In my previous article for CodeBlue, I argued that the current debate on health care affordability – as well as prevailing trends in the industry – risk eroding the differentiation between the private and public sectors of Malaysian health care.
This process has a name: commoditisation. On the surface, commoditisation can often look like progress. As health care providers become more interchangeable, prices should fall.
Patients should be able to compare hospitals more easily. Insurers should control claims with more predictability. Waste should be reduced. The cheapest, most economical option wins.
This is the basic economic logic of the process of commoditisation. As meaningful differentiation disappears, price becomes the main basis of competition.
Cast your mind back to the last time you went to the grocery store. If at any aisle, while perusing the options, you decided to pick one purely on the basis of price, then you purchased a commodity and embodied this very economic principle.
But health care is not a bag of flour. Nor is it a mobile data plan, or standard hotel room.
The problem with health care is that its key differentiator – its outcomes – are not always visible upfront. Quality of care is difficult, if not impossible, for most patients to judge prior to actually experiencing that care.
They are left instead with proxies like trust, reputation, responsiveness, and personal experience, amongst others.
Even after treatment, the true value of the care rendered may not always be obvious. Complications avoided are invisible. Delays that do not happen are never noticed. Careful clinical judgement that prevents unnecessary intervention is seldom appreciated. And a well-coordinated admission or discharge process?
At best, that gets a “things went smoothly” from a patient who expects these things as the bare minimum.
This is perhaps the most notable difference between health care and other markets. Patients are not simply purchasing a product or service.
They are instead committing themselves to a complex system of interdependent factors: clinical judgement, nursing care, equipment, medications, diagnostics, rehabilitation, administrative coordination, and more.
To be clear, standardisation is not the enemy.
On the contrary, I would argue that health care needs standardisation. Clinical pathways, evidence-based medicine, infection control standards, measurable outcomes; these are just some of the essential aspects of modern health care that require it.
Standardisation done well reduces harmful, wasteful variation. It protects patients. It makes health care more consistent and, by extension, safer.
But we risk conflating standardisation with commoditisation. Standardisation means that patients should receive safe, evidence-based health care regardless of where they go.
But commoditisation means that care provided is reduced to the lowest reimbursable denominator: the cheapest medications, the cheapest implants, the lowest prices.
The first improves health care, while the latter risks flattening it. The real danger is that our attempts to control cost spiral into treating all variation as inefficiencies. But not all difference is waste.
Some differences represent real investment: better staffing, better systems, better equipment, better implants. These are costs that are not reflected in a line on an itemised bill.
If these differences are not recognised, measured, or valued, but instead punished, then they will cease to be rewarded. And once that happens, the logic becomes one of commodities: why invest in differentiating by being better when the market only pays for cheaper?
It is here that we need to exercise caution on the conversation around health care affordability. To question rising costs is reasonable, needed even.
So is demanding transparency, or requiring justification for investigations, medications, and admissions. To scrutinise provider behaviour and patient utilisation is reasonable.
But it is not reasonable to drive all models of care towards the bottom of the cost barrel. In health care, lower cost can indeed mean greater efficiency. But equally, it can mean fewer options, thinner service, delayed adoption of new technologies, and potentially poorer outcomes.
The difference matters. Private health care has offered value not only as an alternative site of care, but because it can provide a different kind of care.
Faster access is coupled with greater choice. Service models are more flexible, technologies are adopted earlier. Consultants are more accessible, and their attention more personalised. For many patients, these are the reasons why they choose private health care.
Should private health care lose these differentiating factors, it does not merely become cheaper – it becomes less distinct. It risks being a parallel version of the public sector, but without the same scale, subsidy, and social mandate.
Is this a better system? I would argue it is simply a flatter one. And flatter is not always fairer.
Flatter systems may appear to be more affordable in the short term. But as I have argued previously, short-term savings may translate into long-term capability loss. If providers are not rewarded for investing in improved systems, technology, and people, those investments become impossible to justify.
This is not an argument against cost control. Payors should not be expected to absorb every increase in cost without question. But equally, the answer cannot be to treat all cost as waste. Some costs are wasteful, but others are protective. Some variation is unjustified, but other variation reflects meaningful investment.
The question should not simply be “How do we reduce costs?” The appropriate question is “Is this cost creating value, and can that value be demonstrated?”
This is where I believe the health care affordability debate needs to go deeper. We need to move beyond the idea that all savings are good and all costs are bad.
In health care, value lies in the relationship between cost and outcome, not in cost alone. It is the very foundation of the value-based health care movement.
A cheaper service that delivers the same outcome with the same safety, responsiveness, and reliability is better value. But a cheaper service that achieves savings by silently removing choice, reducing flexibility and delaying adoption of technology is only cheaper.
Malaysia already has, and needs to preserve, its layered health care system. Public health care should maintain its foundational role as a provider of equitable access. This is its essential role.
Private health care should complement it by offering capacity, choice, innovation, and alternative models of care. And within private health care itself, there should also be room for different models to serve different needs.
Not every patient wants the same thing, and not every condition requires the same intensity of service. Equally, not every hospital needs to provide the same options. But if the entire conversation is reduced to price, then price becomes the only factor the system rewards.
That is the danger of commoditisation. It will not announce itself dramatically. It happens gradually.
First, choices narrow. Then, investments slow. Providers become more cautious. Then patients notice that their options have grown thinner. Eventually, every hospital feels like a different counter selling the same product.
When this happens, the system may have become cheaper. But it may also be less innovative, less responsive, and less capable of meeting the expectations of patients who once chose private health care for the exact reason that it provided something different.
The opposite of commoditisation is not profiteering. It is meaningful differentiation.
And if Malaysia wants its health care system to be not only affordable, but also capable, resilient, and innovative, then we must be careful not to make every hospital the same hospital.
Dr Ng Kuo Chern is a medical doctor with an MBA and works in hospital operations, where he is involved in service delivery, organisational improvement, and value-driven outcomes. He writes on health care systems, economics, and policy in his personal capacity. The views expressed in this article are the author’s own and do not represent those of his employer or any affiliated organisation.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
