KUALA LUMPUR, Jan 7 — Patients covered by health insurance often pay more than uninsured patients for medical treatment because of treatment choices, not differing price structures by private hospitals.
Nadiah Wan, former CEO of Thomson Hospital, said health care pricing isn’t as simple as comparing two numbers. Instead, it is influenced by factors such as patient preferences and the severity of the patient’s condition.
“I want to clarify a misconception that private hospitals have differential costing for self-pay and insured patients. As a matter of fact, we only have one IT system that does the charging so it’s very difficult to have two prices for one item. We have thousands and thousands of units or items to manage,” Nadiah said at a forum organised by the Universiti Malaya Student Union Faculty of Medicine, in collaboration with the Galen Centre for Health and Social Policy, Demokrat Malaya, and NewGen UM at Universiti Malaya here last Friday on rising health care costs.
“What does happen is that insurance will negotiate as a buyer to have discounts. In the case of self-pay patients, the doctor and patient decide how to manage their consumption.”
Using cataract surgery as an example, she said insured patients typically opt for general anaesthesia, while self-paying patients are guided by their doctors to opt for the cheaper alternative of local anaesthesia, which costs half the price.
“Do I blame the patient? No, but that does drive consumption up,” Nadiah said.
Nadiah also deemed it unfair to compare treatment costs without a full understanding of the patient profiles. “It’s very simple to say why dengue costs RM1,200 out-of-pocket versus RM4,000 for insured patients, but you have to look at the details,” she said.
“If patients know they have to pay out-of-pocket, they go to public hospitals. So who pays out-of-pocket [at private hospitals]? If the patient has mild dengue and doesn’t need ICU (intensive care unit) care. When you look at it simplistically, the bill is smaller than what a regular dengue patient would have gone through if they used insurance.
“So there’s a lot of subtleties and complexities behind health care costs, but we need to engage and understand and have a lot of transparency for data on costing,” Nadiah said.
Private Hospital Costs Driven By Supply Shortages, Wage Hikes Post-Covid
Rising private health care costs in Malaysia are primarily driven by supply shortages, wage increases, and innovation in medical treatments, Nadiah said.
“Post-Covid, there has been a lack of stability in the supply of medical drugs, and we’re competing worldwide for these supplies with our weak ringgit so that actually has increased our cost base a little bit,” Nadiah explained.
Additionally, the pandemic disrupted training programmes, leading to a shortage of skilled health care workers. The reopening of borders, especially to Singapore, exacerbated this issue, contributing to a “brain drain” of health care professionals. This has prompted private health care operators to raise wages to attract and retain staff.
“Health care is one of the few industries in Malaysia that is protected from foreign labour,” she said. “We are not allowed to hire foreign workers in private health care, so we are competing locally for our nurses and doctors who are in high demand across different markets.”
As a result, private hospitals are investing heavily in education and training. “Not many of you may know but we offer a lot of scholarships for nursing and allied health students. We pay for their studies, allowances, and even flights home to Sabah and Sarawak,” she said.
“We invest a lot in education ongoingly because even if you hire a nurse with a basic diploma, the shortage often happens in specialised areas like dialysis, OT [operating theatre], and ICU.
“The government doesn’t have enough training spots so what happens is that private hospitals actually set up their own training academies to train these nurses to work at a certain level because we can’t compromise on quality.
“Unfortunately, all of this cost has to be borne by the patient. You don’t see it in your bill, but that’s where the markups go,” Nadiah said.
Nadiah also pointed to the cost of medical innovations, such as robotic surgeries and high-demand medications.
“Robotic surgeries are now the new standard of care for prostate cancer and gynaecological procedures. I don’t blame the patients because who would want a big scar when they could have a minimal invasive surgery with a robot. But that costs something,” Nadiah said.
Medications like Ozempic, used for diabetes and in high demand for weight loss, are also driving up prices.
Despite these rising costs, Nadiah noted that Malaysia’s private hospitals still offer services at lower prices than countries like the United States and Australia. “The cost is reasonable because of Malaysia’s status,” she said.
Nadiah also shared that salaries make up a large portion of private hospitals’ operating expenses, with wages accounting for 30 to 36 per cent of costs.
“If you look at private hospital profits, of course, people often focus on the number in the billions, but if you look at the percentages, gross profit – which is the profit after paying for all supplies – is 40 per cent.
“Once you subtract wages, administrative costs, and the rising cost of insurance (especially since the [Federal Court] decision with Columbia Asia holding hospitals liable), medical indemnity insurance has gone up significantly.
“Depreciation and amortisation of capital expenses are extremely high, so from 40 per cent, you’re left with a net profit of about 11 per cent. You can argue it is still a huge amount of money, but remember that investors are looking for their returns and this is highly funded by shareholders without any public subsidies,” Nadiah said.
