Saudi German Health begins new era with board overhaul, cost-cut drive

Saudi German Health has a new board following a turbulent period for the group’s governance. The company is entering “a totally different” chapter, CEO Nezar Bahabri tells EnterpriseAM.

New blood: The seven-member board elected at yesterday’s general assembly, which includes no members of the founding family, brings together physicians, auditors, financial professionals, and McKinsey veteran Nicklas Garemo, marking a clear shift from the governance structure that defined the group since its founding nearly four decades ago.

How it got here: The board change follows a turbulent period for the group. In May, six board members, including members of the Batterjee founding family, stepped down after Saudi Arabia’s Capital Market Authority concluded an investigation into the group’s financial reporting practices between 2018 and 2021.

The numbers that matter: General and administrative costs have come down from 25% of revenue to 23% following a restructuring completed over the past two months, with a target of around 20% by year-end. On a revenue base of approximately USD 800 mn, hitting that target implies annual savings of some USD 40 mn. “It will take us time, but it will be the right way to go,” Bahabri says.

What’s changing: Saudi German has replaced a decentralized operating model, where each hospital managed its own finance, HR, legal, marketing and revenue cycle functions, with a regional structure designed to eliminate duplication and cut costs. The overhaul comes as the group shifts its revenue mix toward ins. patients, which Bahabri described as the core business with greater room to scale.

New pharmacy business: The company also plans to launch Viva, a wholly owned pharmacy subsidiary under the listed company, within three months. The business will add retail sections to existing hospital pharmacies alongside an online platform rather than opening standalone outlets. Bahabri says the investment is modest because it builds on the group’s existing pharmacy network and is not expected to make a meaningful contribution to revenue this year.

The growth gap: Inpatient occupancy exceeds 80% across most hospitals, but Bahabri identifies outpatient clinics as the company’s biggest growth prospect. Clinic utilization stands at around 50-55%, with a target of reaching 60% this year before progressing toward 70-80% over the longer term.

Outpatient services currently account for about 40% of revenue, compared with more than 60% at many peers, he says. The next phase of growth will come from recruiting more physicians, improving patient experience, and making it easier for patients to access services through digital tools and home delivery for meds.

What’s next: The group’s Jeddah hospital expansion is expected to add about 100 beds when it opens by April 2027, taking operational capacity to around 1.8k beds. Beyond that, the company plans to expand specialist and tertiary services within its existing hospitals rather than pursue another major hospital expansion. Bahabri also rules out raising fresh capital, saying the transformation would be funded internally.