Banning hospital IPOs won’t curb rising costs

MALAYSIA’S medical cost inflation of 12.6% in 2023, significantly higher than the global average of 5.6%, is indeed alarming.

However, banning private hospitals from going public may not be the solution to rising medical costs.

This idea was mooted by Bayan Baru Member of Parliament Sim Tze Tzin, who urged the government to prevent private hospitals from going public to curb profit-driven healthcare.

He also suggested that Khazanah Nasional Bhd and the Employees Provident Fund consider delisting the private hospitals that they have stakes in, making them fully government-owned.

Sim cited South Korea’s ban on hospital operators from undertaking initial public offerings (IPOs) as an example, stating that hospitals should prioritise saving lives rather than pursuing higher profits.

Granted that South Korea’s ban on hospital operators going public has allowed its citizens access to high-quality healthcare services and low insurance premiums. But the country has its own set of problems too, primarily low reimbursements that make many hospitals financially inoperable.

In Malaysia, many Bursa Malaysia-listed healthcare providers are raking in record profits, leading to increased scrutiny over rising medical costs.

For instance, shares of KPJ Healthcare Bhd recently hit an all-time high after posting record profits in financial year 2024 and rewarding shareholders with a special dividend.

In contrast, IHH Healthcare Bhd saw a decline in its full-year results, dragged by foreign-exchange losses, higher staff costs and increased depreciation charges.

Regardless of their financial conditions, it may not be wise to penalise hospitals for doing well.

No hospital, whether public-listed or privately held, would provide healthcare services without profitability driving it.

Only government hospitals can do so, but they are bursting at the seams already.

Doctors and nurses at public hospitals are reportedly overworked and underpaid, often turning to private hospitals for better pay.

The government should consider building more hospitals and raising the wages of medical practitioners.

But where will the money come from, as this can further strain the country’s finances?

Perhaps, more effort should go into curbing corruption and leakages.

Emir Research points out that Malaysia incurred an estimated RM4.5 trillion monetary loss over 26 years due to corruption and leakages.

Imagine what that money could do to improve public healthcare accessibility.

Publicly traded hospitals can raise significant capital for expansion, facility upgrades, new technologies and better patient care.

Not forgetting that public companies must adhere to strict regulatory requirements and transparency standards, which can improve operational efficiency and accountability to both shareholders and the public.

Allowing hospitals to operate for profit can introduce competition, leading to better services and innovation in healthcare.

Like education, medical care is a basic necessity provided by the government.

Should the country also ban education providers from listing as their fees are also exorbitantly high?

Probably not a good idea either.