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 The Ministry of Health has been in talks with companies interested
in managing the Saad Specialist Hospital in Khobar, which is one of
the leading cancer treatment facilities in the Gulf but has been
closed since late last year - a casualty of a multi-billion dollar
debt row gripping the family that owns it.
United Arab Emirates-based healthcare provider NMC had been seen as
a frontrunner to win a seven-year contract to run the 750-bed
hospital, according to three sources familiar with the matter. But
bidding has been held up by the government's unwillingness to extend
the contract beyond seven years and investor concern about the debt
dispute involving the hospital's owner, the sources said.
The ministry's handling of the hospital's future is separate from a
privatization drive the kingdom is embarking on, but the process is
being closely watched as an indication of how the kingdom engages
with foreign investors.
"Getting someone like NMC in would send a good signal to the private
sector that the Ministry of Health is getting it right," said one
private sector healthcare professional. "But the economics of the
deal don't look likely to make that happen."
The Ministry of Health did not respond to a request for comment.
A contract limited to seven years would make it hard to turn a
profit after the initial time and investment required to get the
hospital operational again, the sources said, adding that the
facility required some maintenance.
NMC's next move is unclear, but the sources said that unless the
contract terms change, NMC and other foreign private sector
investors are reluctant to become involved.
"We don't comment on market speculation or rumors but I can say that
NMC has an excellent working relationship with the Saudi government,
which has been very supportive of our investments in the kingdom,"
NMC Health's Chief Executive Prasanth Manghat told Reuters in
response to a request for comment.
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Healthcare is one of the sectors the Saudi government identified as
an early candidate for privatization under its Vision 2030 plan,
announced in 2016.
The country's healthcare market is projected to reach $27 billion by
2020, up from around $16 billion 2015, but there has been little
progress on privatizations since Vision 2030 was announced.
Sources familiar with the privatization process say a lack of
organization within the ministry about who is in charge of the
process is also holding back plans.
A tender seeking financial advisers for the privatization of 55
primary healthcare units in Riyadh remains on hold, as does another
tender issued last year to manage the intensive care units of nine
hospitals throughout the kingdom, said two sources.
A flurry of anticipated public-private partnerships covering
radiology, laboratory, long-term care, primary care and pharmacy
have also not yet materialized, with the sources saying the overall
process was at least six months behind schedule.
The Saad Specialist Hospital is owned by family members of tycoon
Maan al-Sanea but the government stepped in last year to outsource
the running of the facility after it became weighed down by
financial problems and al-Sanea was detained by authorities for
unpaid debt.
Prospective investors are worried, among other things, about whether
the debt dispute involving al-Sanea and Saad Group might have
fallout for the hospital, the sources said.
(Reporting By Tom Arnold; Editing by Susan Fenton)
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