KUALA LUMPUR, August 28 — Back in May, Mark O’Dell, chief executive of the Life Insurance Association of Malaysia (LIAM), received a 13-page bill amounting to RM18,837.55 for a minor hernia operation he did at a private hospital in Kuala Lumpur.
The former CEO of AIA and Manulife in Malaysia, Singapore, Indonesia, and Taiwan – who has over 44 years’ experience in the life insurance business – was baffled and thought: “How could a simple procedure with a one-night hospital stay result in a 13-page bill?”
The document, issued on May 28, was filled with numerous line items, most of which the insurance industry veteran didn’t fully understand.
“You look at all the items, and I don’t understand some of the things that are on there,” O’Dell told CodeBlue in an interview on August 16. “How do I, as a consumer, understand what’s necessary and what’s not? It’s just not right.”
The table below is best viewed on desktop. It can also be viewed in images on CodeBlue’s Facebook post here.
The bill included charges for 95 line items across 13 different categories totaling RM18,837.57 (the final bill was rounded up to RM18,837.55):
- Consignment supplies: RM3,189
- Equipment/instrumentation: RM3,850.30
- Gases supply: RM61.19
- Imaging: RM77
- Laboratory investigation: RM120.70
- Medical and surgical supplies: RM2,105.60
- Medication: RM2,606.68
- Miscellaneous: RM158.50
- Nursing care: RM139.50
- Nursing procedure: RM27.70
- Operating theatre: RM1,372.40
- Room and board: RM2,508
- Doctors’ charges: RM2,621
“This arthroscopic surgery is a wonderful thing actually. They don’t have to cut you open. You heal much faster, and maybe that’s why some of the costs are higher,” O’Dell said.
“But some of these things here, I just look at this – three disposable underpads for RM32.70, ear probe cover for RM6.30. None of this is regulated. There’s no reason why tomorrow they can’t make this RM6.60 or RM7.60.”
Doctors’ charges of RM2,621 comprised just 14 per cent of the total hospital bill, while medications at RM2,606.68 formed another 14 per cent.
The biggest chunk of O’Dell’s hospital bill went to equipment/instrumentation at RM3,850.30, forming 20 per cent.
The LIAM CEO declined to name the private hospital that treated him.
How Much Does Hospitalisation Actually Cost? Do You Really Need It?
O’Dell is not alone in questioning the seemingly arbitrary pricing by private hospitals. With Bank Negara Malaysia’s (BNM) mandate requiring a minimum 5 per cent copayment for new health insurance products, concerns have emerged about unregulated medical bills.
Some argue that patients with insurance can end up paying 100 per cent more than those who pay out-of-pocket (OOP).
On this, O’Dell recounted another troubling incident. “I mean this really happened to me. I walked to my ENT specialist, and the first thing the nurse asked me was, ‘Do you have an insurance policy?’ and I said, ‘Why do you need to know that?’ And she said, ‘Because we need to know how to bill your insurer’.”
This is not an uncommon situation. Private hospitals often check if a patient has insurance during registration. However, this practice has raised concerns that hospitals might be inflating costs for insured patients while offering better (cheaper) deals to those paying OOP.
“I’m not really sure whether hospitals formally charge less for uninsured patients or whether uninsured patients are just in a better position to bargain,” O’Dell said.
“But what I do know is that, according to a doctor, if he has an uninsured patient who is paying out-of-pocket, there will be a lot more due care with what diagnostics or drugs he may order because he knows the patient is paying for it out of their pocket.
“But if the patient has insurance, it doesn’t come into play. The doctor might order whatever he thinks is warranted, sometimes unnecessary, but the sky’s the limit,” O’Dell added. “I think it’s very problematic if hospitals are using dual pricing systems.”
Arbitrary ‘A La Carte’ Pricing, Potential Fraud With Good Intentions
Apart from arbitrary “a la carte” pricing, O’Dell also pointed to potential fraud. He shared an incident where a hand specialist suggested administering a more expensive, non-covered therapy, but billing the life insurance expert’s insurance multiple-fold for a different covered treatment instead.
“Some years ago, I went to a hand specialist to get treatment for arthritis in my thumbs. He said, ‘I want to give you protein-rich plasma, which is a new treatment, but your insurance won’t cover it. So I’m going to bill your insurance for hyaluronic acid and charge them 10 times as much, then give you the plasma for free.’
“I told him, ‘Never mind, just bill me for the right amount. I’ll pay with my credit card and sort it out with the insurance company.’
“I honestly believe that the doctor didn’t even think he was doing anything wrong. I thought he probably thought he was helping, and this is also part of the problem.”
O’Dell said insurance agents can also complicate claims processes, sometimes pressuring doctors to write reports in a way that ensures insurance approval, further contributing to a system prone to misuse and inflated costs.
No Serious Cost Containment Efforts By Private Hospitals
O’Dell claimed there’s also a lack of serious cost containment efforts in private hospitals. He said effective cost containment would involve dedicated departments, resources, processes, analysis, and visible results leading to lower costs.
“There’s no evidence of serious cost containment. By evidence, I mean you would see a dedicated cost containment department with resources, personnel, processes, and clear results leading to lower costs over time.
“To my knowledge, no hospital has such a department because it runs contrary to the biggest problem that private insurance and a private provider have is there is an economic conflict, right?
“The private provider wants to make as much profit as possible. The private insurer wants to make a profit, but is looking after a pool of money on behalf of the policyholder, right? And they all have different agendas.”
Private Hospital Bills Can Be Regulated With DRG
O’Dell strongly disagreed with Association of Private Hospitals Malaysia (APHM) president Dr Kuljit Singh’s assertion that private hospital bills cannot be regulated.
“I disagree 100 per cent,” O’Dell said. He advocates for using Diagnostic Related Groups (DRG) to regulate billing. DRG involves paying a fixed amount based on the complexity of the case, rather than itemising each charge. Hospitals would receive a set amount (e.g., RM21,000) and manage their resources within that budget.
“This is quite commonly the way public systems budget and allocate money to their hospitals for their procedures. It’s not as common in private settings because the private hospitals do not want this. They will make more profit by having these line item bills,” O’Dell said.
The LIAM CEO believes that if the Ministry of Health (MOH) mandates the use of DRGs, it could enforce regulations similar to those for doctors’ fees.
Under Schedule 7 of the Private Healthcare Facilities and Services Act (PHFSA) 1998, private clinic GPs and dentists’ consultation fees are capped at RM10 to RM35, and RM25 to RM250 respectively. Under Schedule 13, private hospital specialists’ consultation fees are legislated at a rate of RM80 to RM235.
O’Dell said DRGs can be adjusted by factors like geography and hospital capability. Similar approaches have been used in past public-private collaborations, such as during the Covid-19 pandemic.
“This happened during Covid, when they used the term ‘decanting,’ which is a bit unusual. They moved patients from public hospitals to private hospitals to free up beds in the public system, and then negotiated a fee for those procedures with the private hospitals. That’s essentially a form of DRG, or it is a DRG. So I believe it can happen. If there’s a will to make it happen, it can be done.”
