Special Report: Healthy growth
Saudi's population is creating greater demand for healthcare services
With a rapidly-growing population and improving life expectancy, the demand for healthcare services in Saudi Arabia is set to soar. The market, which was valued at $14bn in 2010, is predicted to rise to $25bn by 2015.
Mansoor Ahmed, a director of development services at real estate consultancy Colliers International, says that the capacity for beds within hospitals is set to grow from 57,000 to 64,000 in the same period.
Major new projects like King Abdullah Medical City in Makkah, the King Abdullah Bin Abdulaziz Project for the Development of Security Forces Medical Complexes in Riyadh and Jeddah, and the King Khalid Medical Center in Dammam are underway with billions of dollars allocated to them.
Other facilities across the Kingdom are being upgraded, such as the King Fahad Medical City in Riyadh, for which Habtoor Leighton Group was awarded a $136m contract to expand the site last year.
Colliers estimates that the population of Saudi Arabia will reach 38.6m by 2020, rising from approximately 28.3m last year. Saudi nationals will make up around 24m of the 2020 population, with the number of non-Saudis expected to reach 14.6m.
“KSA has the largest and one of the fastest growing population in the GCC,” Ahmed said. He added that life expectancy has risen from just 45 years in 1960 to 74 years currently. The bulk of the expected population growth is expected in cities as the population rapidly urbanises.
“The expanding population, coupled with rising average income, will continue to feed demand for infrastructure and services.”
The development of social infrastructure is seen as a key priority by the Saudi government. Recently-published figures put the size of spending on healthcare at $27.4bn for 2013, This is set to rise to $47.7bn by 2017.
The investment is needed, Ahmed says. There is a current shortage in the number of beds required, which is currently worsening before major new hospital programmes are finished.
There is also a “tremendous increase in lifestyle-related diseases”, such as diabetes, hypertension, obesity and cardiovascular and kidney diseases.
“Presently, the private sector plays an important the role in providing care for these diseases. However, the government needs to take an active role in prevention through educating people and offering preventive services,” Ahmed says.
Indeed, the current market for healthcare provision is dominated by insurance companies and is therefore driven by cost pressures.
“Unless a set regulation is introduced to monitor pricing, healthcare access and quality of care in private hospitals (the sector) will continue to face lower profit margins and collection delays which will result in lower quality of care,” Ahmed says.
“Most importantly, one of the major costs for healthcare providers is spending on qualified medical staff. A large number of doctors, nurses, and paramedical staff in KSA migrate to western countries after a few years due to better opportunities and training facilities.
“In addition, the current Saudi regulations for recruitment and Saudization continue to further increase the staff cost due to limited available resources.”
The growth in medical insurance in the Kingdom has been rapid, and has increased dramatically since 2005 when health insurance was made compulsory for all non-Saudi nationals working in the country - provided by employers or sponsors. This move that was extended to all nationals working in the private sector in 2008.
Such moves are likely to boost the market for health insurance, while the market for private sector provision of healthcare is also set to increase rapidly - from $13.3bn in 2012 to $15.3bn in 2015 and $28.6bn in 2020.
Moreover, Ahmed says that with the exception of a few major players like Saudi German Hospital and Dallah Hospitals, the market remains quite fragmented, with opportunities for consolidation and investment.
“The healthcare sector presents lucrative investment opportunities for international investors; however, the high cost of land, difficulties in hiring and retaining manpower and the ownership laws make it difficult for to invest in KSA at present,” he states.
“The overall sentiments are high and a large number of GCC operators and investors are very much interested to expand into the KSA healthcare sector.
“The government is currently offering soft loan incentives of up to $53.3m (SR200m), which acts as a stimulus for the private sector, including international investors. However, foreign investors are still cautious to invest in the KSA healthcare sector, unless the main challenges are removed.”
The other major factor to be aware of is urbanisation, with the growing population focused on major cities. As a result, many of the hospitals planned appear to be based on key cities such as Riyadh, Jeddah, Dammam and Khobar.
“The delivery of quality services is far weaker in the suburbs and other main cities in KSA,” Ahmed adds.
“This creates an opportunity for the private sector, however, the dynamics and economics may not be very appealing.
Henning Larsen Architects CEO Niels Fuglsang and design director Simon Ingvartsen explain the principles of good hospital design.
Hospital architecture is not just a matter of constructing a building. It is a question of balancing a professional environment, efficient workflow, social and environmental sustainability, economy and most importantly human beings.
Looking at the hospital’s development through history of architecture, structures have changed along with medical research and treatment philosophy. Nowadays, town-like structures with varied spaces are preferred and interaction with the rest of the society is highly prioritised. Furthermore it has been generally approved that efficient and aesthetical physical surroundings are crucial to the healing process.
The tendencies are large and compact complexes aiming for short-term efficiency and the creation of concentrated professional environments. Together with the rising acknowledgement of the importance of quality in the surrounding outdoor spaces, these large complexes can be considered as small towns, rather than large buildings.
Architecture plays one of its most important roles in healthcare. Dealing with humans in a highly-vulnerable state is the greatest challenge for architects. And the ability to combine architecture and art with medical science, logistics, technical equipment and building technology is of great importance to design environments that meet the needs of patients, relatives, medical staff and researchers.
Architects and hospital planners face great challenges. Hospitals and research facilities are of great, and constantly increasing, complexity. The programmatic processes that take place before the actual building process - including user groups, experts and consultants - are becoming more and more comprehensive. By looking at the large complexes as small cities within the city, focus is not only on the built environment but also on the infrastructural logistics and the outdoor spaces surrounding the structures.