DRG model a positive for hospital operators

Kenanga Research said there could be some near-term impact on the margins of private hospitals as the initial adoption may target lower-value or minor illnesses.

PETALING JAYA: The government’s commitment to healthcare reform and the requirement for the implementation of the diagnosis related group (DRG) payment model is a positive, despite the possible near-term impact on the margins of private hospitals, analysts say.

Kenanga Research, which has an “overweight” call on healthcare stocks, said recent news reports, including about the establishment of a joint ministerial committee to set the timeline for the implementation of the DRG payment model for private-healthcare providers, “is a step in the right direction”.