Rising costs in private healthcare sector driven by supply chain issues, wage increases - Industry expert
These challenges, compounded by the Covid-19 pandemic, have created a ripple effect across the sector, pushing up operational costs and consequently, patient bills.
SHAH ALAM - Rising costs in Malaysia's private healthcare sector are primarily driven by supply chain disruptions, wage increases and the growing demand for advanced medical technologies, according to industry experts.
These challenges, compounded by the Covid-19 pandemic, have created a ripple effect across the sector, pushing up operational costs and consequently, patient bills.
Speaking at a healthcare forum, Former Thomson Hospital Chief Executive Officer (CEO) Nadiah Wan highlighted the surge in healthcare wages due to a critical shortage of trained professionals since the pandemic.
"Since the pandemic, there has been global competition for medical supplies and devices, which has made procurement unstable and costly.
"At the same time, healthcare wages have surged because of the severe shortage of trained professionals.
"Many training programmes were paused during Covid-19 and we are now feeling the impact," she said.
Nadiah further clarified that the pandemic disrupted global supply chains, leading to a shortage of medical devices and drugs.
Private hospitals in Malaysia faced intense competition for these resources, competing with international markets to secure the necessary supplies.
"This lack of stability has significantly increased costs," the expert said.
In addition to supply chain challenges, Nadiah revealed that advanced medical equipment, such as robotic surgical systems has become the new standard of care for conditions like prostate cancer and complications from diabetes.
While these technologies offer patients less invasive options and improved outcomes, they come at a steep price.
"Robotic surgeries are now the new standard of care for prostate cancer and gynecological procedures.
"I don’t blame patients for wanting less invasive options, but these technologies come with a hefty price tag," she added.
Commenting on the broader impact of the pandemic, Nadiah said the disruption to training programmes has further exacerbated the shortage of healthcare workers.
As a result, private hospitals have been forced to invest heavily in education and workforce development.
"Private hospitals invest a lot in ongoing education.
"Even if you hire a nurse with a basic diploma, the shortage often occurs in specialised areas like dialysis, operating theatres and ICU.
"The government doesn’t have enough training spots, so private hospitals set up their own training academies to develop these nurses. We can't compromise on quality, but unfortunately, the cost of this training is passed on to patients," she said.
Despite the financial pressures, Nadiah emphasised that Malaysia's private hospitals maintain international standards of care and accreditation.
"The quality we offer is comparable to global benchmarks, yet patients are not paying US or Australian prices," she said.
Nadiah also pointed out that salaries remain the largest operational expense for hospitals, accounting for 30 to 36 per cent of hospital costs.
"People often focus on the billions of ringgit in private hospital profits, but when you look at the percentages, gross profit—after paying for supplies—is around 40 per cent.
"Once you subtract wages, administrative costs, and rising insurance premiums, particularly medical indemnity insurance since the Federal Court decision holding Columbia Asia hospitals liable, the net profit is reduced," she said.
She also added that rising insurance premiums, including for medical indemnity, have contributed to the financial strain on private healthcare providers.
"Depreciation and amortisation of capital expenses are also very high, which means from the gross profit of 40 per cent, you're left with a net profit of about 11 per cent.
"While this may still seem like a large amount of money, remember that investors are seeking returns, and these hospitals are heavily funded by shareholders without any public subsidies," Nadiah said.
