The Rising Cost of Halthcare Part 4

This is part of a series about the Rising Cost of Healthcare
Part 1 - Cost versus Standards
Part 2 - Measuring standards
Part 3 - Improving delivery
Part 4 - The PHFCS
Part 5 - Conclusion

PHCFS Act and the Rising Cost of Private Healthcare

Of late, the so-called escalating cost of private healthcare has been constantly highlighted. This has been used as the prime reason by some quarters for calls to regulate the market, promote accessibility and enforce minimum standards and hence the PHFS Act 1998.

It is true that the total hospitalization cost in a top-ranged private hospital for an uncomplicated caesarian section was around RM 3000 15 years ago. It now costs around RM5000. Similarly, for a basic appendectomy, the cost has risen from around RM1300 to RM3000. Invariably the blame has been on the doctor, i.e. the provider of the professional portion of this service. However if one were to examine this issue in greater detail, one could easily see why we are barking up the wrong tree.

We believe that it is not possible to avoid private hospitals from providing “5 star” services (hospital and other services) and charging for them. After all, we are a capitalist society and there is an element of “free market” forces in play even in the provision of an essential item like healthcare. With the new PHCFS Act 1998 and Regulations 2006, we had hoped that just as doctors shall follow a prescribed fees schedule, there should also be a private hospital fees schedule for their hospital and other services. A provision sadly missing in the new law.

The public should be made aware that with the current law, only doctor’s fees (ie. the professional fees) are regulated by law. If this law is to regulate the total business of private healthcare, this is indeed a major deficiency. We should also note that doctors fees is generally about 10% of total private hospitalization charges, for physicians and 20-30% for surgeons. Thus the public must be prepared that there is no mechanism for the control of the hospital portion of the fees that accounts for the bulk of private hospitalization cost.

It is not true that doctors in private hospitals conspire with hospital management to rip off their patients (despite the grim picture painted by the Sun). The truth of the matter is that doctors have no control whatsoever on the hospital portion of the patient’s bills. Doctors in private hospitals are in constant friction with hospital management regarding this issue. At the end of the day, some of these doctors have even been “disciplined” and “sacked” for intruding into what the hospitals believe are purely business matters that doctors should have no role in.

Often it is the private healthcare insurance that helps pay for cost of medical care. We support the need for some form of effective monitoring of all private hospitals and private doctors. Obviously, private hospitals and any of their doctors who abuse health insurance payments should be blacklisted as has happen in some institutions. It is also true that the vast majority of private doctors and hospitals provide good medical care without “abusing the system”. To address this issue and to protect the public, we are of the opinion that there should separate and independent agreements between doctors and payers and between private hospitals and payers.