The first part of this series set out why standardised patient journeys matter. It made the case that a model of care designed around the patient and population need – one that standardises how care is delivered across the breadth of the care pathway – can improve clinical outcomes, reduce inefficiency and narrow the equality gap. But while pathway design is the foundation on which any model of care is built, design alone does not change behaviour, and it is behaviour change that sustains and scales the ambitions set out from the start. Funding, contracts and incentives are among the most powerful levers for driving system-wide change.

For the Saudi Model of Care, and other systems seeking to develop new models of care, payment reform is a pressing mandate.

Through Vision 2030, Saudi Arabia is fundamentally reshaping the way its health system is organised and funded. The Ministry of Health is transitioning from direct service delivery to focus on policy and regulation, providers are being consolidated into corporate entities under the Health Holding Company, and the Center for National Health Insurance (CNHI) is being established as the single national purchaser. At the same time, health clusters are continuing to mature into Accountable Care Organisations, with increasing private sector participation and new purchasing models changing how care is commissioned. As these reforms progress, decisions about the design of patient pathways can no longer be separated from the way services are funded. The question is no longer only which pathway delivers the best outcomes, but whether payment mechanisms encourage providers to prevent illness, coordinate care and improve population health.

A shift from funding activity to purchasing outcomes is therefore central to making the Model of Care real. Value-based payment and strategic purchasing are what connect system ambition to provider behaviour: they align incentives, contracts and delivery expectations around a single agreed model of care, while giving providers room to decide how those outcomes are achieved.

Why payment reform matters now, and what strategic purchasing must do

Traditional activity-based payment has a clear logic, and equally clear limits. It rewards volume, fragments accountability and too often favours treatment over prevention. The stakes are high: patients with diabetes incur medical costs roughly ten times those of patients without the condition,³ and the ten-year economic burden of atherosclerotic cardiovascular disease alone is estimated at SAR 106.2 billion.⁴ In systems trying to manage chronic disease earlier, reduce avoidable admissions and move care closer to home, those incentives pull against the very direction of reform.

This matters for the Saudi Model of Care because many of the Kingdom’s highest-priority conditions need sustained, coordinated intervention rather than episodic treatment. Non-communicable diseases already account for around 73% of all deaths in the Kingdom, with cardiovascular disease alone responsible for 37% of the total,¹ and diabetes prevalence among the highest in the MENA region.² Chronic disease, maternal and child health, mental health and other long-term conditions all rely on providers working across organisational boundaries, intervening early and shaping care around need. Purchasing arrangements built around units of activity are poorly suited to that task.

The implication is not that all activity-based payment should disappear. It is that a greater proportion of funding needs to be tied to outcomes, pathway performance and population value.

In practice, that means defining a small number of evidence-based interventions that can materially improve outcomes, identifying where delivery needs flexibility, and structuring contracts so that providers are rewarded for results rather than throughput alone.

A value-based approach to purchasing must do more than bolt a performance metric onto an existing contract. To support the Saudi Model of Care, it has to reshape how priorities are funded and how accountability is shared across the system.

That begins with choosing the right areas of focus. Not every pathway suits the same payment model, and not every outcome can be contracted in a meaningful way. The strongest starting point is usually a small set of high-burden areas where the evidence on what works is clear, outcomes are measurable, and there is real scope to integrate care across settings – often long-term conditions, urgent care, women’s health, prevention and selected elective pathways.

From there, strategic purchasing needs to do four things well:

1. It must direct funding towards the interventions with the strongest evidence of impact, rather than spreading resources thinly across many initiatives.
2. It must align payment with pathway objectives, so that prevention, continuity and early intervention are rewarded rather than penalised.
3. It must allow providers enough delivery flexibility to tailor implementation to local population need.
4. It must build in a feedback loop, so that what is funded can be reviewed, refined and reallocated as evidence emerges.

In this sense, strategic purchasing is not simply a financing mechanism. It is how the Model of Care is translated into the practical rules a system runs on.

Case study: aligning payment to prevention in Tower Hamlets, London

Strategic purchasing in practice can be seen in CF’s work in Tower Hamlets – an inner-London borough of around 330,000 residents, home to one of the most diverse and deprived populations in the UK. There, commissioners redesigned funding flows to support prevention and improve outcomes in a population with high emergency admission rates and a heavy chronic disease burden.

The starting point was a familiar problem. Traditional Payment by Results mechanisms rewarded hospital activity but did little to encourage upstream intervention or collaboration across primary and community care. For a system facing high rates of diabetes and cardiovascular disease, that model offered little leverage over the outcomes that mattered most.

The response was to create population-based care packages for high-burden conditions and tie funding to prevention. Commissioners introduced a blended payment model: 70 per cent paid up front to build capacity and infrastructure, and 30 per cent linked to performance against agreed outcomes, including immunisation coverage and the control of chronic conditions. Transparent performance metrics were set at network level, and governance was strengthened to hold providers collectively accountable for results.

This was not simply a financial redesign. It was a different operating logic. Funding was used to create the conditions for prevention, while outcomes were used to focus effort and discipline delivery.

The impact was measurable.

• Non-elective admissions fell by 15% compared with baseline. Admissions in Tower Hamlets were 9% lower than local peers and 19% lower than the rest of the country.
• The programme also achieved herd immunity for MMR vaccination, and delivered significant improvements in diabetes management, including blood pressure and cholesterol control.

The relevance for the Kingdom is clear. Where the objective is to reduce avoidable demand, improve prevention and manage long-term conditions more effectively, payment reform can be one of the most powerful levers available. But it works best when linked to a clearly defined pathway, a focused set of outcomes and strong local accountability.

Implications for the Saudi Model of Care

For Saudi Arabia, shifting from funding activity to purchasing outcomes has several practical implications.

Without these foundations, value-based payment risks becoming either symbolic or overly burdensome.

There is also a broader strategic point. A well-designed purchasing model helps shift the conversation from what activity has been delivered to whether the intended population outcome has improved. That is a more useful discipline for systems seeking to improve value, reduce variation and manage finite resources more effectively.

Looking ahead

Aligning payment to outcomes is a critical step in making the Model of Care operational. But once funding is linked to pathway performance rather than activity volume, the system needs a more disciplined way of measuring whether value is actually being delivered.

That is where the next challenge emerges.

In Part 3 of this series, we examine why shared dashboards and system-wide metrics become essential once funding is aligned to outcomes. If value-based purchasing is to work, systems need clear visibility of performance, consistent measures of value and transparent mechanisms for accountability and continuous improvement.

FAQ’s

References

1. American Diabetes Association. Economic Costs of Diabetes in the U.S. in 2022. Diabetes Care, 2024;47(1):26–43. People diagnosed with diabetes have medical expenditures on average 2.6 times higher than would be expected without the condition.

2. Alasnag M, Tash A. The Economic Burden of Atherosclerotic Cardiovascular Disease in the Kingdom of Saudi Arabia. Saudi Medical Journal, 2025;46(10):1117. Estimated ten-year ASCVD burden of SAR 106.2 billion, of which SAR 89.3 billion is direct cost.

3. Noncommunicable diseases and health system responses in Saudi Arabia: focus on policies and strategies (qualitative study), 2022, drawing on WHO and Ministry of Health data. NCDs account for around 73% of all deaths in the Kingdom; cardiovascular disease accounts for 37% of total deaths.

4. International Diabetes Federation, Diabetes Atlas. The MENA region has the highest age-standardised diabetes prevalence of any IDF region (19.9% in adults aged 20–79, 2024); Saudi Arabia is among the top-ten countries globally for diabetes prevalence.

5. UK Government / NHS. Tower Hamlets managed practice networks case study (GOV.UK, 2014); performance figures from CF analysis of the Tower Hamlets prevention and blended-payment programme.

About CF

CF is a leading consultancy dedicated to making an enduring impact on health and healthcare. We work with leaders and frontline teams to improve health, transform healthcare, embed life science innovation and boost growth through investment. With unmatched access to UK healthcare data and award-winning data science expertise, our team are a driving force for delivering positive and meaningful change.

About the authors

Dr Zahra Safarfashandi

Dr Zahra is a partner at CF, and Chief Executive of CF GCC, our Middle East entity. She is a clinician and an experienced healthcare management consultant. She specialises in implementing clinical and digital transformation programmes at scale. She has worked across the UK, Europe and the Middle East focused on improving clinical outcomes, workforce productivity and operational effectiveness by leveraging clinical best practice and digital innovations.

Nada Raoof

Nada Raoof is Director Middle East at CF, based in Riyadh, Saudi Arabia. She brings deep expertise in healthcare strategy, institutional excellence, and translating complex vision into measurable outcomes. She has extensive experience leading organisational strategy, performance management, and board engagement. She strengthened institutional governance, improved strategic delivery effectiveness, and secured significant funding for national health initiatives including biosafety, biosecurity, and public health data systems.