Diagnosis-Related Group (DRG) system has become a very fashionable abbreviation after the medical insurance providers announced yet another spike in excess of 40-70% of medical insurance premiums.  

This premium tsunami is against the backdrop of RM963 million-RM1.41 billion profit after tax for the year ending 2023 for the medical insurance providers. Dividends paid out in 2023 amounted to RM451-RM975 million. 

The medical insurance providers have however pointed their fingers at the exorbitant hospital bills by the private hospitals. 

The PKR MPs in their letter alleged that, “Bank Negara Malaysia (BNM), also highlighted the charges for hospital supplies and services which they said are 59-70% higher than drug bills, as well as the lack of government regulation over consumable items such as syringes, gloves and gauze in hospitals”. 

Not unlike the medical insurance providers, undoubtedly, laughing their way to the banks, the private hospitals are reaping net earnings of RM263.4 million-RM2.95 billion for the year ending 2023. This represented private hospital group profit surges of between 58%-90%. 

Therefore, it is of utmost importance for the Members of Parliament (allegedly championing the rakyat’s cause), BNM, MOH and most critically for the lay public to  note that the medical specialist is a minor player in the billion ringgit corporatization of the healthcare industry in Malaysia. 

Why? This is because the specialist’s fee is only a tiny fraction of the itemized hospital bill. The medical specialist fee is strictly regulated by the 13th Schedule of the Private Healthcare Facilities and Services (Amendment) Order 2013, and published by the Attorney General’s Chambers (AGC).  

This means that the specialist’s fees in the hospital’s itemized bill has NOT been reviewed or revised for 11 long inflationary years.   

Specialist fees by and large (with the rare exception of the very few black sheep in this “most trusted professional group voted by Malaysians and the global public”) have NOT significantly contributed to medical inflation in Malaysia for the last decade. 

This contrasts sharply against the laissez-faire and virtually unregulated business of medicine by the medical insurance providers and the private hospital groups. 

The medical insurance providers and the private hospital groups have been “allowed to do as they choose” with minimal government interference in the reckless  embrace of the doctrine of “hands off policy of crass capitalistic economics”. 

This alarming state of healthcare affairs, apparently, only recently realized by the BNM and the MOH has unfortunately hiked the medical inflation in excess of 12% and is expected to rise to 16.4% in 2025, well above the global average of 10.4%. 

Now that we have all the chips on the table, we will next discuss whether the Diagnosis-Related Group system, is the right way forward to transform our healthcare ecosystem. 

By  
Dr Musa Mohd Nordin, Paediatrician
Dr Ahmad Faizal Mohd Perdaus, Chest Physician
Dr Rajeentheran Suntheralingam, Urologist
KPJ Damansara Specialist Hospital 

This article is the personal views of the author and does not necessarily represent the views or official stance of RTM.