KUALA LUMPUR (March 19): The Association of Private Healthcare Malaysia (APHM) has rejected the insurance and takaful operators’ (ITOs) proposal for private hospitals to freeze costs for three years and also for the Health Ministry to regulate the pricing of pharmaceuticals or medication.

ITOs had called for private hospitals to freeze costs during the period it is facing premium pricing caps, and for regulation on pharmaceutical pricing as part of its list of recommendations to address rising healthcare costs, and insurance premium hikes.

The private hospitals association in its counter recommendations however said freezing costs would be a challenge because of staff wages, rising supplier input costs, utilities, and medico-legal expenses.

It is instead open to working with other stakeholders in the healthcare industry to develop industry guidelines for managing medical inflation, based on standards like Medical Consumer Price Index (M-CPI) or global averages.

The M-CPI measures the rate at which medical costs, such as hospital services and medications, increase.

“It is important to note that, despite rising costs, the baseline costs for patients in Malaysia remain significantly lower than in comparable global and regional markets, even though input costs to hospitals are similar. We are committed to finding solutions that balance cost containment with ensuring high-quality healthcare for all,” it said in the statement.

The association said its member hospitals have consistently been carrying out various cost containment strategies, including group-negotiated pricing, regular reviews, and strategic selection of supplies to optimise costs.

APHM’s recent study on the drivers of medical inflation in Malaysia showed that these efforts have helped reduce the impact of a 12% compounded annual growth rate (CAGR) increase in costs, bringing it down to a more manageable 7% CAGR.

Meanwhile, on the ITO’s recommendation to regulate medication pricing, APHM said regulating pharmaceutical prices could limit access to new treatments in Malaysia's small market.

They instead advocate for a balanced approach to ensure affordable medications while encouraging innovation.

APHM reiterated its support for transparency by publishing data on procedure costs and medical inflation but asked that it is involved in analysing and presenting this data to avoid disputes and ensure clarity.

For long-term sustainability, they suggest the Ministry of Health (MOH) or an independent body collect and publish this data for both insured and non-insured patients.

It is also supportive of an evidence-based way forward to control rising claims costs and suggested that the appointment of the independent consultant is agreed upon by ITOs and APHM, and endorsed by the Health Ministry.

APHM supports mandatory co-payment but warns that using co-payment waivers as a bargaining tool by insurance companies to steer policyholders to specific hospitals undermines the purpose of co-payment, which is to encourage patient responsibility in choosing appropriate care.

It is also supportive of ITOs recommendation for a tax exemption on group insurance from sales and service tax (SST) and asked that SST not be applied to private healthcare, as input costs have already increased with the revision in SST rates.

APHM supports encouraging healthier lifestyles with incentives like no-claim bonuses and premium discounts. They suggest offering these rewards as credits for future premiums instead of cash, which could help offset higher premiums later or contribute to accounts like the EPF Healthcare or National Healthcare Financing accounts.

Additionally, APHM proposes incentivising insurance providers and hospitals to reduce non-communicable diseases (NCDs) among policyholders, promoting long-term health and reducing unnecessary medical claims.