The recent news of a significant increase in medical insurance premiums of up to 40% has sparked a litany of discussions across the entire healthcare system. Underlying the debates are two key concerns – the public who are cancelling their insurance policies, which will inadvertently result in higher patient loads in the already overburdened public hospitals.
The ensuing domino effect threatens to throw the entire healthcare system into disarray, as the public healthcare sector struggles with its own set of systemic and structural problems. Notwithstanding the debates, one thing remains clear: private hospitals have been pivotal in supporting the country’s dichotomous healthcare system since the 1950s.
Initially established to push medical tourism, private hospitals today work hand-in-hand with the government in tackling rising healthcare needs with the rising population, rates of non-communicable diseases (NCDs) and ageing population. Private Health Insurance (PHI), established in Malaysia in the 1950s, but only gaining traction in the 1970s, had previously been a lifeline for many patients by enabling timely care and reduced waiting time.
Understanding Diagnosis-Related Group (DRG)
Rising medical inflation had been a continuous concern for the public, but the rise in insurance premiums could just be the tipping point. To mitigate the impact, the Ministry of Health (MOH) had mooted the use of a Diagnosis-Related Group (DRG) system, which places hospital services into categories according to a patient’s condition and charges according to a fixed rate.
Countries where DRG is practised saw reduced hospital stays and increased outpatient surgeries, which helps control the medical bill and the ‘buffet syndrome’ where healthcare providers and patients try to maximise their healthcare experience by requesting for unnecessary tests or procedures.
By introducing fixed payments according to categories of diagnoses, the DRG system aims to compel hospitals to manage resources more effectively by focusing on quality patient outcomes rather than volume of services. While this system may help control costs in the short term, DRGs alone will not address the other factors contributing to rising healthcare expenses, especially the impending increase in insurance premiums.
Long-term goals vs of Tunnel Vision
While the MOH’s goal of managing rising healthcare costs is commendable, the DRG system has its pitfalls. With patients defined by their category of DRG, personalised medicine is no longer a priority. Private hospitals may begin to select cases that are easier and cheaper to treat under fixed payment models, transferring high-risk and complex cases to public hospitals.
Patients whose diagnoses do not fall into any of the categories within DRG will also see themselves being pushed to public hospitals, further prolonging waiting times and compromising the quality of care in MOH facilities.
Countries where DRG have seen success pair the concept with the Value-Based Care (VBC) model, where health outcomes are at the centre of the diagnosis and ensuing treatment. In VBC, health outcomes are measured by patient-reported experience. Essentially, VBC goes beyond treating the patient while he/she is hospitalised, but monitoring their condition in terms of the 3Cs:-
a. Capability to perform normal duties prior to hospitalisation
b. Comfort levels encompassing management of pain, distress levels and anxiety
c. Calm when receiving care, knowing that their healthcare provider has their best interests at heart
VBC prioritises efficacy and empathy of care in the long term, reducing complications and disease complications that will result in more healthcare costs in the long term. It requires a multidisciplinary approach to a patient’s condition towards achieving the 3Cs of VBC.
For a start, private hospitals should begin incorporating VBC as an underlying policy, making patient outcomes the ultimate goal rather than frivolous elements such as hospitality, gift packs and corporate branding.
The bigger picture
Although COVID-19 was often touted as the time when the inadequacies of the public healthcare system came to light, the opposite is true in many ways. Caught in a pandemic where saving lives takes precedence, every stakeholder in the entire healthcare eco-system set aside their differences to survive the pandemic. Post-pandemic, the problems beleaguering the healthcare system (long waiting times, lack of human resource, aged infrastructure, poor governance) returned with a vengeance. Underpinning these is insufficient funding, despite rising budgets for healthcare every year.
This is what brings patients to private hospitals in the first place. To achieve true Universal Health Coverage where no one is left behind in healthcare, we need to look at the bigger picture. According to the National Health and Morbidity Survey (NHMS) 2019, only 22 per cent of the population have personal health insurance. Hence, the rise in insurance premiums affect less than a quarter of the population, who utilise private hospitals any way.
If DRG and VBC are believed to be effective in increasing efficiency and reducing healthcare costs in the private healthcare sector, it only makes sense to extend them to public hospitals that caters to the 80% of the population. The reality is the burden of care will continue to rise, both in private and public hospitals, with longer lifespans and rising population. The country needs more robust and sustainable healthcare financing systems to ensure a heathy population in the future.
Calls to increase healthcare spending to 5% of government spending would mean taking 32.2% of government revenue, which would mean reduced budgets for equally important national developmental plans.
The challenge is for a bold politician to address the elephant in the room, which among others are the current fee of RM1 for the best drugs in the the KKM formulary, RM200 for angioplasty (versus RM40K in private hospitals), RM400 for Coronary Artey Bypass Graft (CABG) at public hospitals (versus RM60-80K in private hospitals) and the similar, with a social-health safety net for the genuine needy, which we anticipate the Rakan KKM program will address.
In conclusion, the rise in insurance premiums cannot be viewed in isolation. Like pieces of a jigsaw, every piece is interlocked with the other. Bank Negara Malaysia, MOH, and the major stakeholders e.g. The Association of Specialists in Private Medical Practice, needs to look at the whole picture, which boils down to sustainable healthcare financing at the end of the day.
AUTHOR: MUSA MOHD NORDIN, Paediatrician Damansara Specialist Hospital and CHAN LI JIN, Health activist.
This is the author's personal view and does not necessarily represent the views or official position of RTM.