The relationship between doctors and private hospitals

Some hospitals charge rent for clinic space, while some allow doctors to buy the space. — AMITA SEVELLARAJA

Since the 1990s, private hospitals have mushroomed in Malaysia.

In 2018, the ratio of private hospitals to government hospitals was 5:3, with the biggest hospital groups being KPJ, Pantai/Gleneagles and Columbia Asia.

In 1994, I joined a brand new private hospital in Melaka.

It was developed based on the Taiwanese concept, where everything is owned by the hospital.

The doctors just walk in and work for a percentage of the procedure fees.

This was a new concept in Malaysia, as all other private hospitals had a system where the doctor’s fee is separate from the hospital charges.

In this Taiwanese-based system, the doctor gets one-third of all procedure fees charged to the patient.

Therefore, for a certain operation, if the procedure fee is RM3,000, then the doctor gets RM1,000.

The hospital will charge extra for any disposables used during the surgery, but there is no separate operation theatre or instrument usage charge for all reusable items utilised during the operation.

This system was very attractive to young doctors like me.

As our fee was directly attached to the hospital fee, the latter could not be increased unilaterally without also increasing the former.

As young doctors, we were keen to do more cases, even though we might have earned less per procedure.

I was just starting to perform laparoscopic surgeries, which took a longer time.

The hospital charges were the same, whether I took one hour or three to perform the surgery.

The only difference was the cost of the extra drugs used during anaesthesia.

The anaesthetic fees were also 30% of the surgeon’s fees, so all the charges were tied together.

We were able to control the patient’s bill and keep it to a minimum, thus attracting more patients to this new hospital.

As for outpatient services, we were given codes for consultation fees.

The fee was RM30 for a first visit and RM20 for a follow-up visit.

We got 30% of the total ultrasound charges as the machine belonged to the hospital. (As an obstetrician and gynaecologist, ultrasound is our most used imaging equipment.)

As young specialists, we were very happy with this arrangement as we did not have to come out with any capital when we started working at this hospital.

The hospital took 8% of our income for administrative fees.

Changing systems

During the economic crisis of 1998, the original owner of the hospital decided to sell it as it was not doing well.

The new Singaporean owners thought that the system was only benefiting the doctors and not the hospital, so they decided to change it to one similar to what Mount Elizabeth Hospital in Singapore used, whereby suites were created to sell or rent to the doctors.

In this way, they could raise cash for the running of the hospital.

They created suites ranging from 400 sq feet to 1,000 sq feet on the first and second floors of the building.

The doctors were unhappy about this development and opposed it.

As a result, 10 doctors decided to move to another private hospital in Melaka.

I, however, decided to remain where I was and ended up renting a 920 sq foot suite, which I bought for a premium after one year.

My contract with the hospital allows me to dispense drugs and do procedures in the clinic.

I am also allowed to collect cash from my clinic patients.

This was a complete change from the way we worked before.

At first, we were very unhappy with this arrangement.

However, over time, we learnt to recognise that this was a very good system.

The hospital’s fee structure has remained the same since then, with the doctors getting one-third of all surgical fees.

However, patients are now also being charged for the usage of special equipment during surgeries.

Equipment like ultrasound machines are usually purchased by private hospitals for the use of the doctors. — AFPEquipment like ultrasound machines are usually purchased by private hospitals for the use of the doctors. — AFP

Clinic systems

There are basically two types of clinic systems in private hospitals in Malaysia.

The first one is where the hospital owns everything, and the specialist gets their income from consultation fees and doctor’s fees for procedures done in the hospital.

Some hospitals charge their doctors rental for the use of their clinic.

In some hospitals, doctors may even have to pay the nurses’ salaries.

Most private hospitals use this system.

In the second system, the specialist owns their clinic in the hospital and uses the hospital for their inpatient facilities.

Only four hospitals I know of have this system, although two of them no longer extend this privilege to new doctors joining them.

Owning your clinic

The advantage of owning your clinic in the hospital means that you can run the clinic the way you want to.

You can buy your own equipment, as well as sell medications (and earn from them).

You can collect fees directly from your patients.

You can also employ your own nurses, and may be able to take on assistant doctors.

Your clinic value may appreciate over time, increasing your assets.

And you will have your own space for your personal items.

However, the disadvantages include having to pay rent or a premium to buy the space.

You will also be responsible for maintenance fees, your nurses’ salaries and the leasing fees for all your equipment.

The hospital may refuse to give the practising right for an assistant doctor to work in your clinic, should you wish to bring one in.

You may also not be allowed to sell the clinic to anyone other than the hospital.

Alternately, the hospital can exercise the de facto right to approve of the person you plan to sell your clinic to, as they can refuse to give them practising rights in the hospital.

Not owning your clinic

Not owning your clinic in the hospital means that you don’t have to worry about:

  • Paying rental and nurses’ salaries
  • Keeping enough stock of drugs, medical supplies, etc
  • Managing the clinic and the staff
  • Collecting money and any pilfering of drugs or money by your staff.

But it does mean that you may be moved out of your clinic space at any time by the hospital.

Your nurses may be changed by the hospital as they wish.

You also have to work with whatever equipment that has been provided by the hospital.

You will not be able to try out new treatment strategies without the approval of the hospital.

And you will not be able to differentiate yourself from your competitors in terms of providing superior service or competitive pricing.

A new system?

I don’t see a future where private hospitals allow doctors to own their clinics.

Private hospitals have learnt that total control of the hospital is to their advantage – they can dictate to the doctors what they want to do.

As a young specialist, this system is good for you as it will allow you to establish yourself and build your patient load and volume at a low initial cost.

However, as you grow older and have more patients, you might prefer to have your own space/clinic so that you have better control over what you can do.

Unfortunately, this is unlikely to happen in any Malaysian private hospital in the future.

As more and more specialists come out to private practice, I predict that a new system will emerge.

In the future, private hospitals might just employ doctors directly, so that they will have total control of them.

Dr S. Selva is an obstetrician and gynaecologist, and fertility specialist, in private practice in Melaka. This is the fourth article in a weekly series about surviving private practice in Malaysia. For more information, email The information provided is for educational purposes only and should not be considered as medical advice. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.

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