Table 17: Examples of management contracts Company _ Contracts Dallah Dallah has had two types of hospital contracts. One, which just involves management expertise, was worth SAR4.5m over five years and 10% of the hospitals income. The other was worth SAR89m over five years but in this Dallah was responsible for all staffing and supplies and infrastructure operation and maintenance. Mouwasat Mouwasat managed Najd consulting hospital in Riyadh in return for management fees of c.SAR3m per year; this was subsequently changed to receiving a share of revenues and net profits. NMC NMC was awarded a contract to manage a government hospital in Umm Al Quwain, UAE. The five year contract sees it earn $5m (SAR18m) in fees per year, subject to certain performance criteria being met. During the term of the contract NMC is to train government staff to which it will hand over administration at expiration. Source: BofA Merrill Lynch Global Research, company report Private groups may lack capacity to undertake such contracts The private hospital groups in Saudi Arabia are small. Habib Medical Group, Mouwasat and Middle Eastern Healthcare group are the largest, with only 8, 5 and 4 hospitals respectively. We would question whether any company has the depth of management to undertake management of a large number of government hospitals. Potentially the government could seek to import foreign expertise. Insurance roll-out likely to boost private volumes Longer-term, the roll-out of private insurance would likely have a positive impact on volumes available for incumbent operators to capture. This will depend though on the available capacity of private operators at that time and level at which reimbursement is set. The current listed operators typically target high income patients and a lot of the growth in volumes would likely be in the low-to-middle income spectrum. Cultural shift would be needed to target larger population at lower price point It would require a clear cultural shift f