KUALA LUMPUR, July 21 — Bukit Gasing state assemblyman Rajiv Rishyakaran has justified the potential inequality created by Rakan KKM by citing the greater good of increasing public health care funding.
On the “Are We OK?” podcast aired last Friday together with co-host Peter Yong, the DAP state lawmaker admitted that Rakan KKM would be creating a “zero-sum game, to some extent” by expediting access to treatment for paying patients, at the expense of public (non-paying) patients.
“On one hand, it seems like a moral dilemma – private should be private, public should be public. You shouldn’t have two queues in the public service. Everyone should be in the same queue—somewhat socialist thinking.
“I am centre left, ideologically. I would love for everyone to be in one queue, rather than to say there’s two queues – those with money and those without money,” said Rajiv.
“But the reality is that if we don’t have money to run public health care, if we don’t have money to run a hospital, that’s also not good. It’s not healthy, it doesn’t help anyone.
“So I hope this [Rakan KKM] is well executed in a way that it’s able to generate revenue and that revenue is used wisely.”
He expressed public concerns about private wings in government hospitals potentially lengthening waiting times for public patients waiting their turn for a surgery, appointment, or follow-up visit, noting that Rakan KKM uses the public sector’s existing pool of health care workers.
“So if you have insurance, if you have money, you can cut the queue. You pay and you get Rakan KKM wards and services – you cut the queue. But ultimately, it seems like it’s going to use the same doctors and nurses as the hospital already has.”
However, at the same time, Rajiv said profits from Rakan KKM could be used to buy equipment like MRI machines to benefit both public and private patients in government hospitals, besides increasing health care professionals’ remuneration to retain them.
“Because of the dire state that we are in right now, we could use an injection of funds through Rakan KKM,” said Rajiv.
“I’m not against it on a basic level, but I would love to see how the money generated is being used,” he added. “The devil is in the details. So far, there’s enough hope that it will pan out for good.”
Rajiv also pointed out that although some patients may switch from the public to the paying queue, Rakan KKM may inevitably create an additional patient load from patients who switch from conventional private hospitals to the Ministry of Health’s (MOH) cheaper private health care service.
Hence, the DAP state lawmaker stressed that Rakan KKM’s ultimate objective must be to increase the proportion of paying patients to subsidised ones.
For example, if one-third of patients in the country are in the private sector and two-thirds are in the national health service, Rakan KKM should aim towards increasing the proportion of paying patients to half of Malaysia’s overall patient load.
“If it’s still one-third [in private] and two-thirds [in public], then basically Rakan KKM will just be pulling all the patients from existing private hospitals and working doctors and nurses to death in government hospitals,” said Rajiv.
“So that cannot be the big picture game. The big picture game is that you’re pulling more subsidised patients into paying patients.”
Rajiv called for increased health insurance coverage in Malaysia by mandating insurance companies to cover people with pre-existing conditions, including non-communicable diseases (NCDs) like obesity, similar to Obamacare in the United States.
“Our MOF (Ministry of Finance) should step in to ensure insurance is available for everyone, so that people who are willing to pay but can’t get access can get onto insurance,” said Rajiv, who represents a mostly upper middle class constituency in Selangor.
“It’s time we give medical insurance. When we talk about subsidies, subsidise the lower-income population so that they can afford to buy medical insurance. Medical insurance may not be subsidised for the M40 and T20, but subsidised for the lower-income.
“Singapore has shown it can be done. America has shown it can be done.”
When Yong suggested whether Account 2 of one’s Employees’ Provident Fund (EPF) retirement savings should be used to buy medical insurance, Rajiv replied, “Why not?”
Even though there is a wide variety of health insurance plans in the market, from basic ones to costlier ones offering more comprehensive protection, Rajiv suggested creating “two-tier pricing” in medical insurance.
Higher premiums, he said, should avail a policyholder to more expensive hospitals, while health insurance with lower premiums can be used for cheaper hospitals.
“Rakan KKM is probably going to be cheaper than a 5-star private hospital, so the premiums should be cheaper.”
When contacted for additional comment by CodeBlue, Rajiv urged Health Minister Dzulkefly Ahmad, the MOH, or the Rakan KKM CEO to conduct detailed briefings on Rakan KKM for MPs, state assemblymen, as well as the general public with open town halls.
CodeBlue reported recently that Rakan KKM Sdn Bhd aims to maximise profit by using public resources like medical supplies and assets from the MOH at cost and charging paying patients 100 per cent markups for supplies and services, including consumables.
2017 Audit: RM20 Million Revenue From 10 FPP Hospitals
According to the Auditor-General’s 2017 report on an extensive audit of the MOH’s full-paying patient (FPP) scheme, 10 FPP hospitals generated revenue of only RM20.3 million in 2017, comprising RM11.12 million in payments to specialist doctors and RM9.16 million payment to the government.
This revenue was generated in the 10th year of the FPP scheme that began in 2007 and subsequently expanded to 10 hospitals in 2015 to 2016. A total revenue of RM9.16 million (excluding specialist payments) generated for the government from 10 hospitals means an average of just RM916,000 per hospital.
If Rakan KKM Sdn Bhd targets RM1 million net profit per hospital in its first year of operation, the company must make revenue of between RM5 million to RM10 million per hospital, based on a margin of either 20 per cent or 10 per cent. Rakan KKM is expected to launch in four hospitals in its pilot phase.
RM5 million to RM10 million revenue per Rakan KKM hospital is 150 per cent to 400 per cent higher than the average RM2 million total revenue per FPP hospital in 2017.
To put Rajiv’s example of getting Rakan KKM to purchase MRI machines into context, Universiti Putra Malaysia (UPM), which operates Sultan Abdul Aziz Shah Hospital (HSAAS), spent RM12.9 million to buy a 3 Tesla Prisma MRI machine, according to a news release last month.
Even earnings by KPJ Healthcare Berhad – which operates 29 hospitals in Malaysia and 3,847 ward beds, with more than 388,000 inpatient admissions in 2024 – cannot match MOH’s annual budgets.
Last year, the private hospital group posted RM3.92 billion annual revenue and RM407 million net profit. RM407 million is less than 1 per cent of MOH’s RM45.3 billion budget this year.
