The Nutgraph, By Ding Jo-Ann | 06 July 2010IN 2008, Malaysia spent about RM35 billion on healthcare, more than half of it in the private sector. Malaysian Medical Association (MMA) president Dr David Quek says RM18.8 billion was spent in the private sector that year. Of that amount, Malaysians forked out RM10.8 billion from their own pockets for private healthcare. They can expect to fork out more in the years to come.
This may account for health director-general Tan Sri Dr Mohd Ismail Merican’s comments, in early June 2010, about private hospitals’ “exorbitant fees”. Merican said price revisions were necessary, and he would meet the MMA to develop a comprehensive and acceptable fee schedule.
But why is the government attempting to curb private healthcare costs when there is supposed to be a readily available and more affordable public healthcare system? Shouldn’t the government focus on improving the public healthcare system, making it an automatic price check on private healthcare?
After all, why would someone pay RM30,000 for a heart bypass if they could get quality care for minimal cost at a public hospital?
Political, economic ramifications
Universiti Malaya political economist Associate Professor Dr Terence Gomez says declining standards in government sectors have led the middle class to look for ways to bypass the public system.
“The promotion of medical insurance has led to private healthcare being more affordable for the middle class,” he tells The Nut Graph in a phone interview. Rising private healthcare costs, however, have led to higher insurance premiums, coupled with lower coverage.
Gomez says escalating private healthcare costs is therefore a political issue as well as an economic one.
“The government faces a potential backlash from the middle class who don’t want to pay huge insurance premiums and yet are not willing to return to the public health system,” he says.
“This is an issue of concern for the [Barisan Nasional] government, which is already facing declining middle-class support.”
But is capping private healthcare fees a sustainable way to ensure affordable and quality healthcare for all Malaysians?
Sunway Medical Centre chief executive officer Dr Chong Su Lin says running a hospital business is not as lucrative as imagined. “Our nett profit margins are only about 5%,” she tells The Nut Graph in an interview. “That is, if we do make any profit in any given year.”
Merican confirms this. Quoting Association of Private Hospitals Malaysia data, he says private hospitals’ profit margins are about 6%.
Dr Chong says forcing private hospitals to cap their charges could be a disincentive for businesses to remain in the medical market. She disagrees that hospital fees are “exorbitant”. “I’ve offered for the government to go through our accounts and examine the cost of every single item and tell us how we can price things differently,” she says.
The Nut Graph asked Merican how the government would balance the competing interests of ensuring affordable private healthcare and the private sector’s profitability. In an e-mail response, he merely said:
“Private hospitals sustain their profitability by offering efficient and quality healthcare services and compete to attract patients by adding comfort and luxury. Smaller private hospitals may be at an advantage by having lower maintenance and overhead costs and can compete in terms of pricing. Practitioners can also help make services more affordable by reducing their professional fees.”
Merican adds that health tourism will also help private hospitals sustain profitability while generating foreign revenue for Malaysia. Neither response shed light on the question at hand.
Engine of growth?
Dr Quek argues that it’s in the government’s interest to ensure the private sector’s survivability because it shoulders a significant burden of maintaining public health.
“[Private] general practitioners see 62% of first-time ill patients, while private hospitals admit about 25% to 30% of hospital patients,” he tells The Nut Graph by e-mail. Despite this, he says, the private sector does not receive any allocation of the national healthcare budget, which is utilised exclusively in the public sector.
Dr Chong says the private sector fuels a whole sector of growth. “We do this by growing the labour force; we up-skill our staff and purchase a whole range of supplies and services – supplies, ambulances, equipment, drugs … it’s a whole ecosystem.”
Yet, she says, the government has sent the private sector extremely mixed messages. “On one hand, we’re one of the engines of growth; [but on the other hand], we’re the bad [person] because our prices are too high.”
Dr Chong says the government needs to decide if it wants to be more socialist and provide everything, or more capitalist and allow market forces to dictate prices. “Until that is decided, we can’t plan strategy.”
To complicate matters further, Dr Quek says the government, in fact, owns some of the large corporations that have entered the private healthcare business. “Khazanah Nasional owns 60% of the Pantai-Gleneagles group, while KPJ is wholly owned by the Johor state government. Since they’ve entered the market, they’ve been aggressively pushing profit margins higher and higher,” he says.
Merican acknowledges the private healthcare sector’s role as an engine of growth and says that steps will be taken to boost the health tourism industry. However, he did not expressly respond to The Nut Graph’s question on whether the government was sending mixed signals by talking about scaling back hospital fees, which may threaten their profitability.
Public sector, again
Gomez says the ultimate solution to ensuring universal quality and affordable healthcare is to get the public healthcare system back on track. There will be no quick fix, however, and a complete reassessment and revamp will take years to implement.
“There is a growing concern of the quality of healthcare, especially for the poor. There needs to be a significant amount of reinvestment in the public health sector. Training and incentives for [public sector] doctors also need to be looked at,” says Gomez.
Whether or not a government already in deficit will be able to afford the revamp is another question.
Merican says the public sector is heavily government-subsidised, and the increasing cost of healthcare will make these services difficult to sustain in the long term.
Dr Quek agrees that heavily subsidised services are not sustainable in the long run. “Currently, the public only co-pay 2% of the actual public healthcare costs,” he says. He adds that the financing of national healthcare will need to be reviewed and revamped to ensure affordable, quality healthcare for all, including end-of-life care.
If this revamp doesn’t take place, and public hospitals do not improve across the board, Malaysians will find it increasingly hard to afford quality healthcare when they need it the most.