Health White Paper Touts MOH Gradually Dropping Service Provider Role

The Health White Paper moots reforming MOH by gradually removing both its roles as health service provider (goes to autonomous facilities) and purchaser (goes to a Strategic Purchaser entity). MOH will just retain its regulator & policymaker role instead.

KUALA LUMPUR, June 14 – The Health White Paper (HWP) proposes a radical restructuring of the Ministry of Health (MOH) to begin, within five years, relinquishing its role as a health service provider.

The 59-page document by the MOH uploaded onto Parliament’s website last Monday – which outlines proposed health care reforms over a 15-year period – suggested that the MOH would focus instead on the role of governance and regulation, setting standards, and drafting health system policies.

“The roles of provider and purchaser of health services that are currently under the MOH will be separated in stages,” said the HWP.

“The role of provider of health care services will be undertaken by autonomous public health care facilities.

“The role of purchaser of services will be undertaken by the Strategic Purchaser entity that will be responsible for procuring health care services from health service providers in the public and private sectors through an innovative and value-based payment model. This step will ease a staged transition from allocations based on line-item budgets to a system that offers incentives for efficiency and performance.”

In its description of Pillar Four of the HWP on strengthening the foundation and governance of the health care system, the document proposed strengthening the regulatory and supervisory function of the MOH, as well as “separating the roles of provider and purchaser of health care services from the MOH”.

This also includes improving policy, legislation, and regulations related to health to remain relevant with current situations; boosting the health human resource ecosystem; and encouraging evidence-based research, innovation, and approaches.

The HWP said the separation of the roles of provider and purchaser of health services from the MOH would create more transparent regulation and better check and balance.

“The performance and response of health care service providers and purchasers will also be improved, hence able to provide more quality and value-for-money health care services.”

The HWP said efforts to restructure the MOH would include initiatives like reviewing and strengthening the MOH’s policy-making functions related to public health and crisis preparedness, staff management, and other related policies; as well as reviewing and strengthening the MOH’s regulatory function like public health, setting standards and quality assurance, regulating health care service providers and purchasers, and governing data.

Other initiatives include designing, planning, and implementing the autonomy of health care facilities in the public sector in stages, as well as expanding the role of the Strategic Purchaser with a clear reporting and regulatory structure.

The HWP proposed beginning the separation of the roles of health care service provider and purchaser from the MOH in stages, as well as the full operation of the role of the Strategic Purchaser, in the short term of one to five years.

The hospital autonomy pilot initiative will also begin in this phase.

In the medium term of six to 10 years, the hospital autonomy pilot initiative that began in the short term will be the foundation of the implementation of a suitable autonomy model for all related public health care facilities. The implementation of autonomy for primary health care in the public sector will also be scrutinised comprehensively in this period.

In the long term of 11 to 15 years, health care service providers in the public sector will operate autonomously. Standards of enforcement will also be more comprehensive for health care service providers in the public and private sectors to achieve more balanced quality and performance levels across sectors.

The separation of the health care service provider and purchaser roles from the MOH would also be completed by the long term.

Autonomy For Primary Health Care Facilities and Hospitals in the Public Sector

A Ministry of Health ambulance outside the emergency and trauma department at Raja Permaisuri Bainun Hospital, Ipoh, Perak. HRPB is a public tertiary hospital and main referral centre that serves the state of Perak. Photograph taken in November 2022 by CodeBlue.

Autonomy for public health care facilities was proposed at both the primary and hospital level.

For primary health care facilities in the public sector, the HWP proposed autonomy in management, operations, and finances in stages, according to capability.

For public hospitals, autonomy would be given in stages based on a set operational framework.

“The autonomy initiative will be in line with the cluster concept where public hospitals in the same area will be arranged to increase efficiency in administration as well as procurement, human resources, and the sharing of other health resources through cooperation between facilities in the cluster.

“The cluster concept will function as a platform for more unified clinical service delivery across facilities. The hospital cluster concept will also be expanded to district hospitals and MOH specialist hospitals in stages, as well as to other public hospitals under the Ministry of Higher Education and the Ministry of Defence.”

The HWP added that investment in human resource development to improve management capacity was necessary in the autonomous hospital initiative in the public sector.

However, the HWP did not explain if “autonomy”, as envisioned for public health clinics and hospitals, included the freedom to set prices for consultation and treatment, like in private health care facilities, or how exactly the “public” health care sector would differ from “private” in a model where the MOH is no longer a health service provider.

Health Benefits Package, Special Health Fund, Strategic Purchaser

Transition from passive to strategic purchase of health care services. Graphic from the Health White Paper by the Ministry of Health dated June 13, 2023.

The HWP proposed a “health benefits package” that provides a range of services and medicines at appropriate fees for the same level of care, irrespective of whether the health care service provider is from the public, private, or not-for-profit sector.

The health benefits package will comprise various evidence-based services, including promotive and preventive health care, from primary to hospital care, besides possibly including digital health care services.

The scope of the health benefits package will be based on objective economic and health technology evaluations. It will also be expanded continuously in line with the maturation of the country’s health financing system and changing health needs, based on the approach of lifetime health care.

The HWP envisioned creating a special health fund with a clear and transparent regulatory framework to finance the health benefits package to enable risk sharing and to fulfil health service delivery based on the health benefits package.

“The main source of financing for the special health fund is government allocations. This fund may include contributions from individuals and big donors in future.”

The HWP did not explain if part or most of the government’s annual allocations for the MOH would go to the special health fund instead, especially if the MOH is only to focus on its regulator function and release its role as service provider. This year, the MOH received about RM36.3 billion for Budget 2023, comprising RM31.5 billion for operating expenses and RM4.8 billion for development expenditure.

The special health fund will be managed by a professional not-for-profit Strategic Purchaser governed by a clear standard reporting structure and strict regulations.

“The health benefits package funded by a special health fund will enable sharing of health and financial risks, and wider cross-subsidies, in line with the objective of UHC (universal health care),” said the HWP.

“This reform strategy will contribute to reducing out-of-pocket (OOP) expenditure and catastrophic health spending. A health fund governed well and managed professionally will be more systematic, transparent, and have greater accountability in this important aspect of health expenditure.”

The not-for-profit Strategic Purchaser, as proposed by the HWP, will function as the administrator of the special health fund by purchasing health care services from the public and private sectors through an “innovative and value-based payment model” to ensure treatment effectiveness, service coverage, cost effectiveness, and better quality and performance from the service provider.

The HWP explained the difference between passive and strategic purchase of health care services. Passive purchase refers to spending based on allocations that have been set for salaries, utilities, and supplies, among others. Allocations are usually prepared based on spending history and its use is limited to certain items. Hence, this causes the budget to be very rigid and to focus on inputs, instead of health outcomes.

Strategic purchase, on the other hand, refers to obtaining health care services that are aimed to continuously maximise value and performance for a sum of funds that has been allocated or set.

The HWP noted that the development of the health service package and risk sharing at the national level with a special health fund was still at the conceptual level, needing bipartisan support.

Fee Review In Public Health Care Facilities Based on Ability to Pay

A man collects his medication at the specialist complex pharmacy at Raja Permaisuri Bainun Hospital, Ipoh, Perak. Photograph taken in November 2022 by CodeBlue.

The HWP proposed a review of the fee structure at public health care facilities to better match patients’ ability to pay, while retaining a safety net for low-income households.

According to the HWP, the low fees imposed at public health care facilities in Malaysia enables access to the health care system at appropriate costs.

“However, the same fee structure for all contributes to great inequality between the charges and the cost of provision and the ability to pay, especially among high-income households,” said the HWP.

“To improve the sustainability of public health care, the fee structure at public health care facilities will be reviewed so that it better matches ability to pay. However, the safety net for low-income households will be retained.”

Currently, user fees of RM1 and RM5 are charged for outpatient and specialist care respectively at public hospitals and public health clinics under the MOH.

The HWP did not state how much medical fees contribute to the MOH’s revenue. Health policy analyst Chua Hong Teck previously wrote that the medical fees collected comprised only 1 per cent of the MOH’s expenditure in 2021.

HWP Advisory Council co-chair Shahril Ridza Ridzuan, who is also Axiata Group Bhd chairman, said recently that Malaysia should consider a more targeted approach to free health care for long-term sustainability of the health care system: “Today, somebody who’s a millionaire could actually walk into a public hospital and get free health care.”

Besides reviewing the fee structure in public health care facilities, the HWP proposed conducting technical studies, designing, and developing a progressive health insurance model that is sustainable and equitable, including a “targeted subsidy mechanism”.

The HWP also suggested increasing public health care expenditure in stages to 5 per cent of Malaysia’s gross domestic product (GDP); and drafting a long-term working plan for government allocations for health based on indicators, and projections of demand and changes in the treatment delivery model.

The HWP pointed out that relying on just one source for public health care financing was not sustainable, in light of rising health needs in line with Malaysia’s changing demographics.

“A form of social compact will be suggested so that investment into health is a shared responsibility. The mechanism for a progressive insurance scheme will be scrutinised, debated, and tabled in Parliament for bipartisan support,” said the HWP.

“The social compact also stresses the aspect of the health care needs of the poor. Assistance mechanisms and systematic subsidies involving financing sources like zakat, wakaf, corporate foundations, and private donors will be studied and developed.

“The use of appropriate pro-health taxes to change behaviour can also contribute to health allocations by the government, even though the amount is rather small compared to government revenue,” the HWP added, without elaborating what these “pro-health taxes” were.

Short Term (1-5 Years), Medium Term (6-10 Years), Long Term (11-15 Years)

A briefing by the Ministry of Health (MOH) for MPs on the Health White Paper in Parliament on June 8, 2023. From left: Bandar Kuching MP and Health Minister Dr Zaliha Mustafa’s special advisor, Dr Kelvin Yii; Health White Paper Advisory Council co-chair Dr S. Subramaniam, who is also a former health minister; Health director-general Dr Muhammad Radzi Abu Hassan; Health Minister Dr Zaliha Mustafa; MOH deputy secretary-general Norazman Ayob; and MOH planning division director Dr Rozita Halina Hussein. Photo from Twitter @DrZalihaMustafa.

According to the HWP, the review of the fee structure for public health care services will be conducted in the short term of the next one to five years, along with studies and a proposed structure for a social health insurance scheme.

Efforts to create the special health fund, as well as expansion and strengthening of the role of the Strategic Purchaser, will also begin in the short term of one to five years.

In the medium term of six to 10 years, the continued increase of government spending on health in stages will be supported by additional funds from “targeted assistance” from contributions from organisations, “improvements” of the Fees Act, and the suggested implementation of a national health insurance scheme.

The diversity of health financing sources will be channelled to the special health fund created in the previous phase. This will, simultaneously, improve the health benefits package that can be offered to the people.

“Besides that, continued improvements will be made towards the payment model to achieve health care that is based more on value, including the use of incentives for health service providers to drive better health outcomes,” said the HWP.

In the long term of 11 to 15 years, institutions, and regulatory and governance frameworks would be formed and function fully to diversify health financing sources that will then contribute to the special health fund.

“The frameworks for managing funds, purchasing services, and improving the health benefits package would already have been operating for the previous few years. Therefore, this period will see more detailed improvements from the technical or operational aspects like payment models or the criteria for selection of service providers.”

The HWP Advisory Council – which was set up by Health Minister Dr Zaliha Mustafa’s predecessor, Khairy Jamaluddin – is co-chaired by Shahril Ridza and former Health Minister Dr S. Subramaniam, besides comprising 11 other members.

The Dewan Rakyat is expected to debate the HWP before the end of the current Dewan Rakyat meeting on Thursday.

In the past few months, Dr Zaliha embarked on a HWP town hall tour across the country, holding closed-door sessions with stakeholders in the central, north, south, and east zones, as well as in Sabah and Sarawak, to discuss what she touted to be the “document of the basis for the reform of the country’s health system”.

She also held an engagement session with MPs in Parliament on the HWP last Thursday.

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