The Gulf is spending increasingly to treat diseases it could have prevented. Saudi Arabia’s Ministry of Health budget for 2025 is approximately 99.3 billion riyals, within a system in transition from a historically more curative model to one officially oriented toward prevention and integrated care. Risk-adjusted capitation can incentivize providers to prevent costly complications and intervene early, provided it is supplemented by quality indicators and safeguards against underservice. This financial gamble is underway in the Gulf, but British precedents show that a payment mechanism, however well-designed, is insufficient without the organizational conditions that allow it to function.

The Essentials

  • Risk-adjusted capitation structurally modifies the incentive: the provider is paid to prevent disease rather than treat it.
  • Gulf countries project a 96% increase in diabetes prevalence by 2045, making the status quo curative model financially unsustainable (PwC Strategy & Middle East Briefing 2025).
  • Saudi Arabia and several GCC states have integrated capitation into their multi-year plans, but no published evaluation documents its effect on costs or prevention.
  • NHS experience since the 1990s shows that capitation stabilizes chronic pathologies without reducing them when local clinical autonomy is lacking.
  • The question remains for 2030-2035 whether a financial signal can reshape a system built over fifty years around curative specialized medicine.

A System Built for Growth, Not Durability

Gulf health systems were built rapidly, with oil money, for a young and rapidly expanding population. The result is a dense hospital apparatus, technically competent, and oriented toward acute care. For decades, this architecture was coherent with local demographics and morbidity structure.

The problem is that this demography has changed, and morbidity has changed with it. Obesity, type 2 diabetes, cardiovascular diseases, and renal pathologies constitute major health challenges in the region. According to the IDF Diabetes Atlas 2019, the number of people living with diabetes in the MENA region was projected to increase by 96% between 2019 and 2045. This is almost a doubling in twenty-six years, from 2019 to 2045, for a chronic disease whose treatment and complications can be costly; type 2 diabetes is often preventable or can be delayed, unlike type 1 diabetes.

The traditional financing system carries incentives more linked to service volumes; Saudi reforms aim to strengthen incentives for prevention, quality, and outcomes. Each complication of uncontrolled diabetes, each renal failure, each amputation generates a bill. Providers may be funded through budgets, fee-for-service payments, per-stay payments, insurance, performance incentives, and in certain programs, capitation. This is the logic of a tariff system built around volume.

This is precisely the signal that risk-adjusted capitation seeks to modify.

Risk-Adjusted Capitation Modifies the Arithmetic of Care

The principle is simple to state, difficult to calibrate. Instead of being paid per act or per stay, the provider receives an annual sum per registered patient, adjusted according to that patient’s risk profile: their age, comorbidities, medical history. A diabetic patient with hypertension represents a higher risk of future costs than a 30-year-old patient with no history: thus generating a higher capitated payment.

The arithmetic consequence is immediate. If the provider receives a fixed sum to manage a high-risk patient, each euro spent on prevention, therapeutic education, or close monitoring is a euro that reduces the probability of a costly complication. Prevention ceases to be a cost with no direct return and becomes an investment whose benefit remains within the system of the structure responsible for it.

The model, in theory, aligns the provider’s interest with that of the patient and the funder. The NHS has used and evolved capitation mechanisms since the 1990 reforms, combining them with other payment modes; this does not correspond to a uniform and continuous adoption of risk-adjusted capitation. In the United States, some ACOs have capitation options, but not all ACOs are financed by capitation; the Medicare Shared Savings program relies mainly on fee-for-service payment with savings or loss-sharing. Since 2023, Singapore has financed its public health clusters through capitation; polyclinics fall within these clusters but are not described as receiving separate risk-adjusted capitation. Saudi strategy provides for risk-adjusted capitation; claims concerning several other GCC states must cite each state’s public plans.

What is missing, for the moment, is demonstration. Published evaluations outside the Gulf are numerous but yield mixed results; the absence of evaluation specific to Gulf systems must be stated cautiously. Capitation is planned or committed in certain reforms, notably in Saudi Arabia; the extent of its actual deployment and its results must be established program by program.

The Limits of Financial Signal: Thirty Years of NHS Experience

British experience is more instructive than it appears, and it should temper enthusiasm for capitation as a solution in itself. The 1990 British contract modified the obligations and certain remuneration of general practitioners; it did not introduce risk-adjusted capitation ex nihilo. The NHS introduced the QOF in 2004 as a pay-for-performance program, supplementary to existing financing mechanisms. QOF evaluations do not show a clear significant effect on targeted mortality; they do not allow attributing prevalence trends to capitation or local clinical autonomy.

But the evolution of chronic disease prevalence cannot be attributed to the payment mechanism alone. The reason lies less in the payment mechanism than in the conditions under which it operates. The effects of capitation depend notably on clinical autonomy, stability of multidisciplinary teams, and continuity of patient relationships. Risk-adjusted payments can incentivize more documentation of diagnoses; this claim must not be presented as a demonstrated result of the NHS or QOF.

The lesson is precise: risk-adjusted capitation creates the right incentive but does not create the capacity to respond to it. A provider receiving high payment for a high-risk diabetic patient can only prevent complications if they have the time, skills, IT tools, and therapeutic relationship necessary. If any of these elements is missing, the financial signal is captured without behavior change.

For Gulf systems, where general medicine has long been the least valued discipline in a hierarchy dominated by specialization, this is both a structural and organizational obstacle. The question of aging health systems and their capacity to pivot toward prevention extends far beyond the Middle East, but takes on particular acuity there given the speed of the epidemiological transition underway.

The Organizational Conditions That the Signal Cannot Replace

For capitation to produce its preventive effects, three conditions must be met simultaneously. The first is risk adjustment itself, which must be sufficiently precise not to create perverse effects. A poorly calibrated risk profile incentivizes the provider to select low-risk patients whose capitation exceeds actual costs, and to exclude very high-risk patients whose costs exceed capitation. Health economists call this mechanism skimming, which is one of the principal risks of poorly calibrated capitation, along with underservice, quality decline, and cost shifting.

The second condition is data infrastructure. To adjust risk in real time, to identify patients requiring priority preventive intervention, and to measure program effects, interoperable and updated clinical data must be available. Gulf health information systems have made significant progress, notably in Saudi Arabia with deployment of the unified patient record as part of Vision 2030, and in the Emirates with the Malaffi program in Abu Dhabi. But fragmentation between public and private sectors remains a real obstacle, and the state of deployment of analytical platforms capable of feeding dynamic risk adjustment varies across programs.

The third condition is the most difficult to create by administrative decision: it is the continuous therapeutic relationship between a general practitioner and their registered patients. Prevention of chronic diseases relies on repeated conversations, detailed knowledge of the patient’s life context, and trust built over time. This relationship assumes structured primary care, with stable patient rosters and sufficient consultation times. In the Emirates and Kuwait notably, high turnover of expatriate health professionals represents a concrete brake: a capitated system assumes that someone remains long enough to see the effects of their prevention efforts.

Singapore as Reference, Dubai as Testing Ground

Among the systems cited in Gulf analyses, Singapore constitutes a reference. Since 2023, Singapore has oriented its public health cluster financing toward capitation; polyclinics are part of these clusters but are not described as separately financed by risk-adjusted capitation. The Ministry emphasizes prevention within this reform framework.

What distinguishes the Singapore model is less the sophistication of its risk adjustment than the vertical integration that accompanies it: polyclinics are linked to public hospitals through shared information systems, they have stable multidisciplinary teams including care coordinators, dietitians, and clinical pharmacists, and their physicians have sufficiently short patient rosters to maintain individualized follow-up.

Dubai is attempting to reproduce this architecture in a different context. The DHA deployed NABIDH for data exchange between public and private facilities before 2022; it also launched a value-based care model in 2022.

Can a Financial Mechanism Reshape Fifty Years of Curative Medicine

The fundamental question for Gulf systems by 2030-2035 is whether a payment signal can suffice to reshape a system built over half a century around specialized and curative medicine. International experience suggests the answer is conditional.

In a first scenario, risk-adjusted capitation acts as a catalyst for deeper transformation. Providers, facing a clear financial incentive to invest in prevention, request and obtain necessary organizational resources: expanded teams, sufficient consultation times, analytical tools. Funders, private and public, invest in data platforms enabling precise risk adjustment. Medical schools progressively reorient curricula toward family medicine and chronic disease management. In this scenario, the rise of diabetes by 96% by 2045 remains a projection, not a destiny.

In a second scenario, if organizational conditions do not follow, capitation can lead to marginal adaptation: providers can improve their coding of risks, document more existing comorbidities, and optimize their capitated income without substantially modifying their clinical practice. Diabetes progresses, costly complications arrive, and the system absorbs additional costs with delays, not without consequences for care quality.

The projected increase in the number of people living with diabetes in the MENA region increases financial pressure on health systems; it does not, by itself, allow concluding that any curative status quo is financially unsustainable. The transformation of health financing systems facing aging requires structural reforms of which capitation is one element, but only one.

The signals to monitor in the coming years are precise: will the GCC publish independent evaluations of ongoing pilot programs? Will Saudi Arabia increase the number of family physicians trained locally, or will it continue depending on expatriate labor with high turnover? Mandatory private insurers, which cover a large share of the Emirates’ population, will they accept aligning their incentives with preventive indicators rather than billed service volume? These questions are not matters of financial technique: they are matters of political will and reform consistency over time.

Risk-adjusted capitation is a powerful tool. But tools do not substitute for the institutions that must make them work.

Sources

  1. Innovaccer, Value over Volume: How the Economics of Healthcare is Changing in the Middle East (2025)
  2. PwC Strategy & Middle East Briefing 2025, data on Gulf health spending and diabetes projections (report without stable public URL)
  3. Deloitte, Health data Gulf, integrated in Middle East Briefing 2025
  4. Ministry of Health Singapore, data on polyclinics and diabetes control indicators (Singapore Ministry of Health, annual reports)
  5. OECD, OECD Health Statistics 2025 (Organisation for Economic Co-operation and Development)