KUALA LUMPUR, March 12 — Private hospitals in Malaysia say they are willing to negotiate with insurers to reduce costs, but excessive discount demands could threaten treatment quality and patient safety, according to the Association of Private Hospitals Malaysia (APHM).
On the Keluar Sekejap podcast aired last Friday, former Health Minister Khairy Jamaluddin asked whether insurers were threatening to remove hospitals from their panel if they did not lower prices. APHM president Dr Kuljit Singh confirmed this, saying it was part of insurers’ cost-cutting strategies.
“That is true because that is their way of reducing costs,” Dr Kuljit said on the podcast, co-hosted by Khairy and Shahril Hamdan. “We try, we try to meet halfway. Maybe if they ask how many per cent, we try around 10 to 15 per cent, 20 per cent, we’ll try to meet halfway.
“We have never said no, but sometimes their negotiation goes to a level that is too much until the health care service we want to provide to the patient cannot happen with that kind of discount. That becomes a problem,” Dr Kuljit said. “But we do give discounts. If requested, we always negotiate because, as I’ve said, the important thing is our patient.”
APHM honorary secretary Anwar Anis, who was also a guest on Keluar Sekejap alongside Dr Kuljit, linked insurers’ push for bigger discounts to Bank Negara Malaysia’s (BNM) recent policy limiting health insurance premium hikes to 10 per cent over the next three years.
“It’s not that we don’t want to give any commercially negotiated discount. There are, and have always been,” Anwar said.
“But maybe because BNM now caps premium hikes at 10 per cent for the next three years, insurers feel they need bigger discounts. It becomes a problem when the discount request is too high and it becomes unsustainable.
“We cannot give discounts where we have to compromise on service quality and patient safety,” Anwar said. “That’s where there is that tussle at the moment. It’s not that we don’t want to (give discounts). We want to maintain our relationship with insurers to serve patients, but if the requested discounts are too steep, it becomes a problem.”
Rising Costs And ‘Transfer Pricing’
Shahril asked about private hospitals’ responsibility for high medical costs, citing unregulated items in hospital bills that seem unreasonably priced.
“As a layman, even I find some prices unreasonable,” Shahril said. “But many patients, in distress and pain, don’t have the time to scrutinise itemised bills. They just want to settle them quickly. Shouldn’t hospitals take some responsibility?”
Anwar acknowledged that some bill items appear expensive compared to retail prices but said the issue is systemic.
“We don’t deny that certain items seem overpriced where you think, ‘I can buy this for RM2 at a pharmacy,’ but in a hospital, it’s much higher. This has been a systemic issue for years, and we’ve asked for changes,” he said.
Anwar cited hospital room pricing as an example, where insurance coverage for “Room and Board” often falls short, forcing hospitals to recoup costs elsewhere.
“Our insurance right now, the way we sell insurance products, we see ‘Room and Board’ has a limit of RM150, RM200, or RM300, but actually, if we think about it, in KL, even a hotel room at RM200 to RM300 is hard to find. Let alone a hospital room with piped-in medical gas and call bells.
“So, the room coverage is actually not enough. If RM200 is not enough to cover the room cost, then that cost must be shifted elsewhere in the bill. We have to charge other items… There is transfer pricing—that cannot be denied,” Anwar said.
He also pointed to intensive care unit (ICU) nursing costs, where insurers reimburse only RM300 to RM400 per day, while actual costs reach nearly RM1,000 to meet one-to-one nursing requirements.
“It has become the norm for insurers to say, ‘Oh, for this, I am willing to pay this price.’ So because of that, we have to recover the cost in other areas. I’m not saying it is ideal or correct, but in the end, as KJ mentioned, our (profit) margin is not unreasonable.”
Profit Margins And Investment In Health Care
Khairy asked about private hospitals’ profit margins, citing claims they range between 10 and 11 per cent.
Anwar confirmed the figure but stressed that nearly half of those earnings are reinvested in medical equipment and patient safety upgrades. “In health care, MRI machines, IT systems, and safety protocols need upgrading every six to eight years,” he said. “After reinvestment, the actual retained earnings are closer to 3 or 4 per cent.”
“If we think about it, for investors, if they can’t even get 3 or 4 per cent as a return on their investment, no one would want to invest in health care.
“So that is what we are worried about—if there are big changes in this matter, it is very likely that parties who are currently willing to come and invest in health care will think twice, ‘The Malaysian market has a problem.’”
Dr Kuljit said private hospitals already do their best to accommodate financial constraints while maintaining service standards. “We bend backwards as much as possible,” he said. “But health care is not cheap.”
