluster, ensuring swift transfers and patient acceptance. Critical cases received the fastest possible care in collaboration with the Red Crescent Air Ambulance Service, which directly transported critically ill Hajj pilgrims from Al-Mashaer to the King Abdullah Medical City (KAMC), bypassing potential crowding and delays.During the Hajj season of 2012, KAMC successfully performed 12 open-heart surgeries for pilgrims. This figure illustrates KAMC's early commitment to provide life-saving assistance during the Hajj. KAMC performed 136 open-heart surgeries during the recent Hajj season of 2023, 52 of which were for pilgrims and 84 non-pilgrims. This marks a steep increase, demonstrating KAMC's increased capability and experience in managing difficult cardiac treatments during a period of mass movement of people.

King Abdullah Medical City (KAMC), for example, has successfully delivered life-saving cardiovascular treatments to pilgrims from Russia, Syria, India, and China during the recent Hajj season.

Saudi Arabia also aims to become a key player in the Middle East's US$100-billion medical tourism business. A two-pronged strategy drives this ambitious goal. First, the government is spending considerably on high-quality healthcare facilities, as illustrated by the luxury Clinique La Prairie resort, which offers innovative treatments. Second, in recognition of the importance of religious tourism, Saudi Arabia is pioneering programmes such as the Knowledge Economic City hub. This effort efficiently combines cutting-edge healthcare with cultural and history excursions, catering primarily to faith-based travellers needing medical treatment while on pilgrimage. Industry analysts believe that this strategy adjustment will have a big economic impact. According to Saleh Al-Khabti, Saudi Deputy Minister of Investment Transactions, the healthcare sector's contribution to the GDP is projected to reach a staggering US$66.6 billion by 2030, alongside the creation of over 245,000 jobs.

The role of Public-Private Partnerships (PPP)

Public-Private Partnerships (PPP) have become a pivotal strategy in Saudi Arabia to improve healthcare services, infrastructure, and overall quality. The Ministry of Health (MOH) and other government agencies are actively establishing strong PPP frameworks to attract private sector engagement. PPP involves partnerships between public and private enterprises, where private partners provide finance, design knowledge, building skills, and operational know-how. This enables the government to develop healthcare facilities without taking on the entire financial load.

For example, in June, the MOH granted Altakassusi Alliance Medical a PPP to strengthen radiology and imaging services at seven hospitals, affecting more than one million people. The MOH intends to privatise 290 hospitals and 2,300 health institutions, boosting private sector participation from 40 percent to 65 percent. This initiative will also create the country's first collaborative network to help hospital workers, thus improving treatment quality in rural locations. Such collaborations allow knowledge and skill transfer, therefore, benefiting the local healthcare workforce through training programmes and knowledge sharing.

The MOH intends to privatise 290 hospitals and 2,300 health institutions, boosting private sector participation from 40 percent to 65 percent.

PPP’s provide major benefits to the government in healthcare development. First, they reduce the financial load by inviting private finance to support infrastructure improvements such as hospitals and clinics. Second, private sector competence in design and construction allows for speedier completion of new facilities, enhancing access to healthcare services. Finally, effective operation and management strategies introduced by private partners can improve resource allocation inside healthcare institutions, resulting in long-term cost savings for the government.

The National Transformation Programme (NTP) underlines planning and execution challenges, which are alleviated by current healthcare automation systems. A comprehensive regulatory framework that addresses price, quality standards, dispute resolution, and risk sharing is critical for PPP success and private sector participation. Affordability and accessibility necessitate close monitoring to guarantee equal service delivery. Adaptable PPPs are critical for meeting changing healthcare requirements, with more private sector participation and technology-driven initiatives promising to improve healthcare delivery in Saudi Arabia.

Digital health transformation

Digital health reforms is another important pillar in healthcare strategy, with the promotion of telemedicine. The Ministry of Health has aggressively encouraged telemedicine, which resulted in the establishment of around ten teleradiology enterprises. The government devotes enormous resources to healthcare, allocating 60 percent of the GCC's healthcare budget. Vision 2030 proposes to invest US$1.5 billion in health information technology and telemedicine, as well as privatise hospitals to boost private sector participation from 40 percent to 65 percent. With this digital effort, Saudi Arabia hopes to develop a sustainable, efficient healthcare system for its rising population.

The deployment of telemedicine in Saudi Arabia faces challenges such as cost, legal, cultural, and infrastructure issues, despite significant government investment.

Telemedicine, smartphone apps, and remote sensors are all part of Saudi Arabia's quickly growing digital health landscape. During the COVID-19 pandemic, the Ministry of Health (MOH) prioritised telehealth, supporting treatments through remote contact. Investments totaled US$ 39 billion in 2018, with expectations for  US$ 36.8 billion in 2022 and more than US$65 billion by 2030. Seha, a digital health app introduced in 2018, enabled 1,877,440 online consultations by early 2020, although public awareness remained low. This digital transition is being pushed by increasing smartphone use and an increased need to service a growing population in rural places. The World Health Organisation (WHO) ranks Saudi Arabia's healthcare system 26th in the world, ahead of many wealthy nations. The government's 2023 budget allocated more than US$ 66.6 billion for healthcare and social development, demonstrating its commitment to improving digital health infrastructure.

The deployment of telemedicine in Saudi Arabia faces challenges such as cost, legal, cultural, and infrastructure issues, despite significant government investment. Healthcare facilities operate independently with unique strategies, adding complexity. WHO highlights these barriers alongside limitations in knowledge, expertise, standards, and priorities. It was also highlighted that, despite these advancements, 52 percent of citizens have not used the Seha app, often due to trust issues and a lack of familiarity with digital health solutions.

Conclusion

Saudi Arabia's enormous expenditures in healthcare as part of its Vision 2030 have dramatically impacted its economy. There has been an increasing trend in the Annual Expenditure for Health and Social Development in the past few years. The spending increased from US$ 46.6 billion in 2018 to US$ 68.2 billion in 2023, demonstrating a continuing commitment to improving social welfare and healthcare services. These expenditures in healthcare services and infrastructure have enhanced public health outcomes meanwhile, enabling the Kingdom to become a regional healthcare powerhouse. The commitment to healthcare reform has led to improved economic production, job creation, and a higher GDP contribution from the healthcare sector. The emphasis on prevention, human capital development, and the integration of Artificial Intelligence (AI) technologies demonstrates Saudi Arabia's commitment to revolutionising the healthcare industry. Therefore, these investments not only improve the quality of life of Saudi citizens but also substantially contribute to the Kingdom's economic diversification and long-term prosperity, aligning perfectly with the main objectives of Vision 2030.


Kabir Taneja is a Fellow with the Strategic Studies Programme at the Observer Research Foundation

Ahmed Fawaz Lathif is a Research Intern at the Observer Research Foundation

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Authors

Ahmed Fawaz Lathif

Ahmed Fawaz Lathif

Ahmed Fawaz Lathif is a Research Intern at the Observer Research Foundation ...

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Kabir Taneja

Kabir Taneja

Kabir Taneja is a Fellow with Strategic Studies programme. His research focuses on Indias relations with West Asia specifically looking at the domestic political dynamics ...

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