IN the service industry, there is a widely recognised model known as the Iron Triangle of Service, which illustrates the inherent trade-offs between three core factors: cost, speed, and quality.

The idea is simple: you can only choose two. If a service is fast and inexpensive, it often sacrifices quality. If it’s high-quality and fast, it usually comes at a higher cost. And so on. Malaysia is not alone in trying to strike the right balance. Like many of its Asean neighbours, we face mounting pressure to contain healthcare costs, while maintaining service quality and ensuring equitable access.

As Malaysia explores models like diagnosis-related groups (DRGs) and develops medical and health insurance/takaful (MHIT) products, it is worth examining how other regional healthcare systems have approached similar challenges in the public sector.

Thailand presents a particularly exemplary case. The DRG model used in Thailand today has evolved over more than three decades. But even with over 30 years of refinement, the system continues to face challenges.

At the APHM International Healthcare Conference and Exhibition 2025, Professor Dr Supasit Pannarunothai, chair of the Centre for Health Equity Monitoring Foundation, shared insights on Thailand’s journey with DRG implementation, highlighting ongoing issues, particularly in financial sustainability.

Thailand’s Universal Coverage Scheme (UCS) is primarily funded through general taxation and administered by the National Health Security Office (NHSO) — its payment structure, capitation for outpatient and preventive services, and DRGs for inpatient care. The UCS is heavily reliant on government funding, making it vulnerable to economic volatility such as inflation, recessions, and rising medical costs.

Thai hospitals frequently report that DRG payments fail to keep up with real-world expenses, especially for high-risk or complex cases, and the reimbursement rates often lag behind inflation, technological advances, and medical innovation.

Other persistent problems of the DRG include coding errors, inaccurate medical records, and what is known as “DRG creep”, where diagnoses are intentionally misclassified to receive higher reimbursements. Such distortions lead to reduced hospital stays, premature discharges, or avoidance of costly patients, which are practices that undermine quality of care, and place added pressure on tertiary hospitals.

In working towards a DRG-based payment system for MHIT products, Malaysia can learn much from Thailand, especially in taking a realistic approach to reimbursement rates  that are regularly adjusted to reflect inflation, medical advancements, and rising operational costs. Equally important is the need to invest in robust health information systems, clinical documentation training, and audit mechanisms to minimise coding errors and prevent practices like DRG creep. These unintended consequences can be mitigated through careful ministry- and industry-led policy design.

Singapore’s healthcare model is often cited as a global benchmark for sustainability, but it presents a different set of trade-offs.

Critics argue that Singapore’s healthcare model falls short of achieving true universal access. But to the Singaporean government, efficiency goes hand in hand with cost. In a recent media appearance, Singapore’s Deputy Prime Minister Gan Kim Yong remarked, “There is really no such thing as free healthcare, because someone has to pay for the drugs, the pharmaceuticals, the facilities, the doctors and the nurses, and the healthcare workers. ”

It is true: healthcare can never truly be free; someone always bears the cost.

In Malaysia, this perspective is increasingly influencing policy discourse. Rather than pursuing the ideal of “free healthcare”, many technocrats and industry stakeholders are now advocating for a more pragmatic and sustainable approach: making healthcare affordable for all Malaysians and meeting each patient where they are, financially and medically.

Like Malaysia, Singapore is also grappling with rising healthcare costs and tensions between private insurers and healthcare providers, which have led to growing calls for greater pricing transparency and more patient-centric reforms.

For Malaysia, the lesson is clear: there is no such thing as truly “free” healthcare. What isn’t paid upfront will eventually be paid for in other ways, often at a greater cost.

Indonesia’s Jaminan Kesehatan Nasional (JKN), launched in 2014 and covering more than 90% of the population, stands as one of the world’s largest national health insurance programmes, symbolising the country's ambitious pursuit of universal healthcare. Yet, while its scale is impressive, execution has proven far more complex.

One of JKN’s main challenges lies in its financial sustainability, with the rising burden of non-communicable diseases, increased service utilisation, and the high cost of advanced  treatments. It was reported that in 2024, JKN’s projected deficit was approximately 20 trillion rupiah (approximately US$1.25 billion, or RM5.26 billion). In addition, JKN faces a funding gap where many members, particularly informal workers, either delay or stop paying insurance premiums altogether, while continuing to access care.

Meanwhile, premiums and benefit structures have not kept pace with inflation, medical advancements, or shifting demographic needs, leaving the system increasingly vulnerable to cost escalation and underfunding. Moreover, ongoing issues of fraud, over-claiming, and poor monitoring continue to plague the scheme.

Indonesia’s experience offers several important takeaways. Among them, the recognition that equity in access must go hand in hand with long-term financial sustainability. This is relevant for Malaysia, where discussions around using EPF savings to fund current healthcare needs must be weighed carefully against the long-term implications, especially for retirement security and future financial resilience.

What these Asean case studies make clear is that cost-control measures and efforts to attain universal healthcare for the entire nation, while necessary, are never without  trade-offs. Thailand’s DRG model has improved efficiency but faces equity and sustainability issues. Singapore’s market-based framework is financially sound but arguably less inclusive. Indonesia’s vast universal scheme faces real strain under financial challenges.

Beyond looking at the ways in which our neighbouring governments attempt to balance cost, quality and equity sustainability, it is equally important to acknowledge that the mechanisms used, like the DRG and such, are not the primary drivers but rather tools to help manage funding. The key issue still lies in public spending priorities.

For reform to succeed at the national level, the focus must be clear: we must recognise that the public healthcare system, the backbone of the nation’s healthcare, serving over 70% of Malaysians, needs sufficient funding and resources. As much as it is a low-hanging fruit and may seem like it would effect change, reform simply cannot begin nor end with the private sector, because ultimately, that is not where the tipping point lies.

For meaningful healthcare reform to be a success for Malaysia, structural prerequisites must be addressed, starting with the core factors driving rising medical costs. Chief among these are the increasing burden of non-communicable diseases (NCDs) and the reality that we are an ageing population. What this calls for is a much greater emphasis on primary healthcare, with general practitioners (GPs) playing a frontline role in the early detection, treatment, and management of NCDs.

Regular health check-ups should be actively promoted and embedded as part of the national health culture. To achieve this, the needs of GPs must be properly understood and supported through responsive policies for them to be the "frontliners", so to speak, in combatting NCDs at an early stage, before patients require hospital intervention.

At the public hospital level, systemic improvements are necessary, ranging from upgrading healthcare infrastructure to ensuring fair wages for healthcare workers. For this,  pricing policies must be reformed to reflect real-world costs, alongside investments in health technology.

Learning from our neighbouring countries, government efforts must focus on addressing the nation’s healthcare challenges through the public sector, not the private sector which is significantly smaller in its role to serve at the national level. Healthcare reform at the national level cannot realistically be led by the private sector. If we consider the nature of businesses, they can open or close at any time and operate without a mandate, unlike the government, who has a duty to every Malaysian. The health of the nation cannot be entrusted to the uncertainty and volatility of businesses, but must remain the responsibility of the government, which is accountable to taxpayers.

To truly strengthen Malaysia’s healthcare future, we must prioritise sustained and increased investment in public health, being aware at the same time, that there are trade-offs to consider. This means committing the necessary resources to build resilient infrastructure, improve access to quality care, and support healthcare professionals on the frontlines. Only through decisive public health investment can we ensure a robust, equitable system that serves all Malaysians, now and for generations to come.

Datuk Dr Kuljit Singh is president of the Association of Private Hospitals Malaysia (APHM) and independent director of the Malaysia Healthcare Travel Council (MHTC) Board.