* Deal would be test of Saudi economic reform plan
* Saad Specialist Hospital has effectively shut down
* Billionaire owner detained by authorities in October
* Staff of hospital owed months of wages - sources
DUBAI/KHOBAR, Dec 21 (Reuters) - London-listed NMC Healthcare is in talks with the Riyadh government to take over the running of a struggling Saudi hospital, according to four sources familiar with the matter.
A deal for the Saad Specialist Hospital in Khobar, one of the top cancer treatment facilities in the Gulf, would be a rare instance of a foreign group operating a Saudi hospital.
It would be a test of Riyadh's plan to bring overseas investors into the healthcare sector under a reform drive, led by Crown Prince Mohammed bin Salman, aimed at restructuring the kingdom's economy and reducing its dependence on oil revenue.
The Saudi health ministry has asked interested parties to submit bids for the operational license by the end of this month, said the sources who declined to be named as the discussions are confidential. UAE-based NMC is involved in the process and is considered a frontrunner to win the contract, they added.
The 750-bed hospital is owned by Saad Group, a conglomerate owned by billionaire tycoon Maan al-Sanea which also operated the facility. But in recent weeks the government has stepped in after the hospital become weighed down by financial problems, said the sources.
The hospital had effectively ceased operating - with the emergency room the last unit of the facility to close last month - due to debts which meant it was unable to pay salaries or contractors, according to the sources.
The government's intervention coincided with the detention of the al-Sanea by Saudi authorities for unpaid debts, sources have previously told Reuters.
NMC Healthcare and the Saudi health ministry were not immediately available to comment.
Saad Specialist is one of only two hospitals in the kingdom to have a cyclotron, used to help identify cancerous tumors. The ministry is keen to get it re-opened as quickly as possible.
It approached NMC and other healthcare companies a few weeks ago about taking over the running of the facility and conducted a site tour for potential bidders, which number around 10, according to the sources familiar with the matter. The sources did not name any other potential bidders.
Saad Specialist Hospital, which al-Sanea opened in 2001, gradually ground to a halt this year as staff began to leave, including doctors and nurses, because of non-payment of salaries, which in some cases dated back around one year, said the sources.
In addition, contractors began to stop maintaining the high-tech medical equipment because of lack of payment, the sources said.
At the peak of his business success in 2007, al-Sanea was ranked by Forbes as one of the world's 100 richest men, with his Saad Group owning interests in everything from banking to civil engineering.
But his empire has been embroiled in a high-profile debt dispute since 2009 spanning courts in London to the Cayman Islands, and Saudi authorities have recently begun liquidating some of his assets.
Al-Sanea was detained in October in the kingdom's Eastern Province and he has been held in a civil detention center in Khobar, sources previously told Reuters. His detention was a few weeks before Prince Mohammed launched a corruption crackdown in which dozens of Saudi princes and businessmen are being held.
In an effort to get him released, Reemas Group, a financial consultancy hired by Saad Group, has outlined a proposed settlement covering $4 billion in debt, sources previously told Reuters. Reuters was not able to determine whether the plan includes any provision to repay hospital staff or contractors.
NMC Healthcare has $800 million available to start investing in 2018 in the Gulf and other markets, its CEO Prasanth Manghat said this week. "We want to look at opportunities in Saudi Arabia," he said. "It is a very strong market and the reforms happening there will give the healthcare sector a lot of momentum."
The government is looking to bring in foreign investors to the healthcare sector as part of its "Vision 2030" plan.
But progress has been slow.
The health ministry has put on hold its tender seeking financial advisers for the privatization of 55 primary healthcare units in Riyadh, a financial source familiar with the matter told Reuters earlier this month. (Editing by Michael Georgy and Pravin Char)