Healthy profits, costly care

AMID escalating healthcare costs, with Malaysia’s medical inflation estimated to surge 16% this year, according to a BIMB Securities Research report, recent developments involving private hospital investments warrant closer scrutiny.

The main concern is how much healthcare costs could rise following these transactions, as investors will naturally seek returns on their investments.

One way to achieve this would be to raise prices, pushing up costs for patients.

This raises questions about how much medical and health insurance/takaful (MHIT) premiums will eventually rise in response, and whether the government’s MediAsas plan can offer more affordable solutions.

Those with healthcare insurance/takaful coverage should be concerned, as Bank Negara Malaysia’s interim measures capping annual MHIT premium hikes to less than 10% is coming to an end after running from 2024 to 2026.

To mitigate rising premiums, the government is rolling out the MediAsas plan for insurance and takaful policies next January.

This is the government’s basic MHIT initiative, announced at the beginning of the year to help manage medical inflation.

Having a few large hospital operators dominate the market will make the task of managing healthcare costs even more challenging.

Only time will tell whether MediAsas’ annual coverage limits of RM100,000 to RM300,000 are sufficient, or whether greater emphasis should be placed on expanding public healthcare.

To recap, in mid-October, Bloomberg reported that IHH Healthcare Bhd was considering a bid for TPG Inc’s Asia OneHealthcare Sdn Bhd (A1Health), in which the private equity firm, together with Hong Leong Group, owns approximately 74%.

A1Health is enroute to a listing on Bursa Malaysia early next year, which could value the hospital operator at as much

as RM30bil.

In September, KKR & Co Inc acquired a 20% to 25% stake in Avisena Healthcare Sdn Bhd for an estimated RM300mil to RM400mil.

The allure of medical tourism has also attracted significant investments, especially in Penang, where a report noted that private hospitals now have more beds than public hospitals.

The healthcare business is lucrative in Malaysia.

Otherwise, we won’t be seeing initial public offerings (IPO) of the likes of Sunway Healthcare Bhd in March or the planned listing of A1Health next year.

Another healthcare-related IPO is that of Big Caring Group Bhd, the largest pharmacy operator in the country, which is slated to list on Bursa Malaysia’s Main Market on Nov 19.

When A1Health lists next year, Malaysia will have four large listed hospital operators– not bad for a country with a population of around 35 million.

Notably, IHH has successfully used Malaysia as a launchpad to become the world’s second-largest hospital operator, with hospitals across Asia and Europe.

Its move to acquire TPG’s stake in A1Health should be scrutinised, and also that of other healthcare-related mergers and acquisitions, given the ballooning costs.

While IHH is only considering a bid, its interest in A1Health raises questions about the extent of market concentration among the country’s largest hospital operators, particularly as IHH, KPJ Healthcare Bhd and Sunway Healthcare Bhd continue to expand.

Together, these three hospital operators had approximately 9,500 licensed beds as of mid-2026.

A1Health has 2,632 licensed beds in Malaysia, according to its prospectus.

A recent CIMB Research report noted that private hospitals had 18,779 beds as of 2023, while the Health Ministry’s 2025 annual report cited 47,789 beds under its management across 140 hospitals and 11 special medical institutions.

Even with intense competition for patients in the domestic market, the industry has oligopolistic characteristics, Malaysia Competition Commission chief executive officer Datuk Iskandar Ismail says.

Besides the four large hospital operators, there are a number of smaller players, most of which are privately owned, with one or two exceptions.

However, he cautions that even if IHH succeeds in its bid for a stake in A1Health, the plausible conclusion would be a dominant position rather than a monopoly in the domestic market.

This would also depend on factors such as bed count, the number of hospitals, and the types of tertiary and secondary care provided.

“Being dominant or having a monopoly is not an infringement (of Sections 4 and 10 of the Competition Act 2010),” Iskandar says.

Malaysia has a thriving healthcare industry, supported by an ageing and increasingly affluent population.

The IPOs and growing business activity in the sector are evidence of healthy demand and competition.

However, there is also the question of the commodification of healthcare, where the ability to pay takes precedence over access to decent services.

This raises broader concerns about the social safety net, which, like access to quality education, faces challenges as the government struggles to find sufficient funds to support it.

In the meantime, MediAsas will hopefully provide an affordable coverage option for those who need it, as the alternative for many is the public healthcare system, which faces persistent funding and capacity constraints.