Risks Facing the Health Sector in Saudi Arabia


Healthcare is one of the vital pillars of a country’s economy. Provision of health services to the citizens is necessary for the implementation and realization of a country’s strategies and economic goals. In this regard, the thriving of a nation is influenced partly by the state of its healthcare segment. Saudi Arabia’s health sector is a potentially growing market whereby the continued financial investment is projected to spur favorable economic growth (Walston et al. 244). Based on Saudi Arabia’s rapidly growing population, the Saudi government has provided a large market for medical supplies and equipment within the Middle East.

The health sector in Saudi Arabia

Saudi’s healthcare sector has been broadly defined into three classes overseen by the ministry of health. The Ministry of health is considered the overseer as it has the mandate over a large percentage of the market. The non-ministry of the health sector provides health services to government-controlled bodies such as armed forces, universities, and public hospitals. Private healthcare providers also have a stake within the Saudi government’s healthcare segment (Ramady 75).

Researchers portray that the healthcare industry is a major player in the provision of job opportunities in the Middle East country. Government establishes clinics and hospitals through its agencies, which are used to provide free healthcare services to its citizens. Previous exclusive provision of health services by the government was faced with several challenges. According to statistics, demand for healthcare services has risen rapidly owing to the increased population growth rate, the occurrence of communicable diseases, and the fact that the country’s population was largely constituted by aging citizens (Metz 147). In this regard, private sector participation was required to salvage the deteriorated healthcare service provision, which brought about the cooperation between government and private bodies in the provision of the services.

Imported medical supplies account for a large percentage of the Saudi government’s medical supplies. Although pharmaceutical manufacturing has attracted local manufacturers who produce generic pharmaceuticals, the United States and European countries have been the major source of drugs with other producers such as India and Egypt coming in recently (Ramady 89). Several investment opportunities in the Saudi medical industry sector such as biotechnology manufacturing, diagnostic products, neurosurgery, and medical equipment have also been created.

Healthcare business and investments are mainly done through commercial agents, franchises, or distributors in the Middle East country. Government and company tenders to supply medicals and equipment require local agents who oversee the direct supervision of tenders and projects while keeping the investors up to date on the present market trends. Investors are required to be oriented on the socio-cultural factors that may govern business within Saudi Arabia such as Islam (Walston et al. 245).

Insurance companies largely listed in the Saudi stock exchange subjugate the Saudi healthcare sector. The non-liberalized market may be subject to low-profit margins due to the absence of regulations that monitor healthcare access and availability to residents, quality of the healthcare services provided, and revenue collection within the private sector. Factors of cost and quality standards that govern the success of industry players lead to lower quality services being offered within the government facilities unlike within the private sector.

There exists a predominant divide between the provisions of healthcare facilities in the country. Healthcare services are concentrated in key towns and cities unlike within the suburbs and rural areas. This concern has created an allure for private sector ventures outside the main towns despite the unfavorable terms of the market. Privately owned healthcare facilities have done a lot to deal with the rising incidences of lifestyle diseases, shortage of beds, and limited access to medical facilities commonly experienced throughout the country.

The occurrence of the privatization of public hospitals and rehabilitation centers came about as one of the reform strategies to help face the challenges within the health sector. However, matters relating to the workforce within the industry have been a constant challenge in the industry. The Saudi government lacks adequate healthcare professionals to serve in these hospitals. In this regard, the country resorted to sourcing professionals from other countries, thus, leading to the domination of expatriates within the industry. This domination led to instability of the workforce hence the increased labor turnover (Mufti 148).

The Saudi government has reacted to this by formulation of strategies to establish a native professional workforce by increasing investment in training medical personnel and establishing schools of medicine and colleges. The government’s strategies of providing scholarships to students to study abroad have not been successful because most students have attained jobs within the Diasporas.

In the recent past, the Saudis decentralized the provision of healthcare services and awarded autonomy of operation to some hospitals. Recruitment of medics and other hospital staff was tasked to regional executives who also negotiated conventions with other regional healthcare providers. This strategy might not have been highly effective since the regional directorates’ functions are limited by the funds provided by the government and the lack of properly-outlined budgets. In addition, spending of funds is exclusively managed and authorized by the ministry of health, which limits the autonomy of the regional executives in decision-making (Johnson 128).

In some scenarios, the Saudi government gave other governments the mandate to co-manage some hospitals to ensure the improvement of the management of these facilities. This also brought about improved efficiency in the performance of medical functions through administrative flexibility. The introduction of regional autonomy resulted in the adoption of quality insurance policies and the simplification of the recruitment process of health professionals (Metz 199). While giving autonomy to hospitals assisted in the improvement of the provision of services, it also helped them in transitioning into private ones.

Funding of the health sector in Saudi Arabia remains a huge challenge faced by the ministry of health. The government’s policy of providing free healthcare services increases the cost needed to finance the provision of such services to a rapidly increasing population. New technological developments in the medical field and the need for public awareness on health and disease have served to increase the pressure on costs to be incurred. The establishment of cooperative health insurance led the venture into health insurance within the Saudi market.

Types of risks facing the health sector

To meet the objectives within the health the healthcare reform and insurance sector, the insurance industry players had to come to terms with several risks faced within the industry. These risks may not be tailored to the healthcare segment but may be superfluous to other industries. Property risk in the health sector is posed on the health facilities by both private and government-owned institutions. The political instability and terrorist activities in the country establish the property risk factor since such activities may result in the loss of valuable properties. Terrorists’ activities do not encourage investment in much-needed health facilities and equipment.

Natural hazards are a great risk to property and livelihood. Earthquakes, floods, and tsunamis have destroyed infrastructure such as hospitals, health centers, roads among others. This leads to the utilization of funds in reconstruction instead of advancing economic pillars such as healthcare (Ramady 145).

Although the Saudi Arabian market attracts lucrative investment opportunities given the potentiality of the windfalls created by the oil exploration, a considerable amount of business risk is imminent. Operation risks faced by potential investors are in the form of difficulty in obtaining work permits and visas. This brings a challenge to the working environment because reliable business information and data are available locally only. Corrupt practices within the royal families create a potential risk in times of contractual disputes and legal redress.

The judicial inconsistency and lack of transparency heighten the level of business risks within the country. Critics argue that Saudi Arabian courts’ administration of cases is slow leading to frustration of foreign-owned firms. Lack of an efficient justice system weakens the enforceability of contracts such as joint ventures, which may result in non-performance and default of debt payments (Walston et al. 246).

Loss of income risk arises from interruptions of businesses and death by war, natural hazards, and terrorism. The volatile nature of Saudi Arabia’s political arena poses a great challenge on facilities that ensure the smooth running of hospitals and healthcare facilities. The privatization of hospitals has increased the degree of risk exposure in public hospitals because they risk losing clients to the private sector. On the other hand, the policy of provision of free healthcare services to the public by the government poses a loss of income risk to the privately-owned facilities (Johnson 148). The labor turnover experienced within the healthcare industry establishes a loss of income risk since the success of the industry depends on the services offered by its workforce.

A monarch, whereby the House of Saud is the driver of the Middle East kingdom, rules Saudi Arabia. Political pressure has been increasing on kingdoms’ rule owing to the population explosion in recent years. Issues such as urbanization, lack of proper education, and employment opportunities have led to mounting pressure on the country’s political administration. The widespread idleness of the Saudi citizens has led the youths to be susceptible to terrorism and radical activities. Islam-based curricula used in learning have been a vessel to encourage youths to be intolerant towards other religions other than Islam, thus, posing a great risk to non-Islam (Metz 214).

Democracy in Saudi Arabia is limited, excludes women, and thus, decision-making has been exclusive to the ruling House. This poses immense political risk since the rulers may implement policies discouraging investment in the industry. It also makes it less appealing for expatriates to work in the healthcare sector. Oil exploration in the country is known to fuel feuds within the county leading to death, injury, and incapacitation of residents. Demands on reforms have been countered by religious forces, which oppose reforms strategies that alleviate women’s social status to retain the Islam conservatism against women. This places a challenge on the medical workforce as males are given an outright advantage over women in obtaining education and training.

Medical risks mainly arise from death, losses, and liability caused by health-related impairments, illnesses, and injuries. Major health risks are diseases transmitted by small vectors such as insects and animals. Malaria, which is spread by mosquitoes, has been prevalent within the western part of Saudi Arabia. This disease has been known to develop resistance to prescription drugs. The H5N1 bird flu has also been a menace to the residents in the recent past. The disease is spread by farm birds and has largely affected the Eastern part of the country. Other diseases that are transmittable through water, food, or the environment commonly affect people not accustomed to the Saudi environments, food, and water (Al-Saeed 124). Tuberculosis, a disease communicable through contact, has been prevalent throughout the country.

Liability risks in the healthcare sector may take the forms of professional liability, general liability managed care liability, and administrative proceeding costs. Professional liability risk may arise when a patient seeks help from a medical professional. Patients may suffer because of the negligence of the professionals while treating patients. In many instances, doctors have been found guilty of professional negligence due to omissions within procedures, incorrect treatment, and unnecessary treatment. Law stipulates that the professionals owe the patients a responsibility of care against risks such as misdiagnosis, surgical procedure errors, overdose, drug misuse, and other acts deemed to occur because of professional negligence (Mufti 289).

General liability risk arises from bodily damage, injury suffered when carrying out duties within a profession or when one is injured within someone’s premises. These risks may be presented by products, services, or operations within the premises. Harmful chemical products may pose the risk of poisoning from ingestion or inhalation, disease or incapacitation due to prolonged exposure. Negligent performance of operations may result in fatal accidents leading to general liability. In hospitals, negligent exposure to X-rays may be accounted as a general risk liability (Twaddle 236). Saudi Arabia is known for its production of oil and oil products. The health issues associated with oil and gas exploration pose a great challenge to the health of its citizens.

Techniques for managing risk in the health sector

The bodies facing the above risk may have several methods to deal with risk exposure at their disposal. The method devised to control loss is dependent on the type, severity, and frequency of the loss. These factors may be established through the identification and assessment of risks facing the sector. Risks may be eliminated through the identification of the hazards before it gets the chance to cause injury, illness, or death. For instance, the risk posed by harmful chemicals may be eliminated by the substitution of the chemical with less harmful ones. Risk-causing hazards may be isolated from the persons through automation tasks that may minimize injury or death of the person.

In addition, risks can be minimized through reengineering where devices are used to protect people from hazards such as fumes (Al-Saeed 126). Administrative measures are available for minimizing risks such as ensuring safe work methods, training on safety precautions, and the use of protective equipment.

Professional liability risk can be controlled through the diligent and competent performance of work. Recruitment of personnel should be subject to an underlying pre-employment assessment of qualification and competency of staff. Regular training, induction, and specific task training may be included in maintaining competency within professions. Furthermore, the experts can reduce professional liability risk through regular appraisal and evaluation of tasks (Johnson 258).

Medical personnel may be provided with efficient and effective emergency handling procedures to deal with unexpected cases and avoid negligence. Staff should be trained on the safe use of items provided to them such as chemicals, plants, and equipment. As a precaution, this must be included in the staff training and development to ensure safe work procedures. Appropriate tagging and labeling should be done on equipment that poses risk to individuals and regular inspections done on them to ensure safety.

Injury and illness suffered must be met by immediate treatment to prevent major losses of body organs and life. Areas where dangerous incidents have occurred such as spillages of chemicals, explosions, collapse, malfunction, or damage of equipment must be avoided at all costs except where one is a professional who can deal with such risk through the appropriate procedure (Metz 268).

People within surroundings of collapsed structures, flush floods must be notified and evacuated from the area to minimize further risk exposure. Emergency procedures and first aid can be used to manage injuries within workplaces. In addition, accidents should be investigated to prevent further physical injury or harm to property (Mufti 306). At times, counseling services may be offered to persons traumatized by the occurrence of events.

To mitigate business risks, external arbitration clauses may be agreed upon before entering into contracts with other entities. This will ensure that contractual obligations are upheld and compensation is awarded for non-performance of duties or interest paid on debt payments defaulted. Investors should vet the reliability of their agents to ensure that they obtain accurate and reliable business information before they make any decisions (Metz 257).

On the other hand, risks may be covered by retention. In this case, an employer opts to retain the risk by paying employees for health expenses incurred when faced with risks. This can be done on tolerable level risks only, which do not need insurance. An employer should accept to cover part of the economic risk exposure while an insurer covers the rest of the risk. Deductibles on earnings are used to create a contingency fund that takes care of the occurrence of risks. The scope of cover provided through retention is wider than in regular insurance and is stable concerning fluctuating market conditions.

Risk can be transferred to a third party through insurance. In this case, an insurer agrees to indemnify the insured of the loss suffered through the occurrence of an insured risk such that the insured’s financial position is reverted to as before the occurrence of the peril. Medical insurance may cover expenses incurred for treatment of insured ailments while liability risk covers the legal liability in the administration of professional duties. Individuals may undertake life assurance cover such that the insured person’s family members, relatives, or kin may be indemnified of the loss resulting from his/her death (Twaddle 258). Other forms of insurance cover can be obtained tailored to the types of risk faced by the entity or individual.


The Saudi Arabian government has continued to provide funds towards the development of the healthcare industry, although additional initiatives have to be implemented to complement the arrival of private sector players in the sector. The increasing population should be provided with new technologically advanced medical services to ensure the fundamental growth of the nation. Although there is continual evolution in the healthcare needs around the world, the Saudi government should ensure the encouragement of investment within available systems from abroad. There still exist numerous opportunities for healthcare investment whereas increased reform strategies will expedite the growth of the healthcare industry.

Works Cited

Al-Saeed, Abdulhamid. “Medical Liability Litigation in Saudi Arabia.” Saudi Journal of Anaesthesia 4.3 (2010): 122-6.

Johnson, T. Healthcare Development Strategies in the Kingdom of Saudi Arabia. New York: Springer, 2008. Print.

Metz, Helen Chapin. Saudi Arabia: a country study. 5th ed. Washington, D.C.: The Division :, 2007. Print.

Mufti, Mohammed H.. Healthcare development strategies in the Kingdom of Saud i Arabia. New York: Kluwer Academic/Plenum, 2009. Print.

Ramady, M. A.. The Saudi Arabian Economy Policies, Achievements, and Challenges.. 2nd ed. New York: McGraw-Hill, 2010. Print.

Twaddle, Andrew C.. Health care reform around the world. Westport, Conn.: Auburn House, 2002. Print.

Walston, Stephen, Yousef Al-Harbi, and Badran Al-Omar. “The Changing Face of Healthcare in Saudi Arabia.” Annals of Saudi Medicine 28.4 (2008): 243-50.

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