The KSA Private Healthcare Institutions Law (the Law) has been amended by virtue of a Royal Decree in a bid to attract foreign investment in the Kingdom’s healthcare industry.
The amendments, although touching on only two Articles of the Law, are expected to pave the way for foreign healthcare entities/companies to establish private healthcare institutions (PHI) with 100% foreign ownership.
PHI’s are defined broadly under Article 1 of the Law as:
Every health institution which is owned by the private sector and is prepared for providing treatment, diagnosis, nursing, medical tests or habilitation, or intended for convalescent residence including the following:
- general medical complexes
- specialised medical complexes
- radiology centres
- medical laboratories
- one-day surgery centres
- health support services centres - (physiotherapy centres, medical eyeglasses shops, medical equipment and artificial limbs shops; and support centres), and
- ambulance centres.
Prior to this amendment, foreign ownership of PHI’s were restricted to hospitals alone and required a minimum number of beds depending on the hospital’s location and the area it serves - where all other forms of PHI’s required Saudi ownership, thereby limiting the scope of foreign investment in the healthcare industry only to major cities.
The deletion of Article 2(1) of the Law is significant. It provides that except for hospitals, PHI’s must be owned by Saudi nationals. Article 2(2) has also been amended to provide a form of exception to Saudi nationals. It now restricts ownership by Saudi nationals to clinics, where it provides that each clinic must be owned and supervised by a fully dedicated Saudi physician specialised in the relevant medical field of the clinic. Given the law is now silent on the ownership of PHI’s (with the exception of clinics), combined with the eagerness of foreign investors to penetrate the largest economy in the Gulf Cooperation Council, we expect this development to accelerate the pace of foreign investment within the Kingdom’s healthcare industry thereby playing a pivotal role is the Kingdom’s desire to diversify the domestic economy.
The amendment will allow foreign investors to be a part of the Kingdom’s transformation as it moves towards having private sector service providers build and operate government owned health institutions across the Kingdom. The direct impact expected is an improvement in the overall quality of healthcare providers and institutions, which is in line with the Kingdom’s Vision 2030.
Globally, the increase of data-driven healthcare sector decision-making, efficiencies and value creation continues to mature. With increased foreign investment, more focus on the transfer-in of international know-how and uptake of emerging big data technology, the Kingdom has a lot of gain from embracing such legislative change. Additional legislative are expected in the Healthcare & Life Sciences sector to encourage foreign investment in the Kingdom.
We thank Suhaib Hammad from our alliance firm Hammad & Al Mehdar for his input on this note.
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