Saudi Arabia Woos U.S. Investors for Its Health Care Services

(Bloomberg) -- Saudi Arabia is seeking foreign investment in its health care industry as it plans to turn hundreds of government-owned hospitals and thousands of primary care centers into better-run corporations, Health Minister Tawfig Al-Rabiah said.

Nearly 80 percent of health care in Saudi Arabia is provided by the government, Al-Rabiah said in an interview in Boston. But the kingdom “is trying to move the private sector to invest more,” he said at a gathering that attracted executives including General Electric Co. Chief Executive Officer Jeffrey Immelt.

The kingdom wants U.S. companies to invest in various health care and pharmaceutical services, he said. “Whether they want to invest 100 percent directly or with local partners, it’s encouraged.”

Saudi Arabia is moving to privatize entire industries as part of a plan to overhaul its economy, shrink its budget deficit and wean itself off oil, which accounts for more than 70 percent of government revenue. The center piece of Deputy Crown Prince Mohammed bin Salman’s so-called Vision 2030 is selling a stake in oil giant Aramco in 2018 and investing the proceeds domestically and overseas.

Conservative Plans

So far, plans for the health care sector are more conservative. Starting next year, authorities intend to create multiple corporations to manage 279 hospitals and 2,300 primary care centers. The process will separate regulation from operations, but the government will retain ownership, Al-Rabiah said. 

“At least for the time being, we don’t have any revenue aim,” he said. “The aim is efficiency and quality.” Officials haven’t decided if the corporations will eventually be spun out of the government, Al-Rabiah said.

In an interview broadcast Tuesday on Saudi television, Prince Mohammed hinted that could happen in the future.

“In successful countries worldwide, you find that the health-care sector is privatized,” he said. “In the United States, the government doesn’t own hospitals. All hospitals are owned either by the private sector or by the non-profit sector.”

Saudi Arabia hasn’t stopped or slowed orders for medical devices, Al-Rabiah added. Medtronic Plc Chief Executive Officer Omar Ishrak had previously said that the company was facing a decline in Saudi business. The issue largely had “to do with built-up inventory of implantable devices in the Saudi system itself,” which they’re cleaning out now, Ishrak said in a February 2017 earnings call.

“I just had a meeting with the chairman and CEO of Medtronic and there were no complaints at all,” Al-Rabiah said. Orders “are as scheduled and everything is going smooth as it is,” he said.

To contact the reporters on this story: Doni Bloomfield in Boston at mbloomfiel12@bloomberg.net, Vivian Nereim in Riyadh at vnereim@bloomberg.net.

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Mark Williams