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Abstract

The purpose of this dissertation is to identify the present situation and future trend regarding privatisation of public healthcare system in the Kingdom of Saudi Arabia; in addition, it aims to suggest a right direction to carry on public healthcare privatisation in the KSA in order to reduce governmental resource allocation, improve the healthcare management system, and maximise welfare for the citizens. Through an analysis of both primary and secondary data, this research will represent that the ongoing initiatives of public health sector privatization in Saudi Arabia attained fewer achievements than its target and failed to generate the positive impact on the citizens in terms of enhanced public health services delivery.

The findings of this study will point out the rising challenges of the public healthcare system; however, the recommendations will present the best possible direction to improve the healthcare management system by introducing a dynamic public, private partnership, which will generate new resources for public healthcare financing and advance service delivery process and ensure citizens trust and satisfaction.

Problem Statement

Introduction

This dissertation critically investigates the public healthcare privatisation programmes, which were put forward by the Ministry of Health (MoH) of KSA in order to decrease the expenditure of the government for healthcare, improve the management system, and generate a standard healthcare system that will ultimately bring a satisfactory level of health care system for the people of this nation. The process of privatising public healthcare system has challenged by the different socioeconomic realities while the involvement of WHO and other foreign elements made it mandatory for the government to introduce a public health policy to secure the interest of the citizens, donors, business organisations, and another stakeholder.

In the changing economic dynamics of the modern world, the growing requirement for improved public healthcare service has created serious pressure on the government budget allocation while limited resources and scarcity of state services have threatened the quality of better life index; as a result, the experts are increasingly emphasising to reduce the dependency on state-financed public healthcare services.

This dissertation has organised with six major chapters and sub-chapters; however, it includes problem statement (dealing with the underlying dilemmas of privatisation of public healthcare), literature review (it comprises the major theoretical standpoints of the entire study), methodology (that explores the way out of the research process), the findings (prepared from the collected primary data), discussions, recommendations, and conclusion.

Background of the Problem

The public healthcare system of KSA is facing serious challenges due to privatization; the Ministry of Health has already taken different initiatives to reduce budget allocation for public healthcare, for instance, selling out governmental hospitals to the private sector, and providing incentives to the private operators in the healthcare market (Almalki, Fitzgerald & Clark 2011).

As a result, the public service in the healthcare sector and easy access to the medical facilities have been reducing quickly and generating serious pressure over the lifestyle of the citizens to carry on elevated expenditure for healthcare, which was ultimately going beyond the public tolerance. The healthcare privatisation process of KSA has dramatically attracted the foreign and local business houses to invest in the healthcare market of the Arabian Kingdom, and it gradually commercialised the public health care system of KSA and pointed question mark to the criteria of a welfare state.

Bagaresh (2013) and Albejaidi (2010) argued that the government of Saudi Arabia introduced public health service in the country in 1978 following the prescription and guidance of the international organisation WHO; however, the government set up the Saudi health strategy to attain access to public healthcare for all by 2000.

Within 2004, such health strategy of KSA has resulted with 1787 state-operated healthcare centres all over the country where 8727 individuals facilitated with primary medical services; however, these centres incorporated child healthcare, vaccination, specialist appointment, prescription, chronic disease management, maternal health care, health education, and so on. Within two decades of introducing public healthcare system, the demand for quality healthcare service had increased remarkably and shaped it as a multidimensional concept among the people, but the policy-makers have shifted from their strategic alignment, engaged in reducing budgetary allocation for this purpose, and patronised private operation of medical services.

The citizens awareness for public healthcare service has progressed in a stage where people urged to increase the effectiveness of KSA healthcare services, eradicate the barriers to ensure a better quality of healthcare system, improve the hospital management system, enhance organizational factors, provide an adequate level of evidence-based medicine, and expand the professional development strategies for secondary care.

With such background problems of the Saudi public healthcare sector, this dissertation has engaged in conducting a comprehensive study with the privatisation of public healthcare system with the aim to diminish expenses by arranging alternative resources to mitigate increasing cost of medical services through medical insurance and addressing the issues related with the corporate social responsibility of the private operators.

Rationale of the Research

There are very inadequate numbers of researches regarding the public healthcare system in KSA though there are enormous studies with the privatisation strategy of the Saudi government; however, no research agenda has been put forward to deal with the impact of public health sector privatisation policy of the government, its progress, and social impact on the citizens. In the concurrent situation, the public healthcare system in Saudi Arabia is facing a severe crisis with poor accessibility to the healthcare services, scarcity of native health professionals, and increasing demand to get state-backed health service, sustainable health policy, undemocratic management, and lack of community participation.

Thus, it is essential to conduct a wider study with the possible privatisation of public healthcare system in KSA; however, the investigation of the current healthcare system and recommendation for the future trend of the public healthcare system will contribute to ensuring the maximisation of the best use of resources with public satisfaction and enhanced business prospect. With this rationale of the research, this dissertation will expand a conceptual framework in this study that will eventually extend a hand to facilitate the business and academia with a greater understanding in this area.

Aim and Objectives of the Research

The research looks forward to assessing the entire privatisation initiatives of the public healthcare system of KSA and its socioeconomic impact on the citizens that will assist the policy-makers to set up their future health policy based on the economic reality of the limited governmental resources to meet up rising demand for medical service free of cost. In order to attain such aim and objective, this dissertation has intended to address following research questions, the reply to the questions would facilitate the readers and policy-makers with an enhanced understanding to generate new health policy with a superior motivation to integrate health insurance and new financial and technological resources; however, the designed research questions are as follows:

• How the public health sector privatization in Saudi Arabia kept potential impact on its citizens?
• What is the impact of compulsory medical insurance over the citizens and the governmental budgeting?
• How the public health policy could bring suitable balance between privatization and government spending within the health sector?

Findings and Results

The aim of this research is to analyse the privatization of public health sector in the kingdom of Saudi Arabia and consider the impact of it on the citizens and the government of this country. In order to do so, it was highly essential to conduct a field survey to better understand the real phenomena and acquire the results of the entire research. It is important to state that a questionnaire was distributed among 100 respondents to serve this purpose; among the respondents, there were people mainly from the health service providers (owners and managers), the staff of the health service sector (employees), and the beneficiaries of health care services (patients and visitors).

Personal Information

Question 1: The respondents were asked to state their gender

It is significant to mention that in the conducted survey, there were 88% male and 12 percent female respondents; however, the female respondents were mainly from the group of patients and visitors, and there were no women from employment in the health service sector:

Question 2: The respondents were asked to state their age group

In the conducted survey, 18 percent people aged between 18 and 35, 20 percent people aged between 36 and 45, 26 percent people aged between 46 and 55, 23 percent people aged between 55 and 65, 10 percent people aged between 66 and 75, and 3% people aged between above 75; however, this has been shown in the figure below:

Question 3: The respondents were asked to state the highest level of their educational qualifications

This question was asked mainly to know whether the respondents were knowledgeable enough or not. It is notable that in this field survey, 37 percent people had high school education, 32 percent people had university education, 19 percent people had tertiary institution education, and 12 percent people had never attended any schools; the result represents in the graph below:

Question 4: The respondents were asked to state their current occupation

It is very crucial to acknowledge the fact that in this field research, 14 percent people were students, 23 percent people were retired, and 22 percent people had business of their own, whereas 41 percent people were professionals; however, the results illustrate below:

Question 5: The respondents were asked to state their income level per month

It is noteworthy that among 100 respondents, 24 percent people earned less than SAR 5,000, 36 percent people earned SAR 5,000 to SAR 15,000, 21 percent people earned SAR 15,001 to SAR 20,000, and 19 percent people earned above SAR 20,000:

General Questions

Question 1: To what extent the respondents think that privatising the public health sector will affect the existing hospital management

In this part of the questionnaire, most people expressed that privatising the public health sector will result in huge changes in the existing healthcare management system; this can be understood easily from analysing the survey form. In the survey form, 35 percent people had selected the very high option, 37 percent people had selected the high option, 20 percent people had selected the minimal option, and 8% people had selected the no effect option; however, the survey result demonstrates in the graph below:

Question 2: In what ways the respondents expect that the privatisation of the Saudi Arabian public health sector has affected the primary healthcare

The reason behind putting this question forward was to know whether the respondents have taken the entire process of privatisation of the Saudi Arabian public health sector optimistically or not. From the analysis of the collected data, it has been seen that 42 percent people believed that this would improve the primary healthcare sector, 18 percent people believed that this would not improve the primary healthcare sector, while 40 percent people stated that the healthcare sector would remain the same:

Opinion of the respondents

Most people believed that this would improve the primary healthcare sector; their logic was that privatisation would increase competition among the health service providers; however, increase level of competition would ensure better quality services, and lower expenses. A significant number of people contested this concept by stating that the privatisation would mean rise in medical costs because in most of the cases private hospitals charge higher prices due to lack of governmental intervention.

Question 3: In what ways the respondents expect that privatisation of the public health service in Saudi Arabia could affect healthcare delivery in the rural areas

It was truly essential for this research to identify how the privatisation of the public health service in Saudi Arabia would affect the healthcare delivery in the rural areas; it has observed from the responses that 35 percent people believed that the health practitioners and investors would not get excited to work in the rural areas. However, the majority of the surveyed population, for example, 65 percent people believed that health practitioners and investors would get excited to work in the rural areas:

Opinion of the respondents

The majority of the respondent expressed that privatisation would increase involvement of health practitioners and investors in the rural areas because more privatisation would mean rise in creation of new hospitals in rural areas and recruiting people from the local vicinities.

Question 4: Whether the respondents think that, the privatisation of the public health sector in Saudi Arabia influences the citizens living standards

Privatisation of health-sector is a factor, which will undoubtedly affect the lifestyle of the citizens in certain ways; however, in this question, it was important to find out whether the respondents think that the privatisation would influence citizens living standards; it should note that 76 percent people said yes to answer this statement, while the rest 24 percent said no:

Question 5: The respondents were asked in what ways the living standards will be or will not be impacted

This question was the continuation of the previous question where the respondents were asked to clarify their answers, and state why they think that the living standards will be impacted or will not be impacted due to the privatisation.

Opinion of the respondents

The respondents who thought that the living standards would be impacted stated that healthcare services are something by which any person will have to depend on at certain phases of their lives; in addition, the more their health condition deteriorate with age or accidents, the more they will have to depend on it. Therefore, so much of dependency over this service would mean that people would have to pay more charges for hospitals and doctors. If privatisation increases the costs, then their living standards will be affected adversely; however, if privatisation decreases the costs, then their living standards will be affected favourably.

To answer this question, a significant part of people said no, which indicates that no matter whether a service is privatised or nationalised; however, it makes no difference in their own living standards, and ultimately they will have to earn their own living and pay for the health services they require.

Question 6: The respondents were asked how the privatisation of the public health sector in the KSA would affect the level of healthcare delivery to Saudi Citizens

In answering this question, 38 percent people said that the country would experience significant improvement in healthcare delivery, 45 percent people said that most governmental healthcare programmes would be affected adversely, and 17 percent people said that there would be no impact on healthcare delivery to citizens; however, survey result has shown in the chart below:

Question 7: To what extent the respondents expect that the privatisation of the public health sector in Saudi Arabia would affect the existing law on compulsory medical insurance for employees and individuals in the Kingdom

In response to this question, 25 percent people selected the strongly agree option, 30 percent selected the agree option, 5% selected the no comments option, 18 percent selected the disagree option, and 22 percent people selected strongly disagree option; the graph below shows that most of the people believed that privatisation would affect existing law on compulsory medical insurance:

Question 7 (i): The respondents were asked whether they think that the countrys economic development and growth will be impacted by the privatisation

Indeed, the establishment of the compulsory medical insurance on Saudi citizens has played a fundamental role in enhancing the KSA government to stimulate the countrys economic growth; however, in answering this question, 62 percent people said yes, 23 percent people said no, and 15 percent people said no comments:

Opinion of the respondents

Most of the people strongly commented that economic development and growth would be boosted by the privatisation, as privatisation would create more jobs, more investments, higher gross domestic product, more taxation, and so on.

Question 7 (ii): In what ways the respondents expect that the privatisation of the public health sector would influence the citizens lifestyle, level of savings and employment opportunities

In answering this question, 38 percent people stated that savings would decrease, 26 percent people stated that savings would increase, and 35 percent people stated that savings would remain un-affected:

At this portion, 55 percent people stated that employment would decrease, 27 percent people stated that employment would increase, and 18 percent people stated that employment would remain un-affected:

Question 8: Privatisation of the public health sector will transform the existing public hospitals in different parts of the KSA into private entities; so, the respondents were asked in what ways they expect that the cost of seeking medical services to change

This question was asked mainly to get the information of whether the respondent groups like the people from the health service providers (owners and managers), the staff of the health service sector (employees), and the beneficiaries of health care services (patients and visitors) think that the cost of the medical services is going to increase due to the privatisation.

It is remarkable to state that the health service providers (owners and managers) and the staff of the health service sector (employees) tended to note that cost and facilities of the privatised sector will be affordable and less expensive, whereas most of the beneficiaries of health care services (patients and visitors) noted that it will be more costly. The following graph shows that out of 100 respondents, 54 percent people noted that the medical costs are going to be more expensive, whereas 46 percent people noted that it would not be expensive:

The graph below shows that 43 percent people noted that the medical facilities would not be affordable or going to be affordable, whereas 57 percent people noted that it would be affordable:

Question 9: The respondents were asked to give their opinion on privatisation of the public health sector in the KSA

The question has produced a mixed set of responses from the respondent groups; some people took the concept of privatisation very positively, while others took a contrary view and thought that privatisation is going to create further problems rather than trying to solve the existing or former dilemmas. However, it is highly essential to consider the fact that in answering this question, 28 percent people noted that privatisation would increase the level of satisfaction with regard to delivery of healthcare services and 38 percent people noted that privatisation would lead to discrimination in delivery of different healthcare services between the rich and the poor. On the other hand, the rest 34 percent people noted that privatisation would improve quality of care, and good governance in the public health care sector.

Question 10: The Saudi government funds the public health sector in Saudi Arabia through the Ministry of Health; so, the respondents were asked whether they think that the government of the KSA allocates sufficient amounts of money to the public health sector in its annual government-spending budget

The aim of this question was to identify whether the government of Saudi Arabia allows sufficient amounts of money to the public health sector in its yearly spending budget because as there has been rapid privatisation in the health service sector, there must have some issues about the public health sector. Due to some problems about the public health sector, people have shown aversion towards the public service and inclined to the private ones, for which there has been a shift towards mass privatisation. It has noted from the response of the respondents that this problem arose mainly due to the inadequate amount of funds, which the government of the country allotted to the health service sector, for which this change has occurred. To be specific, 35 percent of the respondents said yes to this question, while the rest 65 percent people said no; this result has shown in the figure below:

Opinion of the respondents

Most of the people felt that the amount of funds that the government allots for the public health service sector is not adequate because the needs and requirements of this industry is huge and compulsory medical insurance means that the expectation of the public to get the finest service is even greater. However, it is notable that to handle and satisfy such huge expectations, the instruments, machineries, technologies, and overall facilities are not developed enough for insufficiency of funds.

Question 11 (i): Considering the existing disparity with regard to the citizens purchasing power in the KSA, the respondents were asked to state the most effective strategy that the government should adopt in order to establish a balance between the countrys public and private health sectors

It is important to state that the Kingdom of Saudi Arabia has disparity in income of its citizens and there exists a major class difference from an overall point of view. In this context, it is quite understandable that not everyone in the Saudi society has the ability to afford the high standard services. It is essential to admit that in most of the cases, privatised hospitals charge higher amount to the patients, while the public sector hospitals tend to charge lower rates.

As a result, if there is a full privatisation of the public health sector industry, many lower income earners will be unable to afford the charges. In this situation, it is highly important for the government to establish a balance between the countrys public and private health sectors, so that people of all classes can afford the healthcare facilities. In order to establish this balance, three strategies were put forward before the respondents and they were asked which strategy would be the best suitable in context of the Saudi Arabia to fasten stability.

The first strategy is that the government should eliminate entry barriers in the public health sector in order to attract foreign direct investment, and it is notable to state that only 14 percent of the surveyed population has agreed with this strategy in real sense. The second strategy is that the government should improve quality of service delivery in the public health sector by increasing the annual allocation to the Ministry of Health rather than privatising the sector: it is highly essential to state that in the survey the largest number of the respondents had selected this strategy.

To be specific 56% of the respondents have noted this strategy to be the best one, so that there is ultimately no need to further privatise the industry and rather improve quality of service delivery in the public health sector by increasing the annual allocation to the Ministry of Health. On the other hand, it is notable that 30 percent of the respondents selected the third strategy, which is the government should undertake private-public partnership, rather than entirely privatising the public sector; the result has illustrated in the figure below: