Private hospitals were first introduced in Malaysia in the 1950s to drive medical tourism and boost economic growth.
In recent decades, their role has been expanded to support the government in tackling critical health care needs, as evidenced during the Covid-19 pandemic when patients were decanted to private hospitals as public hospitals were bursting at the seams.
Post-pandemic, private hospitals continue to support the country’s dichotomous health care system by not only providing clinical services, but also by contributing to the national economy.
The total national expenditure on health was RM67.05 billion in 2020, rising to RM79.94 billion in 2022. This represented 4.73 per cent and 4.41 per cent of the national Gross Domestic Product (GDP).
Private health care contribution to the national health expenditure was RM30.45 billion in 2020 and RM37.69 billion in 2022. This translates to a whopping 46 per cent and 48 per cent of the total expenditure on health in 2020 and 2022 respectively.
This bullish run was disrupted on December 10, 2024, when the prime minister announced the planned roll-out of the Diagnosis-Related Groups (DRG) system in private hospitals to tackle medical inflation.
Overnight, share prices of private health care groups tumbled massively, wiping out billions from the Kuala Lumpur Stock Exchange (KLSE).
Mistaking The Forest For The Trees
Private hospitals function as social enterprises, where the industry serves a societal need while generating revenue for sustainability and expansion.
As such, specialists in private medical practice are appalled at how ill-informed and worse still, the hostile approach, of Members of Parliament towards private health care, whose profit margin only stands at 7 per cent to 8 per cent.
Instead, MPs should take a closer look at insurance companies, whose profits margins are nothing less than 25 per cent and who had initially planned to increase medical insurance premiums by 40 per cent to 70 per cent by 2025 until Bank Negara Malaysia stepped in to intervene.
We are strongly cautioning the Ministry of Health (MOH) against mandating DRG on a private ecosystem that is currently efficient, effective, impactful and profit-making.
Consider these: Malaysia scored 95 out of 100, and ranked first in the Best Healthcare in the World category of the 2019 International Living Annual Global Retirement Index.
The report highlighted, “13 hospitals (private) in the country were accredited by the Joint Commission International (JCI). Almost all doctors — the majority of them trained in the United Kingdom, the United States or Australia — were fluent in English, making communication easy. In Malaysia, you don’t need to make an appointment to see a specialist (private) and you don’t need a referral from a general practitioner. It’s as simple as registering at a hospital of your choice and waiting in line to see your specialist of choice”.
Global accolades recognise that Malaysia private hospitals and specialists have not only been serving the expatriate clientele efficiently, effectively and compassionately, but also the 20 per cent of Malaysians who are either insured or paying out-of-pocket (OOP).
Not only that, private health care facilities have invested a massive 2.1 per cent GDP (versus MOH’s 2.9 per cent GDP) in 2021 to offload patients from the MOH, offering an invaluable complementary health care services to an otherwise understaffed, underpaid, overworked, and overcrowded (UUOO Syndrome) MOH.
Lastly, private health care groups have enriched government coffers, with many government-linked investment companies (GLIC) as major investors in the private hospital business.
Medical Tourism At Stake
The Malaysia Healthcare Travel Council (MHTC), an agency under the MOH, was launched in July 2009 to promote the country’s health care travel industry.
Today, Malaysia is flourishing as a leading global health care destination, with major knock-on effects enhancing the national economy.
In 2023, the health care tourism sector posted RM2.25 billion in revenue. MHTC recorded health tourist arrivals of 850,000 (2022), 1 million (2023) and 584,468 (first half of 2024).
So to our dear prime minister, the second finance minister, the governor of Bank Negara Malaysia (BNM), and the health minister, we plead to all of you to heed the wise words of Thomas Bertram Lance (1931-2013), who was a close adviser to the late US president Jimmy Carter (1924-2024), “If it ain’t broke, don’t fix it”, or more succinctly expressed by the Malay metaphor, “marahkan nyamuk, kelambu dibakar.”
With the DRG, the unity government may inadvertently be slaying the goose that lays the golden eggs.
No ‘Business As Usual’
With looming inflation across all sectors, health care services cannot remain business as usual.
The past 14 studies commissioned by MOH shared several common elements, the most critical being the need to address health care under-funding and the sustainability of health financing.
The fraternity of private specialists would like to see real transformation towards a health empowering ecosystem that nurtures a value-based public and private health care milieu.
This would require appropriate regulatory reforms, informed data-based health economics and sustainable health financing, backed by close partnership with private hospitals in a high-quality and Value-Based Care (VBC) system.
Autonomous public hospitals should also be empowered to compete on a level playing field to jointly embrace the principles of equity, accessibility, and efficiency with accreditation by the Malaysian Society for Quality in Health (MSQH) and/or the Joint Commission International (JIC).
Most immediately, BNM must rein in the profiteering insurance providers to cap their sky-rocketing insurance premiums to a fair and decent level.
In conclusion, MOH needs to simulate and nurture this healthy private health care ecosystem. Please do not inhibit, impede, or disrupt private hospitals with a non-future proof DRG system.
High-income countries are moving away from DRGs as the main hospital payment system and opting to prioritise value over volume, as advocated by private specialists.
Unbridled hospital charges cannot be allowed to continue unchecked. While revenue is critical for the long-term sustainability and profitability of private hospital groups, MOH can establish measures to regulate private hospital fees, which constitutes the major portion of itemised hospital bills, just like the strictly regulated fees of the private specialists by the 13th Schedule of the Private Healthcare Facilities and Services (Amendment) Act.
Finally and no less important, MOH must review and update the Private Specialist Fee Schedule, which has been lying supine, stagnant and static for 12 long years since 2013!
Dr Musa Mohd Nordin is a paediatrician, Chan Li Jin is a health activist, Dr Ahmad Faizal Mohd Perdaus is a chest physician, and Dr Rajeentheran Suntheralingam is a urology surgeon.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
