Challenges and Opportunities of Healthcare Economics in Saudi Arabia

Economic Challenges Confronting Healthcare

Healthcare costs have been on the rise globally, with many nations struggling to limit the growth of healthcare expenditures and trying to find innovative ways to improve efficiency. What are the major challenges that Saudi Arabia is facing in healthcare, especially in light of Saudi Vision 2030’s initiatives? How can health economics help solve these challenges?

Be sure to support your statements with logic and argument, citing all sources referenced

In general, most governments aim to provide adequate healthcare services to their citizens. In fact, healthcare is at the center of the national development goals for most countries. Healthcare delivery involves both the private and public sectors. Regardless of the delivery method, there are significant economic challenges that limit the access and adequacy of healthcare services to the public. Many studies have documented the economic challenges confronting healthcare (Teel, 2018). We will briefly discuss the top three challenges in no particular order.

With growth in income, access to education, and widely available information, there is an increasing awareness about health, and hence, an increase in the demand for healthcare. Healthcare is growing both in scope and in the diversity of services provided. Dental braces and cosmetic work, formerly health services afforded by only the wealthy, are now common procedures due to growing patient consumerism (Healthcare Management, 2019).

Although there are variations, there is a trend towards increasing healthcare costs. This is true both in developed and developing economies. Two major drivers of increased healthcare costs are drug prices and a shortage of healthcare professionals (Healthcare Management, 2019; Teel, 2018). Successful drug development takes a long time and costs billions of dollars. Pharmaceuticals need to recoup their investment and require patent protection. There are growing tensions between pharmaceutical companies and policy-makers to balance financial reward with access to fair-priced generic drugs.

Many developed countries experience a shortage of healthcare professionals due in part to fatigue and burnout. Currently, the United States has a shortage of nurses. Saudi Arabia relies on expat health professionals, which have a high turnover. Also, the cost of hiring, relocating, and other incentive packages are very high for many hospitals.

Healthcare funding is at the top of many national agendas and budget discussions. Even countries endowed with natural resources, such as Saudi Arabia, experience budgetary pressure to fund healthcare (KPMG, 2018). Due to rising costs and the increase in demand, access to healthcare is very expensive for low income households. Governments are expected to either directly provide the services, or subsidize the services to make it affordable to these households.

These economic challenges call for a rational decision framework to optimize limited resources. In this course, we will learn various tools and methods that will help us address these challenges.

Research abounds supporting the notion that a healthy populace is more productive. More production equals more taxes. More taxes equals more government programs, and the cycle continues and grows. A healthy population lives longer, saves, and invests in infrastructure (WHO, 2017). Whereas other countries and their governments have had time to respond to changing circumstances and develop programs for their population, the Kingdom of Saudi Arabia has created programs in an accelerated time frame. As a result, some of the programs are still being developed; healthcare is central among them. Saudi Arabia's Vision 2030 includes 16 strategic objectives, 17 key indicators, and 16 targets for health (Vision 2030, 2019).

Saudi Arabia's healthcare field is growing and diversifying. Saudi Arabia offers universal healthcare, which means that all citizens have access to a bundle of healthcare services. According to KPMG (2018) Saudi Arabia's budget for 2019 is SAR 1,106 Billion, which has increased by 7.4% from 2018, out of which 15.6% goes to health and social development. These resources are expensive and are creating an increasing strain on the government's budget. Look at the breakdown of the KSA's expenditures by component (left) and by sector (right).

Healthcare is the third largest expense. While the Kingdom of Saudi Arabia is cutting back on military and education expenses, healthcare continues to grow.

The economics of healthcare in Saudi Arabia, like the rest of the world, is that there is an increasing need for demand-and-costs analyses due to the limited amount of resources available. This will require the Ministry of Health (MOH) in Saudi Arabia to look for innovative means to allocate resources in order to provide optimal healthcare to its residents (Al-Hanawi, Alsharqi, Almazrou, & Vaidya, 2018). In fact, one of the strategic objectives in Saudi Arabia's Vision 2030 for health is to "increase the efficient allocation of available resources" (Vision 2030, 2019). A deeper understanding of healthcare economics will help achieve better health outcomes for all citizens.