Public-private partnerships in healthcare: Malaysia's future trends and models

June 16, 2024

Healthcaretoday, APHM, Association of Private Hospitals Malaysia, Public-private partnership in healthcare, healthcare, public-private partnership, PPP, Dato Sri Norazman Ayob, Pandemic Agreement, International Health Regulations, land swap, Ministry of Health, medical equipment, ambulances, medical assets,

Deputy Secretary General (Finance) Ministry of Health, Dato Sri Norazman Ayob outlines the path forward at APHM’s 30th International Healthcare Conference.

Malaysia's Deputy Secretary General (Finance) Ministry of Health, Dato’ Sri Norazman Ayob, recently shared pivotal insights during his presentation at the Association of Private Hospitals, Malaysia (APHM)’s 30th International Healthcare Conference and Exhibition. In his address, he highlighted the pressing issues facing Malaysia’s healthcare system, the necessity of public-private partnerships, and the innovative strategies being considered to navigate financial constraints while ensuring quality healthcare delivery.

Current healthcare challenges and the role of public-private partnerships
Dato’ Sri Norazman Ayob began by acknowledging the significant budget constraints that the Ministry of Health faces, with a substantial portion of medical assets being outdated. “We face constraints in terms of our budget, which is why you can find that in the Ministry of Health, 60% of our medical assets are more than 10 years, 20% are more than 20 years. Because of the use of medical assets, even perhaps they have reached beyond the requirement to pay. And mostly you can find this in the outskirts, where our community hospitals are all critically ill,” he explained.

Given these limitations, the ministry is compelled to think creatively and embrace public-private partnerships (PPPs) more actively and aggressively. This approach is seen as essential to address the highly human-based public healthcare system with its limited capacity and capabilities.

Pandemic preparedness and international collaboration
An integral part of this strategy involves Malaysia's participation in negotiating crucial international documents under the World Health Organization (WHO), namely the Pandemic Agreement and the International Health Regulations. These agreements aim to enhance global pandemic preparedness, ensuring member countries, including Malaysia, can better handle future pandemics.

Dato’ Sri Norazman emphasized the importance of balancing lives and livelihoods in pandemic preparedness. He pointed to the National Immunisation Programme for COVID-19 in 2021 as a prime example of successful PPP. The programme, devised by the Ministry of Trade and Industry and approved by the Ministry of Health, utilized private sector resources, including hotel operators and convention centers, to convert spaces into immunization centers, and transport operators to facilitate worker vaccinations. Tech giant Microsoft also contributed by developing a vaccination management system free of charge, underscoring the power of collaborative efforts.

Construction of healthcare facilities: Cost and efficiency
The discussion then shifted to the construction of new healthcare facilities. Currently, the Ministry oversees a total of 149 hospitals and healthcare facilities, with approximately 140 of these being hospitals. Dato’ Sri Norazman highlighted the cost discrepancies between public and private hospital constructions. For instance, Avisena Hospital in Pahang cost RM175 million for over 200 beds, while the public Hospital Kapar, with 300 beds, cost over RM830 million. "This significant difference is attributed to the comprehensive suite of services required. We need to have our own dietetic department and provide food for those who are warded.

“We need to build wards and quarters for medical personnel. Public hospitals also need ample space for the high number of patients. Therefore, a hospital with 300 beds will obviously cost over RM800 million.

To address these cost issues, the ministry is exploring private financing initiatives. “This is also something we are looking into in terms of how we can construct or obtain public healthcare facilities at a minimum cost,” Dato’ Sri Norazman Ayob further explained.

“One way is through private financing initiatives. This means companies will build the facilities and then lease them back to the government, with the government paying over the next 20 years. Another option being considered is if you have a piece of land and the industry wants to have a clinic in that area, you can build the clinic according to our specifications, and then we will lease it from you."

This ensures that public healthcare delivery is maintained at a certain level of quality but at a minimized cost. Land swaps are yet another model being considered. "For example, if you have a piece of land and we have a piece of land that we are interested in, we can swap the lands. If one land is valued higher than the other, we can negotiate either paying the difference or constructing a facility to that value. It could also be that if you have a piece of land and the Ministry of Health only requires 5 meters, the other 5 meters can be used by the private sector."

Additionally, the ministry's substantial land banks, valued at RM10 billion, present further opportunities for innovative financing solutions.

Medical equipment and technological advancements
The Ministry of Health is faced with the challenge of a limited budget for procuring and maintaining assets.

“This has resulted in us not being able to procure new assets. Many of our assets are aging, even obsolete. We have now moved away from procurement of assets. The Ministry of Health is slowly transitioning from procurement to leasing of assets—lease to own or lease to use. The ministry will no longer own any ambulances; instead, it will lease ambulances along with the paramedics.

An app will be used so that patients no longer need to call the emergency number. The app has to be downloaded, switched on, and a password keyed in with the identification number before an ambulance is dispatched. This is in the pipeline. Collaboration with the private sector is also being reviewed to manage the ambulance services.

Dato’ Sri Norazman Ayob pointed out that if we paid for use every ambulance fee, the same ambulance can serve either private or public hospitals. "Often, patients opt to be treated at a private hospital upon the arrival of the ambulance. However, because the ambulance is owned by the government, the patient is first referred to a public hospital. From there, the patient has to arrange transportation to a private hospital themselves. The app will give patients the ability to choose whether to be treated at a public or private hospital."

In summary, an exercise is being conducted with all healthcare providers to outsource patients for three different services: cardiology, cardiothoracic, and radiology. These arrangements are currently practiced with the National Heart Institute (IJN), whereby patients are sent to IJN. These arrangements will soon be extended to other private healthcare providers such as KPJ, Columbia, Sunway, or IHH, who offer treatment in these specialties.

Besides providing convenience to patients from other states, this will also encourage IJN to deliver the best value for money.

Hospital information system overhaul needed
Only 10 percent of Malaysia's 149 hospitals have their own information system, with most still relying on memory-based systems. The situation is even more dire in public clinics, where less than 10 percent of the 3,000 mobile clinics across the country are digitalized.

This lack of digital infrastructure presents significant challenges as Malaysia moves towards interoperability between public and private hospitals. Singapore plans to pass a law this year making it mandatory for all private healthcare providers to share patient information with the government. Malaysia aims to implement a similar system to ensure seamless integration between private hospital systems and the government's.

Dato’ Sri Norazman further revealed that his ministry is currently in talks with several technology companies, including Microsoft, to pilot information systems in one or two hospitals. This initiative will be open to any technology provider capable of installing the necessary systems, with financing potentially covered privately and reimbursed by the government over time.

These improvements are targeted to be completed within the next three years. Last year, 50 clinics were equipped with digital systems within six weeks. This year, the goal is to equip 200 more clinics within three months. The ultimate aim is to achieve "one patient, one rakyat, one medical record," ensuring every individual has a unified medical record accessible across the healthcare system.

Commercialization of research and medical tourism
Dato’ Sri Norazman also stressed the importance of commercializing research conducted by the National Institute of Health. Researchers seeking government funding must partner with private sector entities to bring successful research to market. This approach not only facilitates knowledge transfer but also positions Malaysia as a vibrant medical tourism hub, attracting patients from neighboring countries and beyond.

Drug price transparency policy
In a significant policy move, the government has decided not to control the price of pharmaceuticals at this time but will instead enforce price transparency.

Private healthcare providers, including all private hospitals and pharmacies, will be required to share the prices of the pharmaceuticals they dispense to patients. This means that drug prices must be displayed to patients, giving them the option to purchase medications from the hospital or elsewhere. This can be achieved either physically or electronically.

“If it is available on your website, we consider that it’s done. It doesn’t necessarily need to be displayed physically as long as it’s available publicly, which meets the obligation under the law,” Dato' Sri Norazman said.

Pressure groups have been urging the government to impose price controls on drugs due to the significant increase in prices, especially from private hospitals. They argue that price control is necessary to protect consumers. However, such measures would affect private hospitals and general practitioners.

“We are open to engagement before implementing the policy,” said Dato’ Sri Norazman Ayob. “While we understand the concerns, our current focus is on transparency rather than direct price control.”

Future directions
Dato’ Sri Norazman’s presentation provided a comprehensive overview of the current state and future directions of Malaysia’s healthcare system. The emphasis on public-private partnerships, cost-effective construction models, technological advancements, and policy transparency highlights a multi-faceted approach to overcoming budget constraints and improving healthcare delivery.

As Malaysia moves forward with these initiatives, several questions remain open for discussion:

How can Malaysia further enhance its public-private partnerships to maximize healthcare delivery efficiency?
What additional measures can be taken to ensure the digitalization of healthcare records across all facilities?
How will the commercialization of research impact Malaysia’s position as a medical tourism hub?
What steps can be taken to ensure the success of new policies on price transparency in pharmaceuticals?

These questions invite stakeholders, policymakers, and the public to engage in ongoing dialogue, ensuring that Malaysia’s healthcare system evolves to meet future challenges while providing high-quality care to all citizens.

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