Business is not a bed of roses for private hospitals

WE regularly hear complaints about overcharging by private hospitals, the latest being “Private hospital investigated for increasing price of masks” (The Star, May 15; online at https://bit.ly/36el1P2). The question we should ask is, “Do we really believe that private hospitals make lots of money from patients?”

Private hospitals in Malaysia and many other parts of the world are self-funded and do not get any support from government stakeholders. All revenue and profits are based on the payments collected from patients or their related parties, such as health insurance providers or as employment benefits.

A significant part of private hospital revenues go towards capital expenditure and maintenance of the facility. Surpluses will be for the shareholders, which are largely government-linked companies (GLC). These shareholders will reinvest to upgrade equipment and in newer modalities of treatment.

In a typical hospital bill, there are two parts: the doctor’s portion and the hospital’s portion. The doctor’s consultation fee and procedure fee are regulated, hence they are capped by law. There is no hospital fee but there are other categories of charges such as consumables, room rate, lab fees and pharmaceuticals.

As there is no specific hospital fee, unlike in some countries, the income the private hospital generates will be largely from the percentage of mark-ups on items listed within the various categories.

Patients have high expectations of private healthcare, such as personalised care from a chosen specialist, appointments based on patients’ needs, procedures and admission tailored with convenience, and seamless grievance mechanisms.

Additionally, patients seek a reasonable payment to the hospital and doctor. What constitutes a “reasonable payment” is very subjective. There are questions asked by patients and sometimes by insurance companies about the itemised pricing of the hospital bill. Comparative pricing is questioned with actual retail cost and often there is dissatisfaction on the percentage of mark-ups.

It’s more complex for private hospitals now with a price control mechanism for some items, as the recent complaint on the price of the mask suggests. This questioning by patients on the nature of treatment and cost will probably have a long-term effect on the sustainability of private hospitals, as the running cost will not be met.

For patients who think the cost is not affordable or unreasonable, they do have an alternative, which is to use the public system. After all, Malaysia has one of the best public healthcare systems in the world. The fight against the Covid-19 pandemic is testimony to this.

PRIVATE SPECIALIST

Kuala Lumpur