Value-Based Healthcare in Saudi Arabia: The Outcome Measurement Gap That Is Derailing Contracts

In late 2025, a senior Saudi healthcare regulator made a candid admission in a professional setting: "I have lost belief in VBHC; it is too hard to implement, and I am not sure the region needs it now." That statement is not a verdict on value-based healthcare. It is a diagnostic of where implementation has gone wrong, and why the structural problems in Saudi VBHC contracting deserve more serious analytical attention than they currently receive.

The promise is real. PwC estimates that successful VBHC implementation could deliver SAR 40–65 billion in annual savings to the Saudi healthcare system by 2035, representing 10 to 15 per cent of total healthcare spending. Vision 2030's explicit ambition to shift from volume-based to value-based care models has produced genuine regulatory momentum, with CHI, CNHI, and provider groups all investing in VBC programme design. Saudi Arabia's ICHOM outcome measurement activity is also accelerating, with leading institutions demonstrating what is possible when outcomes data is collected with rigour.

Yet the gap between policy ambition and contract performance is widening. To understand why, it helps to look at what is actually happening inside VBHC contracts once they are signed.

Why Saudi VBHC Contracts Are Failing: The Structural Pattern

Reviewing value-based contract proposals and early-stage implementations across the Saudi market reveals a consistent failure cycle: one that is structural rather than incidental, and predictable rather than surprising.

In Year 1, a contract is signed with optimistic actuarial projections. The intent is genuine: both the provider and the payer believe they are aligning around shared outcomes. The contract language reflects this, covering outcome targets, quality indicators, and risk-sharing mechanisms. But the assumptions embedded in the financial model are rarely stress-tested before signing.

By Year 2, the reality of implementation diverges from the model. Utilisation deviates from forecast by 15 to 25 per cent. Case-mix shifts as healthier patients self-select out of bundled care arrangements, leaving a more complex population than the risk adjustment anticipated. Losses exceed the budgeted risk corridor, in many cases by 200 per cent or more.

By Year 3, the contract is renegotiated back to fee-for-service or abandoned entirely. The clinical ambition that drove the original agreement has been overwhelmed by the financial and operational pressures that neither party was analytically prepared to manage.

What is the root cause? Not intent, and not capability in isolation. The underlying driver is that contracts are signed without a credible, agreed measurement infrastructure. The outcome targets are written into the contract. The methodology for measuring those outcomes is not: which data sources, which patient populations, which time horizons, which adjustments.

What Saudi Arabia Is Already Doing With Outcomes Measurement

The picture on outcome measurement is more encouraging than the contract performance data would suggest, and that gap is itself analytically significant.

The International Consortium for Health Outcomes Measurement (ICHOM) publishes standardised outcome sets for specific clinical conditions, designed to enable consistent, comparable measurement of what matters most to patients alongside the cost of delivering it. ICHOM Standard Sets are increasingly being adopted across the Saudi healthcare system, not as a theoretical ambition but as an operational reality.

This is not peripheral activity. Tawuniya's work in particular, integrating PROMs with cost data to inform value-based care decisions, demonstrates exactly the kind of measurement infrastructure that should underpin VBHC contracting. The methodology exists. The data capability is being developed. The institutional will is present.

The Gap: Measuring Outcomes vs. Contracting on Them

Here is where the analysis becomes uncomfortable. The ICHOM adoption trajectory and the VBHC contract failure pattern are not contradictions. They are two sides of the same problem.

Measuring outcomes, which means collecting PROMs, implementing Standard Sets, and achieving ICHOM accreditation, is a clinical and data discipline. Contracting on outcomes, which means specifying which outcome measures govern payment, how they will be adjusted for case-mix, what happens when measurement is incomplete, and who bears the cost of data collection, is a contractual and financial discipline. They require different skills, different governance, and different analytical frameworks.

Saudi Arabia's most advanced institutions are developing the measurement discipline. The contracting discipline is lagging significantly behind.

The result is that outcome data is being generated by some organisations, but it is not being used to design, price, or defend value-based contracts. Contracts are still being written on volume-based actuarial assumptions with outcome targets attached, because the measurement infrastructure needed to do otherwise is either not yet in place, or not yet integrated into the contracting process.

The risk this creates is asymmetric. When a VBHC contract fails, whether because outcomes are not achieved, cannot be verified, or the cost of achieving them exceeds the risk-adjusted payment, the organisation that holds the contractual risk absorbs the loss. That is typically the provider.

The Question Nobody Asks Before Signing

In the Kingdom's current VBHC contracting environment, there is a question that is almost never formally addressed before a contract is executed. It is not a complex question. It is, however, one whose absence explains much of what subsequently goes wrong.

The question is: Does this contract specify, in operationally actionable terms, how outcomes will be measured: which instrument, on which patient population, at which interval, adjusted for which case-mix variables, collected by which party at whose cost?

ICHOM Level 1 Accreditation requires a standard set to be actively implemented and outcomes data to be collected systematically. It does not require that data to be connected to a payment mechanism. The organisations in Saudi Arabia that have achieved accreditation have demonstrated the harder half of the discipline. The contractual half requires the same rigour applied to the agreement that governs what the data is actually used for.

A contract that contains outcome targets but does not specify a measurement framework is making a promise it cannot keep on its own terms. It introduces interpretive disputes about who decides whether the outcome was achieved. Those disputes become expensive and relationship-damaging when they arise, as they inevitably do.

The organisations that will succeed in Saudi VBHC are not necessarily those with the most ambitious contracts. They are those whose contracts are analytically sound: stress-tested against realistic utilisation scenarios, built on agreed measurement frameworks, and designed with explicit conditions for what happens when assumptions do not hold.

That analytical work is not done at the point of implementation. It is done before the contract is signed.