Checks on private healthcare

  • Health
  • Thursday, 20 Feb 2003

In the concluding part of the report on Building an Innovative Healthcare System: Options for Malaysia by LOH FOON FONG, who received the World Health Organisation Journalism Fellowship recently and was sent on exposure trips to Switzerland and Sweden, she writes on private healthcare.

A MAJOR area of concern in the Malaysian healthcare system that needs to be addressed is privatisation. For more than a decade the private healthcare sector burgeoned with little government control. 

The government was also determined to corporatise public hospitals in the 1990s and this effort was met with strong objections from the public. In the last few years, the government set up private wings in public hospitals.  

For more than a decade the private healthcare sector burgeoned with little government control.

On that note, Dr Guy Carrin, senior health economist at the Department of Health Financing and Stewardship, World Health Organisation (WHO), says governments should develop the private sector according to political objective that supports universal coverage and equal access for all, and not let the market run wild. 

Many healthcare experts recommend that fees should be regulated in order to contain healthcare cost. However, Andrew Creese, health economist for Policy, Access and Rational Use, Essential Drugs and Medicines Policy at WHO, recommends a competitive public sector “so that the private sector will have to look for niche opportunities.”  

The Swedish model experimented with creating competition among public providers and on a limited capacity with private providers. The public providers compete for contracts from county councils (which pays for healthcare) based on quality and access. 

Hospitals and other institutions are reimbursed through contracts or agreements with purchasing units. This process can be described as competitive tendering, with mainly public providers competing among themselves (The Swedish Experience with Internal Markets by Clas Rehnberg in Health Care Reform Through Internal Markets: Experience and Proposals, IRPP and Brookings Institution, 1995). 

The Swedish model is commendable in that the growth of the private sector is controlled and the objective for having them is purely to create just enough competition to stir efficiency and lower cost, without letting it rule the market. The Sophia Hemmet Hospital, a private hospital in Stockholm, for instance, managed to get a contract from the Stockholm County Council to provide a certain amount of services to the population because they specialise in carrying out certain procedures/treatment and as a result, they could deliver the services at a lower cost.  

“Our competition is mainly a competition against the standard. It is based on accessibility and quality,” says Dr Kjell Thor, the CEO of the Sophia Hemmet Hospital. 

“There is demand for medical services and the private hospitals supports that demand,” he says. 

This form of non-price competition has created the incentive for providers to become more sensitive to customer satisfaction, says Rehnberg. 

Although the Swedish private healthcare sector is extremely small compared with Malaysia’s private sector, the principle that the Swedish government holds with regards to the role of the private sector should be emulated. 

Due to the big private healthcare sector in Malaysia, consolidating the public and private sectors would pose a major challenge for an integrated National Health Insurance (NHI) set up. In view of strong lobbying by private healthcare providers for their business interests, the Government must continue to bear in mind that the new healthcare structure must provide for universal coverage and equitable access for all Malaysians. As such, private healthcare providers should start thinking about assimilating into the new healthcare system along those lines. They should aim for niche markets. While all citizens will have the necessary basics, the private sector can provide for the extras such as nicer rooms and food and other non-medical facilities.  

Recently, the government aggressively pushed for health tourism and locals fear that this will deprive them of certain healthcare expertise and services and escalate costs. Perhaps the surplus of private healthcare can be allowed to cater to foreigners. However, this market should be strictly limited and in no way should locals be made to compete with foreigners for limited resources. Where certain expertise is lacking, such as in cardiology, neurosurgery, oncology, podiatry and others, these fields should not be open to foreign clients. The private wing of public hospitals too should not be open to foreigners. 

Technology assessment 

One of the things that industrialised countries started to do in the 1990s in containing healthcare cost was to set up technology assessment centres to ensure that only effective treatments are reimbursed to patients. This is something that Malaysia should set up in tandem with Social Health Insurance (SHI).  

The Swedish Council of Technological Assessment in Health Care (SBU), with the assistance of medical experts, for instance, evaluates new as well as established methods from medical, social and ethical perspectives. Findings are then disseminated to central and local government officials and medical staff to assist them in deciding which technology should be subsidised by the Swedish government or the NHI and which should not be subsidised. 

Recently, information on various findings too were simplified and provided for the public to enable them to make better choices, says Dr Ragnar Levi, the scientific communications director of SBU. 

The basis of using certain technologies over others used to be based on doctors’ observation, and the problem is doctors have different opinions. As such, evidence based on research is important in pointing out the actual effective treatments, says Dr Levi. 

SBU also taps into resources at the Cochrane Collaboration, a United Kingdom-based international organisation that collects randomised trials. 

Other measures 

Dr Per Carlsson, health economics professor at Linkopings University, Sweden, noted that Sweden started to reduce healthcare spending in the early 1990s following a downturn in the country’s economy. When drug costs escalated from 8% to 17% of total healthcare spending, senior doctors in Sweden chose other forms of treatment (such as surgery and physiotherapy) and reduced drug usage. The in-patient treatment too shifted to daily ambulatory care, thus saving on hospitalisation. If there were several drugs giving the same effect, the cheaper drug was prescribed. As a result, drug companies began to reduce their drug prices, says Dr Carlsson. 

Dr Miriam Hirschfeld, director of the Long Term Care, Non-communicable Diseases and Mental Health, WHO, says long-term care should be included in the healthcare financing system from the beginning. The industrialised countries did not factor that earlier into the healthcare system and are now having problems getting enough funds, especially when the population of aged people has grown substantially. 

Long-term care include services for those who are suffering from physical and mental illness that cannot be cured and permanent injuries as the result of the illness or accidents. 

“It is important that people start paying when they are young and that you make sure little problems are taken care of before they become big,” she says. 

She says most insurance schemes cover the catastrophic impact of health but not the preventive or long-term care. As such, these factors must be included in a financing system. 

In Norway, all doctors are trained on psychiatry. In more severe cases, patients are referred to specialists. The treatment of mental illness is deinstitutionalised and most patients receive outpatient treatment. This is one neglected area that the Malaysian healthcare system needs to enhance. 

Anticipating the impact of SHI 

In the event that the Malaysian Government decides to go ahead with the SHI, there are several things to consider. In his paper, Social health insurance in developing countries: A continuing challenge, Dr Carrin pointed out four implementation difficulties in developing countries: 

·The population may have difficulty accepting the basic rule of SHI that guarantees similar healthcare for everyone regardless of the level of contributions made. This may pose a major problem if there is significant inequality in incomes and assets. 

·SHI schemes need to assure their members that they will deliver the promised health insurance benefits, otherwise the population will lose trust in the system and refuse to pay the scheduled health insurance contributions. 

·Governments may not yet have the necessary managerial or administrative capacity to design a health insurance scheme and implement it.  

·The lack of political debate in countries with low degree of political freedom may delay the development of social health insurance. 

However, Dr Carrin says steady political action that is rooted in society’s feelings of solidarity and responsive to population demands for better protection may help people accept the new system even if income levels are modest. Similarly, solidarity and voice may be a support to decision-makers in overcoming administrative obstacles to initiate an SHI. 

The Malaysian public has been rather anxious about healthcare restructuring because there is too little information released by the Government. As such, a forum for discussion between the Government and the people will aid in a smooth transition when the new healthcare structure is set up.  

For a long time, various parties were sceptical about the Government’s motive and direction on the development of healthcare in the country due to their battling with the Government’s determination to corporatise hospitals in the past. Coupled with the setting up of private wings in public hospitals and the promotion of health tourism, the fear that the Government might head towards business/profit-oriented healthcare system is constantly in the minds of Malaysians, unless the Government reassures the people, makes policies and takes actions that protect the interests of the population. 

The Government must be genuinely interested in restructuring the healthcare system for the good of the people and not for the good of private interests. If the Government decides on the latter, the SHI will not get the support of the people. 

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