At the same time, insurance premiums are rising well beyond Bank Negara Malaysia’s 10% cap, while public hospitals are overwhelmed with long queues, a shortage of specialists and stretched resources.
However, instead of focusing on faults, experts say the conversation must shift toward practical and transparent solutions that improve outcomes for all Malaysians.
Medical costs are escalating worldwide. Malaysia is no different, experts say, yet in some ways, it is even more exposed.
Why are healthcare costs climbing?
Private hospital charges are often perceived as excessive, yet data shows they operate on modest post-tax margins of between 7% and 11%—lower than the margins reported by insurers (13%), pharmaceutical firms (15%), and MedTech companies (16%).
Up to 90% of private hospital earnings is reinvested in infrastructure, equipment and staffing. This reinvestment is critical in a competitive environment where retaining skilled specialists has become increasingly difficult.
Healthcare costs are rising in part because hospitals must bear the cost of globally-priced technologies, imported drugs and rising wages. Meanwhile, the public system remains severely overburdened.
Over 70% of Malaysians depend on public healthcare, where the doctor-to-patient ratio exceeds 1,500:1. Those who can afford private treatment gain faster access and a more personalised care environment, complementing the essential services offered by public hospitals.
Medical bills also vary depending on a patient’s health profile. A young, healthy individual will naturally incur lower costs than an elderly patient with multiple chronic conditions. However, variations are driven by the complexity of treatment, not arbitrary pricing.
The insurance factor
Patients are often taken aback by the cost of private treatment, particularly in insured cases. However, these outcomes are frequently the result of how insurance policies are structured.
Hospitals usually charge the same base prices for treatments regardless of whether a patient pays out-of-pocket or via insurance. However, insurance companies often negotiate business-to-business (B2B) discounts with hospitals premised on patient volume. In such cases, the final bill that an insured patient incurs would likely be lower than the standard rate.
Before admission, hospitals typically offer patients an estimated treatment cost based on the clinical recommendations of doctors. Patients are always informed of options available to them if the insurance coverage excludes certain procedures or the treatment cost exceeds their policy limit.
Patients who choose to self-pay may, in some cases, incur lower overall costs. This can result from patients opting for less intensive treatment or receiving discretionary discounts and financial aid from hospitals and doctors in deserving cases.
While these practices are typically rooted in clinical judgement and goodwill, they may contribute to the perception of dual pricing between insured and self-paying patients.
When appraised of the estimated costs, patients can then decide whether to pay for treatment out of their own pocket or seek a transfer to a public hospital. This process ensures decisions are made transparently and with informed consent.
Health economist Prof Syed Mohamed Aljunid of IMU University attributes the inflationary pressures to factors affecting both demand and supply.
“On the demand side, an ageing population and the rise in chronic non-communicable diseases are important factors. They require a huge amount of resources—especially in the long term—to treat.
“On the supply side, new technologies, specialised equipment and treatment, and the development of new drugs are also costly,” he told FMT.
He said the insurance sector must also be subject to scrutiny as some policyholders have seen premiums rise by as much as 50% over three years—well above official caps.
When insurance coverage lapses or is exhausted, patients often fall back on the public system. This shift is especially pronounced in cases of recurring illnesses like cancer, where policies typically cover only the initial diagnosis.
Transparency vs. reality in medical billing
Unlike retail products, medical costs can’t always be quoted upfront. Treatments may evolve in real-time depending on a patient’s condition, complications and their recovery trajectory. While hospitals provide detailed, itemised bills post-treatment, estimating exact costs in advance is often impossible.
Since May 1, private healthcare providers have had to publicly display medication prices—a move aimed at enhancing transparency. However, industry stakeholders have voiced concern over practical hurdles, from administrative burdens to unclear regulatory oversight.
Critics of the move say doctor-patient consultations may end up becoming price-haggling sessions.
Smaller clinics, already struggling with rising costs, may find it difficult to absorb the compliance burden. Penalties for non-compliance—up to RM50,000 for individuals and RM100,000 for companies—are also raising alarm.
Dr Nomee Ashikin, group medical director at state-owned Selgate Healthcare Sdn Bhd, said private hospitals already operate on tight margins and absorb significant overheads to maintain high standards of care.
“Hospitals have no choice, as they are facing a lot of headwinds. With the current issue of tariffs and a poor ringgit, a lot of these problems will trickle down and be borne by the public,” she told FMT.
Other countries offer mixed lessons. Thailand’s price controls were met with resistance due to fears of stifling innovation. Vietnam has capped basic services but allowed premium offerings to offset costs. Singapore has sought to balance public and private roles through hybrid funding and structured pricing.
What can be done?
One critical area is better regulation of the insurance industry, said Nomee.
“When the bottom line is prioritised, it will be to the detriment of the public. We need some sort of regulation.
“We know that the medical doctors are the ones who are being regulated. Our fees have not changed for the last decade. Before, the ratio of medical bills was one to the doctor, three to the hospital. Now it’s one to ten,” she said.
Some patients have faced steep premium hikes and coverage inconsistencies. Improving transparency around claims and clearly communicating co-payment structures could help rebuild trust.
Another priority is strengthening coordination between public and private healthcare. Both sectors are essential, and better collaboration can ease congestion and improve access across the board.
At the policy level, reform needs to be cautious and deliberate as overly aggressive regulation could deter investment and affect service quality.
Dr Khor Swee Kheng, CEO of Angsana Health, said reforms must be gradual and consultative.
“Reforms should take place with enough notice so that people are not surprised by it. As long as you manage the reforms in a gradual, predictable way that is familiar to people—without scaring them—reforms will work,” he told FMT.
He said addressing Malaysia’s healthcare challenges will require cooperation from all sides.
“Stop blaming each other. Stop saying that a certain stakeholder has got more duty, more responsibility, and therefore has more on the hook than other stakeholders.
“The middle way must be collaborative, evidence-based and should be implemented in a pilot fashion. If it shows some early promising signs of results, then we go all in,” he said.