The premium on medical cards for hospitalisation treatment is escalating every year due to increasing frequency and amount of claims. Insurance companies have to increase the premium not to generate more profit but to avoid losses. Their main earning is from life assurance; the medical card is a loss-making arm just to complete the range of their products.
The annual rising trend in medical premium has become a burden especially for the middle class (M40) who prefer private healthcare. To keep the premium low, all parties including insurance companies, healthcare providers and policyholders must work together to keep the frequency and amount of medical claims low.
The concept of the medical card is to pool premium money from policyholders to assist the unfortunate subscribers when the need arises. However, many holders of medical cards have the attitude of “must use since I have already paid”, which has resulted in many unnecessary hospitalisation treatment and drainage of the pooled fund. They do not realise that their action contributes to the rise in the premium in the coming years.
To discourage unnecessary claims, some medical card systems impose co-payment in which the cardholder will bear a certain percentage, for example 10%, of the hospital bill.
Another good strategy is the no claim discount (NCD) in automobile insurance that has successfully reduced “car hospitalisation claims” after road traffic accidents.
Another issue is the amount of claim, which is reflected in the hospital bill. The hospitalisation bill for an appendectomy is much different today compared to 10 years ago. The professional fee of doctors hasn’t changed much as it is regulated by the Private Healthcare Facilities and Services Act. The length of stay has probably shortened due to advances in medical care. The only thing that has changed is the hospital charges, which now cover medication, disposables, medical equipment, hospital facilities, investigation procedures, nursing care and etc. And don’t forget the charges for consignment items or special equipment on a case-by-case basis from private vendors, which the hospital mark ups further.
It is obvious that hospital charges, which are not regulated, are the culprits behind the rising hospitalisation cost. The profit margins for medication and disposable items, for example, are exorbitant.
Private hospitals cite heavy investments in setting up a hospital to justify their hefty profit margin. A hospital should be like a highway which, after recuperation of the construction costs, subsequently becomes the goose that lays the golden eggs.
A hospital is not a comfortable place to be in. The patient has to deal with the uncertainty of the medical bill, which is sometimes catastrophic despite having a medical card. Private hospitals should make billing more predictable and help to bear the cost when it unexpectedly becomes excessive.
One way to do this is to have all inclusive fixed charges for treatment according to categories of severity. The level of fixed charges should be determined after a survey so that the hospital can get a good margin most of the time with efficient use of resources and effective treatment.
Let’s say simple surgical operations, for example excision of lumps and bumps, are categorised as minor and charged a flat rate of RM5,000. Tonsil surgery and appendectomy are in the intermediate category and charged a flat rate of RM15,000 while abdomen surgery and joint replacement are categorised as major and charged RM25,000. From these amounts, the hospital pays the doctor’s professional fee and other associated costs and the rest is profit.
The onus is on the hospital management to save costs by getting generic medication, negotiating better prices from suppliers of equipment, making more efficient use of disposables and not prolonging the stay of patients.
Any budget overshoot should be borne by the hospital or the doctors who created the complications. As such, the hospital and doctors would be extra vigilant to ensure efficiency and effectiveness of treatment from the financial point of view, and patients and policyholders would benefit from the cost predictability and safety of medical treatment.
It’s also not true to say that the government cannot interfere with the business of private hospitals. After all, the government is the major equity holder of most of the private hospitals in this country. It is not wrong to say that the government GLCs are the culprits who have dictated the rise in hospitalisation costs for the past decades.