DRG: One Step Forward Or Two Steps Back? (Part IV)

5 Jan 2025

DRG: One Step Forward Or Two Steps Back?: Part 4

Dr Musa Mohd Nordin, Paediatrician

Chan Li Jin, Health Activist

Dr Ahmad Faizal Mohd Perdaus , Chest Physician

Dr Rajeentheran Suntheralingam, Urology Surgeon

The total national expenditure on health rose from RM67.05 billion in 2020 to RM79.94 billion in 2022. This represented 4.73% and 4.41% of the national Gross Domestic Product (GDP). (1)

The private healthcare contribution to the national health expenditure was RM30.45 billion in 2020 and RM37.69 billion in 2022. The private healthcare business, contributed 46% and 48% of the total expenditure on health in 2020 and 2022 respectively.

The 10 Dec 2024 announcement of the Prime Minister on the planned roll out of the Diagnosis-Related Group (DRG) caused the share prices of private healthcare groups to tumble massively. (2)

The reckless use of one word, DRG, wiped out billions from the Kuala Lumpur Stock Exchange (KLSE).

The unity government must be more sensitive and cognisant of the pivotal role of the private healthcare industry and do not inadvertently slay the goose that laid the golden eggs.

As specialists in private medical practice, we are appalled at the abysmal lack of awareness, how ill-informed and worse still, the hostility of Members of Parliament (MP) towards the private hospitals, essentially a social enterprise industry, whose take home is only a meagre 7-8% profit margin. (3)

Instead, the MPs should direct their malevolence and malice at the insurance companies, whose profits margins are nothing less than 25% and who continue with impunity to increase medical insurance premiums by 40-70% this year. (4)

We are strongly cautioning the Ministry of Health (MOH) on mandating DRG to a presently efficient, effective, impactful and profit-making private healthcare ecosystem.

Malaysia scored 95 out of 100, and ranked first in the Best Healthcare in the World category of the 2019 International Living Annual Global Retirement Index. (5)

It highlighted, “13 hospitals (private) in the country were accredited by the Joint Commission International (JCI). Almost all doctors — the majority of them trained in the United Kingdom, the United States or Australia — were fluent in English, making communication easy. In Malaysia, you don’t need to make an appointment to see a specialist (private) and you don’t need a referral from a general practitioner. It’s as simple as registering at a hospital of your choice and waiting in line to see your specialist of choice” (6)

It is glaringly obvious from the above-mentioned global accolades, that the private hospitals and specialists have not only been serving the expatriate clientele efficiently, effectively and compassionately, but also the 20% Malaysians who are either insured or paying out-of-pocket (OOP).

Not only that, the private healthcare facilities have invested a massive 2.1% GDP (versus MOH 2.9% GDP) in 2021 to offload patients from the MOH, offering an invaluable complementary healthcare services to an otherwise, understaffed, underpaid, overworked, and overcrowded (UUOO Syndrome) MOH. (1,7)

The private healthcare groups have enriched the government coffers, because many of the Government Linked Investment Companies (GLIC) are major investors in the private hospital business

Malaysia is increasingly flourishing as a leading global healthcare destination with major knock-on effects enhancing the national economy. In 2023, the healthcare tourism sector posted RM2.25 billion in revenue. (8)

The Malaysia Healthcare Travel Council (MHTC), an agency under the MOH, showed that the country recorded 850,000 (2022), 1 million (2023) and 584,468 (first half of 2024) health tourist arrivals.

Therefore, sincerely and frankly, from the bottom of our hearts, this begs the question as to which healthcare space needs to be urgently reformed, an internationally recognized private healthcare system or the public healthcare system which is overwhelmed with the UUOO Syndrome?

So to our dear Prime Minster, the second Minister of Finance (MOF), the governor of Bank Negara Malaysia (BNM) and the Minister of Health, we plead to all of you to heed the wise words of Thomas Bertram Lance (1931 – 2013), who was a close adviser to Jimmy Carter (1924 – 2024), “if it ain’t broke, don’t fix it” Or more succinctly expressed by the Malay metaphor, “marahkan nyamuk kelambu dibakar”

However, with the looming medical inflation, it simply cannot remain – business as usual!

The fraternity of private specialists would like to see a transformation towards a health empowering ecosystem, nurturing a value-based public and private healthcare milieu, with appropriate regulatory reforms, informed by evidence based health economics and enabled by sustainable health financing.

The past 14 MOH commissioned studies share several common elements, including the need to address healthcare under-funding and the sustainability of health financing. (9)

And to enhance a close partnership with the private hospitals in a high-quality and Value-Based Care (VBC) system, while empowering autonomous public hospitals to compete on a level playing field to jointly embrace the principles of equity, accessibility, and efficiency.

More immediately, the Bank Negara Malaysia (BNM)
must rein in the profiteering Medical Insurance Providers to cap their sky-rocketing insurance premiums to a fair and decent level (3,7)

The full accreditation by the Malaysian Society for Quality in Health (MSQH) and/or the Joint Commission International (JIC) of virtually all major private hospitals reflects their quest for quality, safety, efficiency and cost-effectiveness in search for Value-Based Care (VBC) and Universal Health Coverage (UHC).

The MOH needs to simulate and enhance this healthy private healthcare ecosystem within the public healthcare space. Please do not inhibit, impede or disrupt the private hospitals with a non-future proof DRG system.

High-income countries are moving away from DRGs as the main hospital payment system, which reflects a move away from volume to value, which the private specialists have advocated. (7,10)

Unbridled hospital charges cannot be allowed to continue unchecked. This is critical for the long-term sustainability and profitability of the private hospital groups.

Just like the strictly regulated fees of the private specialists by the 13th Schedule of the Private Healthcare Facilities and Services (Amendment), the MOH must put in place measures to control & regulate private hospital fees which by the way makes up the major portion of the itemised hospital bills (7,11)

And finally and no less important, the MOH must review and update the Private Specialist Fee Schedule which has been lying supine, stagnant and static for 12 long years since 2013! (3)

DRG: One Step Forward Or Two Steps Back? (Part IV)

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