PETALING JAYA: Malaysia’s private healthcare sector could be facing the end of a golden era of uncapped earnings growth from medical insurance claims, following tighter regulatory scrutiny on escalating healthcare costs and excessively high insurance coverage limits.
Still, RHB Research maintained its “overweight” call on the healthcare sector, arguing that the regulatory reset could ultimately favour efficient and established operators.
The research house said recent findings from the World Bank and new directives from Bank Negara Malaysia (BNM) pointed to a more transparent and sustainable operating environment for the industry.
“While the World Bank’s findings on provider-induced demand and the central bank’s cap order may imply the end of uncapped revenue per patient growth, these also signal a shift towards a more transparent and sustainable operating environment,” RHB Research said.
According to the World Bank’s study on Malaysia’s Centralised Claims Database, around 67% of medical cost inflation is driven by higher utilisation rates rather than pricing increases, which accounted for just 26% of cost growth.
The research house also flagged structural inefficiencies within private healthcare, including a high incidence of avoidable inpatient admissions and the dominance of Hospital Supplies and Services (HSS) billings, which make up roughly 70% of inpatient bills.
RHB Research further noted that HSS charges are largely unregulated and susceptible to over-servicing and provider- induced demand aimed at maximising revenue.
Separately, media reports indicated that effective May 1, insurers and takaful operators are no longer allowed to offer medical and health insurance/takaful products with excessively high annual claim limits, in line with BNM’s directive under the broader RESET strategy.
While the central bank’s data suggests that an annual coverage of RM150,000 is sufficient to cover 99% of claims, RHB Research said that it believes the remaining 1% of high-value cases contribute disproportionately to healthcare providers’ earnings.
“Hence, the introduction of a claims ceiling is likely to cap revenue per patient growth, forcing providers to pivot towards cost discipline,” the research house said.
Among healthcare players, RHB Research continues to favour KPJ Healthcare Bhd
, citing its defensive domestic-focused business model and comparatively lower reliance on medical tourism, which contributes only around 6% of revenue versus 14% to 15% for peers.
