Poised for growth

Frost & Sullivan’s Dinesh Rangaraj, vice president and head of healthcare for APAC at Frost & Sullivan, argues that digital technology can be a means to bridge the private and public healthcare systems in Malaysia

 

Malaysia is a Southeast Asian country poised to join the ranks of developed economies, projected to achieve a high-income economy status by 2024. Malaysia’s economy grew from US$303bn in 2015 to US$364bn last year which is at an estimated annual growth rate between 4% and 6%.

Although Malaysia’s GDP faces a 4.5% contraction in 2020 due to the Covid-19 pandemic, it is projected to rebound and grow by 6.5% to 7.5% in 2021. This upward trajectory is forecast to be driven by improvements in global growth and international trade as well as the positive impact of government stimulus packages.

According to the 2019 International Living Annual Global Retirement Index, Malaysia’s healthcare services are ranked first with a score of 95 out of 100. Its success in the healthcare category is attributed to advanced infrastructure, affordable services and globally accredited institutions.

Over the last five years, Malaysia has consistently spent 4% to 4.2% of its GDP on healthcare which is lower than the 2019 OECD average of 8.8%. This stagnant spend on healthcare, however, might be challenging given the rise in healthcare costs in the country and across the ASEAN region as a whole.

With the impact of Covid-19 and its resultant lockdowns, healthcare spending in Malaysia is projected to decrease by 2% to 3% in 2020. The recently released Malaysian budget 2021 recorded an increase of 4% in allocations for the Ministry of Health (MOH) to M$31.9bn (US$7.8bn) as compared to the previous year. In light of these budget cuts, it is uncertain whether the country will be able to raise its health expenditure to WHO standards which recommend countries spend at least 7% of their GDP on health.

Malaysia is ranked among the top international medical tourism destination in terms of volume of in-bound travellers for three consecutive years. Malaysia attracted around 1.3 million medical tourists in 2019. In line with the government’s efforts to promote an economic rebound, M$35m has been allocation towards the Malaysian Healthcare Travel Council as well as an extension of tax exemption on private healthcare services export.

MALAYSIA’S DUALTIER HEALTHCARE
SYSTEM
CONSISTS OF A
GOVERNMENTBASED UNIVERSAL
HEALTHCARE
SYSTEM AND
A PRIVATE
HEALTHCARE
SYSTEM

Malaysia’s healthcare tourism is projected to contribute up to M$10bn to the country’s recovering economy and will be able to boost revenues of private healthcare providers.

Private and public
healthcare in Malaysia

Malaysia’s dual-tier healthcare system consists of a government-based universal healthcare system and a private healthcare system.

As of 2020, the country has 354 hospitals, over 200 of which are privately owned. In addition to the hospitals, Malaysia also has 1,090 health clinics and 1,791 community clinics (K Desa) providing outpatient care to the population. Although only 40% of hospitals in the country are public hospitals, public healthcare expenditure accounts for 51% of healthcare spending and provides care for the majority of patients in the country. 70% of inpatients and 95% of outpatients receive treatment from public hospitals.

Malaysia’s healthcare challenges

Public healthcare is paid for by the Malaysian citizens through income taxes and provides universal, comprehensive medical services at low costs. Private insurance penetration has been poor in Malaysia with the contribution of private insurance to total healthcare expenditure unchanged at 7%.

Nearly 70% of Malaysians lack health coverage beyond public care and as the majority of the population enters into retirement, income constraints will shift healthcare spending further towards public healthcare expenditure.

Additionally, a fall in overall income levels due to unemployment induced by the recession and a dwindling workforce will mean a decline in out-of-pocket transactions that contribute to private healthcare revenue. The increase in life expectancy with lower based working population will place a further burden on public healthcare.

As the majority of the population is served by the public healthcare system, it puts burden in terms of infrastructure on the public hospitals and clinics. Long waiting times, delay in diagnosis lead to inefficiency in the healthcare system that defeats the aim of providing healthcare access to all, at affordable costs with best patient experience.

Malaysia has one doctor for every 530 population (as per 2018 MOH report), however, there are still issues of lack of workforce in the public healthcare system. This could be because of the concentration of hospitals and doctors in urban areas that may be creating an imbalance of workforce availability.

Healthcare financing is one of the key challenges that Malaysia will face in the near future. It is estimated that Malaysia’s healthcare spending needs to increase to 6% of GDP but increasing the healthcare budget beyond the GDP growth will not be easy.

The divide between the public and private sector with no collaborative provisioning of services is a challenge that can be resolved through public-private partnerships. There needs to be sharing of infrastructure, purchasing of services at a cost that will benefit the service providers and the patients. The 2021 budget allocated M$4.7bn for the development of the healthcare sector in Malaysia with M$71m towards fostering public-private partnerships in the industry.

Malaysia’s healthcare opportunities

About 8.1% of the adult population (1.7 million people) in Malaysia have all three risk factors of diabetes, hypertension and high cholesterol that lead to chronic diseases.

Half the Malaysian adult population were overweight or obese in 2019. This leads to the point of early diagnosis and prevention than treatment approach that can help reduce mortality and the burden on healthcare costs. Digital health solutions such as digital health tracking devices, health coaching and mental health apps can help the population be healthy.

Covid-19 has accelerated the adoption of digital health globally and it has been the catalyst for change in Malaysia as well.

In the Covid scenario, chronic disease patients have been avoiding going to primary clinics or hospitals that has had an impact on the consultations, e-prescriptions and delivery of medicines. This has an impact on patient health that may lead to complications requiring hospitalisation. Adoption of digital platforms such as telemedicine and digitally transforming the supply chain through e-prescription and e-pharmacy will make the supply chain efficient and also ensure that patients receive the drugs without physical visits to the healthcare service centres.

For diseases that involve a high cost of treatment and long-term care such as those that affect the central nervous system (CNS) and cancer, the use of digital solutions can enable early detection of at-risk patients and appropriate approach to treat it.

Cancers such as oral cancer can be detected using a smartphone-based diagnosis platform though it may require specialists to evaluate the images taken through the mobile application. Such approaches will reduce the burden on hospitals and also ensure that treatment is available at the right time.

Though digital health/digital technology cannot be a solution to all the issues it can definitely be a means to bridge the private and public healthcare system, can help build capacity for prevention, early diagnosis and treatment and to ensure care is decentralised providing healthcare access to all.

In adversity lies opportunities – Malaysia has a unique opportunity to embrace technology and transform the healthcare scenario from healthcare to health and wellness in the future.