Extended Care In Saudi Arabia

An Intro to Extended Care

There will be more individuals in their golden years than ever before. By 2030, the number of persons aged 60 and above is projected to reach 1.4 billion, up from 1 billion in 2020. As per WHO, one out of six individuals on Earth will be 60 or older by 2030. Ageing makes people more vulnerable to health issues, and for many, it means they need help just to get through the day. 

Here's where Extended Care comes into play. Extended care, often known as long-term care, refers to medical and non-medical services required by persons with chronic illnesses or disabilities, usually associated with ageing. These people cannot care for themselves for long periods and need help with daily chores, bathing, and using the bathroom to more intensive therapeutic and medical care requiring the services of skilled medical personnel.

The services can be given at home, in a community hall, in an assisted living facility, or in a skilled nursing home. Even though people of all ages can get extended care, people over 60 are most likely to use it.

• Who requires Extended Care?

Extended care is usually needed by people with serious medical issues that require constant monitoring and supervision from medical professionals. The elderly who are unable to do their daily tasks also require it. The main objective of extended care is to ensure individuals have access to required care while supporting their independence and dignity. 

• Costs and Financing

At a global level, the median cost for extended care for the elderly is $5,511 per month for assisted living and $10,025 per month for a private room in a nursing home. The figure varies depending on the country and level of care required.

In most cases, family and friends pay for the costs. Individuals who do not want to burden their families with these costs can pay for it through their retirement savings or purchase extended care insurance. Planning for such situations at an early age can help reduce the financial and mental burden.

Extended Care Market from a Global Perspective

Precedence Research estimates that the worldwide extended care industry will grow from its 2022 valuation of $1.03 trillion at a CAGR of 6.5% between 2023 and 2032. Extended care costs are a significant issue for all countries, representing 1.5% of a country’s GDP for OECD countries, which is around 760 per capita. Around 70% of adults who are 65 years old or older would need extended care services at some point in their lives.  

Market Characteristics & Major Players

The extended care market is moderately fragmented, with the presence of several local companies. Companies in the industry are developing sophisticated, user-friendly products and services, such as internet-enabled home monitoring, telemedicine, and mobile health applications, with a significant emphasis on innovation and technology in the future.

M&A Activity in this industry is increasing, with several existing market players such as Almost Family, Inc., Brookdale Senior Living, Inc., and Extendicare, Inc. involved. Through merger and acquisition (M&A) activities, companies can expand their business operations and enter new untapped areas. Strict regulatory requirements control the industry to ensure patient safety, high-quality treatment, and prevention of elder abuse.

Some of the leading companies in the extended care market at a global scale are Brookdale Senior Living, Knight Health Holdings, LHC Group, Atria Senior Living, Sunrise Senior Living, and Extendicare. New entrants are making a mark in the industry by separating themselves from the competition through technology, strategic partnerships, and developing innovative solutions.

Geographical Bifurcation

North America formed the biggest region for the extended care market with a share of 48.68% in 2023. The growth in the region is primarily driven by the availability of LTC centres, improving reimbursement frameworks, and favourable government policies.

In North America, the United States accounts for the lion's share. In 2021, approximately 69% of adults in the United States used extended care as they aged, according to the Commonwealth Fund Statistics. The USA is the biggest market for extended care providers due to a rapidly ageing population with a higher need for such services, well-developed healthcare infrastructure, better financing and insurance options, and high healthcare spending by the government.

Latin America, and Brazil in particular, are projected to have the highest growth from 2024 to 2030.  Extended care in Latin America is on the rise due to various reasons, such as a higher emphasis on elderly needs by the government, increasing awareness regarding the benefits of extended care, and the rising frequency of chronic diseases.

Growth Catalysts

On a worldwide scale, the Extended Care market is growing due to many important factors, including: -

• Increasing Geriatric Population

The main reason for the growth of the extended care market is the rise in the number of people aged 60 and above, who use these kinds of services more often. 

• Prevalence of Chronic Diseases

At a global scale, age-related disabilities and chronic diseases such as cancer, diabetes, Alzheimer’s, dementia, heart problems, and mental stress have increased significantly. As such, the need for extended care facilities providing medical assistance for such issues is also rising.

• Government Funding

Governments across the globe are increasingly concerned about the elderly population and placing a higher emphasis on launching programs and initiatives targeted to support the needs of this strata, which would boost the growth of the extended care market.

• Increasing Participation from Insurance Companies

Insurance providers are actively working on creating new and exciting products specifically designed for the elderly population. Additionally, they are collaborating with governments, boosting the growth of the extended care market. The 2022 Milliman Long-Term Care Insurance Survey found that compared to 2020, more than 140,000 people in the U.S. bought LTC insurance in 2021.

• Technology and Innovation

Technological developments in healthcare delivery, such as internet-enabled home monitoring, telemedicine, mobile health applications, and telehealth, have the potential to accelerate industry growth. 

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Extended Care Market in Saudi Arabia

The extended care market in Saudi Arabia was valued at $16.8 billion in 2018. The industry will grow by 1.3% CAGR and reach $18.2 billion by 2024.  

In 2024, Saudi Arabia had a population of 37.45 million with a median age of 30.6 years. In KSA, only 5.5% of people are over 60 now, but that is expected to rise to 11.1% by 2030. The KSA government is focusing heavily on upgrading its healthcare infrastructure and improving its extended care services as the country's ageing population grows and fertility rates decline. The high presence of lifestyle-related diseases like diabetes, coronary heart disease, and obesity is another thing that is driving the need for extended care services in Saudi Arabia.   

To meet the driving demand for extended care, a study by Colliers shows that KSA would need 28,000 to 30,000 extra beds. That translates to 22,000 to 24,000 more beds than are currently available. Saudi Arabia would have to invest around US $6.5–7.5 billion to build this additional capacity. Also, medical equipment will cost between US $1.0–1.2 billion.

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Under its Vision 2030, the KSA government has plans to invest over $65 billion to revamp the country’s healthcare infrastructure. In 2022, the government allocated around $36.8 billion of its annual budget to health care and social development, formatting a healthy 14.4% of the total planned expenditure by the government.

Additionally, the government of Saudi Arabia intends to raise the private sector's involvement in the healthcare industry from 40% now to 65% by 2030. One way to get more private companies involved is through public-private partnerships (PPPs). Upon announcement of its plans to launch three PPP projects, the Saudi Government received 424 proposals from companies in 21 countries for developing extended care facilities. Seventy per cent of the submissions, however, were from Saudi corporations.

Due to a lack of dedicated facilities, people requiring extended care services are currently treated in general hospitals. Government finances are already feeling the pinch due to the rising medical costs. As a result, the Saudi government is very concerned with meeting the demands of its ageing population and has a strong interest in building extended care facilities.

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Conclusion

The demand for extended care services will increase throughout the globe due to the rise in the elderly population as a result of increased life expectancy. The industry has a high potential for growth due to rising consumer awareness and government expenditure. Deployment of Technology and innovation in caring for the elderly population is an additional element that can help companies optimise their operations and offer better quality care services for their customers. The extended care industry is ripe with opportunities for growth for companies on a global and regional scale. 

Disclaimer: The content provided in this article is for informational purposes only and should not be construed as investment advice. Tanemya Capital will not be held responsible for any decisions made based on the information provided. Always consult with a qualified financial advisor before making any investment decisions.

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