From Dr Kuljit Singh
The medical trend rate (MTR) measures how quickly healthcare costs rise over time. A key determining factor behind this rise is the increase in utilisation.
Simply put, the increase in utilisation means more people are seeking healthcare services, at a more frequent rate, and often for higher-intensity treatments.
In reality, the real pressure point is not medical inflation itself but the sharp rise in utilisation.
As utilisation increases, it causes a ripple effect. Patients may face higher out-of-pocket bills, insurers adjust premiums, and employers plan their benefits budgets accordingly.
Hospitals and policymakers also use the MTR to gauge the sustainability of care.
Still, many have asked: isn’t there something private hospitals can do to contain costs?
Providing quality healthcare in the face of rising expenses is challenging. Even public hospitals struggle with escalating costs, and private hospitals are not immune.
A recent analysis by a bank’s research unit has warned that stricter insurer controls could put pressure on hospital margins, which understandably worries patients who fear higher bills.
While systemic solutions like strategic investments in public hospitals and workforce planning are essential, private hospitals in Malaysia have long been working behind the scenes to manage costs proactively.
Between 2020 and 2023, operating costs for private hospitals rose by 10% to 15% annually due to factors such as supply chain disruptions, higher drug and consumable prices, talent shortages, and global inflationary pressures.
Yet throughout this period, private hospitals managed to shield patients from the full impact of rising costs so that it was not borne by patients.
Instead, hospitals absorbed the pressure and achieved roughly 22% in cost savings for patients through measures such as streamlining operations, optimising resource use, and improving internal efficiency.
The rise in healthcare costs is not unique to Malaysia, so understanding how savings are achieved requires a regional perspective. In Thailand, rising costs for imported medical devices and drugs have pushed up hospital fees, leaving patients with higher out-of-pocket expenses.
Australia faces similar pressures — the costs of labour and imported medical supplies have surged, leaving some private hospitals barely breaking even.
Singapore is projected to see medical inflation of 16.9% by 2026, prompting insurers to increase co-pays, deductibles, and cost-sharing measures.
Across the region, the challenge is clear: balancing quality care with financial sustainability is a delicate act.
Malaysian private hospitals have always been proactive in addressing cost inflation.
Investing in efficiency may be costly in the short term, but it pays dividends. Technologies such as robotic-assisted surgery, minimally invasive procedures, personalised diagnostics, digital health platforms, and data-driven clinical decision support tools reduce hospital stays, improve outcomes, and save patients time and money.
It has been estimated that early access to these innovations will lead to increased productivity, faster recovery, and better health outcomes. This, in turn, will account for about RM11 billion in GDP equivalent.
Private hospitals have long been refining procurement, optimising workforce deployment, digitising administrative processes, reducing wastage, adopting value-based care models, and collaborating with insurers on smarter benefit structures.
Individually incremental, together these efforts have a tangible impact on affordability.
However, cost containment is a shared responsibility. Patients play a crucial role in ensuring that over-utilisation is curbed. Private hospitals actively discourage the “buffet syndrome”, where benefits are over-utilised simply because they are available, and, as previously stated, this practice drives up medical cost inflation.
Doctors encourage patients to undergo only necessary tests and procedures, and unnecessary hospital admissions are avoided.
Outpatient services for non-critical conditions have expanded, reducing pressure on beds and allowing patients to recover comfortably at home.
Beyond individual hospitals, the Association of Private Hospitals Malaysia (APHM) champions informed, preventive care, which curbs unnecessary expenditure and improves health outcomes.
Financial counselling has become standard, helping patients understand coverage, make informed decisions, and avoid unexpected costs.
Since May 1, 2025, hospitals have also been displaying medicine prices, empowering patients to compare costs and collaborate with healthcare providers on both financial and medical decisions.
At the national level, APHM is actively engaged with the Joint Ministerial Committee on Private Healthcare Costs, as well as working with the health and finance ministries to provide insights, advise on policy, and highlight patients’ financial challenges.
Coordinated efforts by APHM, patients, and policymakers have already softened the impact of global cost pressures.
As healthcare costs rise globally, innovation and adaptation are vital.
Private hospitals’ efforts go beyond technology, efficiency, and patient-centered care. Additional innovative measures are being implemented to ensure quality healthcare remains sustainable for private hospital patients.
Dr Kuljit Singh is president of the Association of Private Hospitals Malaysia.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
