KUALA LUMPUR (Feb 5): Private hospital operators are always continuously seeking ways to manage rising medical inflation in the country, said Khazanah Nasional Bhd, shareholder in healthcare group IHH Healthcare Bhd (KL:IHH).

Khazanah managing director Datuk Amirul Feisal Wan Zahir noted that private hospitals are exploring various approaches, including offering alternative treatment options, to help mitigate costs.

Responding to questions on IHH’s role in addressing medical inflation, Amirul added that private hospitals are also engaging with medical insurers to find more effective cost-management solutions.

“Medical inflation is not unique to Malaysia, it is a global phenomenon,” he said.

“In Malaysia’s case, the public healthcare system is quite constrained, we need options for more capacity.

“For the private healthcare system, insurance companies have responded and come up with policies [such as] capping premiums to help the people. And private hospitals would also want to see how they can help.

“For example, how can they change operations to have more generic drugs instead of innovative drugs, for example, and have more treatment options — perhaps local anaesthetics as opposed to general anaesthetics — and also speak to insurance companies on how the hospitals will help them [better address costs],” he added.

Commenting on the expected impact on IHH from the government’s ongoing efforts to put a lid on medical inflation, Amirul said it should be “manageable”.

“[IHH’s] revenue is quite diversified, with around 20% from Malaysia, and not all is related to [patients who are covered by] insurance,” he said.

IHH, in which Khazanah owns an indirect stake of 25.73%, operates several hospital brands in Malaysia, including Pantai, Gleneagles, and Prince Court, on top of operations in Singapore, Türkiye, India and China.

In the nine months ended Sept 30, 2024 (9MFY2024), the healthcare group's net profit fell 13.44% to RM1.93 billion from RM2.22 billion, despite revenue rising 13.1% in the same period to RM17.69 billion, from RM15.64 billion.

The decline was in absence of disposal gains, including that of IMU Health (RM873 million), Gleneagles Chengdu Hospital (RM116 million), IHH’s 9MFY2024 results filing showed. The group also saw double-digit percentage increases in costs attributed to inventories and consumables and staff costs.

In light of the concerns on accelerating medical inflation in Malaysia — up 15% year-on-year in 2024, which is higher than the Asia Pacific average of 10% — Bank Negara Malaysia, which regulates insurers, in December announced interim measures including spreading out premium increases over at least three years, and pausing certain premium adjustments for individuals aged 60 and above. For individuals whose policies lapsed in 2024 due to previous premium revisions, reinstatement will be permitted without any additional underwriting requirements.

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