Healthcare

The State Is Leaving the Hospital. It Is Not Leaving the Bill.

Saudi healthcare is described as a sector being privatized. The biggest structural move so far went in a different direction, and it may matter more than any sale.

Ameer Albahouth

14 Oct 2026 • 5 min read

A privatization without a seller

The word privatization suggests a transaction. A government sells an asset, a company buys it, and the state steps back. Yet the most consequential change in Saudi healthcare over the past few years moved thousands of public facilities out of a ministry and into a company the state owns entirely.

That company is Health Holding Company. The Council of Ministers approved its creation in [INSERT: confirm year of the May 31 Cabinet decision, 2022 per HHC's own timeline] alongside the charter of a national health insurance center. The Ministry of Health would focus on regulating and supervising public and private providers, while the new company would deliver care through regional subsidiaries. Health Holding describes itself as a national state-owned company, and lists 2022 as the year it was established and 2024 as the start of a second phase of transformation.

The facilities were reorganized into 20 health clusters. According to Health Holding's chief executive, Nasser Al Huqbani, those clusters now operate with administrative and financial independence under five regional boards. A separate body, the Center for National Health Insurance, is designed to buy care from those clusters on behalf of citizens.

Read together, these decisions describe something more precise than a sale. The state is splitting the three jobs it used to hold at once. It writes the rules. It pays for care. It delivers care. For decades, one ministry did all three. Now each job has a different owner.

The private sector is growing, and paying for its growth

None of this means the private sector is standing still. The listed hospital groups have been expanding at a pace that would stand out in most markets.

Dr. Sulaiman Al Habib Medical Services Group, the largest listed operator, reported 2025 revenue of SAR 13.7 billion, up 22.4% from the previous year. Its net profit, however, rose only 3.7% to SAR 2.4 billion. The company's own explanation is instructive: newly opened hospitals carry fixed costs before they fill their beds. In 2025 alone it opened hospitals in Al-Hamra in Riyadh, in Al-Kharj, and in Al Muhammadiyah in Jeddah. Its profit margin fell from about 20.7% to 17.5% over the year.

That gap between revenue and profit is the detail the headline growth figure hides. Building capacity in Saudi healthcare is expensive, and the return arrives later than the patients do. [INSERT: Al Habib H1 2026 results, revenue and net profit, from the company's Tadawul filing, to show whether the ramp-up is paying off]

Investor appetite has not been deterred. When Fakeeh Care Group listed in 2024, its offering drew about $91 billion in orders, according to Bloomberg reporting carried by Gulf News. The family-founded Jeddah group said it plans to grow from four hospitals to seven by 2028. Those plans are company targets, not completed capacity.

The contracts tell a quieter story

The more revealing evidence of how the state thinks about the private sector sits in procurement documents, not stock prices.

In June 2026, the Ministry of Health and the National Center for Privatization awarded a public-private partnership contract to operate the SABIC mental health hospital in Riyadh, a 150-bed facility. The winning consortium, SEH Healthcare, combines two Saudi firms with Germany's Dr. Ebel group. SMC Healthcare told the Saudi Exchange the project is worth about SR 3.8 billion over a 15-year term. Weeks later, Umm Al-Qura University and the same center invited bids to complete and operate a 391-bed university hospital in Makkah. A national dialysis program has also entered procurement, involving the Ministry of Defense as well.

Look closely at the structure. The state builds or owns the asset, and the private operator runs it under a long contract. Patients may never notice a change in who owns the building. What changes is who is accountable for running it well, and on what terms.

This is privatization by contract rather than by sale. It is also part of something larger. In January 2026, Saudi Arabia launched a National Privatization Strategy aimed at mobilizing $64 billion of private capital by 2030, drawing on a pipeline of more than 500 projects across 18 sectors.

What the numbers cannot agree on

Ask how large the private sector's role in Saudi healthcare actually is, and the answer depends on who is counting.

The US International Trade Administration's market guide says Vision 2030 aims to raise private sector contribution from 40% to 65% and targets the privatization of 290 hospitals and 2,300 primary health centers. Health Minister Fahad AlJalajel has said the transformation program aims to raise the private sector's contribution to 50%. At the same event, Investment Minister Khalid Al-Falih put the private sector's current share of health and related areas at just 11%.

These figures are not necessarily contradictory. They measure different things: spending, capacity, investment, contribution to GDP. But the spread matters. A sector described as rapidly privatizing cannot yet agree on a baseline.

Meanwhile, the state's own spending keeps rising. Health and social development is the largest line in the 2026 budget at SAR 259 billion. Actual spending on that category in the first half of 2026 rose 10% to SAR 170.6 billion, according to Ministry of Finance data reported by Okaz. The government is not retreating from healthcare. It is changing how its money moves.

The customer has changed

For most of the Kingdom's modern history, a public hospital answered to a ministry. A private hospital answered to its patients and their insurers. The reform blurs that line in an interesting way.

Once a national insurance center buys care from clusters and operators, the hospital's most important customer may no longer be the patient walking through the door. It may be the institution that signs the contract and measures the outcome.

That shift could reward operators who are good at keeping people healthy rather than simply busy. It could also reward operators who are good at winning contracts. Which one happens will depend less on the word privatization and more on what the purchaser chooses to pay for.

The story usually told about Saudi healthcare is that the private sector is taking over. The more accurate story may be that the state has decided what kind of buyer it wants to be. The hospitals will follow whatever that buyer values.