PETALING JAYA: The charges for hospital supplies and services (HSS) should be regulated to prevent patients from having to put up with excessive costs, say insurance consultants.
Senior insurance consultant Chan Wei Fay said drug prices merely made up to a third of the bills issued by private hospitals.
“A bulk of the charges often comprised miscellaneous HSS,” he said.
HSS refers to consumables, laboratory testing, and the use of medical and diagnostic equipment, such as scanners, X-ray machines, and other amenities.
Bank Negara Malaysia (BNM) said in its 2024 annual report that the total cost of medical and health insurance/takaful (MHIT) claims had gone up by 73% between 2021 and 2023, surpassing the 21% growth in MHIT premiums collected.
BNM reported that the elevated costs associated with HSS, including pharmaceuticals, laboratory fees, and consumables such as gloves, further exacerbated this issue.
The central bank pointed out that these costs, which could comprise up to 70% of the overall private hospital bills, are unregulated, thus impacting the overall claims costs.
Chan, who has been in the insurance sector for three decades, said that authorities aiming to curb medical inflation must look beyond drug prices and address HSS charges as well.
“Drugs are just one part of it. Generally, a fair and transparent hospital billing structure should allocate between 30% and 40% to professional fees, 35% to 40% to room and board and 30% to 40% to HSS.
“However, what we are seeing now is that HSS charges are exceeding 60% of the charges. Since professional fees are regulated and room and board charges are often fixed, are HSS being overpriced?” Chan said.
For example, he said that a small syringe that could be purchased for RM1 could cost four times more at a private hospital.
“Even the price of disposable cups used to serve medication is marked up several times over,” he claimed.
“It is the same case with laboratory tests and health scan charges?” he said.
Chan claims that the “inevitable” steep rise in medical insurance premiums, which has burdened policyholders, was unavoidable as insurance companies have been in the red for years after paying out the exorbitant charges imposed by private healthcare services.
However, he also acknowledged that insurance companies share the blame over the “inflated” billing by private hospitals.
“For years, insurance companies paid out these charges without scrutiny. The appointment of third-party administrators (TPAs) has made it even worse, triggering higher costs.
“When the TPA presents the charges, the insurance companies would pay up without question, even when it appears to be unreasonable.
“No auditing is conducted and this is why the insurance companies have themselves to blame,” he said.
Another veteran insurance consultant, Leonard Tan, suggested that the government form a commission to review healthcare charges.
The commission, he said, could also study insurance premium and reimbursement structures.
He said insurance companies have been selling policies with multi-million ringgit limits and higher premiums.
“These bigger limits trigger and encourage higher charges for medical services and drugs,” he said.
Tan pointed out that the overall cost of a hospital stay is in tandem with the room that the patient chooses.
“If you pick a high-end room, the rest of the other charges will also rise, except for the fee of medical consultants and surgeons, which is regulated.”
He questioned the high prices of drugs, too.
“Why does it cost way more at private hospitals compared to pharmacies? HSS charges should be strictly regulated,” he said.
Lawmaker Sim Tze Tzin, who has raised concerns about medical charges and insurance premiums, said HSS should be regulated to counter excessive profiteering.
“Yes, private healthcare centres are profit-driven and may invest their profits in R&D (research and development) or sophisticated medical equipment. However, we are against excessive profiteering.”
He claimed that private hospitals are imposing HSS charges “as they wish”.
“Currently, there are no laws to regulate HSS charges,” he said, adding that patients are often given bills that run into dozens of pages which they are expected to accept.
“Transparency is the best policy and market forces should be the control mechanism,” he said.
Sim said the overcharging by private hospitals has also impacted the insurance industry, which in turn has raised premiums that are burdening its policyholders.
He said private healthcare operators should work closely with the government on the matter.
“Just because other countries do not regulate private hospital charges, it does not mean we cannot do so. We have our ecosystem. Every country is unique in its own way,” he said.
