The planned expansion of SMC Healthcare in Riyadh, Saudi Arabia, through the construction of three new hospitals, aims to address the healthcare shortfalls in the kingdom and meet the demands of a rapidly growing population. This strategic move is designed to cater to the increasing healthcare needs of Riyadh’s residents, driven by the city’s projected population growth and the broader Vision 2030 economic diversification plan. Saudi Arabia’s Vision 2030 places significant emphasis on enhancing various sectors, including healthcare, ensuring that its population has access to advanced medical services.
SMC Healthcare’s Growth Strategy
SMC Healthcare, founded in the 1990s by four Saudi Arabian families, currently operates two hospitals in central and eastern Riyadh. The existing facilities include SMC 1, which covers 140,000 square meters with 400 beds and 150 specialist clinics, and SMC 2, which spans 34,000 square meters accommodating 150 beds alongside various outpatient services. The company has announced plans to construct three additional hospitals in Riyadh, with land acquisition for the third and fourth hospitals already completed. The procurement for the land of the fifth hospital is expected to be finalized within two months.
The construction of SMC 3 is underway, with SMC 4 slated to begin in the coming weeks, and SMC 5’s construction set for next year. These new hospitals are projected to be operational by late 2027 or early 2029, incrementally adding 240,000 square meters of healthcare infrastructure. This expansion is driven by the need to cater to Riyadh’s growing population, which is set to increase from seven million in 2022 to an estimated 9.6 million by 2030, according to consultant Knight Frank. The company is set to deliver a significant portfolio of healthcare services that aligns with the increasing demand stemming from the city’s demographic growth.
Financial Health and Profitability
A notable aspect of SMC Healthcare’s development strategy is the anticipated profitability of the new hospitals. The company’s CEO, Bassam Chahine, predicts that each hospital will break even within three to four years of launching services, a faster-than-average period compared to the global healthcare industry standard of six to seven years. This expectation is rooted in SMC’s operational efficiency and its successful model demonstrated during the COVID-19 pandemic, where its second hospital achieved breakeven within two years of opening.
Financially, SMC Healthcare is well-positioned to support its expansion without an immediate need for an initial public offering (IPO). The company’s joint stock structure allows for future IPO potential, but, as stated by Chahine, there is no urgent plan to pursue this route. Instead, SMC is funding its expansion through a mix of its revenue and bank loans. This considered approach underscores a preference for organic growth, which Chahine believes is a more sustainable method, ensuring that the company can maintain control and uphold its high standards of quality in healthcare services.
Modern Hospital Design and Services
The trend of advancements in medical treatments, technologies, and procedures has significantly reduced the necessity for overnight hospital stays. This evolution has led to an increased ratio of clinics to beds, which is influencing the design of modern hospitals. Consequently, SMC Healthcare’s new facilities will include specialized care up to tertiary levels, such as advanced treatments like chemotherapy, radiotherapy, intensive care, and organ transplants, embodying the company’s commitment to providing comprehensive medical services.
The new hospitals will be designed to meet the highest standards of medical care, incorporating state-of-the-art technology and facilities. This approach ensures that SMC Healthcare can provide advanced medical services to the growing population of Riyadh, aligning with the broader goals of Saudi Arabia’s Vision 2030 plan. As the population grows and the demand for healthcare services increases, SMC’s hospitals are strategically positioned to meet these needs efficiently and effectively, leveraging the latest medical technologies and best practices.
Staffing Challenges and Solutions
A significant concern regarding SMC Healthcare’s expansion is the staffing challenge for the new hospitals. Historically, recruiting nurses from the Philippines and India was feasible, but given the direct hiring of these professionals by Europe and North America, SMC has diversified its sources of nursing staff. The company now recruits nurses from countries like Taiwan, South Korea, China, Vietnam, Egypt, and Tunisia. Currently, SMC employs 1,000 nurses, with 15 percent being Saudis, reflecting a strategic approach to ensure an adequate supply of highly qualified healthcare professionals.
Doctor recruitment is relatively less challenging due to Saudi Arabia’s extensive training programs for nationals. SMC employs 150 full-time doctors, 30 of whom are Saudis, and all 300 part-time doctors are nationals. This strategic approach to staffing ensures that SMC Healthcare maintains high standards of care while addressing the growing demand for healthcare services in Riyadh. By diversifying its recruitment sources and investing in local talent, SMC is effectively overcoming staffing challenges and securing a workforce that can meet the increasing healthcare needs of the city’s population.
Strategic Focus on Riyadh
SMC Healthcare is planning to expand in Riyadh, Saudi Arabia, with the construction of three new hospitals. This expansion aims to address current healthcare shortages and meet the growing needs of the city’s rapidly expanding population. Riyadh is expected to see significant population growth in the coming years, and the strategic move by SMC is designed to ensure that the city’s residents have better access to medical care. This initiative ties into Saudi Arabia’s broader Vision 2030 plan, which emphasizes economic diversification and improving various sectors, including healthcare. Vision 2030 is critical in ensuring that the Saudi population benefits from advanced, high-quality medical services. The new hospitals will contribute to enhancing the healthcare infrastructure, meeting the increasing demand for medical facilities, and offering state-of-the-art medical services to residents. This development is a timely response to the anticipated increase in healthcare needs and aligns with the nation’s goals of providing comprehensive healthcare services to its people.