The impact of PPPs in accelerating healthcare in the GCC

The rising healthcare expenditure burden, greater need for specialized treatments and a growing ageing population, among other reasons, make GCC countries ideal candidates for public-private partnerships.

With a rise in the elderly population and growing prevalence of lifestyle and chronic diseases across the world, including the GCC, there is a greater need for quality health infrastructure including primary care centers, elderly and long-term care, dialysis units, and more. Moreover, the region has had consistent population growth, with statistics suggesting doubling over the last two decades—from 26.2 million in 1995 to 56.4 million in 2021. It is projected to reach more than 66 million in 2030.

In the last two decades, healthcare expenditure as a percentage of GDP has shot up across all its countries and is projected to reach USD 124 billion in 2028. However, the public healthcare sector across the GCC countries is stretched thin. The statistics (given below) reveal the burden is being borne by the governments, which is unsustainable in the long run. All of the GCC countries have seen an increase in the healthcare spending as a percentage of GDP between 2000 and 2021. In the same period, the share of government healthcare expenditure has also increased for majority of the countries, indicating an increasing burden on public finances.

Currently, there are gaps in the availability of adequate primary, secondary, and tertiary care services. Additionally, attracting and retaining manpower in the public healthcare sector has been a recurring issue.

The pandemic was an eye-opener in several ways, offering insights into the impending transformation that the healthcare sector in the GCC requires. There was a significant decline in out-bound medical tourism due to COVID-induced travel restrictions, highlighting the need to build stronger local capacity and capabilities in medical care. 

With increased focus on personalized medicine, healthcare awareness, a preference for specialized health services, increase in insurance penetration which is leading to increase in access to health services and an overall increase in the population in the region, governments across GCC countries are looking to expand the role of the private sector. This can happen through higher insurance coverage for the population, providing a thriving investment environment for private sector investment in increasing the capacity as well as PPP opportunities.

As the name suggests, PPP is a long-term agreement between public and private parties, under which the private party is responsible for developing or managing a public asset or service, with its compensation linked to performance, demand or use of that asset or service.

Thus, addressing gaps in healthcare delivery through better access, efficiency and quality services can happen by bringing in the private sector to partner with the government.

Governments across the GCC have proactively brought in legislation which can support PPPs within the healthcare sector.

Kuwait was one of the early adopters of the PPP Law (Law No. 116 of 2014), providing a detailed framework for PPP projects, including healthcare, way back in 2014.

Saudi Arabia has also implemented significant policies to promote PPPs in the healthcare sector as part of its Vision 2030 initiative. The National Center for Privatization (NCP) was established to oversee and regulate PPP projects across various sectors, including healthcare. In July 2018, the NCP prepared a draft private sector participation law (the Draft PSP Law) with a view to establishing a standardised regulatory framework for PPPs.

Oman enacted the Public-Private Partnership Law in 2019 (Royal Decree No. 52/2019) to provide a legal framework for PPP projects.

The UAE introduced the Federal Decree-Law No. 12 in 2023, while Bahrain implemented Decision No. 30/2022 Issuing the Guide Regulating Partnerships between Public and Private Sectors, which provides further guidance in the context of PPPs over the previous legislation.

Qatar has introduced several policies to promote PPPs in the healthcare sector as part of its National Health Strategy 2018-2022. Law No. 12 of 2020 on the Regulation of Public Private Partnerships (‘PPP Law’) was recently promulgated in Qatar. The PPP Law aims to develop the Qatar private sector and encourage competition to boost the role and participation of the private sector in developing the local economy.

Any healthcare facility offers infrastructure, clinical and non-clinical services (further classified into hard and soft facility management services). Infrastructure PPPs do not include any clinical services under the scope of services of the private sector. These contracts are very often Design-Build-Finance-Maintain (DBFM) contracts and have been seen in countries like Italy, Australia, UK, India, Turkey, and Canada. On the other hand, integrated PPPs have a wider scope of services under the purview of the private sector.

In the GCC region, Saudi Arabia’s NCP has been a pioneer in rolling out PPPs within the healthcare sector. There are 19 PPPs in all out of which four are closed and were already awarded. Six were marked as non-clinical while others are under evaluation. The timeline for healthcare PPPs is much longer and takes anywhere between 10 to 25 years to execute. The Al Ansar Hospital PPP in Madinah was the first PPP hospital project awarded by the Ministry of Health Saudi Arabia to Alghanim International – Tamasuk consortium. In June 2023, the Ministry of Health Saudi Arabia awarded a PPP to Altakassusi Alliance Medical following an open tender, to extend better radiology and imaging services to over one million beneficiaries across seven hospitals. There are also PPPs ongoing in the areas of long-term care and skilled nursing homes, home health care, virtual care, dialysis services and mental health, among others.

The growing preference for PPPs presents a huge opportunity for the GCC to advance its healthcare sector through private sector expertise and resources, including the provision of clinical services or medical equipment to meet the large-scale health demands of its population.

As part of the process, the government generally employs financial, technical, and legal advisors to evaluate the facility, determine the healthcare needs and the size of the project, conduct a thorough due diligence of the assets involved and finally run a bid process in accordance with the local laws and regulations.

JLL Healthcare is also actively involved as a technical advisor in such PPP projects in the region. It will continue to lend its expertise in conducting needs assessment studies, commercial, technical, and operational due diligence, business planning, feasibility studies, and market entry strategies, helping streamline transaction processes and boosting the competitiveness of the region’s prominent healthcare brands.