ADDRESSING HEALTH CARE COSTS IN THE PRIVATE SECTOR

Tan Sri Dato’ Seri Dr Hj Mohd Ismail Merican

Director General of Health, Malaysia

Press Statement 26 December 2010

The Ministry of Health (MOH) held a meeting on 24 December 2010 with the Malaysian
Medical Council (MMC), Malaysian Medical Association, Association of Private Hospitals of
Malaysia, hospital Chief Executive Officers and persons–in charge of private hospitals,
representatives from managed care organisations (MCOs), insurance companies and several
healthcare professional groups and independent professionals to explore ways of curbing
exorbitant increases in health care costs in private hospitals, without compromising on the
quality in healthcare.

The factors affecting healthcare costs include doctors’ professional fees, hospitals charges
and issues related to managed care organisations and insurance companies.

The following points were agreed upon:

 Provision of healthcare to the public by all private medical practitioners and private
healthcare facilities and services should be done in adherence to standard operating
procedures, without infringing on the MMC’s Code of Professional Conduct and
medical ethics.
 Policy holders must be made aware of what is covered in their medical insurance
policy and be made aware that not all medical conditions or treatment are covered
in any one insurance policy.
 Hospitals must ensure that patients be fully informed about the professional charges
and the anticipated hospital charges before they are admitted or provided with
treatment at the hospital.

As the role and functions of the various MCOs appear to differ, it is recommended that all
MCOs agree to their specific functions and they are encouraged to form and join an
association they can relate with. Presently, out of the 25 MCOs, only four are members of
an existing Association and even those registered may not actually be doing the job of MCOs
and in this respect, even insurance companies have sought for registration as an MCO with
the MOH. Formal registration and forming a valid and credible association is the best way
to regulate and ensure that MCOs play their intended role.

All MCOs must not interfere with the clinical judgement and management of patients by all
attending medical practitioners, including general practitioners.

Different forms used by various MCOs and insurance companies should be standardised to
facilitate admission and discharge.

Ambiguity in doctors’ charges that may lead to inflation in healthcare costs is currently
being addressed in the on-going exercise to amend the Thirteenth Schedule on Professional
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Fees of the Private Healthcare Facilities and Services (Private Hospitals and Other Private
Healthcare Facilities) Regulations 2006.

Hospital Management and MCOs have been told not to blacklist medical practitioners
should they disagree to provide discounts on their professional fees or for whatever reason,
without giving them written notice or warning. If any of the doctors are found to practise
unethically or immorally, the management should report them to the MMC.

Private Hospitals are urged to be transparent and, amongst others, ensure the following
 Inform all patients upfront about the estimated costs of treatment, apart from the
professional fees of the doctors. This would include, for example, the mark-up of
consumables, costs to institute quality initiatives, hospital infection control, and
others.
 Provide itemised billing to patients and healthcare financiers when requested;
 Strengthen the grievance mechanism and procedures to address all grievances
relating to healthcare costs. A grievance committee must be in place to address
complaints so that matters can be settled at the hospital level. Only when there is a
dispute should the matter be brought to the attention of the Medical Practice
Division of the MOH.
 Provide information on the website on estimated total costs for hospitalisation of
common medical conditions and procedures to provide potential patients with
options ; and
 Conduct regular medical audits and ensure hospital charges undergo a peer-
reviewed process from time to time to weed out those who do not comply or who
resort to unreasonable or unethical practices. Private hospitals must also validate
charges imposed by both hospitals and practitioners before submitting to the MCOs
for reimbursement.

The Ministry of Health will strengthen its regulatory functions by the following:
 Study and find solutions to the difference in charges between patients paying out-of-
pocket and insured patients as this has also contributed to the overall healthcare
costs;
 Reiterate and emphasise that discounts are only allowed for hospital charges and
must exclude professional fees; and
 Monitor private hospitals and private medical practitioners to ensure they do not
abuse the medical benefits provided for in their insurance by unnecessary
procedures and tests on their patients.

It was also mentioned that some of the hospitals are pressured by their shareholders to
charge certain fees to meet their key performance indicators. This has also contributed to
the increase in health care costs.

The MOH will continue to engage private sector doctors, hospitals, MCOs, and insurers and
others to ensure that the charges are fair and reasonable and will continue to insist that all
charges be itemised and transparent. This will allow patients to finally make the choice of
where to go for treatment as long as they have enough information about the charges.
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