Regulate the healthcare middlemen

Proper attention must be given to proposals to enact regulations to protect patients and doctors from MCOs 

IN THE midst of managing the increasingly challenging price hikes in this country, nothing is more alarming than learning that your next hospital stay could well bankrupt you, or learning that your next visit to the GP (general practitioner) could blow a huge hole in your wallet. 

Medical experts have long been warning that the medical cost in Malaysia has been rising exponentially in the past decade and will soon outpace the average person’s ability to pay. 

A quick check on AON’s 2024 Global Medical Trend Rates Report confirmed that Malaysia’s current annual medical inflation rate peaks at 15%, which is 384% higher than the annual general inflation rate. It is significantly higher than the global medical inflation rate average of 10.1%, or compared to the Asia-Pacific region’s average of 9.7%. 

With a heftily subsidised public healthcare, the burden of medical inflation squarely hits the private healthcare sector. 

In terms of medical accessibility, Malaysia as a country has been improving significantly within two decades with the total number of doctors reaching 73,996 in 2020 from 15,619 in 2000, increasing the doctor-to-population ratio to 1:441 from 1:1,490. 

Much of this improved access is attributed to the increasing proportion of doctors in the public service, with 59,006 (including house officers and newly registered) compared to 14,990 doctors in the private sector. 

However, the contribution of the private doctors, especially the GPs should not be underestimated. 

Private GPs have long been the main factor for reducing queues and waiting time in government clinics. It was estimated that despite their smaller numbers, private GPs catered to approximately 60% of the total outpatient care in the country. 

It is also evident in the growth of the out-of-pocket (OOP) payments for healthcare cost. More than 77% of healthcare expenditure in the private sector including GP was contributed by OOP. 

In 2017, OOP payments registered was RM21.5 billion or 38% of the total national health expenditure. In 20 years since 1997, OOP payments have grown at a rate of 10% annually and projected to reach RM55 billion by 2027. 

Malaysia’s GP system is generally acknowledged as among the most affordable in the world, therefore it is imperative for the government to maintain its status by rein- ing in cost for existing private GPs. 

One of the key grievances within the private GP fraternity was the introduction of the “middlemen”, the managed care organisations (MCOs) in their ecosystem since the early 2000s. The academic purpose of these MCOs was supposedly to better organise the primary care services fronted by GPs to improve efficiencies to the extent of lessening healthcare cost. 

After two decades, it was found that they actually work in the opposite manner. 

Most MCOs are profit-oriented, and their decisions are mostly arbitrarily implemented based on their bottom line rather than quality of services or health outcomes. 

GPs have long been lamenting about these unregulated MCOs, which are based on a business model of containing cost by rationing care. This approach uses broad exclusion clauses, limits access to choices for patients and inevitably delays payments to GPs and specialists, sometimes for months and at times even years. 

With the MCOs, a patient has to go through an appointed middleman to see a doctor, and vice versa. In the process, a fee is extracted from each party, either in the form of co-payment, management fee or registration fee, or a fat joining fee for the GP. 

What is worse is that the access, choice and pre-approval guarantee letters for patient referral to specialists are determined by fine prints and provisions in the exclusive master contracts between MCOs and employers. 

Doctors and patients, the main protagonists of private healthcare, have long been suffering as the disenfranchised parties in the MCO space. 

Doctors have drafted proposals to enact regulations to protect patients and themselves from these MCOs, as far back as 2006. In the spirit of the Madani Economy, it is high time that proper attention is given to these proposals before the situation gets untenable. — pic BERNAMA

  • Asuki Abas is the editor at The Malaysian Reserve.

  • This article first appeared in The Malaysian Reserve weekly print edition