The recent uproar over insurance premium increases has compelled me to voice my opinion on this matter. This is a disaster waiting to happen, as the private health care industry is continuing to capitalise on an unchecked and lucrative business model that ultimately burdens ordinary Malaysians.
The Proliferation Of Private Hospitals In The Klang Valley
Let’s start with the number of private hospitals in the Klang Valley. Estimates suggest that there are over 50 private hospitals operating within this region, many with bed capacities beyond 200.
This might place the Klang Valley among the regions with the highest density of private hospitals globally. However, where are the Ministry of Health (MOH) or government hospitals?
Petaling Jaya, one of the most densely populated suburbs of Klang Valley, does not have a single public hospital, despite the obvious need for onr. This disparity is concerning.
If population density warrants such a high number of medical facilities, signalling an unhealthy population, why hasn’t the government stepped in to provide equitable access to health care?
This unchecked growth of private hospitals illustrates how profitable the business model is. The private sector has steadily grown to dominate the serviceable market, often without competition from public hospitals.
This monopoly drives a dependency on private health care, which comes at an exorbitant cost for the average Malaysian.
The Reimbursement Game: Insurers Vs Private Hospitals
As consumers, we pay insurance premiums to hedge against the risk of illness, assuming that this will guarantee better and faster care at private facilities.
While many centers boast top-notch facilities, with some bordering on opulence, the reality is far from ideal. Long waiting times persist, and treatment costs continue to rise despite advancements in technology and training.
Private health care providers have long gamed the reimbursement model, seeking to maximise claims from insurers without raising red flags.
Twenty years ago, a common procedure such as a caesarean section in a private hospital typically cost RM3,000 to RM5,000. Today, a hospital stay for the same procedure can cost between RM12,000 and RM 20,000 — a staggering increase, despite improvements in technology and efficiency.
One might wonder, how is it that with more trained personnel, better equipment, and decades of operational experience, private hospitals have not achieved cost efficiency for routine procedures? The answer lies in a systemic focus on maximising revenue rather than optimising care.
It is worth noting that doctors’ professional fees have been regulated since 1998 under the Fee Schedule in the Private Healthcare Facilities and Services Act. These regulations aim to prevent overcharging by health care professionals; however, they exclude hospital-related charges, which often constitute the bulk of a patient’s bill.
To compound this issue, insurance providers have tightened their payout structures to curb excessive claims. This cat-and-mouse game between payers and private hospitals has led to an inflation rate of 10 to 15 per cent annually for private medical costs, far outpacing Malaysia’s general inflation rate.
Ultimately, it is the consumer who bears the brunt of the increases, with soaring premiums and out-of-pocket costs.
Hospital Billing Practices: A Legalised Free-For-All
A deep dive into how hospital finance departments operate reveals the resource-intensive process of billing and collections.
When a patient is referred to a private hospital with a medical card insurance, the process typically begins with a referral from a general practitioner (GP) or specialist, followed by the issuance of a Guarantee Letter (GL) from the insurer.
This letter establishes claim limits and authorises treatment. Beyond the regulated doctor’s fees, every plaster, bed hour, and “gift pack” is itemised on the bill.
Here is where the imbalance becomes apparent: despite legal compliance, there’s little oversight or regulation over hospital billing practices.
The results are inflated costs for patients and prolonged battles between hospitals and insurers over payouts. In this complex ecosystem, the private health care industry has created a bubble that is ripe for collapse — a reality now reflected in next year’s announced insurance premium hikes.
A Difficult Choice
Should Malaysians continue to feed this profit-first health care model?
Yes, because hedging health risks is a practical necessity. No, because private hospitals — fuelled by insurance and Third-Party Administrator (TPA) systems — prioritise profits over equitable care.
As I’ve told my insurance agent: “If my hospital bill falls between RM35,000 to RM 50,000, I’d rather be treated at a government facility.”
Public hospitals see far more cases, and they also house multidisciplinary teams capable of managing complex conditions. These teams, which handle a high volume of complex cases daily, possess far more expertise than the typical consultant in a private hospital, who often manages cases independently with limited support.
A Way Forward
Approximately 70 per cent of private hospital patients in Malaysia use insurance for their treatments, while 30 per cent pay out of pocket.
Several private hospital groups have reported growing profits year-on-year, with profit margins ranging between 15 and 20 per cent, indicating a lucrative industry.
Malaysia needs systemic reform in health care to address this imbalance. Possible solutions include:
- Greater Investment in MOH Facilities: Increasing the availability and quality of government hospitals in underserved urban areas like Petaling Jaya.
- Regulation of Hospital Billing Practices: Introducing transparency and capping charges for common procedures and services.
- Public-Private Partnerships: Encouraging collaboration between the public and private sectors to reduce costs and improve efficiency.
- Learning from Singapore: Singapore’s model of health care combines subsidised public health care with mandatory savings in MediSave accounts. Their strict cost controls and outcome-based evaluations ensure equitable access while maintaining high-quality care.
- Incentivising Preventive Care: Reducing health care costs by encouraging wellness programmes and regular health screenings to mitigate expensive treatments later.
Until such measures are implemented, the private health care industry will remain a hungry monster that feeds on the hard-earned money of ordinary Malaysians while promising the best care at the highest price.
It is time to hold all stakeholders accountable and push for a health care system that prioritises people over profits.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
