A country’s economic performance is closely linked to the well-being of its people, as a healthier population translates into a more efficient workforce. Recognizing this critical link, Saudi Arabia has prioritized healthcare reform as part of its ambitious Vision 2030. The Kingdom is rapidly diversifying its economy to minimize its reliance on oil. According to a March 2024 review of the General Statistics Office by the Ministry of Economy and Planning, Saudi Arabia’s non-oil activities will account for a historic 50% of the country’s real GDP in 2023. State-funded programs have always been core business. Healthcare is now a key component of the diversification strategy, with the ability to generate funds, create jobs, and drive innovation.
Saudi Arabia is reaching its ambitious goals through a range of approaches, including public-private partnerships (PPPs), infrastructure development for medical tourism and digital health initiatives, all of which aim to maximize the economic potential of the health sector while improving public health.
A country’s economic performance is closely linked to the well-being of its people, because a healthier population leads to a more efficient workforce.
Infrastructure and Medical Tourism
A key element of Saudi Arabia’s healthcare strategy is the development of medical cities to establish the country as a healthcare leader. State-of-the-art facilities such as King Fahd Medical City in Riyadh and King Abdullah Medical City in Makkah are prime examples of the Kingdom’s major infrastructure investment, offering the latest technology and a wide range of medical services.
These medical cities are intended to serve both Saudi nationals and international medical tourists. For example, King Abdullah Medical City (KAMC) successfully provided life-saving cardiovascular care to pilgrims from Russia, Syria, India, and China during the recent Hajj season. Furthermore, seamless coordination within the medical city helped with all cardiac care cases. This coordination extended to the entire Mecca medical cluster, ensuring rapid transfer and admission of patients. Critical cases received the fastest possible treatment through coordination with the Red Crescent Air Ambulance Service, which transported critically ill Hajj pilgrims directly from Al Mashaer to King Abdullah Medical City (KAMC), avoiding potential congestion and delays. During the 2012 Hajj season, KAMC successfully performed 12 open-heart surgeries for pilgrims. This figure demonstrates KAMC’s early commitment to providing life-saving support during the Hajj. KAMC performed 136 open-heart surgeries during the recent 2023 Hajj season. Of these, 52 were for pilgrims and 84 for non-pilgrims. This represents a significant increase and demonstrates KAMC’s improved capacity and experience in managing challenging cardiac care during periods of mass movement of people.
For example, King Abdullah Medical City (KAMC) successfully provided life-saving cardiovascular treatment to pilgrims from Russia, Syria, India and China during the recent Hajj season.
Saudi Arabia also aims to become a major player in the Middle East’s $100 billion medical tourism business. Two strategies are driving this ambitious goal. First, the government is spending heavily on high-quality medical facilities, as seen in the luxury resort Clinique La Prairie, which offers innovative treatments. Second, recognizing the importance of religious tourism, Saudi Arabia has pioneered programs such as the Knowledge Economic City Hub. The initiative effectively combines cutting-edge medical care with cultural and historical tours, primarily targeting faith-based travelers who require medical care during their pilgrimage. Industry analysts believe this strategic adjustment will have a significant economic impact. According to Saleh Al Habti, Saudi Arabia’s Deputy Minister of Investment and Exchange, the health sector’s contribution to GDP is projected to reach a staggering $66.6 billion by 2030, creating more than 245,000 jobs.
The role of public-private partnerships (PPPs)
In Saudi Arabia, public-private partnerships (PPPs) have become a key strategy to improve healthcare services, infrastructure, and overall quality. The Ministry of Health (MOH) and other government agencies are actively building a strong PPP framework to attract private sector involvement. PPPs involve a partnership between public and private companies, where the private partner provides funding, design knowledge, construction technology, and operational know-how. This allows the government to develop healthcare facilities without bearing all the financial burden.
For example, in June, the Ministry of Health granted a PPP to Artakassi Alliance Medical to enhance radiology and imaging services in seven hospitals, serving more than one million people. The Ministry of Health plans to privatize 290 hospitals and 2,300 medical facilities, increasing private sector participation from 40 percent to 65 percent. The initiative also creates the country’s first collaboration network to support hospital employees, improving the quality of care in rural areas. Such collaborations enable knowledge and skills transfer, benefiting local health workers through training programs and knowledge sharing.
The Ministry of Health plans to privatize 290 hospitals and 2,300 health facilities, increasing private sector participation from 40 percent to 65 percent.
PPPs offer significant benefits to governments in healthcare development. First, they reduce fiscal burdens by attracting private capital to support infrastructure improvements such as hospitals and clinics. Second, private sector capabilities in design and construction speed up the completion of new facilities, improving access to healthcare services. Finally, effective operations and management strategies put in place by the private partner improve resource allocation within healthcare institutions, resulting in long-term cost savings for governments.
The National Transformation Program (NTP) highlights planning and execution challenges, which are mitigated by current healthcare automation systems. A comprehensive regulatory framework addressing pricing, quality standards, dispute resolution, and risk sharing is essential for PPP success and private sector participation. Affordability and accessibility require close monitoring to ensure equitable service delivery. Adaptable PPPs are essential to meet changing healthcare requirements, and more private sector participation and technology-driven initiatives are expected to improve healthcare delivery in Saudi Arabia.
Digital Health Transformation
Digital health reform is another key pillar of the healthcare strategy, along with the promotion of telemedicine. The Ministry of Health has actively encouraged telemedicine, which has resulted in the establishment of around 10 teleradiology companies. The government has committed huge resources to healthcare, allocating 60% of the GCC healthcare budget. Vision 2030 proposes to invest $1.5 billion in healthcare information technology and telemedicine, and privatize hospitals to increase private sector participation from 40% to 65%. With this digitalization effort, Saudi Arabia hopes to develop a sustainable and efficient healthcare system for its growing population.
The implementation of telemedicine in Saudi Arabia faces challenges including cost, legal, cultural and infrastructure issues, despite significant government investment.
Telemedicine, smartphone apps, and remote sensors are all part of Saudi Arabia’s rapidly growing digital health environment. During the COVID-19 pandemic, the Ministry of Health (MOH) prioritized telemedicine to support care through remote contact. Investments reached US$39 billion in 2018, and are expected to reach 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, despite low public awareness. This digitalization is driven by increasing smartphone usage and the growing need to serve a growing rural population. The World Health Organization (WHO) ranks Saudi Arabia’s healthcare system 26th.Number The government has allocated more than $66.6 billion to health care and social development in the 2023 budget, signaling a commitment to improving digital health infrastructure.
The implementation of telehealth in Saudi Arabia faces challenges including cost, legal, cultural and infrastructure issues, despite significant government investment. Healthcare facilities operate independently with their own strategies, adding to the complexity. WHO highlights these barriers, along with limitations in knowledge, expertise, standards and priorities. It also highlighted that despite these progress, 52% of the population has not used the Seha app. This is often due to trust issues and unfamiliarity with digital health solutions.
Conclusion
Saudi Arabia is spending heavily on healthcare as part of its Vision 2030, which is having a dramatic impact on the country’s economy. Over the past few years, annual expenditures for health and social development have been on the rise. Expenditures have increased from USD 46.6 billion in 2018 to USD 68.2 billion in 2023, demonstrating continued efforts towards improving social welfare and healthcare services. Meanwhile, these expenditures on healthcare services and infrastructure have improved public health outcomes, enabling the Kingdom to become a regional healthcare powerhouse. Efforts in healthcare reform have led to improved economic output, job creation, and an increased contribution of the healthcare sector to GDP. The focus on prevention, human capital development, and the integration of artificial intelligence (AI) technologies demonstrate Saudi Arabia’s commitment to revolutionizing the healthcare industry. Thus, these investments will not only improve the quality of life for Saudi Arabian citizens, but will also contribute significantly to the diversification and long-term prosperity of the Kingdom’s economy, fully aligned with the key goals of Vision 2030.
Kabir Taneja He is a fellow in the Strategic Studies Program at the Observer Research Foundation.
Ahmed Fawaz Latif I am a research intern at the Observer Research Foundation.
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