The Ministry of Health (MoH) of Saudi Arabia published the Expression of Interest (EOI) for 3 Public-Private-Partnership (PPP) projects in each of the Central Region of Riyadh and the Eastern Region of Dammam. The MOH has fixed the final date to submit the Expression of Interests on April 13, 2023, by 3:00 PM as per KSA time.
Background of Ministry of Health PPP Projects
These PPP Health projects will be the first across the Second Health Cluster in the Central Region of KSA (Riyadh), and in the First Health Cluster in the Eastern Region of KSA (Dammam). The aim of these projects is to contribute to achieving Vision 2030’s key objective by increasing private sector participation in the Saudi healthcare sector. The Vision 2030 strategic objectives in healthcare is targeting the privatisation of 290 hospitals and 2,300 primary health centres by 2030, includiing other Private Sector Participation arrangements opportunities.
The Kingdom’s assessed population is approximately 36 million that makes it the largest country in the Gulf Cooperation Council (GCC). As a result, Saudi Arabia spends the largest on its healthcare across the Gulf region which is approximately 60% of the GCC countries’ healthcare expenditure. The Saudi Government’s 2022 budget allocated more than USD 36.8 billion to Health and Social Development. The 14.4% of Saudi budget expenditure on health, making it the third largest recipient of government funding. Saudi Arabia’s growing elderly population in 2019 was 3.4% which is estimated to become approximately 17% in 2050. This growing elderly population of Saudi Arabia with increased life expectancy of both females and males need increased expenditure and PPP model of health infrasture for post-acute rehabilitation by 2030. Such types of needs are due to increasing lifestyle and secondary diseases that lead to strokes and heart attacks. In addition to above, 7% of the total population of the Kingdom is disabled which is expected to grow by 1.3% annually between 2020-30. It is another segment of society which will also need post-acute rehabilitation facilities in future.
Ministry of Health PPP Projects’ Details
Saudi Arabia’s Ministry of Health (MoH) identified a gap between demand and supply in the healthcare services across the Kingdom. To fill up this gap by extending the privatization agenda under the Vision 2030, the Ministry of Health has decided to introduce a diverse nature of extended healthcare services under the PPP model. These healthcare services on PPP model will be supported by three projects across the Health Cluster R2 in the Central Region of Riyadh, and in the Health Cluster E1 in the Eastern Region of Dammam. These 3 health projects are:
- LTC and SNH Project in Riyadh and Dammam Region
- Medical Rehabilitation Hospital with Inpatient-Outpatient Facility.
- Home Healthcare (HHC) Facility.
1. Long-Term Care (LTC) and Skilled Nursing Home (SNH) Projects in Riyadh & Dammam
These both projects, LTC and SNH, include the Design, Build, Finance, Operate and Maintain (DBFOM) by the project companies based on the PPP model. The operation of these facilities will include both clinical and non-clinical. The project company will be assigned the DBFOM activities of 200 beds for the LTC facility and 100 beds for SNH facility in each of the Central Region of KSA (Riyadh) and the Eastern Region of KSA (Dammam) which become 400 beds for LTC and 200 beds for SNH. The duration of contract is supposed to be of 23 years in which 3 years for construction work and 20 years for operations period. The public private partnership (PPP) model will be maintained through a special purpose vehicle or a project company. This Project Company can be either a developer or an operator of the project. There can be important operators shareholding in the Project Company. The Project Company will be provided two distinct payment flows, one for infrastructure facility as per availability, and other for provision of clinical services based on facility’s activity with minimum volume guaranteed by Saudi MoH. Interested parties can submit their EOI here.
2. Medical Rehabilitation Hospital with Inpatient-Outpatient Facility
The Medical Rehabilitation Hospital project consists of the DBFOM of 150 beds, and 2 outpatient facilities of 120,000 outpatient rehabilitation sessions annually for each of the Central and Eastern regions of KSA. Thus, project capacity is of 300 Medical Rehabilitation Hospitals (150 for each region or cluster) and 240000 Rehab Outpatient Sessions annually (120000 for each cluster or region). The contract for this project is also expected to be for 23 years ( 3 years construction & 20 years operations) as in the above project.
In this rehabilitation project the partnership model with the private sector will be also maintained through a Project Company. Here the Project Company can either be developer or operator of the project. In this case too the payment to the Project Company will be disbursed in two ways, one for infrastructure and other for clinical services based on activity with minimum volume guarantees from the Saudi Ministry of Health (MoH). Interested parties can submit their EOI “here.
3. Home Healthcare (HHC) Facility
The Saudi Ministry of Health in association (collaboration) of the National Center for Privatization (NCP) and PPP declares the launch of Expression of Interest (EOI) for home healthcare project. It will be the first home healthcare project in the Central Region (Second Health Cluster) and in the Eastern Region (First Health Cluster). This Project consists of clinical operation and maintenance of 5,000 active patients for Second Health Cluster (Riyadh Region) and First Health Cluster (Dammam Region). Thus, 10,000 active patients (AP) for both Central and Eastern regions of KSA. The duration of the contract will be of 11 years (1 year pre-operations + 10 years operations period). The service contract for the Project is supposed to be delivered from facilities either rented or owned by the private sector, without the requirement to incorporate a Project Company. In this Project the private sector will receive one activity-based payment only. Interested parties of the private sector can submit their EOI “here.
Required Experience of Participating Parties
Interested private sector parties for the above projects who have a track-record of extensive and relevant quality experience in designing, building, operating, financing, implementing and maintaining projects of healthcare facilities and services are invited to submit an EOI before the last date on April 13, 2023. At the EOI submission process stage interested participants may wish to form a consortium to bid for a Project. But interested private companies or firms should respond individually to the EOI and mention their individual expertise across the required key areas. However, the applicant parties can indicate their expected consortium partners.
At the qualification stage for each project, participating private parties will be anticipated to give full details of the consortium partners if applicable in the case. After submission of EOI, the Ministry of Helath is likely to publish the list of the respondents to the EOI,for the purpose of facilitating the formation of consortia among the interested parties to execute the project. The interested private sector parties can submit their EOI in one or more of the projects mentioned above for either of the two locations (Central and Eastern Regions).
Legal & Regulatory Reforms for FDI & PPP in Health Sector
Recently an arrangement of regulatory and legal reforms have been made in the Kingdom of Saudi Arabia to attract more foreign investment and accommodate PPPs in different sectors, including health services. To make it operating the Saudi Private Health Institutions Law permitted foreign investors in 2019 to own, operate, and manage hospitals and health centres in the Kingdom through public private partnership (PPPs) based on build-operate-transfer models. However, private sector contribution to government funded projects is not new in the Kingdom, but it was largely restricted to certain sectors, and not allowed in healthcare services. In addition to above, the National Center for Privatization & PPP (NCP) in March 2021 published the regulatory base for private sector participation and PPPs in Saudi Arabia through the Private Sector Participation Law (PSP Law) and its implementing regulations.
Objective of the PSP Law is to increase private sector participation in Saudi infrastructure projects and in different public services to citizens and residents through PPPs models and the privatization of the Kingdom public sector assets. To make the objective successful, the PSP Law covers all contractual relationships between the public and private sector that relate to infrastructure or the delivery of public services in Saudi Arabia, if certain required parameters are met. The public-private-partnerships (PPPs) is one of the main pillars for driving reforms in the Kingdom. The Ministry of Health in Saudi Arabia has announced several opportunities through its PPP program for increasing private sector involvement in 8 strategic areas:
- Primary care
- Hospital commissioning
- The construction of medical cities
- Rehabilitation
- Radiology
- Long-term care
- Home care, and
- Laboratories.