Saudi Arabia Healthcare Market Report Chapter One - Part 2 of 5

Gulf Writers & Dreamdrive Digital

G u l f W r i t e r s & D r e a m d r i v e D i g i t a l

3

lift the weight off the shoulders of the government and create a more sustainable economic

environment. KSA Healthcare basically represents GCC healthcare with more than double the resources of all

the other countries in the region combined with regards to numbers of hospitals and beds. The country alone accounts for close to 10 times that of some indicators of UAE which is next on the table as illustrated in Figure 2 below.

Reports show a tremendous difference between KSA figures and that of the other countries in the GCC with regards to many other indicators as well. However, despite leading numbers, per 1000 population indicators are very low due to relatively high population and population growth rate. The strong desire of the governments of KSA and UAE to raise healthcare to international

standards, create a medical hub for medical tourism, in addition to other efforts to enhance the sector, strongly propels growth in the market.

2.0 KSA Healthcare: An Introduction The healthcare sector of KSA remains one of the areas highly prioritized by the government.

This is evident in the level of resource dedication in the eighth and ninth National Development Plans (NDP). A tenth NDP is expected before the end of 2014 for the period of 2015 to 2019. ORYZ Saudi Arabia predicts substantial resource allocation to the healthcare sector in the tenth NDP taking a close look at the health service targets for the KSA Vision 2025 and the healthcare targets it has set to reach in comparison with the current state of affairs, given that there are only two more National Plans to be issued before the achievement of the Vision 2025 targets. With the NDPs discussed later in this report, a clearer view of the sector reveals the firm arm of

the government behind the greatly increased and improved market. The government applies due efforts to provide its people with state of the arts healthcare service and facilities. Fundamentally, the government has wholly nurtured the health sector into one of the largest

and most prominent on the globe with no other country coming close to such an expansion rate over such a short period as experienced in KSA over the last decade.

Last produced in 2000, the World Health Organization (WHO) ranking of effectiveness of world healthcare systems placed that of KSA as 26th among 190 healthcare systems over the world. KSA came before other healthcare systems like Australia (32), Canada (30), New Zealand (41). It as well came before United Arab Emirates (27), Qatar (44) and Kuwait (45) who are close pals in the GCC Region. This system of ranking is no more produced by the WHO due to the complexity of systems and indicators with varied weights across various regions. Essentially, it remains difficult to compare two or more healthcare system on the same grounds due to

Figure 2. GCC Healthcare Indicators 2011

Source: Gulf Writers

Country

Govt Private Govt Private Govt Private

Saudi Arabia 282 125 44,099 11,833 2,037 2,308

UAE 32 58 6,627 2,549 243 2,057

Kuwait 30 15 5,149 653 97 98

Qatar 5 4 2,464 394 30 177

Oman 55 5 5,430 189 217 817

Bahrain 10 13 1,702 384 24 N/A

Hospital Beds Clinics



4

differences in fundamental indicators and extremely wide variety of indicators coming with

different weights in individual countries. The report produced in 2000 by the WHO on how to improve performance of health systems was not a complete representation of the comparative effectiveness as agreed by the WHO. Health expenditure is a typical measure of efficiency;

however, room exist in many regions for the achievement of efficiency without necessarily increasing health expenditure. It may be concluded that some countries are doing better than others given limited amount of resources. The point of view that KSA must have been ranked high as a result of considerable investment in the sector at the time may be controversial given that the United States invests more than 17% into healthcare and yet was ranked lower than KSA. In more recent reports, attempts have been made to rank healthcare effectiveness based on factors and indicators pertaining to health expenditure, average years of schooling, alongside

other demographic indicators as was used by the WHO (2000). The profile of healthcare of any region cannot be comprehended without a good view of key demographic, health expenditure, government plans and policies, sustainable economic indicators, risk factors and much other trend analysis. Pertaining to demographics, KSA has a population of about 30.254 million (IMF, 2014) and

records an annual growth rate of 2.2%; an average over the past 5 years. KSA experienced the highest in the region at 6.4% in the late 80s with fertility rate at 7.5 births per woman, to 3.8% in the 90s with fertility at 5.8 births per woman, and 1.9% growth with 2.74 births per woman recorded specifically in 2011. Future population projections estimate high rates in areas of population growth and births per woman. A closer look at economic conditions of KSA discloses Gross Domestic Product at purchasing power parity (GDP PPP) per capita hovering around US$22,328 since 1985 with around the same figure recorded in 2012 according to WHO records.

The country is ranked 57 out of 186 in terms of Human Development Index (HDI) with an HDI value of 0.770. Other statistical connotations are addressed in the demographics and economic sections of this report, elaborating on key features applicable to the healthcare market of the country. The Ministry of Health (MoH) is seen in the middle of affairs, creating conflicting roles as an arbitrator and the financier or supplier of medical services. Healthcare is free of charge to all

citizens and government spends about 7.0% total spending on healthcare. A 74% Saudization is set to be achieved by 2024 but this is far from reach; KSA lacks local healthcare practitioners.

Private sector enhancement programs have been put in place; primary, secondary and tertiary healthcare sectors are altogether given high priority in the four tire health system in the making. Other challenging issues have to do with the methodology and pace of financial recourses application; changes in the pattern of diseases; excessive demand resulting from free service

delivery; non-existence of a national crisis management legislation and system; inaccessible facilities and rural regions given its large regional country coverage; nonexistence of national and centralized health information system leading to duplication of information; and the underutilization of installed healthcare information technologies among others.

3.0 KSA Demographic Overview Population estimates

The total population of Saudi Arabia as at 2010 was 27.3 million; this is estimated to reach 30.9 million by 2015, 32.7 by 2020 and 36.7 by 2025. Annual population growth rate reached about 6.4% per annum in the 1980s; however, a growth rate of 1.9% was recorded for 2012. Fertility rate reduced from 7.3 births per woman in the early 1980s to about 2.7 in 2011 and still remains the highest recorded in the Gulf Region; higher than the global average of 2.4 births

per woman. Percentage of population who are female reduced from 43.7 in 2009 to 42.9 in 2012. Currently, Locals make about 68.9% of the total population. A closer view at the population levels of KSA is illustrated in Figure 3.



5

Population estimates for the Vision 2025 long term strategy and other KSA plans prior to 2008 were highly underestimated. Moreover, non-Saudi Nationals were expected to reduce at an

annual growth rate of -1.38 between 2004 and 2025 as illustrated in Figure 4a but current trends show otherwise. Actual population estimations by the International Monetary Fund (IMF) and recent projections by other agencies are illustrated in Figure 4b.

Contrary to the national projections in Vision 2025 published in 2004, an increase in non-Saudi Nationals is anticipated. The government is keen on making this less probable as it intensifies its

Figure 3. Population of KSA (millions)

Source: World Economic Outlook (2014)

Figure 4. Population of KSA: Vision 2025 and IMF estimates

a b

Source: KSA Vision 2025 (2004) & World Economic Outlook (2014)



6

human resource development attempts and has begun replacing influential positions formally

occupied by non-Saudis with Saudi Nationals; these programs are channelled through Saudization Plans. There is increased spending in relation to actual projections as long term plans are reviewed every five years together with new development plans; about 19% increased

government spending was observed from 2012 to 2013. It is anticipated that the government would have to stretch its financing in the last two development plans (2015–2025) towards the achievement of actual Vision 2025 targets given population and demographics expansion rate. Recent attempts were made by the government to reduce spending after a warning from the IMF. This placed the government’s budget at $228 billion in 2014, a supposedly controlled 4.3% increase in spending from 2013 compared to a 19% increase from the previous year. There are speculations as to the authenticity of this budget as the government usually overspends

budgeted expenditure and yet experiences surpluses due to favourable oil prices and the heavy presence on the world oil market; these are further discussed in the economic overview section of this report. Back to the demographics, about 82% of the total population are living in urban areas with good access to electricity, water and sanitation; over 98% of the population have access to portable

drinking water implying basic social amenities are well taken care of in the country. Given its large area, the government is faced with the challenge of equitable distribution of key healthcare services across the region.

Population Structure and Gender Inequality Index

The population of Saudi Arabia has a fairly large middle belts with many of them falling between the ages of 15 to 45; between generation X and generation Y. There is a sharp decline in

population up the ladder beyond the ages of 49 years. Saudi Arabia Life expectancy at birth is poised at 78 years, placing the future of the healthcare market in an advantageous position with a big belt of aging population. Female as a percentage of total population stood at 43.7% in 2009, 43.5% in 2010, 43.3% in 2011, and 42.9% in 2012; about 57% of the population constitute males. Age-gender population are presented in Figure 6.

Majority of males belong to the age category of 30 to 34 years. KSA recorded a Gender Inequality Index (GII) of 0.682, ranking it 145 out of 148 countries according to the 2012 index.

KSA GII may be compared to that of Iraq and Syrian Arab Republic who were ranked lower at 120 and 118 respectively; KSA records one of the most extreme levels of gender inequality.

Figure 5. Structure of KSA Population 2013 (thousands)

Source: World Bank Data Bank (2013)



7

Contrary to previous measurement formats, the new format for measuring the GII shows depicts

signs of loss in human development due to inequalities between male and female achievements in the three main dimensions; reproductive health, empowerment, and economic activity. Reproductive health takes into consideration maternal mortality and adolescent fertility rate;

empowerment considers share of parliamentary seats held by each gender and attainment of secondary and higher education by each gender; and finally, economic activity is determined by the labour market participation rate for each gender (see Figure 7).

Figure 6. KSA Age-Gender Population 2013

Source: World Bank DataBank (2013)

Figure 7. KSA relative Gender Inequality Index (2012)

Source: WHO (2013)

GII

value

GII

Rank

Maternal

mortality

ratio

Adolesce

nt fertility

rate

Female

seats in

parliame

nt (%)

Female Male Female Male

Saudi Arabia 0.682 145 24 22.1 0.1 50.3 57.9 17.7 74.1

Syrian Arab

Republic0.551 118 70 36.5 12 27.4 38.2 13.1 71.6

Iraq 0.557 120 63 85.9 25.2 22 42.7 14.5 69.3

Arab States 0.555 — 176 39.2 13 31.8 44.7 22.8 74.1

High HDI 0.376 — 47 45.9 18.5 62.9 65.2 46.8 75.3

Population with at

least secondary

education (%)

Labour force

participation rate

(%)