Rising pressure of healthcare cost

Source/Credit To : http://biz.thestar.com.my

Increases in medical bills are outpacing the general inflation rate each year. That raises the question whether healthcare is reserved only for those who can afford it

“I got the bill for my surgery. Now I know what those doctors were wearing masks for”
– American bureaucrat, James H. Boren (1925)

WHAT is the value of a human’s health? Sixteenth-century English scholar and vicar at Oxford University Robert Burton put it at such: “Restore a man to his health, and his purse lies open to thee.”

Tan Sri Dr Abdul Khalid Sahan

That denotes that health is priceless, and almost everyone would pay anything to get well. With the doctors’ power to demand, medical services do not come cheap.

And with the continuous rise of investments in research and development as well as the adoption of the latest technologies to deal with the rapid emergence of new and complicated illnesses (and the re-emergence of some deadly ones), healthcare costs are soaring by the day.

So, who can afford to fall sick these days?

Across the world, the increases in doctors’ bills are outpacing the general inflation rate each year. It is estimated that the global medical inflation averages about 10% each year.

In Malaysia, medical inflation is estimated to be around 15% each year. That is to say, a simple appendicitis surgery that cost RM1,800 three years ago will set you back by about RM3,000 today.

The next question then: Is healthcare reserved only for those who can afford it?

Far from it. As former Health Ministry director-general Tan Sri Dr Abdul Khalid Sahan puts it, healthcare has been universally accepted as a basic right of all citizens.

Dr Pawel Suwinski

“Everyone has a right to receive it irrespective of his or her ability to pay,” Khalid explains, adding that the Government is accountable for ensuring that healthcare is made accessible to all citizens.

The existence of public healthcare services in Malaysia is in line with that notion. Although the system is not perfect, its services are provided almost free of charge because they are heavily subsidised by the Government.

And complementing the public healthcare system in Malaysia is the private sector, whose existence is supposed to help improve the delivery standards of the public healthcare sector – in that the “richer” patients would go to the private hospitals, and therefore, help lighten the workload of the public sector, so that the “poorer” patients can have better and faster services at government hospitals.

Private healthcare services are expensive (or as some would complain, ridiculously expensive) mainly because they are profit-driven centres.

Shocking bills

Over the years, there have been growing concerns that private hospitals tend to overcharge their patients. According to Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, there are built-in incentives for over-investigation, over-treatment and over-medication in a profit-driven, fee-for-service system.

Therefore, some patients have been slapped with exorbitant charges by private hospitals due to “unnecessary” treatment courses.

Datuk Dr Jacob Thomas

For example, there is the case of Madam LC, in her 60s, who had been diagnosed with breast cancer with metastasis to liver stage IV, and was admitted to a private hospital in Kuala Lumpur in January. Upon discharge the following day, she was slapped with a bill of more than RM7,000. Of this amount, nearly half was for a specific medication called Injection Aclasta, which, according to the patient, retailed at only RM1,400. In addition, LC was also billed for a bilateral mammogram, when she actually did a single one, as she had a left mastectomy more than 10 years ago.

Upon protest, LC was offered a 7% discount, which included a revision of the mammogram charges. She turned down the offer because she felt she was still being overcharged for the medication.

In the middle of last month, she received a telephone call and an SMS from the hospital’s public relations officer, offering a 20% refund. She requested the offer be made in writing but to this day, she has yet to hear from the hospital.

Unfortunately, LC’s experience is not an isolated case. As an industry analyst puts it, whenever the patient is unaware and “can afford it”, such practices tend to occur because private hospitals are driven by profits.

However, a private hospital doctor told StarBizWeek that most of them do not mean to over-diagnose or over-treat patients. He explains that doctors in the private hospitals tend to subject their patients to “better monitoring” as part of what they call defensive medicine, due to the rising risk of litigation.

He adds, “So, gone are the days when the doctor would send the patient home for self-monitoring before admitting him or her for further treatment.”

Nevertheless, thanks to the introduction of medical insurance, certain medical expenses incurred by policyholders can be taken care of. Hence, it is viewed as increasingly important for individuals to have such insurance policies, with sufficient coverage.

This is because we have often heard of how terminally ill patients had to endure the high costs of treatment. Some even had to borrow money. Some had exhausted their insurance coverage and some had given up hope for medication.

Then again, while medical insurance policies have helped to alleviate the financial burden of patients, they have also contributed to the rapid increase of medical costs at private hospitals. This is because insurance policies are another opportunity through which private hospitals can make quick bucks.

Affordability issue

It is estimated that only about 40% of the country’s population, or 10.8 million Malaysians, are medically insured. This leaves about 16.2 million people without health insurance policies. Then again, this may not be a big concern in Malaysia as patients can always turn to the Government.

Over the years, the steep costs at private healthcare centres have caused some patients to go back to public healthcare. And with the global recession, even more are expected to seek public, rather than private, healthcare services.

Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, says this may be the trend, given the present economic condition, which has an impact on consumers’ incomes, making private healthcare services increasingly unaffordable to many.

Suwinski points out that people will obviously make their choices based on affordability. And between the options of a cheaper but more troublesome public healthcare and a more convenient but expensive private healthcare, patients are now more likely going to opt for the former.

Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas concedes that it is possible that patients will turn to the public healthcare system in these troubled times, but he argues that there is only so much that the public hospitals can cope with. As it stands now, these hospitals are already overloaded with patients.

The healthcare gap

Undeniably, there is a huge disparity between public and private healthcare services in Malaysia. First, the public healthcare sector continues to lose its trained medical professionals to the more lucrative and usually urban-based private sector.

Also, it has to cater to the growing number of patients as the bulk of the Malaysian population cannot afford private healthcare.

The massive brain drain and the higher volume of patients have resulted in an overwhelming workload for the public healthcare sytem. At present, the public sector accounts for about 39,000, or 77%, of the total hospital beds in the country, while the private sector accounts for the remainder of about 12,000 beds.

But there are almost 9,000 doctors in the private sector, compared with about 13,500 doctors employed by the Government.

So, the ratio of doctors to hospital beds is still lower for the private sector, which has one doctor to attend to every 1.3 beds, versus the public sector’s one doctor for every three beds.

As a result, patients at government hospitals wait longer to get medical attention and they get less personalised attention from the doctors. Therefore, there tends to be a lack of communication between doctors and patients.

Equally competent

However, industry observers say this does not mean that doctors at public hospitals are any less competent than their counterparts in the private sector.

Frost & Sullivan’s Suwinski says the public healthcare sector, in fact, has more experienced specialists, who are also involved in the teaching process for the medical profession.

APHM’s Thomas concurs, saying that most doctors in the private sector are after all, products of the public sector. Hence, there is not much difference in the competency levels between doctors of both sectors.

He adds that the private healthcare sector has been “fortunate”, as it does not have a large volume of patients, and is therefore able to provide more personalised attention.

According to Suwinski, the perception that public healthcare services are inferior is mainly due to the longer waiting hours at government hospitals and their less attractive facades. “But these have no connection with the quality of care delivered,” he points out.

He thinks the public healthcare sector can overcome the poor perception by upgrading older facilities, acquiring new technologies and equipment, and improving its manpower.

Meanwhile, Thomas points out that the public-private partnership was recently established to help the Government cope with its growing list of patients.

The partnership involves the Government sending some of its patients to the private sector for certain consultation and treatment. The process will not burden the patients as the costs incurred are still borne by the Government.

“It is a win-win situation, whereby the private sector can help ease the load of public hospitals,” Thomas explains.

Beyond borders

A recent study by the National University of Singapore shows that the process of transforming Malaysian healthcare into a global commodity is well under way. This is underpinned by the Government’s effort in institutionalising various incentives such as tax support, accreditation, sales promotion and marketing activities to promote the country as a healthcare hub.

According to Thomas, the private healthcare sector has been tasked to be the driver of medical tourism in Malaysia.

Among the factors working to Malaysia’s advantage, Thomas says, are its cost-competitiveness compared to the regional and international markets, the good infrastructure, and the fact that English is widely spoken here.

In addition, the overall performance of Malaysia’s healthcare system is considered remarkably good by the standards of the World Health Organisation (WHO).

Indicators supporting this are the country’s health-adjusted life expectancy, which is around 63 years (comparable to that of industrialised countries), and the maternal mortality rates, which have fallen by more than ten-fold over the last four decades (from 320 deaths per 100,000 livebirths in 1957 to less than 30 deaths per 100,000 livebirths currently).

According to Suwinski, WHO considers the Malaysian healthcare system to be one of the best and a role model for developing nations.

Frost & Sullivan had earlier estimated that Malaysia’s healthcare industry would grow 8% this year, supported by a 2009 budget allocation of RM13.7bil. Last year, the Government spent about RM13bil on the healthcare industry.

Room for improvement

Malaysia devotes only a small portion of its gross domestic product (GDP) annually to healthcare. Over the years, the Government has consistently spent less than 3% of its GDP on the healthcare sector. The WHO-recommended level is 5%.

But it is almost in line with the trend of neighbouring countries Singapore and Thailand that have been dedicating around 4% of their GDP on health spending. On the other hand, the expenditures on health by the governments of rapidly developing China and India have both exceeded 5% of their GDP since 2002.

In general, developed countries allocate larger portions of their budgets to healthcare. The US, for example, dedicates around 15% of its GDP annually to health spending, while Japan dedicates around 8% and Britain, 7%.

According to an analyst, by consistently spending less than the WHO-recommended amount, a country could turn its healthcare system into a laggard.

Industry observers say the importance of healthcare cannot be underestimated. As Khalid puts it, healthcare goes beyond the individual recipients to the family and society, and investment in health is an indirect investment in the economy of the country.