This article first appeared in The Edge Financial Daily, on January 28, 2016.

SHAH ALAM: Malaysia’s healthcare spending could rise to as high as US$20 billion (RM85 billion) by 2020, due to the rising incidence of chronic diseases, increasing healthcare costs and a weak ringgit, according to consulting firm Frost & Sullivan.

Based on data collected, Malaysia’s healthcare expenditure for 2013 stood at US$12 billion, said Frost & Sullivan partner and senior vice-president of transformational health Rhenu Bhuller. One way to tackle the rising expenditure is to further enable public and private healthcare integration in terms of resource usage, and a social health insurance platform, to create a more balanced healthcare environment, said Rhenu.

Sharing of beds services is one public-private integration to cater to the increasing number of patients. Already being done in the United Kingdom and Indonesia, this is one area Malaysia can look into, said Rhenu. Malaysia’s healthcare services, especially in the public sector, are facing capacity constraints, with one of four hospitals having a bed occupancy rate (BOR) of over 85%, compared with a more efficient BOR of 70% to 75%, said Rhenu.

Public-private integration is especially relevant for Malaysia now as the bulk or 60% to 70% of patients in the country are treated in public hospitals, but “where the patients are is not where the resources are being channelled to,” Rhenu told a briefing on the consulting firm’s 2016 transformational health outlook yesterday.

Malaysia faces a resource gap and needs to further develop healthcare resources, particularly specialists and ancillary healthcare workers, and the technical skills of its healthcare staff, she said. “As the country works towards attracting investors and medical tourists, areas such as resources and technology application, as well as stronger public-private integration, will be key success factors,” said Rhenu.

The current economic situation is not all bad for the country though. The weaker ringgit now may present Malaysia as a more competitive destination for medical tourism compared with its neighbours. “But the primary reason a patient chooses a destination is based on the quality of healthcare services provided, and this is what Malaysia needs to continue to build, otherwise we might lose our competitive advantage,” cautioned Rhenu.

While healthcare has always been regarded a recession-proof industry, Rhenu believes 2016 will be a “very tough year” for private players here to deliver strong results due to economic uncertainties. 

On the impact of the Trans-Pacific Partnership agreement, Rhenu believes it is a matter of how Malaysia manages the situation. “We can look at it as an opportunity, given that competition is everywhere. At the end of the day, it’s about what gives a good quality product to healthcare consumers,” she said.