KUALA LUMPUR, July 14 — Experts have told the government not to use public resources to subsidise the operations of Rakan KKM, the Ministry of Health’s (MOH) new private health care service.
Dr Zainal Ariffin Omar – former deputy director of the MOH’s disease control division and ex-Negeri Sembilan state health director – said if Rakan KKM Sdn Bhd were to use the same doctors, nurses, facilities, and budget as the MOH, similar to the full-paying patient (FPP) model, Rakan KKM would inevitably create a “two-tier” care system that prioritises private over public patients.
“Among the most critical consequences would be the worsening of current problems of inadequate and overburdened staff,” Dr Zainal told CodeBlue.
“Public funds subsidise ‘private’ profits. Rakan KKM’s usage of MOH facilities means that public infrastructure supports ‘private’ revenue.
“There is the possibility of brain drain from MOH to Rakan KKM Sdn Bhd. There may also be loss of trust in public health care. When people see MOH doctors or nurses working for Rakan KKM, confidence in fair treatment erodes. Public hospitals become ‘second-class’.”
The public health physician branded Rakan KKM as a modified version of the “failed” FPP model in the MOH, adding that Rakan KKM would end up becoming another “IJN” in MOH settings. The National Heart Institute (IJN) is a private hospital owned by the Minister of Finance Incorporated (MOF Inc.).
“It risks creating a two-tiered system (or a caste system), where the wealthy get better care, but the poor face longer waits and lower quality services from government or public facilities or resources,” said Dr Zainal.
“This could effectively function as a de facto ‘caste system’ in health care, dividing society into ‘haves’ and ‘have-not’.”
Unlike FPP services run by the MOH itself, Rakan KKM’s private health care service will be operated by a company, Rakan KKM Sdn Bhd owned by MOF Inc.
And unlike university hospitals that operate specialist centres in separate buildings, the MOH plans to launch Rakan KKM in the third quarter of this year in existing government hospitals, namely Cyberjaya Hospital, Putrajaya Hospital, Sultan Idris Shah Serdang Hospital, and the National Cancer Institute (IKN).
Dr Zainal said Rakan KKM Sdn Bhd must pay full market rates for every single resource used, such as lease of wards, facilities, operating theatres, laboratories, and equipment, as well as drugs, consumables, and other medical supplies. Rakan KKM would be unfairly competing with “true” private hospitals if the company were to get free or cheap access to resources.
“If Rakan KKM uses MOH facilities without full cost recovery, taxpayers effectively subsidise a private business,” said Dr Zainal.
“Itemised billing ensures Rakan KKM isn’t ‘leeching’ public resources for profit. If Rakan KKM can’t survive without MOH subsidies, it proves this model is flawed.”
Galen Centre: What Happens After RM25 Million Seed Funding Runs Out?
Galen Centre for Health and Social Policy chief executive Azrul Mohd Khalib asked if Rakan KKM was intended to be self-sufficient and independent of government grants.
“What will happen after the seed funding from GEAR-uP (reportedly RM25 million) runs out?” Azrul told CodeBlue.
“It would also be both ethically vague and artificial to utilise MOH’s pool procurement of medicines, bulk purchasing of medical consumables and devices, and logistics chain without paying commercial rates for them as it could be seen as subsidising Rakan KKM patients.
“This would artificially suppress costs and result in lower but unsustainable fees. Would Rakan KKM end up becoming a co-pay programme instead, which has its own advantages?”
The Galen Centre also asked if Rakan KKM Sdn Bhd would take up indemnity insurance as a private entity and if that cost would be factored into billing, in addition to other regulatory costs imposed on private hospitals.
Azrul cited the Federal Court’s landmark verdict in February 2024 in the case of Siow Ching Yee v Columbia Asia Sdn Bhd that held private hospital operators liable for medical negligence, ruling that private hospitals have a non-delegable duty of care to their patients.
In response to claims by some MOH officials that Rakan KKM will only operate after hours, the Galen Centre questioned the viability of a business that depends on specialists and services that are only available to private paying patients after hours, in the middle of the night, who are probably fatigued after completing their “official” work seeing public patients.
“It makes a claim that this will be a faster service that maintains quality, effectiveness and safety, justifying the higher fees charged. However, it is important to learn from the lessons of the FPP service, its capabilities and shortcomings, especially why it is very much diminished and limited today than when it was first introduced.”
When asked about health human resources for Rakan KKM, Azrul noted that there has been almost no mention of nurses and auxiliary staff that form the backbone of any medical service.
“Will they be working on Rakan KKM after hours and at night too, or will there be separate recruitment for Rakan KKM personnel in those roles? Could this result in dissatisfaction or discontent in the public health service when Rakan KKM is perceived to be yet another competitor for skilled doctors and nurses, resources, and funding? Except this time, the competition is self-created.”
Last Friday, the Public Service Department (JPA) announced that nurses and assistant medical officers would be exempt from a 45-hour work week, retaining a 42-hour work week instead for five service schemes in the MOH.
The Galen Centre questioned if Rakan KKM was a form of privatisation of the public health care system and if this was a good or bad thing.
“No rational government will want to do something to deliberately harm or damage its health care system.”
“However, a main reasonable concern is whether the assets, resources and services, which are funded by taxpayers funds’ or public money, are being utilised, and whether there is any payment made to use them. This includes physical structures such as buildings, hospital beds, and medical equipment, to diagnostic and nursing services,” said Azrul.
“Another concern is whether such private paying patients will benefit by placing them at higher priority compared to public patients who are heavily subsidised by the government, allowing them to secure appointments for services such as diagnostic imaging earlier, to obtain the results and consultations earlier, to schedule surgical procedures sooner. In other words, jumping the queue using those resources by paying for the privilege.”
Azrul pointed out that since 1998, public teaching hospitals like Universiti Malaya Medical Centre (UMMC) have deliberately separated their private specialist facilities and services to prevent conflict and ensure proper compensation of the utilisation of services.
FPMPAM: CKAPS Licensing A ‘Grey Zone’, Act 586 Prohibits Licensing Of Government-Owned Facilities
Federation of Private Medical Practitioners’ Associations, Malaysia (FPMPAM) president Dr Shanmuganathan Ganeson said Rakan KKM Sdn Bhd’s plans to obtain licensing from the MOH’s Private Medical Practice Control Section (CKAPS) lay in a “legal and regulatory grey zone.”
“By applying for a CKAPS license, Rakan KKM is classifying itself as a private health care facility. However, it intends to operate from government hospital buildings, which are legally exempt under Act 586 (Private Healthcare Facilities and Services Act 1998). Part IV of the Act prohibits licensing of facilities that are government-owned,” Dr Shanmuganathan told CodeBlue.
“Is CKAPS licensing the full hospital, a segregated ward, or just administrative functions? How will shared-use facilities (OTs, diagnostics, ICUs) be regulated? Who ensures compliance without conflict of interest, given that the regulator (CKAPS) and the licensee (Rakan KKM) are housed under the same ministry?
“Private clinics and hospitals are stringently held to Act 586. Rakan KKM must be held to the same level of scrutiny—no more, no less.”
He noted that ironically, Rakan KKM may soon discover the “burdensome” compliance challenges that private providers have long endured under Act 586.
Dr Shanmuganathan, who operates a private general practitioner (GP) clinic in Kuala Lumpur, said Rakan KKM was unlikely to achieve significant growth by only operating after hours.
“A business model based solely on after-hours, limited-volume procedures is inherently constrained. To meet growth targets and ‘premium economy’ promises (faster access, tailored care, high confidentiality), Rakan KKM would need to operate extended hours, possibly overlapping with public service times; offer a wide range of services, including high-margin procedures; and prioritise private patients throughout,” he said.
“This creates pressure to reallocate prime resources (equipment, slots, specialists) toward paying clients.”
“Without clear boundaries, the public system could quietly shift toward two-tier care, favouring those who can pay.”
FPMPAM also told the MOH to bill Rakan KKM for every resource used – including facilities, consumables, diagnostics, and support services – at commercial rates.
“Failure to do so amounts to hidden subsidies from taxpayers to a corporate operation,” he said.
“On drug procurement, if Rakan KKM uses MOH bulk channels to obtain discounted supplies, it presents a clear conflict of interest. Conversely, procuring independently at small volumes may inflate costs and impact profitability.
“The role of MOF (Ministry of Finance), EPF (Employees’ Provident Fund), and other GLICs (government-linked investment companies) as investors raises further questions about whether public funds are backing a commercial venture that competes—on skewed terms—with independent private practitioners.”
On health human resources, FPMPAM said it would be difficult and potentially unlawful under existing public service rules if Rakan KKM were to use MOH staff.
Civil servants cannot take on private work unless they resign and join Rakan KKM as new hires or if there is a formal secondment arrangement recognised by the Public Service Department (JPA) and CKAPS, said Dr Shanmuganathan. Secondment means that staff continue to receive salaries from the government as civil servants.
“If Rakan KKM seeks Act 586 compliance, it must declare the names, roles, and contracts of its entire staff, as well as proof that these staff are not moonlighting without approval,” said Dr Shanmuganathan.
“Public health care staff are already overstretched. Re-deploying them after hours for private care—without safeguards—risks fatigue, compromised quality, and an erosion of public duty.”
He said it would be much clearer, from legal and operational perspectives, for Rakan KKM to employ its own workforce by either hiring new professionals from the private sector or attracting resigning government staff into formal employment.
When CodeBlue pointed out that university hospitals have been operating private specialist centres for years, FPMPAM said university hospitals are academic institutions under the Ministry of Higher Education with a distinct mission and limited patient reach.
“Their private services are typically adjunct to their training roles and not integrated into national health service delivery,” said Dr Shanmuganathan.
“In contrast, MOH hospitals are core public health care providers—serving the majority of Malaysians. Introducing Rakan KKM, a corporate entity under MOF Inc., to run premium private services from within public facilities marks a fundamental shift. It potentially diverts scarce resources toward revenue-generating services, raising equity concerns about public access.
“This isn’t merely an FPP revival—it’s a corporatisation model with long-term implications.”
The Organisation of Malaysian Muslim Doctors (Perdim) simply told the government to implement Rakan KKM in private hospitals via referrals.
“Patients who choose to pay should be referred to and have their surgeries/ interventions conducted at private hospitals by private specialist doctors. This approach will help shorten the public hospital waiting list, particularly for patients who cannot afford to fast-track,” Perdim president Dr Boi Saidi Abd Razak said in a statement Friday.
“Perdim does not agree if paying patients are allowed to have elective procedures performed in government hospitals or by government doctors, as this would seem like wealthier patients are taking the place of lower-income (B40) patients.”
