KSA HEALTHCARE INDICATORS - Mecomed · KSA MARKET KSA HEALTHCARE FINANCING Public 61.7% of THE is...

KSA HEALTHCARE INDICATORSMarket Access Group

Report Q’4 2016

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CONTENT

➢ Key Healthcare Data

➢ Key Organizations

➢ Provision of Healthcare Services

➢ Financial Flow

➢ Payment Schemes

➢ Regulatory Approval

➢ Reimbursement

➢ Procurement

➢ Reform

➢ Healthcare cost & Demand Drivers

➢ Health Insurance

➢ Medical Devices Market

➢ Healthcare Market Forecast

SAUDI ARABIA MARKET OVERVIEW

For MECOMED member information only. This presentation does not constitute legal advice and may not be relied upon as such. Independent legal advice should be sought by members.

KSAMARKET

Population: 28.7 million, with an annual growth rate of 2.1% (2015)Total health expenditure in Saudi Arabia: US$30.2 billion in 2015, or 4.6% GDP

KEY HEALTHCARE DATA


KSAMARKET

KEY HEALTHCARE DATA


KSAMARKET

➢ The economy is heavily dependent on oil, with oil-derived income accounting for around 40% of the GDP, and around 90% of export revenues.

➢ Therefore, government spending fluctuates with the price of oil..

➢ The economic growth slowed down in 2015 from 3.4%, 1.5% in 2016 and expected 1.9% in 2017

➢ 2016 will mark the slowest growth rate for the economy since 2002.

➢ Lower government spending will affect Health and Social Development. Primarily capital investments, such as new hospitals and clinics, and the purchase and upgrade of medical devices and equipment.

➢ Many key organizations operate public healthcare facilities, and access depends on citizenship and whether a person is an employee in the public sector.

➢ In addition to this, there are different levels of private healthcare facilities throughout the country.

KEY HEALTHCARE DATA


KSAMARKET

GCC export oil revenues declined ~($360Bn) in 2015; Cumulative fiscal deficit to climb to $1.0 Trillion (relevant Data from 2016 needed here)

Economic diversification critical (KSA)

KSA GDP is 85% oil revenue dependent vs UAE at only 25%. However, with KSA GDP growth slowing to +1.5% in 2015 and forecast at +0.2% - 2.4% in 2016

2016 fiscal budget announced with significant austerity programs. These include;

▪ 2% reduction in like for like vs 2015 and 14% reduction as compared with finance ministry overrun estimate; total deficit in 2016 predicted to be $87Bn vs. $98Bn in 2015 (shortfall to be financed in Intl. debt markets)

▪ Healthcare and Social Development budget cut 34%

▪ Overhaul in Tax and spending

▪ Cut of state wages, salaries and allowances up to 15%

▪ Reduction of fuel subsidy; fuel costs expected to rise 50% in January 2016

▪ New airport tax for international passengers

▪ 5 year plan in place to change current structure of water and electricity prices

▪ New fees planned on harmful goods such as tobacco, soft drinks and etc.

▪ VAT will become reality (timing TBD)

▪ Increased visa entry fees (except for first time pilgrimage or Umrah performers)

▪ Public sector payments adapted to Gregorian calendar instead of Hijri calendar

KEY HEALTHCARE DATA


KSAMARKET Organization Function Key Activities

Ministry of Health (MOH) Regulator • supervise 22 regional directorates-general of health

affairs

• supervise health programs and monitor health services

in the public and private sector

• manage, plan and formulate health policies

• advise other government agencies and the private

sector on achieving health objectives

22 Regional directorates – general of

health affairs

Regulator and

operator

• implement policies, plans and programs of the MOH

• operate public health facilitates in the regions

• supervise and organize private sector services

Other governmental bodies (e.g. the

Ministry of Defense and Aviation)

Provider • operate their own hospitals

The Council of Cooperative Health

Insurance (CCHI)

Regulator of

health

insurance for

private

employees

• supervise and implement the CHI system (It’s CCHI)

• qualify and select insurance companies in the CHI

system

• regulate and monitor the healthcare services provided

to CHI enrollees

Regulatory

Saudi Food and Drug Authority (SFDA) Regulator • register medical products according to law

• authorizes marketing license

• monitor safety of medical products

KEY ORGANIZATIONS


http://www.moh.gov.sa/en/Pages/Default.aspx

http://www.cchi.gov.sa/en/Pages/default.aspx

http://www.sfda.gov.sa/en/Pages/default.aspx

KSAMARKET

ORGANIZATION OF KSA HEALTHCARE SYSTEM


KSAMARKET

HEALTHCARE PROVISION

➢ Healthcare is provided as a two-tier health provision system, which is heavily regulated and planned by the government.

Tier 1 includes a network of primary healthcare centers and clinics.

Tier 2 consists of a network of secondary/tertiary hospitals and specialized treatment facilities located mainly in major urban areas.

➢ Public Sector:

Primarily managed by the MOH.

Accessible by Saudi and non-Saudi working in the public sector (free)

Saudi and non-Saudi working in the private sector based on referrals (with charge, either covered by health insurance or out-of-pocket payment).

The public sector dominates healthcare provision, with state expenditure representing approximately 75% of total spending

➢ Private Sector: There is an advanced private sector that provides health services through its health facilities including hospitals, dispensaries, laboratories, pharmacies, and physiotherapy centers throughout the country.


KSAMARKET

HEALTHCARE PROVISION


KSAMARKET

FINANCIAL FLOW OF KSA HEALTHCARE SYSTEM


KSAMARKET

KSA HEALTHCARE FINANCING

Public

➢ 61.7% of THE is publicly financed.

➢ With government based funding, healthcare facilities owned by the MOH provide free access to comprehensive services for people working in the public sector

Private

➢ Private funding took a share of 38.3% of the THE in 2011.

➢ CCHI (41.9% of the private health expenditure). All employees working in the private sector and their dependents are obliged to be insured since 2007 (for non-Saudi employees) and 2008 (for Saudi employees).

➢ This scheme is funded by employers and the government, with no employee contribution.

➢ Out-of-pocket payments (58.1% of the private health expenditure): Enrollees of the CCHI need to pay some copayments when they get access to certain healthcare services.

➢ As of July 2015, a total of 10.2mn people were covered under the Kingdom's co-operative health insurance system, of whom about 3.3mn were Saudis


KSAMARKET

PAYMENT SCHEMES

Hospitals

➢ Public: Hospitals in the public sector are largely funded by global budgets. Currently these global budgets are not considered as financial constraints to the public hospitals.

➢ Hospitals are financed based on provided services.

➢ Private: Private hospitals are mostly funded based on fee-for-service.

➢ There is a rapid movement toward diagnostic related groups (DRG) DRG-based payment, though it is not yet common.

Physicians

➢ Physicians work as salary-based employees in either public or private hospitals in Saudi Arabia.

Although DRG payments are currently not common in Saudi Arabia, there is a trend in the private sector toward DRG-based payments.


KSAMARKET

REGULATORY APPROVAL AND AUTHORIZATION

➢ The Saudi Food and Drug Authority (SFDA) regulates the medical device market.

➢ All medical device manufacturers wishing to supply a medical device in Saudi Arabia require a SFDA Market Authorization.

➢ Manufacturers must provide the SFDA with documents demonstrating that the device is authorized on the market in one of the Global Harmonization Task Force members (the European Union, USA, Canada, Australia, or Japan).

➢ Submissions must be completed by a Saudi Arabian authorized representative, who is approved by the manufacturer.

➢ The Medical Devices Interim Regulations, issued in December 2008 by the SFDA, require products to be regulated throughout their lifecycle from conception and development to disposal


KSAMARKET

REIMBURSEMENT

➢ There is no formal pricing regulation in the Saudi Arabia. However, price is indirectly controlled via tender processes in the procurement phase.

➢ In the public sector there is a full funding system, meaning that all medical devices with a legal market authorization can take part in tenders.

➢ Hence, ‘reimbursement’ only applies to the private sector.

➢ Each private health insurance company makes their own decisions about the reimbursement of medical devices.


KSAMARKET

PROCUREMENT

Public

➢ Since the governments of the Gulf Cooperation Council (GCC) member states being the main provider and financier of healthcare, procurement of medical devices is to a large extend secured by public tenders.

➢ In order to participate in these tenders, foreign manufacturers usually need a local distributor or representative and often need to pre-qualify.

➢ Procurement Bodies:

➢ SGH (Saudi Gulf Hospital) tender: The SGH tender is the largest group purchasing organization (GPO) for medical products in the GCC member states. It organizes annual tenders, which combine the requirements of the governments of the six GCC countries and some other governmental institutions.

➢ Other government/semi-public bodies

➢ University Hospitals: University hospitals their own, independent purchasing department that organize tenders..

Private: Private hospitals have their own procurement departments, and there is no structured procurement procedure.


KSAMARKET

HEALTHCARE REFORM IN KSA

➢ The Saudi Arabian government plans to substantially increase its investment in the healthcare sector. Key objectives of the investment include:

➢ Enhancing and expanding the healthcare infrastructure with an increase in hospital bed capacity.

➢ The construction of new hospitals and healthcare centers.

➢ Improving the quality of Saudi medical personnel and promoting the growth of the private sector.

➢ The government is trying to ease the burden on the public healthcare system through the promotion of health insurance and privatization of healthcare facilities.

➢ A more rapid development in the private sector may occur.

➢ Health technology assessments (HTA) are likely to be used for procurement decision-making, but on hospital level.


KSAMARKET

HEALTHCARE DRIVERS

Healthcare Cost

Drivers

Poorly Controlled

HC Inflation

Medical complexity

Medical Technology

Healthcare Demand

Driver

LifeExpectancy

Increased the Public

Health Awareness

Population Growth

Life Style Diseases

Health Insurance


KSAMARKET

HEALTHCARE DEMAND DRIVER

Increased demand GCC 2006 - 2025


KSAMARKET

HEALTHCARE DEMAND DRIVER

Saudi rank No.# 3 on diabetes prevalence globally

Prevalence of Obesity in the Saudi is almost triple the global averages


KSAMARKET

PILGRIM HEALTH

➢ Saudi Arabia is the location of the two holiest cities in Islam, Mecca and Medina. In 2012, over 3.0mn pilgrims visited Saudi Arabia during the annual Hajj, or pilgrimage season.

➢ While in the country, the Saudi government is responsible for the healthcare of these pilgrims, the Red Crescent Society, the Ministry of the Interior and the Armed Forces all provide medical facilities and treatment along the major pilgrimage routes and at the sites themselves.


KSAMARKET

HEALTH INSURANCE IN KSA

Age structure


KSAMARKET

NATIONAL INSURANCE

➢ General Organization for Social Insurance (GOSI) is a "semi-state body" that administers the Kingdom's national insurance scheme.

➢ GOSI covers industrial workers and pays allowances compensation to individuals and families within the scheme. It is funded by employers and the government, with no employee contribution.


KSAMARKET

PRIVATE INSURANCE

➢ Private health insurance is compulsory for all expatriate workers and Saudi nationals working in the private sector. It started in 2001, when it was announced that Saudi employers would be required to provide health insurance coverage for their foreign workers.

➢ The scheme has been introduced to relieve the burden caused by foreign workers that are treated by government hospitals each year.

➢ All expatriate workers, and their families, must be covered under the scheme covering most medical costs, excluding HIV/AIDS treatment, mental disorders, transplants and non-essential procedures.

➢ Expatriates without insurance will not be granted a resident permit.


KSAMARKET

PRIVATE INSURANCE

➢ In July 2014, the Council of Cooperative Health Insurance (CCHI) applied new regulations on all insurance policies.

➢ The key changes involve a maximum insurance payout, spousal cover, fertility treatment and protection for the recently unemployed.

➢ It was revealed in June 2014 that around 16mn Saudis, including government workers, students and the unemployed, do not have private medical insurance.

➢ From May 2014, all private businesses must provide medical insurance for their workers and families, including Saudis and expatriates. It does not apply to the children of Saudi women married to foreign men, or the foreign wives of Saudis.

➢ The CCHI has delayed a proposal to introduce medical insurance for all Saudis by five years based on the findings of a recent study.


KSAMARKET

HI TRANSFORMATION STRATEGIES

• Open the markets for the private Health Insurers.

• Their experience in Risk pooling & data management will drive more efficiency to the HC system.

Private HI

• Obligates the employers to cover their employee HI

• As a major reform, It was done in phases

Mandatory HI Regulations


KSAMARKET

STRATEGIC ISSUED FACING HEALTH INSURERS IN KSA

Too many competitors

• KSA licensed 11 private HI with another 14 awaiting.

• They need to differentiate themselves.

Uncertain long term Profitability

• Lack of data

• Changes in Regulations.

• Their plan for profit is: population consolidation & to get bigger market share through value added services.

Need to improve HC Quality

• The main objective of the transformation is to improve the cost control measures.

• Developing a HC database.


KSAMARKET

MEDICAL DEVICE MARKET PERFORMANCE

➢ Saudi Arabia's medical device market has experienced volatile but overwhelmingly positive growth over the past five years.

➢ The country was slightly affected by the downturn in the global economy in 2009. This resulted in lower oil prices and subsequently growth in medical device sales declined to just 1.3% in 2010.

➢ The following years saw a strong rebound in growth, with the market expanding by 16.6% in 2011 and 22.1% in 2012.

➢ The market recorded a 2008-2013 CAGR of 12.7%, ranging from 9.6% for diagnostic


KSAMARKET

MEDICAL DEVICE MARKET PERFORMANCE

➢ Saudi Arabia has the largest medical device market in the MEA region, valued at SAR 7,189mn (US$1,920mn), equal to SAR249 (US$67) in per capita terms.

➢ The market is expected to rise by a 2013-2018 CAGR of 9.3%.

➢ This is expected to take the value of the market to US$2,999mn, equal to US.$95.5 per capita.

➢ Saudi Arabia produces very little medical equipment, with around 97% of the market being supplied by imports.

➢ Currently, around two-thirds of health expenditure is by the public sector, while the remaining third is spent by the private sector. This balance is likely to change in the near future, as the government tries to ease the burden on the public healthcare system through the promotion of health insurance and privatization of healthcare facilities.


KSAMARKET

HEALTH MARKET FORECAST 2030

➢ In August 2016, Saudi Arabia's Ministry of Health (MoH) announced plans to employ 100,000 Saudi nationals in the healthcare sector by 2030. As part of the Kingdom's 'Vision 2030' National

➢ Transformation Plans (NTP), the MoH has already formed partnerships with specialised educational establishments to help reach its recruitment target.

➢ In July 2016, the Kingdom's MoH revealed its target to boost the private sectors' contribution towards total healthcare expenditure by 10% by 2020.


Mecomed Medical Technology Association Middle East& North Africa

Executive Office No. 01 | Floor 2Block C | Building No. 27 | Dubai Healthcare City | United Arab Emirates

+971 50 70 80 [email protected]

www.mecomed.com

KSA HEALTHCARE INDICATORS - Mecomed · KSA MARKET KSA HEALTHCARE FINANCING Public 61.7% of THE is...

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