This article first appeared in Wealth, The Edge Malaysia Weekly on October 23, 2023 - October 29, 2023

An ageing population and fast-rising healthcare costs are causes for concern. The government, the private sector and the public will need to work closely together to tackle the various challenges ahead. This was the key message from speakers at The Edge Malaysia Retirement Reimagined Forum 2023.

Just how high is medical inflation locally? Professional services and management consulting firm Aon’s 2022 Global Medical Trend Rates Report put it at 12% last year, increasing at an average rate of 10% to 15% each year. In contrast, the general inflation rate for goods and services was only about 2% last year. This is a concern because with ageing, healthcare can eat up a big portion of one’s money put aside for retirement.

During a fireside chat at the forum, Subang Jaya Medical Centre (SJMC) CEO Bryan Lin pointed out that the obesity rate in Malaysia is as high as 20%. Thailand’s is 11%, Singapore’s is 7% and Vietnam’s is a mere 2%, he added.

“At the same time, our nation is ageing and we are going to have a lot more elderly [people]. If I use obesity as a lead indicator for health, our future doesn’t look good. NCD (noncommunicable disease) incidents [will happen] all the time,” he said.

When the public is already burdened by healthcare and medical costs, the pressure will only increase moving forward if things stay the same. A weak ringgit will add salt to the wound.

“As we are all aware, the general inflation rate today doesn’t reflect healthcare or medical inflation. The ringgit’s depreciation doesn’t help, as we import a lot of our medication and medical equipment,” said Lin.

Another issue that the local healthcare sector has to contend with is the manpower crunch, with medical professionals and nurses increasingly leaving the country to work overseas, such as in Singapore. Their salaries are multiplied by more than three times by just crossing a bridge to work in the city state, he said.

“So, these are the challenges that we are facing. We have to embrace them, be prepared and think of new ways to tackle and mitigate them,” he added.

“I think our healthcare system will be under tremendous pressure moving forward. Looking at what has been shared by the previous speakers and by putting it against the backdrop of an ageing population.”

The public healthcare sector, mainly the public hospitals, will have to shoulder the burden of the country’s growing demand for healthcare if the majority of its people cannot afford private hospital services.

However, as an emerging economy, Malaysia is not as wealthy as its developed counterparts. Its expenditure on the healthcare sector is also far lower than in countries such as the US, the UK and Australia, said former director-general of health Tan Sri Dr Noor Hisham Abdullah.

“Our healthcare expenditure on the public sector is 2.2% of GDP, while the private sector’s is about 2.1%. The total is about 4.3%. As compared to developed nations, it is about 11% in the UK, 19% in Australia and 20% in the US,” he added.

Noor Hisham joined Lin at the fireside chat session to discuss their concerns about the country’s healthcare system. An elderly participant said the price of medical care services provided by private hospitals is “exorbitant” and increasing. While one can buy an insurance policy to cover these expenses, the premium could go as high as “five figures” per annum for the elderly. “Private hospital care is going to be elitist care. What can be done to bring down costs and make it more equitable for the people?” he asked.

In answering the participant’s question, Noor Hisham shared his experience as the former director-general of health. A potential solution to bring down healthcare costs is by pooling resources when purchasing medicine and other services, he said.

Noor Hisham pointed out that countries around the world were scrambling for the Covid-19 vaccine when the pandemic was at its peak. Although the Malaysian government had placed its order with the vaccine suppliers relatively early and paid the bill, the products arrived only six months later.

In comparison, the European Union got a better deal as it bought vaccines in bulk on behalf of about 30 member countries. As the purchase orders were much bigger, the prices were lower and the products were delivered earlier.

Therefore, he came up with the idea of pooling resources last year. “We realised that university hospitals came under the Ministry of Higher Education and others under the Ministry of Health and Ministry of Defence. We did procurements for medicine [independently].

“So, we broke down the walls and came together — three ministries. We identified 82 medicines and pooled our resources. We saved RM179 million that year. It was an initiative with high impact, good outcome.”

Noor Hisham suggested that the government and the private sector in Malaysia, or even in other Asean countries, can adopt the same strategy to purchase and engage medical products and services to bring down medical costs. “I’m sure we can bring down the cost of medicine in the private sector by doing so,” he said.

The same solution of pooling resources can also be applied to aged care centres, which are currently inaccessible to most Malaysians due to the high prices. Noor Hisham suggested that the Employees Provident Fund (EPF) invest in retirement homes or villages for its more than 16 million members.

“Again, if you can get the volume, then you can bring down the cost. Then the prices won’t be as high as RM5,000, which are prices offered by smaller aged care centres,” he said.

However, the issues surrounding aged care centres also involve processes, quality and regulations, he added.

An encouraging development is the passing of the Private Aged Healthcare Facilities and Service Act 2018, which replaced the Care Centres Act 1993.

Noor Hisham said the Act wants aged care centres to fulfil certain minimum requirements before they can commence operations, including proper registration with the authorities, having a viable business plan and business model, and ensuring the qualifications of the people they hire.

Yet, setting up a proper aged care centre remains challenging as it involves multiple ministries. “For instance, the registration comes under the RoS (Registrar of Societies). The minimum standard requirements come under the Department of Social Welfare. Then, you have the local authorities in charge of the licences, as well as the Fire and Rescue Department. Obviously, the Ministry of Health is also involved,” he said.

“Can we have a one-stop centre to coordinate [and streamline] the processes? Also, to provide subsidies and incentives for the operators to improve their quality? At the end of the day, we want the healthcare and aged care centres to be of good quality.”

For the aged care industry to grow and be viable, Noor Hisham emphasised the importance of changing the mindset of society. Sending parents to a care centre should be seen as children taking responsibility for their elders’ health.

He added that trust needs to be built between parents, children and the aged care centres. “We need to build trust in the population. Sending your parents to an aged care centre should be something to look forward to.

“It shouldn’t be a taboo and [be said] that your children are not responsible. The mindset of ‘why one mother can look after 10 children, but 10 children cannot look after one mother’ should be changed.

“However, the care centres need to be able to provide a whole array of services, and with good quality. That’s the way we can move forward.”

Speaking as one who helms one of the most famous hospital brands in Malaysia, Lin reiterated that the cost of private healthcare and aged care is high for a reason.

“From an investment point of view, it is not just a ‘pure property play’. It doesn’t involve just the hardware, but also the software, including the nurses, doctors and talents,” he said.

“As for the cost of RM5,000 to RM8,000 [per month fee] for some of these retirement homes or villages, I agree that it is prohibitive [to the public]. But it is, again, because of the investment required in infrastructure, construction materials, equipment and more. There is also the inflation factor in play.”

However, it does not mean that healthcare and aged care costs cannot be brought down, especially with the help of technology and innovative ideas.

“Honestly, the way forward [to bring down costs] is to have a paradigm shift [in how healthcare and aged care services are being provided]. For our hospital, we are looking at ‘Uberising’ healthcare. Our focus is to bring these services to the homes of patients,” said Lin.

The “uberisation” of healthcare and aged care can be done with the help of technological devices, the internet and trained nurses, he added. Incidentally, a few years ago, Noor Hisham also proposed such a system.

Lin said SJMC launched its connected care services, Home Connect, in 2020 during the pandemic. Under the programme, patients who have undergone certain surgeries can be discharged and taken care of by trained nurses at home with the help of connected medical devices.

Subsequently, the hospital launched its TeleConnect services, where a medical concierge advisory centre manned by professional personnel advise and guide callers who need medical help.

“You can call the centre free of charge. We will advise you on any questions you have regarding emergency medical conditions. We can guide you on what needs to be done and what you need to know until the patient is sent to the nearest hospital,” said Lin.

“You can also use WhatsApp to communicate with us. The centre is manned by professionals — doctors, nurses and specialists — from 8am to 6pm.”

SJMC then launched SeniorConnect, utilising medical equipment and the internet to monitor the elderly in their homes, he said.

“Again, everything we’ve done is using technology. It is available and it’s not expensive. These are medical devices we call IoMT (Internet of Medical Things) or just IoT. We started in July using medical devices approved by the Ministry of Health and its Medical Device Authority,” said Lin.

“We hook these devices up to the patients or elderly, and their data is pumped into the cloud, and our command centre in the hospital will look at the data coming in. If there’s something wrong, we can alert the caregiver or patient.”

It costs RM10 per day or RM300 per month for one to use SeniorConnect, he said. “The elderly can be monitored remotely. And just as Tan Sri mentioned, technology allows us to scale [and lower our prices].”

With technology, patients and the elderly are able to save costs too, such as room and board. At the other end, the hospital can operate more efficiently and, hopefully, be able to provide cheaper services to the masses.

“You know, in the hospital, we need a certain breadth and depth of healthcare services at work, 24/7. We have medical offices, nurses, specialists, subspecialists, doctors and more. So, we are looking at how we can disrupt the industry by using technology and make healthcare and aged care services more affordable to our population,” said Lin.

He added that most elderly people wish to be cared for at home, according to a study conducted by Universiti Malaya.

“The study asked the elderly [respondents] in the Klang Valley whether they were willing to move [to another place for treatment]. The result shows that 22% of them were willing to move. But of the 22%, only 5% were willing to go to a retirement home or village,” he noted.

Lin said self-care is one of the best ways for a person to reduce medical and aged care costs.

“The reality is that healthcare costs are on the rise globally. And we must realise that the burden [of reducing healthcare costs] also falls on the shoulders of each individual. We cannot solely depend on the government or other people to manage our health.

“If we are living unhealthily, eating unhealthily and taking in a lot of sugar, we are asking for trouble. We should be looking at ourselves and how we can do better.”

He emphasised the importance of self-care by drawing an analogy between how an investor performs active management of his investments and how a person similarly needs to manage his own health. “Self-care is taking ownership of our health. It is investing in our health. Self-care is a way to invest in your future, to mitigate the costs [of healthcare issues that arise as people age]. The burden of health is on yourself,” said Lin.

Noor Hisham concurred. The future of healthcare doesn’t rely on building more operating theatres, he said. “Surgeons are looking beyond the operating room, not building more operating rooms, [because that means] you have not actually addressed the real issue. [The long-term solution] is to address the issues by using public health measures.”

For example, regular screenings are important because early treatment is better and more cost-effective in the long run. If a disease is diagnosed early, it can be treated more effectively.

“We just talked about investment shifting from curative to preventive treatments and primary care. You can reduce the cost of healthcare and primary care when you look after yourself and live a healthy lifestyle. You exercise regularly and do regular health check-ups. Early treatment is better and more cost-efficient,” said Noor Hisham.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.