Healing Malaysia’s healthcare system

  • Nation
  • Sunday, 11 Dec 2016

Private Hospital Association Malaysia (PHAM) president Datuk Dr Jacob Thomas.

EXCLUSIVE: With patients and stakeholders blaming private hospitals for the spike in healthcare costs, Sunday Star speaks to Private Hospital Association Malaysia president Datuk Dr Jacob Thomas about keeping medical care affordable and revamping the national healthcare system.

IT’S unfair for Malaysians to blame private hospitals for ballooning healthcare costs.

As more patients opt for public hospitals, patient volume in private hospitals has dropped by 20% to 30%, Private Hospital Association Malaysia president Datuk Dr Jacob Thomas shares.

And, with medical inflation expected to be at 15% next year, private hospitals too must find ways of coping in light of falling revenue. Charges will go up when private hospitals can no longer contain their costs within reasonable limits, he admits.

“Let’s say a hospital invests in a CT or MRI scanner. If we have 50 patients, we can charge RM2,000 each but if we only have 20 patients, we have to charge more to recoup our investment,” he says.

“If we have volume, we can bring prices down. Otherwise, we have to increase our charges to cope with rising prices.”

The weak ringgit and Goods and Services Tax (GST) have not helped. The prices of medical supplies and drugs are up. Faced with heavier expenses and saddled with staff salaries, benefits, increments and bonuses to pay, private hospitals are forced to raise their rates.

There’s great demand for our nurses and medical technicians in the Middle East, United Kingdom and Singapore. So we’ve to offer more attractive packages to keep our staff happy, he justifies, while calling for the Government to exempt healthcare from GST.

“What the Government collects from the GST imposed on private sector healthcare is less than what it has to spend on patients who are now flocking to public hospitals for treatment and medication. Why are we taxing patients who are already in misery?” he says.

Deputy Health director-general (Medical) Datuk Dr S. Jeyaindran speaking to medical students at Universiti Malaya on March 5 2016.
Health Ministry deputy director-general Datuk Dr Jeyaindran Sinnadurai


Commenting on the Health Ministry’s call for private hospitals to implement the bundling system, Dr Thomas said it was already being done in certain disciplines like cardiac surgery, bone marrow transplant and spinal surgery.

But, unlike in Australia where the bundles or diagnosis-related groups are set by insurance companies and the government, bundles in Malaysia are more like treatment packages.

“In Australia, whether it’s Hospital A or B or a public hospital, prices are the same. But when a patient sees the doctor about a procedure here, the overall cost – barring complications, is made clear as part of the financial planning consultation. The sum varies between hospitals,” he explains.

The Harvard Business Review in its July-August 2016 issue, hailed the bundled payment system as a real game changer that would transform the way care is delivered and finally put healthcare on the right path. Under the bundled payment system, providers are paid for the care of a patient’s medical condition across the entire care cycle.

The article, How to Pay for Health Care, highlighted how bundled payment covers all the services, procedures, tests, drugs and devices used to treat a patient with, say, heart failure, an arthritic hip that needs replacement, or diabetes.

While private hospitals here are for bundling as practised in countries like Australia and New Zealand, the actual cost of care and treatment must first be accurately assessed. Knowing the actual costs is crucial.

That, says Dr Thomas, is a prerequisite regardless of whether it’s a private or public hospital that is implementing the bundling system.

“From the time a patient is admitted to the point of discharge, everything including the room, medical supplies, nurses, doctors, and food charges, must be clearly identified so that we know the hospital’s exact cost. And, there must be different bundles that take into account the medical technology used in treatments. Charges for the use of a 0.5-Tesla MRI or 3-Tesla MRI, for example, can’t be in the same bundle. Nor can a laparoscopy be lumped with an open surgery where the patient is warded for one week.

“Unlike public hospitals that are heavily subsidised, expenses like land price, building construction and taxes must also be taken into account when calculating private hospital costs. Then, we factor in a small profit. That’s the only way to come up with a fair bundle sum.”

“Malaysia can look at how Australia and New Zealand have implemented bundling but we can’t just ‘copy and paste’ their system. Ours must incorporate the good aspects of what these other countries have done but it has to be unique to us,” he says.

“And, bundles once identified, must be constantly reviewed by a specially set up panel,” he says, adding that it can be successful with the Health Ministry taking the lead.

“The Health Ministry must engage with private hospitals to understand what are our costs and expenses,” he adds.

Health director-general Datuk Dr Noor Hisham Abdullah recently announced that the Government would come up with a voluntary private insurance scheme, with the price being negotiated by the Government for better healthcare access to the private sector. With financing from the scheme, private hospitals could expand in urban and rural areas with the financing coming from the voluntary financial scheme, Sunday Star reported on Nov 20.

Lauding the move as a “very good start”, Dr Thomas thinks that having a pool – like the Employees Provident Fund (EPF) which everyone contributes to, is good.

A national fund that pays for basic healthcare is the way forward. But this can only be achieved if bundling in both the private and public sectors is in place, he opines. Once the voluntary financial scheme kicks off in the public sector, the pros and cons can be evaluated and tweaked so that it can be applied to the private sector.

Private hospitals, he assures, is in full support of transparency and will work closely with the Health Ministry on the scheme because “we don’t want to keep grappling about costs and insurance premiums shooting up.”

Putting a stop to premium hikes

Bundling will stop insurance prices from spiking as insurers won’t be able to increase premiums as and when they feel like it, nor can they pin the blame on private hospitals anymore, Dr Thomas believes.

Denying claims that hospitals ask patients whether they’re paying by medical card or cash to justify higher charges, Dr Thomas clarifies: “Insurers get a special 10%-15% discount and upgrades from hospitals. This is clearly reflected in the bill we send them. If at all patients are asked whether they have a medical card, it’s because of the cashless service we offer. Medical card holders don’t have to pay a deposit. Because of the deal we have with insurers, non-policyholders may even end up paying more for care because they don’t get a discount.”

It’s the doctors, he says, who usually ask a patient if they have insurance. A doctor, he explains, can either forgo their professional fees or charge the maximum allowed under the law because their remuneration is regulated.

If a patient is paying for the treatment, the doctor may sympathise and charge less. But if the patient is covered by insurance, then the fee charged could be the maximum allowed under the law.

Hospitals pay, you pay

Hospitals take malpractice insurance as they’re responsible for the nurses they employ and for any equipment failure that results in something going wrong with the patient. But the emerging trend, says Dr Thomas, is for the legal fraternity to argue that hospitals be made liable for mistakes committed by the doctors despite the latter having their own insurance.

“Hospitals have no control over doctors who use our facilities to treat patients. The doctor is not our employee. We don’t tell a doctor – who’s an independent contractor, how to do a surgery. If the doctor removes the wrong eye or leg, it’s beyond the hospital’s control. How can we be liable?

“The premiums hospitals are paying now doesn’t include coverage for our doctors. But this is set to change as insurers will likely raise our premiums if the courts start finding us liable for the doctor’s mistakes,” he says.

Doctors too are being slapped with heftier premiums, especially the those in the field of obstetrics and gynaecology. Yearly premiums range between RM40,000 and RM70,000 and even retired doctors are pressured to continue paying, he adds.

“If a doctor retires two months after delivering a baby and something happens to the child because of the delivery, there’ll be no coverage if premium payments were not continued. Recent court awards of up to RM6.8mil have also pushed premiums up,” he says, adding that higher malpractice premiums imposed on hospitals and doctors will ultimately burden the patient.

Concerned about rising healthcare costs, he warns that if Malaysia’s not careful, we’ll end up like the US.

“If premiums keep going up, patients will suffer. A bypass surgery in Malaysia is about US$20,000. In the US, it’s US$130,000. Why? The technology and procedure are the same. But it’s much pricier there because patients have to bear the high insurance premiums for the hospitals and doctors,” he says.

Charging the same

There are two systems in the country now – public and private. There should only be one. Whether a patient goes to a public or private hospital, the basic rate should be the same. The only difference should be the out-of-pocket expenses because the treatment is the same.

“For example, treatment for appendicitis is RM3,000 but you want a VVIP room with butler service. The extra RM500 is for you to bear. It’s not for the insurance company to pay. That’s fair,” he says.

The treatment is the same whether it’s a private or public hospital and if the bundling system is adopted across the board, more patients are expected to flock to private hospitals because charges are the same.

This will ease the heavy burden public hospitals are currently facing, he says, while stressing on the need for seamless integration between private and public hospitals. Government hospitals cannot turn patients away but they are struggling to cope.

We must share our resources not just with the Government, but among private hospitals too, he says.

And, university hospitals, armed forces hospitals and general practitioners, must also all come together.

“Those days, if a private hospital in the area has an advanced treatment machine, the Health Ministry will still go and get one but now they send the patients to us and we charge a special rate. That’s public-private partnership,” he says.

The biggest hurdle, he points out, is changing the Malaysian mindset. We must stop expecting quality treatment for free. Our doctors are good but we need a better system, he says matter-of-factly.

The system we have worked in the past but now it’s become too Government-dependant.

“Instead of two systems running side-by-side, we should only have one system managed by both the public and private sectors,” he says.

“General practitioners with over 8,000 clinics nationwide are the backbone of our healthcare system. They must be roped in because they are the front liners referring patients to hospitals.”

Wiping out wastage

Doctors don’t get a single sen from ordering tests. So, there’s no reason for doctors to put patients through a barrage of expensive tests nor do doctors prescribe medication to earn extra, Dr Thomas insists.

Revenue from tests ordered, medication prescribed or physiotherapy treatment goes to the hospital.

The profits are spent on new equipment, staff salaries, upkeeping of facilities, paying for utilities, running the ambulance service and keeping the hospital open 24/7.

“It’s a misconception to say that doctors earn more from ordering unnecessary tests and treatments,” he says.

He says there isn’t a lot of wastage in private hospitals because like all businesses, the inventory is done with due diligence.

“We make sure that all charges are captured. Nothing is given away for free – even a box of tissue. Whatever wastage, we want to cut that down and be more efficient.

“Private hospitals don’t overstock because it’ll tie up our finances. Anything we order is justified and accounted for,” he says in response to Health Ministry deputy director-general Datuk Dr Jeyaindran Sinnadurai’s call for private hospitals to curb wastage so that they won’t have to increase their charges.

Unlike public hospitals, notes Dr Thomas, wastage in private hospitals is minimal because patients pay for what they take.

There’s more wastage in public hospitals because patients stock up on medicine sometimes for up to three months’ supply. When the drugs expire or when they are prescribed new medication, everything goes into the bin.

Because it’s free, some don’t bother to store the medication properly because they can just go out and get some more.

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