Private Health Care - " Is this a subtle fight back by the Private Hospitals?" By VM Chandran

In our country there is a belief of a  presumption that  "Whatever you hear is held to have elements of truth unless the proven to the contrary". Maybe the term "khabar angin" must have given some credence to this presumption.

This brings me to the story of this article. It dates back to the Minister of Health's announcement on 2nd May 2019 of a Cabinet decision to have a mechanism in place to regulate prices of medicine in the country. This is a bold and timely decision as the price of private healthcare is "sky rocketing". Medical inflation rates are about 3 to 4 times that of national inflation.

Public outcry has been loud and clear. It would have been even louder if not mitigated by the Medical insurance absorbing much of individual claims, notwithstanding the size of billing. For a mediocre premium the patient get a sizeable coverage. This is a sort of hedging arrangement. Unaware to the public is that Medical Insurance inflation is growing  much faster ie. about 15% and there will come a time when this figure would be "biting" their pockets.

When the announcement was made by the YB Health Minister, the Association of Private Hospitals Malaysia (APHM) had their reservation, which was made known in their letter to the media on 7th May 2019. Thereafter, in an unprecedented move, one of its members, at their Annual General Meeting, took an opposite stance ie. wanting to work with the Health Ministry on the price mechanism. This "hullabaloo" created a confusion and some backtracking was done to repair any distorted image with the optics that everyone in APHM is cooperating.

The key operative word is "co-operation". Yet!! the developing news in the market is that APHM is commissioning a renowned Accounting firm ( probably one of the Big 4) to assist in their case to justify their pricing structure and also have some form of comparative studies or figures of a few countries in the region. This seems a subtle way of fighting back on the Cabinet's decision of a price regulating mechanism. Definately a strange way of providing co-operation. 

The moral of it is seemingly to run away from transparency and accountability by hiding behind Studies or Reports commissioned and paid for by the Private Hospitals. This is a defensive approach arising from a fear syndrome that the  "veil" would be lifted to see through the exhorbitant margins that are being levied on drugs, medical supplies,  services, usage of equipments, nursing care, and other ancillary matters. A paid Consultant Report is the strategy to preserve their excessive values.

I am not saying the Consultant would not do a good job. Quite the contrary, they can only go by the representations that shall be made to them by  the Private Hospitals for the work to be undertaken, as this is not of a forensic nature. I believe the time span and Consultant fees  does not permit it.

Forensic work requires much greater skill and depth with longer time to achieve the true nature of the costing and revenue models in every facet of the operating segment of Private Hospital management. To do that is a mamooth exercise with substantial fees. I believe it is nothing near what is being offered.

So what APHM is endeavouring to do seems much like a "political drama" ie. create a "make believe" scenario that professional work has been done to justify their status quo. They hope to stand behind it to support their position. 

Some call this greed at any cost, some may say it is a "chess game" and such a move is not to allow them to be checkmated, while others may say that it is how free market works. Whichever it is, this is an industry relating to the sick and suffering. There must be a significant moral value yardstick incorporated into the business model. How on earth can  private hospitals have margins running from 75 to 1000% and yet state that they are helping patients to recover?

It would seem that the private hospital billings would make the patients more sick rather than the illness itself. At least 75% of hospital billing relates to hospital drugs, supplies, services, equipment usage etc. The Doctors' fees are usually around 25% of billing and  is a "controlled item" as prescribed by the Malaysian Medical Council. The 75% is the material amount that has uncontrollable pricing.

My advice to the Private Hospitals is to reconstitute their cost models. Be self-regulating and be open to transparency and accountability. One such way is to publicise all your charges from the drugs to services, supplies, equipment usage, and even to parking charges, on a your designated website. Create  proper Policies and Procedures such that everyone involved know what they are giving and getting. Is that too much to ask???

In Thailand the Government there has decreed such things must be done. Indeed they have even gone one step further to add social responsibility by stating that for 72 hours, patients are entitled to get free treatment in the Emergency Departments of all hospitals. A further added value is that the prescriptions from Emergency for drugs can be bought outside the stated hospitals. A proviso that such would be extended to other prescriptions from the hospital. 

If the Private Hospitals here are not convinced to self regulate with transparency and accountability on their prices and services, i think they are only begging for serious and wider intervention by the Authorities. It is inevitable that Public outcry would get bigger and grow stronger. The Government has to hear them because they are elected by the people for the people and not for a few corporate stakeholders.

Of course the Private Hospitals would argue based on the amount of investment, providing services to overcome any chaotic nature at  Public Health, providing employment opportunities, creating taxable revenue and so forth. All these are absolutely valid arguments and the nation is grateful.

This does not mean they have the carte blanche to do what they like. Take for an example a laparoscopic procedure. Most of these equipments are imported and come mainly from countries like US, Germany, Japan and China. The prices for such equipment range depending from which country they originate. The equipments from China would probably be 50 to 60 % cheaper than the others. Functionality is about the same maybe a slight difference in manner of handling. The key issue is to determine the country of origin of the equipments being used and what would be the charges.

I ask this question because innovation is supposed to make life more convenient in procedure and recovery. However the way the billing is done on the so-called innovative procedure negates the whole process because the bills have increased multiple folds. It would seem that somewhere the cost model seems to have lost its direction or is being used as an excuse to hike prices. In the absence of transparency, the existing "veil" may not permit the truth to be known. This is but one such example. There are many more.

This is why I  am consistently calling for a proper independent infrastructure of a monitoring self-financing Directorate to be set up to do continous audit and spot checks on Private Hospital establishments of their services, performance and prices. This must be manned by professionals of various disciplines  ranging from medical, pharmaceutical, health planning & administration, health economics, accounting, legal, and IT. 

Supporting this, as part of registering  grievances of patients, is a need for an independent Tribunal. A platform for patients to voice their complaints, which would be presided by experienced experts in the medical legal  arena. It's independence would provide credibility to settlement on issues between patients and private hospitals and also assist in setting a registry to collate such information.  

These 2 structures would set the basis of streamlining the Private Health care sector and bringing a sense of balance to the.market. This is fundamental for Private Healthcare as it is an integral part of our country's health system. It would operate within reasonable parameters incorporating accountability with transparency. This would avoid exploitation based on excessive charges and still have a good affordable delivery system. This would go to strengthen the nation's health and become a pathway for the betterment to the lives of. Malaysians.

V M Chandran

July 2019.