KSA MOH: EOI for LTC & SNH, Medical Rehab, and HHC Projects in Riyadh & Eastern Region

The Saudi Ministry of Health (“MOH“) published the Expression of Interest (“EOI“) for three Public Private Partnership (“PPP“) projects in each of Riyadh (Central Region) and Dammam (Eastern Region). The final date to submit the EOIs is on 13 April 2023, by 3:00 PM KSA time.

Opportunity Background

These projects will be the first across the Second Health Cluster (Riyadh), in the Central Region, and in the First Health Cluster (Dammam), in the Eastern Region. The projects aim to contribute to a key objective of Vision 2030, by increasing private sector participation in the healthcare sector. The Vision 2030 strategic objectives include a number that are dedicated to healthcare, including targeting the privatisation of 290 hospitals and 2,300 primary health centres by 2030 and other Private Sector Participation arrangements opportunities.

Saudi’s estimated population of approximately 36 million makes it the largest country in the Gulf Cooperation Council (“GCC“). Consequently, KSA is the largest spender on healthcare across the MENA region; it accounts for 60 per cent of the GCC countries’ healthcare expenditure. The 2022 budget allocated more than USD 36.8 Bn for Health and Social Development, 14.4% of Saudi Arabia’s budget expenditure, making the sector the Kingdom’s third largest recipient of government funding.

Saudi has a growing elderly population (3.4% are 65 yrs + in 2019, with a forecast of 17% in 2050). With a growing and ageing Saudi population and increased life expectancy of both females and males, there is an increased need for post-acute rehabilitation by 2030, for example. Such needs are related to increasing lifestyle disease and secondary disease, leading to strokes and heart attacks. Further, 7% of the total Saudi population is classified as disabled and it is expected to grow by 1.3% p.a. between 2020-30, which will also drive the need for post-acute rehabilitation facilities.

The Projects Specifics

The MOH identified a demand-supply gap in the extended care services across KSA. In order to address this gap and to further the privatization agenda under the Vision 2030, MOH has decided to procure a variety of extended healthcare services under a Public Private Partnership (“PPP”) model by deploying three projects across each of Riyadh (cluster R2) in the central region of KSA and Dammam (cluster E1) in the eastern region of KSA (“Projects”).

The projects are as follows:

1. Long-Term Care (“LTC”) and Skilled Nursing Home (“SNH”) project:The project includes the Design, Build, Finance, Operate (clinical and non-clinical) and Maintain (“DBFOM“) of 200 beds for the LTC facility and 100 bed for SNH (for each of Riyadh and Dammam region – therefore 400 and 200 total, respectively). The contract duration is expected to be 23 years, including 3-years construction and 20-years operations period. The partnership model with the private sector will be maintained through a project company, or a special purpose vehicle (“Project Company“).  This Project Company can either be developer or an operator-led (within a consortium with significant operator shareholding in the Project Company). The Project Company will receive two distinct payment streams: 1) infrastructure facility (based on availability); and 2) provision of clinical services (based on activity with minimum volume guarantees from MOH). Submit an EOI here.
2. Medical Rehabilitation (Inpatient & Outpatient) Hospital:The project includes the DBFOM of 150 beds, and 2 outpatient facilities (120,000 outpatient rehabilitation sessions annually) (for each of Riyadh and Dammam region). The contract is expected to be for 23 years, including 3-year construction and 20-years operations period. The partnership model with the private sector will be maintained through a Project Company. This Project Company can either be developer or operator-led (within a consortium with significant operator shareholding in the Project Company). However, this excludes outpatient rehab, which is expected to be delivered from facilities the private sector will rent from third parties. The Project Company will receive two distinct payment streams: 1) infrastructure facility (based on availability); and 2) provision of clinical services (based on activity with minimum volume guarantees from MOH). Submit an EOI here.
3. Home Healthcare (“HHC”):  Clinical operation and maintenance of 5,000 active patients (for each of Riyadh and Dammam region). The contract duration will be 11 years, including 1 year pre-operations and 10 years operations period. The services contract are expected to be delivered from facilities rented or owned by the private sector, without the need to incorporating a Project Company. The private sector will receive one activity-based payment stream. Submit an EOI here.

Interested parties with a track-record of extensive and relevant experience in designing, building, operating, financing, implementing and maintaining healthcare facilities and services or projects similar to the Project(s) are invited to submit an EOI. While interested participants may wish to form a consortium to bid for a Project, at this stage of the process, interested companies and firms should respond individually to the EOI and demonstrate their individual expertise across the key areas; however, they can indicate their likely consortium partners. At the Request for Qualification stage, parties will be expected to provide full details of the consortium partners (if applicable).  MOH is expected to publish the list of the respondents to this EOI, in order to facilitate the formation of consortia among the interested parties. Interested private parties can opt to express their interest in one or more of the projects, in either of the two locations (Riyadh and Dammam).

Legal & Regulatory Framework Highlights

In very recent years, we have also seen a shift towards PPPs. An array of regulatory and legal reforms have been made in recent years to accommodate more foreign investment and PPPs. Of particular highlight is the Private Health Institutions Law, which in 2019 newly permitted foreign investors to own, operate, and manage hospitals and health centres in the Kingdom through PPPs and build-operate-transfer models, for example. While private sector contribution to publicly funded projects is not new within Saudi, it had traditionally been largely restricted to certain sectors, and not permitted in healthcare.

Additionally, in March 2021 the National Center for Privatization & PPP (“NCP”) issued the regulatory base for private sector participation and PPPs in KSA – the Private Sector Participation Law and its implementing regulations (“PSP Law”). The PSP Law aims to increase private sector participation in infrastructure projects and in the provision of public services to citizens and residents, through PPPs and the privatization of public sector assets. All contractual relationships between the public and private sector that relate to infrastructure or the delivery of public services are covered by the PSP Law, if certain parameters are met.

PPP’s are one of the main pillars for driving reform in the Kingdom. The MOH has issued a number of opportunities through its PPP program, charged with increasing private sector involvement in eight strategic areas: primary care; hospital commissioning; the construction of medical cities; rehabilitation; radiology; long-term care; home care; and laboratories.

As the region’s largest law firm and having the largest dedicated Healthcare & Life Sciences practice group, we can assist with a wide variety of projects in KSA. Please let us know should you require more information about these or other opportunities in the Kingdom.

How can we help?

For more information, please contact our Healthcare & Life Sciences sector group, which operates across the region, including in our three Saudi Arabia offices, advising a wide range of healthcare and life sciences clients on entering or operating in the Kingdom.