MANAGING THE RISING COST OF HEALTHCARE
Interview by BFM 89.9, Business Radio Station
By Dr David KL Quek, July 2009
1. What does the average family spend on healthcare per annum in Malaysia?
It is estimated that only about 40% of the country’s population or 10.8 million Malaysians, are medically insured. This leaves about 16.2 million people without health insurance policies. But this is probably not accurate. The UNDP and the UN health accounts data suggest that only around 11.9 to 14.2 per cent of Malaysians have their healthcare cost paid by private prepaid schemes (i.e. insurance or third party payers). Social Security (i.e. Socso and EPF) contributes another 0.8%, which leaves the bulk of Malaysians self-paying, out of pocket so to speak.
(Source: Star, 14 March 2009 – “Rising pressure of healthcare cost”)
Healthcare spending is still suboptimum in Malaysia, the government spending just 6.9% of its total expenditure on health care services (i.e. 2.2% of the GDP). In 2003, Malaysians spend just USD 374 in total (Purchasing Power Parity) per person per year on healthcare expenditure, with the government contributing USD 218. However, the last two three years have seen an increase in healthcare spending up to 4.4%, with 2.0% by the government and 2.4% from the private sector.
We hope we can raise this level to around 7 to 8%, which is what is recommended by WHO. This is all the more important because, there’s been so much development of new technologies, devices and medicines which are life-saving and prolonging, that invariably the cost of modern healthcare, especially specialised care, has escalated. But fueling this is the growing demand and expectation from more and more enlightened and knowledge-empowered consumers, our patients.
This compares with USD 1,156 for Singapore, USD 260 for Thailand, USD 2,244 for Japan, USD 1,074 for South Korea, USD 2,874 for Australia, USD 2,389 for the UK and USD 5,711 for the US. As can be seen, although we have prided ourselves as becoming more developed than many other nations around us, we have yet to emulate those with better and arguably more advanced healthcare services.
Out-of-pocket spending as a percentage of private expenditure on health takes up about 75% of the total costs, with some form of private prepaid plan (e.g. insurance) contributing 11.9 to 14.2% over the years from 1999 to 2003. Social security expenditure as a percentage of general government spending on health hovers around 0.8% only, mostly from requested withdrawals from the specific allowable account within the EPF savings.
We encourage more Malaysians to take up a good health insurance scheme, especially when they are still young, as the premiums then will be more manageable and lower. However, the plans should be scrutinized well, so that you fully understand what is covered and what not, and how much is the co-payment or the upper limit of claims.
We have to encourage more of the insurance companies to accept more senior citizens for these products, but those available now can be too expensive for most. Also, we have to work out with our insurance companies to reduce exclusion clauses, which undermine the effort of encouraging more to take up these plans.
Most retirees do not save any money for their healthcare when they grow older. This is of course very wrong. If you are a pensioner with a retiree benefit then this is probably ok, but do remember that this means that you can only utilise the public healthcare services and not private ones.
How much to reserve for older age healthcare cost? Perhaps as much as 15 to 20% of all your life savings, because most these health care problems tend to be chronic and catastrophic when one grows older, and then these are the ones that cost the most!
(Source: “The Malaysian Health Care System: A Review” by Dr David KL Quek; WHO National Health Accounts data: http://www.who.int/nha/country/mys/en/)
2. How much does it cost for medication for common ailments (flu, diarrhea) and what are your options – generics vs. preferred and non preferred brands, pharmacies, private hospital dispensaries (I understand you need a prescription for certain drugs, of course)?
Branded drugs are an ‘innovator products’ which are first discovered, tested exhaustively and then marketed after being authorized by drug control agencies (normally as protected patented products. After some years (ranging from 10 to 20 years) the patent period expires and generic or copy products may be produced and sold. These generic drugs is usually intended to be interchangeable with the innovator product, but may only be marketed after expiry of the patent or other exclusivity rights. Generic products may be marketed either under the approved non proprietary name or under a brand name. They may be marketed in dosage, forms and/or strengths different from those of the innovator products. So they are not necessarily identical.
Companies who develop new medicines invest 10% to 20% of their revenue on R & D. The innovation process may start out with promising compounds, but only one out of some 20,000 compounds tested, might make it to the market place after exhaustive testing and final approval by drug control authorities. Once the “innovative” medicine has been approved, the formulation of the new drug is protected by a “patent” – a grant that gives the inventor the right for a limited period of time to stop others from making, using or selling the invention without permission.
According to WHO Western Pacific Survey, developing countries including Malaysia usually spend about 25% to 50% of total public and private health expenditures on medicines. This expenditure has increased every year as more people in Malaysia are taking drugs on a long term basis for chronic diseases.
In Malaysia, the price of medicines can vary widely within the same class. Some generic drugs may be as low as 60 to 90% less than innovator drugs. Generic drugs are of course less expensive because their manufacturers do not have the high R & D investment costs of the innovator drug companies. Generic drugs also are not required to repeat costly animal and clinical research on ingredient or dosage already approved for safety and effectiveness. Sometimes, this is where uncertainty as to its efficacy or potency comes in. Are these drugs as good or contain as much active medicine as it purports to have? Such doubts are more so with smaller companies, and doctors then will have to use their judgement call to decide on which products to use or not.
(Source: “Generic and Branded Products” by Zarina Noordin, B Pharm, M Pharm, Malaysian Pharmaceutical Society Seminar, 28 November 2004)
It is claimed that the price of medicines in Malaysia is much higher than even in developed countries, according to a survey by local universities. The survey covering branded drugs and generic medicines at 20 public hospitals, 32 private retail pharmacies and 20 dispensing doctors found the price of these medicines to be higher by between 10 and 16 times than the International Reference Price (IRP) under the WHO methodology.
However, this study has not been substantiated or replicated by another group of researchers. Most doctors doubt the veracity of this study because, from our travels around the world, we know for a fact that medicines and medical care in this country is one of the cheapest and the most advanced in this region and also in the world!
That is why, we are now suddenly known as an important medical tourism destination—we are probably the fifth in terms of medical tourism dollars in the world. Obviously, our standards are good enough and also that we are very cost-effective and relatively cheap to attract these medical tourists.
Doctors in Malaysia sometimes feel that it’s only our own rakyat who feel that our standards are low and our fees are too high! But our patients should go out to our neighbouring countries and see for themselves, the actual cost of private sector healthcare even in ASEAN, excluding Singapore.
But we cannot of course compare with the public sector which is so heavily subsidised, the government (yes we taxpayers) pays 98% of the bill of 12.9 billion ringgit yearly. Only 2% is contributed by the patients using the public sector! This is revealed by the Health Minister Dato Sri Liow recently in an inteview with Malaysiakini.
(Source: “Medicines in M’sia Dearer Than Ever In Developed Countries: Survey” – UCSI Weekly, 27 July 2006)
A recent study by the School of Pharmaceutical Sciences at USM indicated that healthcare costs can be reduced substantially if generic drugs are used instead of branded ones. Dr Mohamed Azmi Ahmad Hassali, a senior lecturer at the faculty, informed that his study showed that the use of generic drugs can help patients at private hospitals save between 60% and 90% on their medical bills. However, he said the usage of generic drugs is not promoted in Malaysia, and the lack of awareness among consumers is a factor.
In addition, the private healthcare sector in general seems to prefer using branded drugs. This is due to the perception that branded drugs means ensured effectiveness. According to him about 85% of the listed essential drugs in the country have generic substitutes. He emphasized that approved generic drugs have been tested for their bio-equivalents, and the rate of absorption of these drugs is comparable to that of branded ones.
Even the government is now relying more on generic drugs to mitigate the effects of rising medical costs. Above all, he said, the healthcare system must ensure that “the right drug is given to the right patient at the right dose, at the right time, addressing the right root at the right cost”. (Source: “Generic drugs vs. branded ones”, Star, 14 March 2009)
3. How to negotiate for less when it comes to CT scans, MRIs, other medical tests, healthcare checks, operations – price range for different providers (government vs private healthcare providers)?
There really is no comparison with public healthcare facilities, because all these are massively subsidised. Most tests and medical treatment are paid for by tax ringgit, and certain rules apply depending on which class (first, second or third) you are admitted into.
This is of course very different in the private sector. Here doctors abide by the MMA Schedule of Fees, which have been incorporated by the MOH into the Private Healthcare Facilities & Services Regulations, 2006.
The charges imposed for any of these procedures/tests is based on this Schedule but the public must bear in mind that this Schedule only serves as a guide, but variations sometimes are allowed based on either compassion or complexity.
For example, most GP do not charge the allowable professional fee which ranges from RM 30 to 65, depending on the complexity and time of consultation. GPs usually bundle together with medications, during which the amount for the professional fee is usually pegged at RM10 to 35 only.
When you compare with other professionals, this is indeed a very low rate of fee. Even the consult from your plumber or electrician would cost you more! Also some newer therapeutic procedures have not been identified in this schedule however.
What about specialists? Nowadays, most of our specialists are well-documented and credentialed, i.e. they are recognised by their specialty boards to have had adequate training and experience. However, this is not to say that every specialist will deliver the same identical product of service or excellence of technique or treatment. There will always be variations, but by and large, most would be close to some form of accepted standards of care.
However, it is probably true that experience and individual skills, may still be something that one acquires with age and practice among some exceptional doctors. Thus, we hear of some more famous skilled specialists because of their favourable records and results. Thus, sometimes, it is not unreasonable that these doctors may be more expensive to consult or to seek treatment from—best care is akin to having the best services e.g. 5-star service as in some hotels, etc.
Having said that, this is only true if the specialist keeps on updating him/herself with modern advances, training and development. In some studies in the USA, younger doctors just fresh from residency training give the most appropriate and up-to-date treatment! Of course there are exceptional doctors who are only the best with the best training and experiences, and who are most sought after.
4. How can a patient keep from being subjected to needless tests and procedures?
Good communication between the doctor and patient is essential for consent. Patients should be given adequate information in a way they can understand to enable them to make decisions about their medical care. It is a general rule that doctors should examine and treat patients only with their consent. No consent is valid if obtained under the following conditions:
(i) when there is coercion or threat or force
(ii) when the party giving consent is not aware of the full implications of consent.
When the patient is incompetent and cannot give a valid consent, then consent should be obtained from the next-of-kin, who should of course be the usual legal authority.
(Source: MMA Code of Medical Ethics)
A 2006 study in the American Journal of Preventive Medicine found that in 43% of routine checkups of outwardly healthy people, doctors ordered an X-ray, electrocardiogram or urinalysis – tests that are not recommended for routine prevention under national guidelines.
If your doctor orders an MRI, CT scan or other medical tests, speak up and ask why this test is necessary, what will be done afterwards if the results are positive or negative and what the risk factors are. If the answer is simply “routine screening”, the test may be unnecessary.
If there’s any doubt, every patient should exercise his or her right to seek another second or even third opinion. There’s also the internet these days which can offer some background check on some of the conditions or tests that are relevant. Asking your friends and relatives who may know better can also sometimes help; especially pertaining to the reliability and trustworthiness of the doctor or medical center. But these people are also the ones who sometimes pressure you into doing too many unnecessary tests—eg. some one had a CT scan of his heart, like the beautiful pictures so much that he brings all his symptom-free, worried-well friends and family to go have one too!
However, the Internet and most of these www sites are disorganised and cannot be fully trusted or relied upon. Also different people have different problems, presentations and possibly differing responses. Therefore, a doctor is still needed to make some sense as to some medical complaint. Ask more questions and find a doctor that you can relate with the best to your satisfaction, but also know that consultation is a professional service, which should be appreciated, and thus, as patients, you should also do your bit, and be a good listener, and a good provider of historical information—don’t hide anything which can sometimes compromise the consultation process.