PETALING JAYA: Malaysia's private healthcare players are expected to see a continuous uptrend in inpatient admissions, more complex cases and patients traveling from abroad to obtain medical treatment here.
Maybank Investment Bank (Maybank IBG) Research said while it is cautious on risks of unfavourable regulatory changes, it believes that market has priced in the negatives ahead of fundamentals as implementation of diagnosis-related group (DRG) can only roll out beyond 2025.
The DRG pricing system was recently mooted by the government to regulate private hospital bills. It places hospital services into categories according to a patient's condition, and charges according to a fixed rate.
"The healthcare sector remains defensive as private healthcare expenditure grows in tandem with nominal gross domestic product (GDP) of the population.
"We expect greater patient admissions and case-mix complexity especially related to cardiology and oncology, plus and non-communicable diseases, which should generate higher margins versus traditional surgeries or treatments.
"This is largely supported by Malaysia’s ageing population and increasing affluence, proxied by bed expansions and rising bed occupancy rate in the private hospitals."
On the prospects of medical tourism, it noted that Indonesia’s growing demand for complex healthcare has led to an influx of medical patients into Malaysia, especially Penang, Kuala Lumpur and Johor.
This is positive for the sector as foreign patients typically register about 20% higher revenue intensity due to greater concentration in complex cases such as cancer and utilisation of additional services.
According to the research firm, IHH Healthcare Bhd
stands to be the biggest beneficiary of medical tourism into Penang.
This is likewise for KPJ Healthcare Bhd in Johor with the Johor-Singapore Special Economic Zone launch.
"Earnings should remain intact in the near-term as DRG implementation will likely be beyond 2025, in our view. In the mid-to-longer term, eventual roll-out will be phased out over several years which should allow hospitals to adjust, keeping impact on margins minimal."
