Health Minister Dzulkefly Ahmad reportedly said in his speech at the Malaysian Medical Association’s (MMA) annual general meeting on September 13 that Malaysia is embarking on a “bold wave of health care reforms” to build a more resilient, equitable and future-ready system (as against “future-proof” by KJ).
Let us look at this “bold wave” of reforms mentioned by the minister.
Health Care Financing Reform
Just a general statement with no details given. There have been more than 10 studies conducted by the government since the 1980s on health care care financing reform, including the introduction of social health insurance, ear-marked taxes, and voluntary health insurance.
But to date, no reform has taken place. I guess we have to wait for more details from the minister?
Rakan KKM
The Ministry of Health (MOH), together with the Employees Provident Fund (EPF), will implement an initiative called Rakan KKM to provide “premium economy” health care services at selected public hospitals.
Rakan KKM is meant to “increase the supply of affordable, mid-tier hospital beds”, which will be implemented and expanded by MOH. The initiative, it said, can serve as a “price benchmark” and is expected to provide “more cost-effective options” for policyholders while encouraging the growth of not-for-profit hospitals.
The goal of the initiative is to enhance the public health care system, with the revenue intended to be reinvested into the public system and improve the retention of health care workers.
The Rakan KKM service, set to launch at the end of 2025 at selected government hospitals, will be run by Rakan KKM Sdn Bhd, a company owned by the Ministry of Finance Inc.
However, how will Rakan KKM be part of a cost-effective measure to reduce medical inflation? This is hard to comprehend. Whether it will be able to generate “excess revenue” to fund the operations and development of MOH facilities is also difficult to achieve, as seen by the implementation of the full-paying patient (FPP) scheme.
Rakan KKM can improve the remuneration of the staff involved, rather than act as a tool to reduce medical inflation or to provide a new source of revenue for the government. There is also concern is to why the MOH and EPF are involved in providing private health care.
There are already GLICs like IHH and various state government entities such as KPJ, TDM, and Selgate that provide private health care.
Why must the federal government be involved again in providing private health care services and compete with the above through Rakan KKM Sdn Bhd? Is Rakan KKM better for patients, private health care, and the national health care system?
This is not a bold move, but more of a rebranding of FPP.
Diagnosis-Related Groups (DRG)
This payment system will be implemented by mid-2026 to address runway medical inflation. The fixed-fee, diagnosis-based payment model aims to shift the focus from service volume to quality outcomes.
In its latest announcement of the roadmap on DRG, MOH said that a national DRG payment system will be launched in 2027. The implementation of DRG for private hospitals will be done via the introduction of a basic medical and health insurance/takaful (MHIT) product that is being led by Bank Negara Malaysia (BNM).
While the MOH is leading the initiative, private hospitals and medical specialists have called for more inclusive and collaborative discussions to develop a system that suits Malaysia’s unique dual health care system.
Key challenges include fragmented digital infrastructure, the need for significant change management, and ensuring the system is tailored to Malaysia’s specific health care ecosystem.
Private providers, reliant on diverse insurance plans and out-of-pocket payments, face financial uncertainty with a standardised payment system. The lack of a universal health care financing framework in Malaysia is a significant hurdle for private hospitals.
DRG models are typically successful in systems with a single funder. Applying this to a market with fragmented insurance coverage is complex and untested. Shifting from fee-for-service to DRG for the provider payment mechanism may be a bold move, though there are many challenges, like not having a single-payer system.
Basic MHIT Product
BNM is also working to transform MHIT offerings by developing a basic MHIT product designed as a “scalable” solution to ensure more sustainable premiums over the long term through “larger risk pooling”.
The new basic product aims to provide straightforward, affordable coverage for essential health care needs, particularly for those facing high medical costs. It is part of a broader strategy, known as the Reset initiative, to combat rising medical inflation.
One specific focus for the new product is to help existing policyholders aged 60 and above switch to a more affordable base product. BNM is working with the MOH, insurers, takaful operators, and private hospitals to ensure the product meets the goals of affordability and long-term sustainability.
The plan to launch a basic MHIT product by end-2026, ensuring affordability and long-term sustainability. While the product’s conceptual development is underway, the exact features have yet to be finalised.
Buying will be voluntary, with EPF Account 2 savings likely allowed via the i-Lindung facility once the policy design is finalised.
How this product will be attractive to consumers and health care providers and compete with existing products and its sustainability in the long term is yet to be seen. Is this the start of a national health care insurance scheme? This is a bold move, if it is a step towards that.
Digitalisation Programme In MOH
According to the minister, there are now about 200 clinics using cloud-based clinic management system (CCMS) and nearly 15 hospitals using EMR in 2025, with 16 hospitals to follow next year.
There are 3,114 health clinics of various types in MOH with another 63 standalone dental clinics in 2023. MOH has 149 hospitals and 11 special medical institutions in 2023.
The digitalisation in MOH started in the 1980s with billing and other administrative functions. It was followed by the MSC projects, like Telemedicine Blueprint and later with Selayang Hospital with the first total hospital Information system (THIS).
Despite initial efforts, the digitalisation of MOH health facilities remain limited, with few hospitals adopting hospital information systems (HIS). Some health and dental clinics adopted the teleprimary care and oral health clinical information system (TPC-OHCIS).
Another major initiative was the national health data warehouse (MyHDW) with a virtual platform to facilitate cross-agency data sharing. During the Covid-19 years, the MySejahtera app was nationally used for reporting, monitoring, and contact tracing. It is now used as an integrated appointment system at MOH health facilities.
MOH’s ambitious plan to roll out the overall national plan by 2026 which will be integrated by the private health care providers. The plan aims to establish a Lifetime Health Record (LHR) for each individual, which will allow for a seamless flow of patient health information across different health care facilities.
The MOH is deploying off-the-shelf, cloud-based EMR systems. But all these plans need long-term and sustainable commitments from all parties involved. With ever-changing technology, it may just be a continuation of the digitalisation programme in MOH.
While I agree that a couple of these are indeed bold moves by MOH and the government, these have not been fully implemented yet. Therefore, we need to see the results after they have been implemented.
The elephant in the room about the rising costs of non-communcable diseases (NCDs) was mentioned by the health minister, but there has been no bold move to combat and reduce this in the long term.
We need to be bold and come together to build a healthier nation for the next generation of Malaysians.
Chua Hong Teck is an independent public policy and health analyst.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
