Saturday March 14, 2009
Medical insurance still affordable in Malaysia
By ELAINE ANG
JOSEPH Lee heaved a sigh of relief in between grimaces. His insurance company will cover all the medical expenses he will rack up due to a spinal slipped disc. For the past two weeks, he has been in a private hospital, suffering excruciating pain after various treatments have failed. Now he is scheduled for surgery.
His hospital bill has grown to a few thousand ringgit and there will be even larger charges for his upcoming surgery and post-operative care.
Lee is one of the more fortunate Malaysians who have medical insurance to lean on amid escalating medical and healthcare costs.
These costs have risen by an estimated 30% to 40% over the last three years, mainly due to the increase in the utilisation of medical services and advancements in medical technology.
Prudential Assurance Malaysia Bhd chief marketing officer Thomas Wong sees it as an uphill task to mitigate, let alone bring down, high medical costs, as this will need the collective effort of insurers, healthcare providers and the Government.
“Higher medical claims will definitely affect premiums in the long run because premiums are meant to be able to cover claims, and claims paid are meant to cover inflating medical costs.
“But any premium increase usually comes with an increase in benefits in the medical plan,” he says, adding that Prudential Assurance’s medical claim incidences have increased by around 20% annually for the past three years.
Most insurers, however, feel that medical insurance is still fairly affordable in Malaysia. ING Insurance Bhd president and chief executive officer Datuk Dr Nirmala Menon says this is because a medical insurance package will always offer the option of accessing care at public as well as private hospitals.
“Public hospitals are subsidised by the Government and therefore, medical costs are much lower at these hospitals, which also provide good medical treatment,” she adds.
For example, cash plans (which pays a fixed cash benefit for each day the customer is hospitalised) are typically cheap, ranging from RM40 per annum for RM100 daily cash benefit to RM200 per annum for RM400 daily cash benefit, depending on the age of the customer at the time of purchase.
Reimbursement plans, however, are relatively more expensive and depend on the age of the customer, which room the customer prefers to stay in during hospitalisation and the amount of claims he can make in a year should hospitalisation occur (annual limit).
A reimbursement plan covers the hospitalisation charges, consultation before hospitalisation and post-treatment after hospitalisation and may also include outpatient treatment such as day surgery, cancer treatment and kidney dialysis.
For example, premiums for Prudential’s PRUmajor med 5 can range from about RM505 per year for the cheapest room plan with an annual limit of RM50,000, to about RM5,000 per year for the most expensive room plan with a RM150,000 annual limit.
Great Eastern Life Assurance (M) Bhd’s Great MediCare offers medical coverage at an affordable premium ranging from RM500 to RM800 a year, depending on the age and plan selected.
Executive vice-president and chief marketing officer Loke Kah Meng says depending on the policyholder’s selected plan, medical expenses can be reimbursed in one lump sum up to an annual limit of RM200,000 and a lifetime limit of up to RM1.6mil.
According to General Insurance Association of Malaysia, medical expenses insurance generated close to RM485mil in gross premiums, which represented only about 5% of the general insurance market in 2007.
Executive director Lim Chia Fook says growth in the medical insurance sector has been very encouraging, averaging at least 15% over the last few years with expectations of continued strong growth going forward.
“This is indicative of the greater awareness among individuals, employers and corporations of medical insurance protection as an effective and affordable means of financing these costs,” he says.
Nevertheless, Lim says general insurers in Malaysia expect a difficult 2009 as the global economic slowdown takes its toll on premium growth in this sector, in particular.
“This view is balanced somewhat by the fact that many are now even more aware of the greater need for medical insurance in difficult financial times,” he adds.
Wong is still optimistic about the outlook for the medical insurance sector as only about 40% of the Malaysian population is insured as at 2007.
“The market certainly has plenty of room for growth. There are opportunities for insurance players to continue to introduce new products that not only meet consumers’ protection and savings needs, but are affordable as well,” he says.
To Wong of Prudential, comprehensive healthcare protection should ideally have a hospitalisation and surgical insurance plan, a critical illness plan and a disability income plan designed to cover one’s day-to-day expenses in the event one is unable to work due to an accident or illness.
“More importantly, review your medical insurance plans at least on an annual basis. With healthcare increases continuing to outpace the general inflation rate, chances are the plans that you have bought years ago are unlikely to be enough to meet future needs,” he stresses.
Related stories:
Rising pressure of healthcare cost
Getting a lifeline with definitive health policy
Generic drugs vs branded ones
Room for more hospitals
Providing patients quality service
Private hospitals move towards specialised disciplines to meet demand
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Friday, March 13, 2009
Private hospitals move towards specialised disciplines to meet demand
Saturday March 14, 2009
Private hospitals move towards specialised disciplines to meet demand
By ELAINE ANG
TWENTY years ago, Sally Teh’s mother used to take her to a general practitioner (GP) in a clinic near her house when she was ill – be it for her asthma or a simple sore throat. Today, Teh takes her two-year-old daughter to a paediatrician at a private hospital every time the child falls sick.
“There are so many diseases nowadays and taking her to a paediatrician makes me feel secure as he would have more in-depth knowledge of children’s ailments,” she says.
TMC Life Sciences Bhd managing director Datuk Dr Colin Lee believes Malaysians are sophisticated enough in their demand for quality healthcare that they have reached a stage where they want to go for “super speciality”.
Citing an example, Lee says parents now prefer to take their children to see a paediatrician and even a paediatric sub-specialist such as one who specialises in respiratory ailments or developmental problems for any illness.
KPJ Healthcare Bhd senior group general manager Amiruddin Satar concurs. He notes that the demand for sub-specialities where doctors are more focused and have in-depth knowledge on a certain discipline is increasing.
“As more research and development and techniques are developed, we also see more doctors specialising on certain parts of the body. For example, doctors can sub-specialise in spinal disorders under the orthopedic discipline,” he says.
For KPJ, it is a natural progression to move towards setting up “centres of excellence” – highly specialised centres focused on certain medical disciplines with breakthrough medical technologies and procedures – to differentiate itself from other hospital groups.
“It is a way to move forward. We hope to have centres of excellence in eye, dental, orthopedic and outpatient disciplines in future,” says Amiruddin.
KPJ which has a cancer centre and an obesity centre in Damansara Specialist Centre is currently moulding them into centres of excellence.
Amiruddin says the group aims to expand its cancer centre and will be investing some RM15mil this year to renovate its cancer outpatient department and add more radiotherapy machines.
KPJ’s obesity centre, the only one in the country, has specialists who perform a unique bypass surgery to make a patient’s stomach smaller.
“This is a sub-specialty and we have a US surgeon who visits every quarter to supervise the procedure. We hope to capture the overseas market, especially the Asean region. So far, we have had about 15 patients, of which two or three are from overseas,” he says.
Nevertheless, Amiruddin admits that having centres of excellence may be easier said than done for most hospitals.
“There must be the demand for a certain sub-speciality for hospitals to supply the specialised treatments. We can equip ourselves to do unique procedures but it will defeat the purpose if the numbers are not there.
“In addition, the centres may have the expertise to do new procedures but they cost a lot. The question is whether patients can afford them,” he says.
To Amiruddin, the best example of a centre of excellence is the National Heart Institute (IJN). “The IJN model has worked very well but I believe centres of excellence of most hospitals would be smaller and attached to their respective hospitals,” he says.
This will enable the centres to save costs by tapping on the hospitals’ facilities. In addition, some centres may not be big enough to have their own laboratory and pharmacy due to a shortage of doctors, especially in such highly specialised areas.
“This is a major challenge for the industry as there are insufficient doctors with the necessary skills to have a full-fledged centre of excellence the likes of IJN,” he says.
He sees a need for more centres of excellence specialising in cancer, orthopedics, heart and fertility in the country.
TMC, which recently established a new hospital, Tropicana Medical Centre, in Kota Damansara, aims to beef up its portfolio of doctors to include specialists with sub-specialities to meet the change in demand.
Says Lee, “We want to position ourselves as a niche market hospital focusing on a few areas. Our centres of excellence will be focused on fertility, children, interventional radiology (using radiology for treatment and reducing invasive surgery) and stem cell collection, which involves cord blood and adult stem cell collection and stem cell therapy.”
Other centres of excellence TMC plans to develop further will cover fields such as endocrinology and diabetes as well as certain areas of orthopedics, especially in relation to stem cell therapy (regeneration of cartilage in joints).
Related stories:
Private hospitals move towards specialised disciplines to meet demand
By ELAINE ANG
TWENTY years ago, Sally Teh’s mother used to take her to a general practitioner (GP) in a clinic near her house when she was ill – be it for her asthma or a simple sore throat. Today, Teh takes her two-year-old daughter to a paediatrician at a private hospital every time the child falls sick.
“There are so many diseases nowadays and taking her to a paediatrician makes me feel secure as he would have more in-depth knowledge of children’s ailments,” she says.
TMC Life Sciences Bhd managing director Datuk Dr Colin Lee believes Malaysians are sophisticated enough in their demand for quality healthcare that they have reached a stage where they want to go for “super speciality”.
Citing an example, Lee says parents now prefer to take their children to see a paediatrician and even a paediatric sub-specialist such as one who specialises in respiratory ailments or developmental problems for any illness.
KPJ Healthcare Bhd senior group general manager Amiruddin Satar concurs. He notes that the demand for sub-specialities where doctors are more focused and have in-depth knowledge on a certain discipline is increasing.
“As more research and development and techniques are developed, we also see more doctors specialising on certain parts of the body. For example, doctors can sub-specialise in spinal disorders under the orthopedic discipline,” he says.
For KPJ, it is a natural progression to move towards setting up “centres of excellence” – highly specialised centres focused on certain medical disciplines with breakthrough medical technologies and procedures – to differentiate itself from other hospital groups.
“It is a way to move forward. We hope to have centres of excellence in eye, dental, orthopedic and outpatient disciplines in future,” says Amiruddin.
KPJ which has a cancer centre and an obesity centre in Damansara Specialist Centre is currently moulding them into centres of excellence.
Amiruddin says the group aims to expand its cancer centre and will be investing some RM15mil this year to renovate its cancer outpatient department and add more radiotherapy machines.
KPJ’s obesity centre, the only one in the country, has specialists who perform a unique bypass surgery to make a patient’s stomach smaller.
“This is a sub-specialty and we have a US surgeon who visits every quarter to supervise the procedure. We hope to capture the overseas market, especially the Asean region. So far, we have had about 15 patients, of which two or three are from overseas,” he says.
Nevertheless, Amiruddin admits that having centres of excellence may be easier said than done for most hospitals.
“There must be the demand for a certain sub-speciality for hospitals to supply the specialised treatments. We can equip ourselves to do unique procedures but it will defeat the purpose if the numbers are not there.
“In addition, the centres may have the expertise to do new procedures but they cost a lot. The question is whether patients can afford them,” he says.
To Amiruddin, the best example of a centre of excellence is the National Heart Institute (IJN). “The IJN model has worked very well but I believe centres of excellence of most hospitals would be smaller and attached to their respective hospitals,” he says.
This will enable the centres to save costs by tapping on the hospitals’ facilities. In addition, some centres may not be big enough to have their own laboratory and pharmacy due to a shortage of doctors, especially in such highly specialised areas.
“This is a major challenge for the industry as there are insufficient doctors with the necessary skills to have a full-fledged centre of excellence the likes of IJN,” he says.
He sees a need for more centres of excellence specialising in cancer, orthopedics, heart and fertility in the country.
TMC, which recently established a new hospital, Tropicana Medical Centre, in Kota Damansara, aims to beef up its portfolio of doctors to include specialists with sub-specialities to meet the change in demand.
Says Lee, “We want to position ourselves as a niche market hospital focusing on a few areas. Our centres of excellence will be focused on fertility, children, interventional radiology (using radiology for treatment and reducing invasive surgery) and stem cell collection, which involves cord blood and adult stem cell collection and stem cell therapy.”
Other centres of excellence TMC plans to develop further will cover fields such as endocrinology and diabetes as well as certain areas of orthopedics, especially in relation to stem cell therapy (regeneration of cartilage in joints).
Related stories:
Providing patients quality service
Saturday March 14, 2009
Providing patients quality service
MALAYSIA’S healthcare problems are two-fold. While the poor are forced to contend with the difficulties and inefficiencies of the public sector, many of those who prefer to go to private clinics and hospitals are struggling to pay for the medical services.
This suggests that people go to government doctors only because they have to. Does that reflect the quality of the services in the public healthcare system?
Gleneagles Penang consultant general surgeon Dr Vimal K. Vasudeavan says he enjoyed his 16 years of service at the Taiping General Hospital, providing care to patients, especially those with nowhere else to go.
“People do not realise the workload of public sector doctors is very heavy. Doctors don’t get the credit they deserve. The procedures we do in the public sector are very high-end. The drugs and equipment used are of the latest technologies,” he says.
In fact, because treatment is more expensive in the private sector, sometimes the doctors don’t use the most advanced equipment because they would otherwise have to charge more.
In this respect, Vimal says, patients in the public sector sometimes benefit more.
He feels that doctors in the public sector are unfairly criticised. “You get the good and the bad, whether in the public or private sector. Not all private sector doctors are brilliant.
“Eventually, public sector doctors go to the private sector because the money is better. If the doctor has worked longer in the public hospital, he would have seen a great number of patients. Hence, he is better,” he argues.
Dr Kong Chee Kwan, a medical officer with Universiti Malaya Medical Centre’s surgical department, says surgeries for hernia, knee or hip replacement, and removal of gall bladder stones can have a waiting list of two to three months, and sometimes longer.
“Such cases aren’t considered life-threatening, although there can sometimes cause pain and discomfort. Due to the long waiting list, the patient has no choice but to wait,” he adds. However, he feels that in the case of life-threatening conditions, public hospitals are generally efficient.
Vimal would like to see the public sector doctors being rewarded on merit. He says these doctors ought to be appreciated by the patients and their relatives, and by the Health Ministry.
“Many doctors, especially those who have reached their 40s, will think of leaving when the monetary factor becomes more important. When the senior doctors leave, there is not only a brain drain, but the juniors are unable to learn from the experience and expertise of the seniors. That training opportunity is gone,” he says.
Kong says when doctors are on call, they are entitled to an allowance of RM150 per day, which works out to RM6.25 per hour.
“The workload is heavy and because we are always being rotated, we don’t have a personal relationship with patients as the doctors in the private sector do,” he says. Not surprisingly, he plans to move to the private sector once he obtains his surgical specialisation qualifications.
There is little doubt that government doctors are overworked, and it will get worse as the economy slows down, forcing more people to rely on the public healthcare system.
The Government handles 75% of Malaysia’s healthcare needs. The Health Ministry provides virtually free services to civil servants, pensioners, their dependents and the poor.
Of the 22,500 medical practitioners in 2007, 13,500 were in the public sector and the rest in the private sector.
While statistics are not publicly available, studies have shown that the public sector treats three and a half times as many inpatients compared to the private sector, and public beds constitute more than three quarters of all hospital beds.
Public facilities also treat six to seven times as many outpatients as private hospitals.
With the public healthcare sector being so heavily subsidised, the Government recovers only 3% of its annual operating budget.
The Health Ministry’s operating expenditure has increased from almost RM3bil in 1996 to close to RM12bil in 2008. However, Malaysia’s healthcare spending (approximately 2% of GDP) is considered modest when compared with that of Singapore (3.7%) and Thailand (3% to 3.5%).
The World Health Organisation says a country should budget a minimum of 5% of its GDP for healthcare services.
Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, says the Malaysian public sector healthcare is underfunded.
“Widely accessible, well-funded, adequately staffed, competent healthcare provided by the public sector can be a fallback option that can serve as a price bulwark and hence restrain price increases in the private sector,” he says.
“In Singapore, for instance, the government’s strategically located and well-equipped polyclinics account for only 20% of primary healthcare on the island, but their subsidised outpatient services provide sufficient price competition to help restrain fee increases of the private clinics. In Hong Kong, well-remunerated and adequately-staffed public sector healthcare achieves a similar effect.”
Providing patients quality service
MALAYSIA’S healthcare problems are two-fold. While the poor are forced to contend with the difficulties and inefficiencies of the public sector, many of those who prefer to go to private clinics and hospitals are struggling to pay for the medical services.
This suggests that people go to government doctors only because they have to. Does that reflect the quality of the services in the public healthcare system?
Gleneagles Penang consultant general surgeon Dr Vimal K. Vasudeavan says he enjoyed his 16 years of service at the Taiping General Hospital, providing care to patients, especially those with nowhere else to go.
“People do not realise the workload of public sector doctors is very heavy. Doctors don’t get the credit they deserve. The procedures we do in the public sector are very high-end. The drugs and equipment used are of the latest technologies,” he says.
In fact, because treatment is more expensive in the private sector, sometimes the doctors don’t use the most advanced equipment because they would otherwise have to charge more.
In this respect, Vimal says, patients in the public sector sometimes benefit more.
He feels that doctors in the public sector are unfairly criticised. “You get the good and the bad, whether in the public or private sector. Not all private sector doctors are brilliant.
“Eventually, public sector doctors go to the private sector because the money is better. If the doctor has worked longer in the public hospital, he would have seen a great number of patients. Hence, he is better,” he argues.
Dr Kong Chee Kwan, a medical officer with Universiti Malaya Medical Centre’s surgical department, says surgeries for hernia, knee or hip replacement, and removal of gall bladder stones can have a waiting list of two to three months, and sometimes longer.
“Such cases aren’t considered life-threatening, although there can sometimes cause pain and discomfort. Due to the long waiting list, the patient has no choice but to wait,” he adds. However, he feels that in the case of life-threatening conditions, public hospitals are generally efficient.
Vimal would like to see the public sector doctors being rewarded on merit. He says these doctors ought to be appreciated by the patients and their relatives, and by the Health Ministry.
“Many doctors, especially those who have reached their 40s, will think of leaving when the monetary factor becomes more important. When the senior doctors leave, there is not only a brain drain, but the juniors are unable to learn from the experience and expertise of the seniors. That training opportunity is gone,” he says.
Kong says when doctors are on call, they are entitled to an allowance of RM150 per day, which works out to RM6.25 per hour.
“The workload is heavy and because we are always being rotated, we don’t have a personal relationship with patients as the doctors in the private sector do,” he says. Not surprisingly, he plans to move to the private sector once he obtains his surgical specialisation qualifications.
There is little doubt that government doctors are overworked, and it will get worse as the economy slows down, forcing more people to rely on the public healthcare system.
The Government handles 75% of Malaysia’s healthcare needs. The Health Ministry provides virtually free services to civil servants, pensioners, their dependents and the poor.
Of the 22,500 medical practitioners in 2007, 13,500 were in the public sector and the rest in the private sector.
While statistics are not publicly available, studies have shown that the public sector treats three and a half times as many inpatients compared to the private sector, and public beds constitute more than three quarters of all hospital beds.
Public facilities also treat six to seven times as many outpatients as private hospitals.
With the public healthcare sector being so heavily subsidised, the Government recovers only 3% of its annual operating budget.
The Health Ministry’s operating expenditure has increased from almost RM3bil in 1996 to close to RM12bil in 2008. However, Malaysia’s healthcare spending (approximately 2% of GDP) is considered modest when compared with that of Singapore (3.7%) and Thailand (3% to 3.5%).
The World Health Organisation says a country should budget a minimum of 5% of its GDP for healthcare services.
Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, says the Malaysian public sector healthcare is underfunded.
“Widely accessible, well-funded, adequately staffed, competent healthcare provided by the public sector can be a fallback option that can serve as a price bulwark and hence restrain price increases in the private sector,” he says.
“In Singapore, for instance, the government’s strategically located and well-equipped polyclinics account for only 20% of primary healthcare on the island, but their subsidised outpatient services provide sufficient price competition to help restrain fee increases of the private clinics. In Hong Kong, well-remunerated and adequately-staffed public sector healthcare achieves a similar effect.”
Room for more hospitals
Saturday March 14, 2009
Room for more hospitals
By TEE LIN SAY
THE healthcare business offers good money. That much is very clear today, but two decades ago, the private sector did not quite see things that way. Initially, private hospitals had not been seen as ideal investments; it had often taken up to 10 years before the operators saw profits.
However, with the Government overwhelmed by the demand for medical services, there was a move to encourage the growth of the private healthcare sector.
The number of private hospitals has been rising rapidly, from about 20 hospitals with 1,171 beds in 1980 to 209 hospitals with 11,689 beds last year. There is room for more. Although they employ some 40% of the country’s doctors, these hospitals only account for about 25% of the hospital beds.
Recently, the Government approved licences for 45 new private hospitals and this will grow the number of beds in the private sector to 15,178.
The growth is not without some pain to the consumers. It is common to hear complaints of private health providers overcharging and overprescribing. Who should be blamed – the doctors or the hospital operators?
It is said that the bulk of a hospital’s revenue goes to doctors. Charges to doctors alone take up a hefty 30% to 35% off the hospital’s total revenue. After the hospital pays for costs such as building and maintenance, salaries, equipment and drugs, it is left only with a profit margin of some 5% to 10%.
Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas says private hospitals had been hesitant in sharing their financial results in the past, but this has changed in recent years and today there is much more benchmarking of the various performance indicators.
Sometimes, the numbers are indeed intriguing. For example, for its financial year ended December 2008, main board-listed KPJ Healthcare Bhd made a net profit of RM78.45mil on the back of RM1.27bil in revenue. This translates to a margin of only 6%.
Slim margins or not, there is always the worry that the private sector is overly focused on the bottomline.
Says ex-director-general of health Tan Sri Dr Abdul Khalid Sahan, “It’s almost a certainty that private hospitals are business entities run to have as short a break-even period as possible. The focus is on profitability and thus, decisions made are very likely on income-generating tendencies.”
Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, points out that doctors are not angels. Some are noble and compassionate, while others are corruptible and prone to temptation in an environment of incentives.
“If a private hospital has invested millions in an MRI (magnetic resonance imaging) machine, and it has patients who will do its bidding, there’s a strong incentive to be liberal in ordering MRI scans even when the need may be minimal or the benefit marginal,” he says.
In medical practice, the vendor usually tells the customer what the customer should buy. Health economists call this information asymmetry, a serious market failure according to conventional micro-economic theory.
Thomas of APHM explains that running a private hospital has many parallels to running a hotel. “Hospitals need to renovate and refurbish their facilities from time to time, but unlike hotels, hospitals do not get any tax exemption or rebate for such expenses,” he says.
He adds that Malaysian doctors are competent, and Malaysian hospitals are as modern as the best hospitals in some neighbouring countries.
“We’ve got a fantastic system. Do you know that our infection rates are less than 1%, and are a lot better than hospitals in developed nations?” he argues.
“Our charges are also reasonable. A bypass here for instance, costs RM30,000, compared to S$30,000 in Singapore. And Malaysian doctors are not inferior to Singaporean doctors. Most doctors in Singapore are Malaysians. Our hospitals are also accredited, which means patients are getting quality treatment for a very reasonable price.”
Related stories:
Rising pressure of healthcare cost
Getting a lifeline with definitive health policy
Generic drugs vs branded ones
Providing patients quality service
Private hospitals move towards specialised disciplines to meet demand
Medical insurance still affordable in Malaysia
Room for more hospitals
By TEE LIN SAY
THE healthcare business offers good money. That much is very clear today, but two decades ago, the private sector did not quite see things that way. Initially, private hospitals had not been seen as ideal investments; it had often taken up to 10 years before the operators saw profits.
However, with the Government overwhelmed by the demand for medical services, there was a move to encourage the growth of the private healthcare sector.
The number of private hospitals has been rising rapidly, from about 20 hospitals with 1,171 beds in 1980 to 209 hospitals with 11,689 beds last year. There is room for more. Although they employ some 40% of the country’s doctors, these hospitals only account for about 25% of the hospital beds.
Recently, the Government approved licences for 45 new private hospitals and this will grow the number of beds in the private sector to 15,178.
The growth is not without some pain to the consumers. It is common to hear complaints of private health providers overcharging and overprescribing. Who should be blamed – the doctors or the hospital operators?
It is said that the bulk of a hospital’s revenue goes to doctors. Charges to doctors alone take up a hefty 30% to 35% off the hospital’s total revenue. After the hospital pays for costs such as building and maintenance, salaries, equipment and drugs, it is left only with a profit margin of some 5% to 10%.
Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas says private hospitals had been hesitant in sharing their financial results in the past, but this has changed in recent years and today there is much more benchmarking of the various performance indicators.
Sometimes, the numbers are indeed intriguing. For example, for its financial year ended December 2008, main board-listed KPJ Healthcare Bhd made a net profit of RM78.45mil on the back of RM1.27bil in revenue. This translates to a margin of only 6%.
Slim margins or not, there is always the worry that the private sector is overly focused on the bottomline.
Says ex-director-general of health Tan Sri Dr Abdul Khalid Sahan, “It’s almost a certainty that private hospitals are business entities run to have as short a break-even period as possible. The focus is on profitability and thus, decisions made are very likely on income-generating tendencies.”
Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, points out that doctors are not angels. Some are noble and compassionate, while others are corruptible and prone to temptation in an environment of incentives.
“If a private hospital has invested millions in an MRI (magnetic resonance imaging) machine, and it has patients who will do its bidding, there’s a strong incentive to be liberal in ordering MRI scans even when the need may be minimal or the benefit marginal,” he says.
In medical practice, the vendor usually tells the customer what the customer should buy. Health economists call this information asymmetry, a serious market failure according to conventional micro-economic theory.
Thomas of APHM explains that running a private hospital has many parallels to running a hotel. “Hospitals need to renovate and refurbish their facilities from time to time, but unlike hotels, hospitals do not get any tax exemption or rebate for such expenses,” he says.
He adds that Malaysian doctors are competent, and Malaysian hospitals are as modern as the best hospitals in some neighbouring countries.
“We’ve got a fantastic system. Do you know that our infection rates are less than 1%, and are a lot better than hospitals in developed nations?” he argues.
“Our charges are also reasonable. A bypass here for instance, costs RM30,000, compared to S$30,000 in Singapore. And Malaysian doctors are not inferior to Singaporean doctors. Most doctors in Singapore are Malaysians. Our hospitals are also accredited, which means patients are getting quality treatment for a very reasonable price.”
Related stories:
Rising pressure of healthcare cost
Getting a lifeline with definitive health policy
Generic drugs vs branded ones
Providing patients quality service
Private hospitals move towards specialised disciplines to meet demand
Medical insurance still affordable in Malaysia
Rising pressure of healthcare cost
Saturday March 14, 2009
Rising pressure of healthcare cost
By CECILIA KOK
Increases in medical bills are outpacing the general inflation rate each year. That raises the question whether healthcare is reserved only for those who can afford it
“I got the bill for my surgery. Now I know what those doctors were wearing masks for”
– American bureaucrat, James H. Boren (1925)
WHAT is the value of a human’s health? Sixteenth-century English scholar and vicar at Oxford University Robert Burton put it at such: “Restore a man to his health, and his purse lies open to thee.”
That denotes that health is priceless, and almost everyone would pay anything to get well. With the doctors’ power to demand, medical services do not come cheap.
And with the continuous rise of investments in research and development as well as the adoption of the latest technologies to deal with the rapid emergence of new and complicated illnesses (and the re-emergence of some deadly ones), healthcare costs are soaring by the day.
So, who can afford to fall sick these days?
Across the world, the increases in doctors’ bills are outpacing the general inflation rate each year. It is estimated that the global medical inflation averages about 10% each year.
In Malaysia, medical inflation is estimated to be around 15% each year. That is to say, a simple appendicitis surgery that cost RM1,800 three years ago will set you back by about RM3,000 today.
The next question then: Is healthcare reserved only for those who can afford it?
Far from it. As former Health Ministry director-general Tan Sri Dr Abdul Khalid Sahan puts it, healthcare has been universally accepted as a basic right of all citizens.
“Everyone has a right to receive it irrespective of his or her ability to pay,” Khalid explains, adding that the Government is accountable for ensuring that healthcare is made accessible to all citizens.
The existence of public healthcare services in Malaysia is in line with that notion. Although the system is not perfect, its services are provided almost free of charge because they are heavily subsidised by the Government.
And complementing the public healthcare system in Malaysia is the private sector, whose existence is supposed to help improve the delivery standards of the public healthcare sector – in that the “richer” patients would go to the private hospitals, and therefore, help lighten the workload of the public sector, so that the “poorer” patients can have better and faster services at government hospitals.
Private healthcare services are expensive (or as some would complain, ridiculously expensive) mainly because they are profit-driven centres.
Shocking bills
Over the years, there have been growing concerns that private hospitals tend to overcharge their patients. According to Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, there are built-in incentives for over-investigation, over-treatment and over-medication in a profit-driven, fee-for-service system.
Therefore, some patients have been slapped with exorbitant charges by private hospitals due to “unnecessary” treatment courses.
For example, there is the case of Madam LC, in her 60s, who had been diagnosed with breast cancer with metastasis to liver stage IV, and was admitted to a private hospital in Kuala Lumpur in January. Upon discharge the following day, she was slapped with a bill of more than RM7,000. Of this amount, nearly half was for a specific medication called Injection Aclasta, which, according to the patient, retailed at only RM1,400. In addition, LC was also billed for a bilateral mammogram, when she actually did a single one, as she had a left mastectomy more than 10 years ago.
Upon protest, LC was offered a 7% discount, which included a revision of the mammogram charges. She turned down the offer because she felt she was still being overcharged for the medication.
In the middle of last month, she received a telephone call and an SMS from the hospital’s public relations officer, offering a 20% refund. She requested the offer be made in writing but to this day, she has yet to hear from the hospital.
Unfortunately, LC’s experience is not an isolated case. As an industry analyst puts it, whenever the patient is unaware and “can afford it”, such practices tend to occur because private hospitals are driven by profits.
However, a private hospital doctor told StarBizWeek that most of them do not mean to over-diagnose or over-treat patients. He explains that doctors in the private hospitals tend to subject their patients to “better monitoring” as part of what they call defensive medicine, due to the rising risk of litigation.
He adds, “So, gone are the days when the doctor would send the patient home for self-monitoring before admitting him or her for further treatment.”
Nevertheless, thanks to the introduction of medical insurance, certain medical expenses incurred by policyholders can be taken care of. Hence, it is viewed as increasingly important for individuals to have such insurance policies, with sufficient coverage.
This is because we have often heard of how terminally ill patients had to endure the high costs of treatment. Some even had to borrow money. Some had exhausted their insurance coverage and some had given up hope for medication.
Then again, while medical insurance policies have helped to alleviate the financial burden of patients, they have also contributed to the rapid increase of medical costs at private hospitals. This is because insurance policies are another opportunity through which private hospitals can make quick bucks.
Affordability issue
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. Then again, this may not be a big concern in Malaysia as patients can always turn to the Government.
Over the years, the steep costs at private healthcare centres have caused some patients to go back to public healthcare. And with the global recession, even more are expected to seek public, rather than private, healthcare services.
Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, says this may be the trend, given the present economic condition, which has an impact on consumers’ incomes, making private healthcare services increasingly unaffordable to many.
Suwinski points out that people will obviously make their choices based on affordability. And between the options of a cheaper but more troublesome public healthcare and a more convenient but expensive private healthcare, patients are now more likely going to opt for the former.
Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas concedes that it is possible that patients will turn to the public healthcare system in these troubled times, but he argues that there is only so much that the public hospitals can cope with. As it stands now, these hospitals are already overloaded with patients.
The healthcare gap
Undeniably, there is a huge disparity between public and private healthcare services in Malaysia. First, the public healthcare sector continues to lose its trained medical professionals to the more lucrative and usually urban-based private sector.
Also, it has to cater to the growing number of patients as the bulk of the Malaysian population cannot afford private healthcare.
The massive brain drain and the higher volume of patients have resulted in an overwhelming workload for the public healthcare sytem. At present, the public sector accounts for about 39,000, or 77%, of the total hospital beds in the country, while the private sector accounts for the remainder of about 12,000 beds.
But there are almost 9,000 doctors in the private sector, compared with about 13,500 doctors employed by the Government.
So, the ratio of doctors to hospital beds is still lower for the private sector, which has one doctor to attend to every 1.3 beds, versus the public sector’s one doctor for every three beds.
As a result, patients at government hospitals wait longer to get medical attention and they get less personalised attention from the doctors. Therefore, there tends to be a lack of communication between doctors and patients.
Equally competent
However, industry observers say this does not mean that doctors at public hospitals are any less competent than their counterparts in the private sector.
Frost & Sullivan’s Suwinski says the public healthcare sector, in fact, has more experienced specialists, who are also involved in the teaching process for the medical profession.
APHM’s Thomas concurs, saying that most doctors in the private sector are after all, products of the public sector. Hence, there is not much difference in the competency levels between doctors of both sectors.
He adds that the private healthcare sector has been “fortunate”, as it does not have a large volume of patients, and is therefore able to provide more personalised attention.
According to Suwinski, the perception that public healthcare services are inferior is mainly due to the longer waiting hours at government hospitals and their less attractive facades. “But these have no connection with the quality of care delivered,” he points out.
He thinks the public healthcare sector can overcome the poor perception by upgrading older facilities, acquiring new technologies and equipment, and improving its manpower.
Meanwhile, Thomas points out that the public-private partnership was recently established to help the Government cope with its growing list of patients.
The partnership involves the Government sending some of its patients to the private sector for certain consultation and treatment. The process will not burden the patients as the costs incurred are still borne by the Government.
“It is a win-win situation, whereby the private sector can help ease the load of public hospitals,” Thomas explains.
Beyond borders
A recent study by the National University of Singapore shows that the process of transforming Malaysian healthcare into a global commodity is well under way. This is underpinned by the Government’s effort in institutionalising various incentives such as tax support, accreditation, sales promotion and marketing activities to promote the country as a healthcare hub.
According to Thomas, the private healthcare sector has been tasked to be the driver of medical tourism in Malaysia.
Among the factors working to Malaysia’s advantage, Thomas says, are its cost-competitiveness compared to the regional and international markets, the good infrastructure, and the fact that English is widely spoken here.
In addition, the overall performance of Malaysia’s healthcare system is considered remarkably good by the standards of the World Health Organisation (WHO).
Indicators supporting this are the country’s health-adjusted life expectancy, which is around 63 years (comparable to that of industrialised countries), and the maternal mortality rates, which have fallen by more than ten-fold over the last four decades (from 320 deaths per 100,000 livebirths in 1957 to less than 30 deaths per 100,000 livebirths currently).
According to Suwinski, WHO considers the Malaysian healthcare system to be one of the best and a role model for developing nations.
Frost & Sullivan had earlier estimated that Malaysia’s healthcare industry would grow 8% this year, supported by a 2009 budget allocation of RM13.7bil. Last year, the Government spent about RM13bil on the healthcare industry.
Room for improvement
Malaysia devotes only a small portion of its gross domestic product (GDP) annually to healthcare. Over the years, the Government has consistently spent less than 3% of its GDP on the healthcare sector. The WHO-recommended level is 5%.
But it is almost in line with the trend of neighbouring countries Singapore and Thailand that have been dedicating around 4% of their GDP on health spending. On the other hand, the expenditures on health by the governments of rapidly developing China and India have both exceeded 5% of their GDP since 2002.
In general, developed countries allocate larger portions of their budgets to healthcare. The US, for example, dedicates around 15% of its GDP annually to health spending, while Japan dedicates around 8% and Britain, 7%.
According to an analyst, by consistently spending less than the WHO-recommended amount, a country could turn its healthcare system into a laggard.
Industry observers say the importance of healthcare cannot be underestimated. As Khalid puts it, healthcare goes beyond the individual recipients to the family and society, and investment in health is an indirect investment in the economy of the country.
Rising pressure of healthcare cost
By CECILIA KOK
Increases in medical bills are outpacing the general inflation rate each year. That raises the question whether healthcare is reserved only for those who can afford it
“I got the bill for my surgery. Now I know what those doctors were wearing masks for”
– American bureaucrat, James H. Boren (1925)
WHAT is the value of a human’s health? Sixteenth-century English scholar and vicar at Oxford University Robert Burton put it at such: “Restore a man to his health, and his purse lies open to thee.”
That denotes that health is priceless, and almost everyone would pay anything to get well. With the doctors’ power to demand, medical services do not come cheap.
And with the continuous rise of investments in research and development as well as the adoption of the latest technologies to deal with the rapid emergence of new and complicated illnesses (and the re-emergence of some deadly ones), healthcare costs are soaring by the day.
So, who can afford to fall sick these days?
Across the world, the increases in doctors’ bills are outpacing the general inflation rate each year. It is estimated that the global medical inflation averages about 10% each year.
In Malaysia, medical inflation is estimated to be around 15% each year. That is to say, a simple appendicitis surgery that cost RM1,800 three years ago will set you back by about RM3,000 today.
The next question then: Is healthcare reserved only for those who can afford it?
Far from it. As former Health Ministry director-general Tan Sri Dr Abdul Khalid Sahan puts it, healthcare has been universally accepted as a basic right of all citizens.
“Everyone has a right to receive it irrespective of his or her ability to pay,” Khalid explains, adding that the Government is accountable for ensuring that healthcare is made accessible to all citizens.
The existence of public healthcare services in Malaysia is in line with that notion. Although the system is not perfect, its services are provided almost free of charge because they are heavily subsidised by the Government.
And complementing the public healthcare system in Malaysia is the private sector, whose existence is supposed to help improve the delivery standards of the public healthcare sector – in that the “richer” patients would go to the private hospitals, and therefore, help lighten the workload of the public sector, so that the “poorer” patients can have better and faster services at government hospitals.
Private healthcare services are expensive (or as some would complain, ridiculously expensive) mainly because they are profit-driven centres.
Shocking bills
Over the years, there have been growing concerns that private hospitals tend to overcharge their patients. According to Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, there are built-in incentives for over-investigation, over-treatment and over-medication in a profit-driven, fee-for-service system.
Therefore, some patients have been slapped with exorbitant charges by private hospitals due to “unnecessary” treatment courses.
For example, there is the case of Madam LC, in her 60s, who had been diagnosed with breast cancer with metastasis to liver stage IV, and was admitted to a private hospital in Kuala Lumpur in January. Upon discharge the following day, she was slapped with a bill of more than RM7,000. Of this amount, nearly half was for a specific medication called Injection Aclasta, which, according to the patient, retailed at only RM1,400. In addition, LC was also billed for a bilateral mammogram, when she actually did a single one, as she had a left mastectomy more than 10 years ago.
Upon protest, LC was offered a 7% discount, which included a revision of the mammogram charges. She turned down the offer because she felt she was still being overcharged for the medication.
In the middle of last month, she received a telephone call and an SMS from the hospital’s public relations officer, offering a 20% refund. She requested the offer be made in writing but to this day, she has yet to hear from the hospital.
Unfortunately, LC’s experience is not an isolated case. As an industry analyst puts it, whenever the patient is unaware and “can afford it”, such practices tend to occur because private hospitals are driven by profits.
However, a private hospital doctor told StarBizWeek that most of them do not mean to over-diagnose or over-treat patients. He explains that doctors in the private hospitals tend to subject their patients to “better monitoring” as part of what they call defensive medicine, due to the rising risk of litigation.
He adds, “So, gone are the days when the doctor would send the patient home for self-monitoring before admitting him or her for further treatment.”
Nevertheless, thanks to the introduction of medical insurance, certain medical expenses incurred by policyholders can be taken care of. Hence, it is viewed as increasingly important for individuals to have such insurance policies, with sufficient coverage.
This is because we have often heard of how terminally ill patients had to endure the high costs of treatment. Some even had to borrow money. Some had exhausted their insurance coverage and some had given up hope for medication.
Then again, while medical insurance policies have helped to alleviate the financial burden of patients, they have also contributed to the rapid increase of medical costs at private hospitals. This is because insurance policies are another opportunity through which private hospitals can make quick bucks.
Affordability issue
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. Then again, this may not be a big concern in Malaysia as patients can always turn to the Government.
Over the years, the steep costs at private healthcare centres have caused some patients to go back to public healthcare. And with the global recession, even more are expected to seek public, rather than private, healthcare services.
Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, says this may be the trend, given the present economic condition, which has an impact on consumers’ incomes, making private healthcare services increasingly unaffordable to many.
Suwinski points out that people will obviously make their choices based on affordability. And between the options of a cheaper but more troublesome public healthcare and a more convenient but expensive private healthcare, patients are now more likely going to opt for the former.
Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas concedes that it is possible that patients will turn to the public healthcare system in these troubled times, but he argues that there is only so much that the public hospitals can cope with. As it stands now, these hospitals are already overloaded with patients.
The healthcare gap
Undeniably, there is a huge disparity between public and private healthcare services in Malaysia. First, the public healthcare sector continues to lose its trained medical professionals to the more lucrative and usually urban-based private sector.
Also, it has to cater to the growing number of patients as the bulk of the Malaysian population cannot afford private healthcare.
The massive brain drain and the higher volume of patients have resulted in an overwhelming workload for the public healthcare sytem. At present, the public sector accounts for about 39,000, or 77%, of the total hospital beds in the country, while the private sector accounts for the remainder of about 12,000 beds.
But there are almost 9,000 doctors in the private sector, compared with about 13,500 doctors employed by the Government.
So, the ratio of doctors to hospital beds is still lower for the private sector, which has one doctor to attend to every 1.3 beds, versus the public sector’s one doctor for every three beds.
As a result, patients at government hospitals wait longer to get medical attention and they get less personalised attention from the doctors. Therefore, there tends to be a lack of communication between doctors and patients.
Equally competent
However, industry observers say this does not mean that doctors at public hospitals are any less competent than their counterparts in the private sector.
Frost & Sullivan’s Suwinski says the public healthcare sector, in fact, has more experienced specialists, who are also involved in the teaching process for the medical profession.
APHM’s Thomas concurs, saying that most doctors in the private sector are after all, products of the public sector. Hence, there is not much difference in the competency levels between doctors of both sectors.
He adds that the private healthcare sector has been “fortunate”, as it does not have a large volume of patients, and is therefore able to provide more personalised attention.
According to Suwinski, the perception that public healthcare services are inferior is mainly due to the longer waiting hours at government hospitals and their less attractive facades. “But these have no connection with the quality of care delivered,” he points out.
He thinks the public healthcare sector can overcome the poor perception by upgrading older facilities, acquiring new technologies and equipment, and improving its manpower.
Meanwhile, Thomas points out that the public-private partnership was recently established to help the Government cope with its growing list of patients.
The partnership involves the Government sending some of its patients to the private sector for certain consultation and treatment. The process will not burden the patients as the costs incurred are still borne by the Government.
“It is a win-win situation, whereby the private sector can help ease the load of public hospitals,” Thomas explains.
Beyond borders
A recent study by the National University of Singapore shows that the process of transforming Malaysian healthcare into a global commodity is well under way. This is underpinned by the Government’s effort in institutionalising various incentives such as tax support, accreditation, sales promotion and marketing activities to promote the country as a healthcare hub.
According to Thomas, the private healthcare sector has been tasked to be the driver of medical tourism in Malaysia.
Among the factors working to Malaysia’s advantage, Thomas says, are its cost-competitiveness compared to the regional and international markets, the good infrastructure, and the fact that English is widely spoken here.
In addition, the overall performance of Malaysia’s healthcare system is considered remarkably good by the standards of the World Health Organisation (WHO).
Indicators supporting this are the country’s health-adjusted life expectancy, which is around 63 years (comparable to that of industrialised countries), and the maternal mortality rates, which have fallen by more than ten-fold over the last four decades (from 320 deaths per 100,000 livebirths in 1957 to less than 30 deaths per 100,000 livebirths currently).
According to Suwinski, WHO considers the Malaysian healthcare system to be one of the best and a role model for developing nations.
Frost & Sullivan had earlier estimated that Malaysia’s healthcare industry would grow 8% this year, supported by a 2009 budget allocation of RM13.7bil. Last year, the Government spent about RM13bil on the healthcare industry.
Room for improvement
Malaysia devotes only a small portion of its gross domestic product (GDP) annually to healthcare. Over the years, the Government has consistently spent less than 3% of its GDP on the healthcare sector. The WHO-recommended level is 5%.
But it is almost in line with the trend of neighbouring countries Singapore and Thailand that have been dedicating around 4% of their GDP on health spending. On the other hand, the expenditures on health by the governments of rapidly developing China and India have both exceeded 5% of their GDP since 2002.
In general, developed countries allocate larger portions of their budgets to healthcare. The US, for example, dedicates around 15% of its GDP annually to health spending, while Japan dedicates around 8% and Britain, 7%.
According to an analyst, by consistently spending less than the WHO-recommended amount, a country could turn its healthcare system into a laggard.
Industry observers say the importance of healthcare cannot be underestimated. As Khalid puts it, healthcare goes beyond the individual recipients to the family and society, and investment in health is an indirect investment in the economy of the country.
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Innovative Private Medical Coverage
GlobalHealth Asia plans provide comprehensive medical insurance coverage for you and your family wherever you live, work or play. You have the freedom to choose any physician, hospital or clinic in any country around the world. GlobalHealth Asia can also provide medical coverage to those with pre-existing medical conditions. In addition, we include worldwide International SOS emergency and evacuation assistance in the event of an immediate medical need. GlobalHealth Asia is your innovative personal medical insurer.
GlobalHealth Asia plans provide comprehensive medical insurance coverage for you and your family wherever you live, work or play. You have the freedom to choose any physician, hospital or clinic in any country around the world. GlobalHealth Asia can also provide medical coverage to those with pre-existing medical conditions. In addition, we include worldwide International SOS emergency and evacuation assistance in the event of an immediate medical need. GlobalHealth Asia is your innovative personal medical insurer.
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