Worrying trend: Zyafzan Mohd Zin, 45, looking at costly medical bills at her house in Petaling Jaya. With medical inflation on the rise, individuals and families are increasingly at risk of significant financial burden. — AZLINA ABDULLAH/The Star
Malaysia’s medical inflation more than twice the global average
PETALING JAYA: After weeks of suffering from bad headaches, Ain Mat Saad was relieved to know that the cause – a tumour on her pituitary gland – was benign.
But then came the thunderbolt news from the doctor: the surgery to remove the tumour could hit RM80,000.
“I was so, so shocked,” she said.
The accounts assistant executive, who was warded at a private hospital in Selangor, eventually settled the bill through her company’s health insurance and her personal medical policy.
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But she was also rather displeased that the bill included items that she had not asked for, such as wet wipes, a “Fall Risk” wrist band and a warm bag.
Her experience got her thinking about those in the B40 income group or without medical insurance, who would not be able to afford the convenience and services provided by private healthcare.
“Anyone can get sick anytime, whether you are young or old. At least, with insurance, it can ease the financial burden,” said the 35-year-old.
Yet, medical inflation is on the rise, putting a significant financial burden on individuals and families.
Bank Negara said Malaysia recorded a medical cost inflation rate of 12.6% last year.
This is much higher than the global average of 5.6%.
“Medical inflation is a global occurrence and is unavoidable,” Association of Private Hospitals of Malaysia president Datuk Dr Kuljit Singh said in an interview.
Medical inflation is evaluated by tracking the expenses associated with healthcare services, such as hospital services, outpatient treatment, drugs and indemnity insurance, he said.
Private hospitals in Malaysia have long maintained low costs to ensure their services were affordable and comparable with private healthcare in other Asean countries, he added.
“Nevertheless, maintaining this model gets progressively intricate as a result of escalating expenses for pharmaceuticals, medical devices, liability insurance and nursing wages, which are further compounded by the unfavourable foreign exchange rates as the majority of medical equipment is imported,” he said, adding however that doctors’ fees had remained unchanged for years.
Dr Kuljit said the intricacies involved in sustaining a functional private healthcare system were often underestimated by patients, insurance companies and government stakeholders due to comparisons made with government healthcare services, which were almost cost-free for the public.
Furthermore, the healthcare sector, he said, required ongoing modifications and upgrades to its equipment and services with the rapid growth of technology.
He added that profits were also often reinvested to expand bed capacity in new hospital wings.
Dr Kuljit said private healthcare organisations must generate substantial returns on investment for their stakeholders or they would not be able to deliver better patient outcomes through sophisticated medical treatment.
“The majority of patients in private hospitals often have the financial means and are aware of the expenses involved.
“Although the government is obligated to provide healthcare to all Malaysians, there are those who choose private medical services,” he added.
Dr Kuljit suggested a study be carried out to determine why certain patients, who lack the financial means for private healthcare, were refraining from going to public hospitals.
“The government should prioritise resolving this matter instead of focusing on cost management inside a private setting,” he said.
Federation of Private Medical Practitioners’ Associations Malaysia president Dr Shanmuganathan Ganeson said medical inflation has been steadily rising here due to advancements in medical technology as well as an increased demand for healthcare services with a rise in out-of-pocket cases due to overcrowding at public healthcare facilities.
The ageing population and the rising costs of pharmaceuticals and medical devices were also to be blamed, he added.
“Often, another forgotten factor is the cost of compliance to a myriad of regulations.
“New clinics have to wait for months before approval,” he said, claiming that various agencies such as local councils were endlessly looking at private health facilities as revenue streams in licensing and other fees.
He cited the 2022 Global Medical Trend Rates Report by global professional services firm Aon, which estimated Malaysia’s medical inflation rate at 12%, and increasing by an average of between 10% and 15% annually.
“This rise in costs can lead to a higher financial burden on families, especially those with chronic non-communicable conditions or that which require regular medical attention.
“For those with private insurance, rising premiums may further strain household budgets,” he added.
Dr Shanmuganathan said with the increase in personal expenditure, more patients may end up relying on public healthcare facilities, leading to overcrowding and longer waiting times.
He said the fees of specialist doctors, which are capped by law and currently contribute to between 15% and 20% of a private hospital bill, was not a factor in the rising cost of healthcare.
Besides an absence of control on drug prices, the mark-up of medicines in hospitals was high due to various factors and costs involved in having them readily available, he said.
“Hospitals also face high operational costs, including staff salaries and utility expenses. To manage these rising costs, some hospitals regularly reevaluate their pricing structures, which always trend upward,” he added.
Medical inflation directly influences premiums as insurers need to cover the increased costs of healthcare services, said Dr Shanmuganathan.
“As the cost of treatments and hospital stays rise, insurance companies adjust their premiums to ensure that they can meet the claims made by policyholders.
“This means that Malaysians will likely face higher premiums for their health insurance policies.
“Now we see Bank Negara intervening to introduce co-payments, so policyholders with comprehensive coverage have to face an extra burden. Co-payments are a penalty on the sick but may be a necessary evil to contain spiralling costs,” he said.
On what Malaysians can do to prepare themselves for higher medical costs, Dr Shamuganathan said they should consider reviewing their insurance coverage periodically.
Other measures are taking preventive steps to stay healthy by avoiding tobacco use, managing body weight, undergoing periodic medical check-ups, and first seeking affordable medical treatment with a family doctor for outpatient ailments, he said.
They should also set aside savings specifically for emergency healthcare and co-payments, he added.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said medical inflation would have an impact on purchasing power, especially for those whose employers do not offer medical benefits.
He said consumers were further affected when profit-driven private hospitals opt to pass the rising costs to their patients.
“Naturally, the alternative is to seek treatment from public hospitals where charges are mostly affordable,” said Mohd Afzanizam.
“However, due to higher utilisation among Malaysians, one would need to endure long waiting periods.”
“In the end, prevention is better than cure.”
