Malaysia’s Unexpected Health Reform Program

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After 61 years of single-party rule, the May 2018 electoral victory of the populist Pakatan Harapan (PH) coalition sent shockwaves through the Malaysian political landscape. This has been keenly felt within the healthcare sphere, where industry players are broadly supportive of PH’s plans to increase low-income Malaysians’ access to treatments but concerned as to how these measures will be funded and implemented.

 

This is a massive historical change… The new government has a sensible plan for reform. We have studied in detail the PH manifesto which, if realized, will be of great benefit to the country

Roberto Benetello, EUMCCI

Upon taking office, PH pledged to abolish an unpopular goods-and-services tax (GST), reintroduce subsidies on petrol and investigate recent big-ticket investment projects which had received foreign funding. Though popular with the electorate, these measures could precipitate a fall in the national purse; the GST having brought in MYR 45bn (EUR 9.5bn) alone in 2017.

However, Roberto Benetello, CEO of the EU-Malaysia Chamber of Commerce and Industry (EUMCCI), feels that PH’s plan – if carried out in full – could be a huge boost to the nation. “This is a massive historical change… The new government has a sensible plan for reform. We have studied in detail the PH manifesto which, if realized, will be of great benefit to the country. It addresses issues ranging from transparency and public procurement to healthcare spending and green energy adoption.”

In terms of healthcare, PH has designated the field one of 12 National Key Economic Areas (NKEA), with a particular emphasis on pharmaceuticals, under the Economic Transformation Programme (ETP) to bring Malaysia to high-income status by 2020. Within this framework, Malaysia plans to invest heavily in health infrastructure, clinical research, medical tourism promotion, promotion of the use of generic drugs, and the production of drugs in Malaysia for export.

 

B40 Spending Spree

Eye-catchingly, the plan also includes a healthcare scheme to allocate MYR 500 (EUR 106) per year to Malaysia’s three million low-income families (the so-called ‘B40’ group, the bottom 40 percent of earners) to receive basic healthcare in private clinics. This programme should prove popular with both patients and clinics as the B40 families will get access to treatment and private clinics can encourage these families to use their insurance for other screenings, investigations and treatments through advertisements. Minister of Health Datuk Seri Dr Haji Dzulkefly bin Ahmad notes that “the federal B40 health protection scheme will be focused on the health protection of the B40 group, with allocation provided, so they won’t have to pay.”

The most immediate impact in healthcare policy is the manifesto on the introduction of a new health service – Skim Peduli Sihat – from a state-based program in Selangor to a nationwide program

Dato’ Sri Dr Mohammed Azman, PERKESO,

Dato’ Sri Dr Mohammed Azman, CEO at PERKESO, the Malaysian Social Security Organization, highlights the greater levels of inclusivity within the new government’s healthcare strategy, noting that, “With the new government, we have already made immediate changes such as the inclusion of the spouse of the owner of the enterprise sole proprietorship or partnership into our coverage, who had previously been excluded. In the pipeline, the coverage for housewives is currently being prepared and hopefully will be approved soon. The most immediate impact in healthcare policy is the manifesto on the introduction of a new health service – Skim Peduli Sihat – from a state-based program in Selangor to a nationwide program. The program will definitely be beneficial to ordinary citizens, especially those in the B40s where support in obtaining primary care is part of the social security requirement for medical coverage.”

 

Co-opting the Private Sector

The focus now is on leveraging the capacity of the private sector, involving them in consultations on policy matters and trouble-shooting

Minister of Health Datuk Seri Dr Haji Dzulkefly bin Ahmad

Such a comprehensive reform programme will necessitate close collaboration between the public and private sectors. Minister Dzulkefly bin Ahmad suggests that this collaboration needs to go beyond merely making use of private hospitals and their facilities: “The focus now is on leveraging the capacity of the private sector, involving them in consultations on policy matters and trouble-shooting. Moreover, we could also agree to gain access to the private sector’s facilities at a discount price. There is expensive equipment such as MRI scanners un-utilised in the private sector. With a synergy of the systems, we could optimise resources and the private sector could alleviate some of the congestion and bottlenecks in the public sector hospitals.”

 

Industry: Cautiously Optimistic

The PH government is planning a significant hike to healthcare spending, as Lance Duan, Roche’s general manager notes, “In Malaysia, healthcare expenditure only accounts for around 4.5 percent of GDP. In regard to drug expenditure, we have seen a decreasing trend – going from RM 2.4 billion in 2014 to RM 1.9 billion currently. The new government has stated that they aim to double public spending, increasing the GDP percentage from 4.5 to six or seven percent.”

We have yet to see any specific agenda created. While we are excited to see the ambition for monetary investment, discussing the specific steps to be taken in order to achieve these goals is critical

Lance Duan, Roche

However, industry actors, while welcoming this potential funding injection, are raising questions as to how it will be sourced and the feasibility of the government’s plan. Duan warns that, “we have yet to see any specific agenda created. While we are excited to see the ambition for monetary investment, discussing the specific steps to be taken in order to achieve these goals is critical.”

Tunku Naquiyuddin, executive chairman of Antah Healthcare Group, strikes a similar tone, noting that “The new government was voted in for their progressive thinking to avoid monopolies and build an even-playing field in various sectors. Up until now they have done very well but what is causing concern in the industry is that while we are aware that change will occur, we don’t know yet how reforms will be implemented.”

The EUMCCI’s Benetello underlines the fact that it will take time for the PH to get their feet under the table and properly implement their reform programme, positing, “It must be acknowledged that the governing party now was the opposition for many years, never having been exposed to running a country. Here in Malaysia, the previous party had been in power for 60 years. What we are seeing is that is it taking time for the new government to get established, which is understandable.”

Benetello continues, “Malaysia’s governance is established by plethora of ministries, agencies and government-linked corporations that engage in not just policy making but funding and implementation. These multiple stakeholders have their own set of policy instruments and framework which may lead to fragmentation of resources, overlapping competencies and redundancies. Also, ministries and agencies were given the freedom to set their own priorities and tend to perform in silos. Therefore, the current challenge is transitioning into such an intricate system. We just hope that the transition time will not take too long!”

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