PETALING JAYA: Private healthcare affordability in Malaysia remains constrained by the country’s relatively high reliance on private healthcare funding and comparatively limited social insurance penetration, says CIMB Research.
The research house, which has maintained an “overweight” call on domestic private healthcare stocks, said despite the funding obstacle and comparatively limited social insurance penetration, the country’s private healthcare remains affordable due to relatively moderate procedure pricing.
This pricing has been bolstered by the government’s Hospital Services Outsourcing Programme (HSOP), an initiative by the Health Ministry aiming to alleviate congestion in public hospitals by outsourcing selected patients and procedures to private healthcare facilities.
It has maintained an “overweight” call on healthcare stocks, with top picks being IHH Healthcare Bhd
and KPJ Healthcare Bhd, both with “buy” calls and a “hold” on Sunway Healthcare Holdings Bhd.
“Private healthcare patients often rely on direct out of pocket (OOP) payments or employer sponsored and private insurance plans.
“Although consultation fees are regulated under the 13th Schedule of the Private Healthcare Facilities and Services Act, overall treatment affordability remains a concern owing to medical inflation and limited reimbursement coverage,” it said.
“As a result, Malaysia continues to record relatively high OOP expenditure compared with countries that operate more comprehensive social health insurance systems.
“This is in comparison with private hospital procedure fees across Malaysia, Singapore, Thailand and Indonesia that benchmarked against each country’s median monthly wages assessing income levels and purchasing power against the cost of medical treatment.”
This showed that Malaysian private healthcare providers have relatively affordable procedure fees, as do their counterparts in Singapore, with Indonesia the least affordable across select countries in South-East Asia.
It said in Singapore, which has a broadly similar funding structure for its private healthcare, public hospital bills “are partially subsidised by the government, with subsidies of up to 80% for Singaporean citizens and up to 50% for permanent residents”.
“We view KPJ as the clear leader in championing healthcare affordability and accessibility. As Malaysia’s largest private hospital operator by bed capacity, KPJ has established a strong presence across both urban and rural regions, enabling broader access to private healthcare services.”
“Through its extensive network and active involvement in HSOP, KPJ plays a significant role in expanding access to affordable and timely healthcare services,” it said.
CIMB Research has kept a target price (TP) of RM4.09 for KPJ. It has also maintained a TP of RM10.30 on IHH, which has a presence in Malaysia, Singapore, India, Turkiye, Europe and Greater China, and a TP of RM1.88 on Sunway Healthcare, which operates five hospitals in Malaysia primarily in the domestic market.
