Globally, healthcare remains a topic of debate, specifically whether it is a right or a privilege, which has major implications for primary stakeholders, including patients, healthcare providers, and governments.
However, no such debate exists in Saudi Arabia because healthcare is inveterately regarded as a fundamental human right, and the government has historically protected citizens’ right to healthcare: Public healthcare coverage is free, accessible to every citizen, and fully funded by non-tax-based governmental subsidies delivered to a number of government agencies.
In spite of this, the private sector continues to play an active role in delivering healthcare services to self-pay patients and policyholders who are typically employees of private-sector entities that are legally required to provide their employees and their dependents private health insurance coverage.
This model has been in place for decades and offers relatively good public healthcare services, yet its flaws and deficiencies are significant, and there are many neglected opportunities worthy of exploration and utilization.
For instance, a standardized organizing framework for users is lacking, which has resulted in certain segments of the population underutilizing public healthcare services and others overusing them. The current system also lacks national standards, incentives, and means to improve performance.
Another major issue is over-centralization, which has taken power away from patients, not to mention the low levels of innovation and competition among healthcare organizations and the pervasiveness of inefficient and wasteful spending due to poor governance, abuse, and corruption.
With that being said, 2022 marks a paradigm shift in the Saudi healthcare system. In June of this year, the Saudi Cabinet endorsed the establishment of the Health Holding Company (HHC) and the charter of the National Health Insurance Center (NHIC).
Following this decree’s implementation, ownership and operation of healthcare organizations will be gradually transferred to the HHC; thereafter, these organizations will operate as independent private for-profit and non-profit organizations, individually managed and in competition with one another.
After the transition, the healthcare system will primarily rely on private healthcare organizations, owned by either the HHC or investor-owned corporations, to deliver healthcare services to citizens and residents through insurance plans issued and funded by the NHIC or private insurers.
Most pressingly, what does operating as a private entity mean for a healthcare organization, and how will the change impact primary stakeholders? In answer to the first question, the survival and sustainability of the organization will be heavily dependent on patients’ experience and satisfaction.
In answer to the second question, under this new system, patients will be entitled to better and more equitable access to care and the freedom to choose their doctor, hospital, and services, with considerably shorter wait times. For healthcare providers, it presents the opportunity for a pay for performance (P4P) model, which ties reimbursement to metric-driven outcomes, best practices, and patient satisfaction, thereby increasing competition, recognition, and opportunities for growth and development.
This model also paves the way for competitive advantages and innovation and entrepreneurship in the healthcare industry, such as scalable new products, technologies, policies and processes, and delivery methods. For the government, the privatization of healthcare creates an incentive for the market to achieve a higher-quality healthcare system.
“It will create a better health sector with better services and less corruption because interests have become shared among stakeholders. It will also reduce the administrative and fiscal burden on the government, so these expenditures can be allocated to other areas that need attention,” affirms his Crown Prince Mohammad Bin Salman, deputy prime minister and minister of defense.
Such policies also put Saudi Arabia on the path to achieving promising industries with great potential to spur economic growth, such as the medical tourism industry. Saudi Arabia has a healthcare system with extraordinary infrastructure and an enormous workforce of highly trained health professionals, who have received their training locally and abroad. A world-class medical hub attracting foreign patients would represent a significant contribution to the economy.
It is worth mentioning that the privatization of healthcare has its own flaws and deficiencies and has been widely criticized. In light of this, it is important to note that the various dramatic and fast-paced reform policies taking place today in healthcare and many other sectors in Saudi Arabia are not the results of policymakers replicating or importing existing models elsewhere.
Rather, all the drawbacks and lessons learned, as well as the sociocultural contexts of the kingdom, have all been taken into account in the formulation and implementation of these new policies.