Seeking a remedy for healthcare financing

It is said that UMMC’s government annual allocation is much smaller than what hospitals under the Health Ministry receive. Yet it does seem that UMMC is able to run a better show. — LOW BOON TAT/The Star

FIGURING out the right healthcare financing structures is a global challenge. Most governments today still struggle to provide sufficient healthcare for their populace, and some do it better than others.

Malaysia today has a hybrid healthcare system — public and private healthcare, which operate largely separately and with different standards of care.

Challenges abound in both systems.

Our public healthcare system is known for long waiting times and being overcrowded. Staff are underpaid and overworked with fewer and fewer joining the sector.

Our private healthcare system is getting more expensive, with healthcare insurance premiums rising too fast. Solving this problem is not going to be easy.

Health Minister Datuk Seri Dr Dzulkefly Ahmad is well aware of the situation and is doing his best to fix things.

His ministry will soon announce a healthcare financing reform plan which will focus on innovative and creative ways to spend its yearly budget.

He recently said this: “... allow me to be resourceful and I will come up with all the innovative ideas to ensure that we can spend and drive our expenditure in a creative way”.

One solution is having more public-private partnerships.

PwC, in a recent publication, notes how Malaysia’s healthcare system could be transformed by more such partnerships.

The report cites the example of Singapore, which launched the Private Care Network (PCN) in 2018. It entails making private GP clinics part of the public healthcare system, with the government subsidising treatment.

One model in Spain involves the government appointing a consortium to design, finance, build and operate a hospital. The government pays for the hospital’s services to the public, according to the PwC report.

In both these cases, the advantage is that the government does not have to deal with all the hoopla surrounding the building, designing and running of hospitals. Leaving such jobs to civil servants is not the best idea as they are not entrepreneurs. And as we know, the world over, when procurement is involved, abuse is likely.

Accordingly, in these new models, every sen spent by the government is directed directly towards medical care for the rakyat. It is important to ensure that these private clinics and hospitals that the government deals with are not overcharging and are providing the right level of care.

The Spanish model, as explained in the PwC report, has figured out some novel approaches to achieve this, such as using the concept of “per-capita payment” systems and implementing the principle of the “money follows the patient”.

In this public-private partnership concept, another model exists — there are hospitals which have both a public and private wing.

In Malaysia, this model has worked best at University Hospital in Petaling Jaya, which is the country’s oldest medical teaching hospital dating back to the early 1960s.

The hospital was renamed University Malaya Medical Centre (UMMC) in the 1990s. It later opened its private wing called UM Specialist Centre (UMSC). Both segments are said to be profitable and share facilities and doctors.

UMMC gets an allocation from the government but since it is a teaching hospital, it comes under the Education Ministry and not the Health Ministry.

It is said also that UMMC’s government annual allocation is much smaller than what hospitals under the Health Ministry receive. Yet it does seem that UMMC is able to run a better show.

UMMC, the public wing, is the mainstay of the hospital, with over 1,600 beds compared to its 100-odd beds in the private wing.

UMMC does charge for its services, although it is still cheaper than most private healthcare providers.

Based on the quality of services, it is one of the most sought-after by people in the Klang Valley. It is reported that UMMC currently caters to close to a million patients annually, although it was designed for a maximum of 600,000.

The UMMC model is not impossible to replicate, notes a hospital consultant who has spent many years in the industry in Malaysia, both as a government servant and private medical practitioner.

The consultant points out that while private hospitals say they spend around RM1.3mil per bed in capital expenditure to build a hospital, it can be done at half that cost.

In his opinion, a 200-bed hospital can be built at RM600,000 per bed by using cheaper equipment and not fitting out the entire complex at once, focusing on say 100 beds initially.

The multidisciplinary hospital will have general and private wards and will be professionally and efficiently run, to ensure that healthcare costs are kept to a minimum, similar to how it is done in private healthcare in India.

His idea is for the general wards to charge a fee similar to what private hospitals in India charge, which is much less than our current private healthcare.

He also notes that under his model, the capital expenditure can be lowered a bit by monetising some of the retail space and selling clinics to specialists, among others.

Another idea he has is for a medical card to be sold to the residents of that community, specifically for use at this specific hospital. This way, the premiums will be kept low and the entire community will have another option for their healthcare, other than relying on the overcrowded public hospitals or the increasingly expensive private ones.

This article first appeared in Star Biz7 weekly edition.

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