Saturday, March 14, 2015


This letter was send for publication. Lets see if it appears.

Doctors threaten to sue Customs on GST.
It is all over the social media,  that poorly advised private doctors are mulling taking legal action against the government.  Having participated in meetings with the MOH on Regulations of the PHCFS Regulations and having participated in discussions with Custom’s on healthcare GST, please allow me to help clarify on this issue of GST on Healthcare with particular reference on Private Hospital Consultant. I believe that I am in the know, and would like the facts to be known.
 Perhaps the only wrong doing of the government, in this case the Prime Minister,  is to promise that the coming GST will see no increase in private healthcare cost as healthcare will be GST exempt. Besides that, the government ( in my opinion ) is not to blame for the controversy of private hospital doctors charges when GST is imposed on the 1st April 2015.
When we met with the Director of GST, Datuk Dr Sobramaniam in late Nov 2014, he made it very clear to us that all private doctors, who are registered with the Ministry of Health under the PHCFS Act is GST exempt. That was clearly spelt out. In November 2006, when the PHCFS Regulations were being enforced, private doctors were asked to register. GPs and solo practitioners paid their dues and registered. They subjected themselves to inspection by Ministry of Health Officials and were okayed.  Private Hospital Specialists were advised by their hospitals not to register individually but that the hospital will register them under their  healthcare facility. This was obviously because the private hospitals wanted to control the doctors. Doctors were labeled “independent contractors” by the hospitals and treated as such, which included the right to hire and fire, like other contractors are subjected to, with little regard to their medical duties and responsibilities. This independent contractor status had been accepted from the very beginning by all the private doctors for the last 30 years. When private hospitals labeled doctors as contractors, they had no qualms that this was a noble  profession dealing with patients health.
The “Goods and Services Tax ( GST ) is a tax on goods and services. Since the doctors are providing a service to the hospital, the hospital should duly pay them the 6% GST.  The private medical consultants  should therefore have no issue with the Custom’s Department. Their duty then is to remit this 6% to the Custom’s Department.  The issue is the private hospital is unhappy as this may affect their profit margin. So they are using the doctors to fight their battle. And the doctors, without understanding the issue have fallen into the trap and allow themselves to be used. I have tried my best to explain to the doctors, but to no avail.
So the doctors are wrong to argue that Custom’s Department are wrong. This issue has nothing to do with private practice doctors. They are being made used off by private hospitals. Of course, what is not said is that should private doctors not “play ball” with private hospitals, they face the possibility of disciplinary action, not excluding termination.
What then is the solution?
Well, on the doctors end, do nothing. Let the hospital solve the 6% issue through creative accounting, and price manipulation. Obviously the private hospital will increase cost of care, to allow for the 6% increase to be passed on to doctors. I hear that they will probably round of to at least 10% or maybe even 15%, to include their annual fees increase. I hear that some private hospitals have also asked doctors to raise their charges by 6 % and share the 6% with  the hospital. This is called “fees splitting” which is against the PHCFS Act. The private hospitals may also allow doctors to be fully independent, amend their contract and make doctors medical service providers with rented premises in the private hospitals. This will allow doctors to collect their own fees. Then doctors will register with the MOH under the PHCFS Act.Then their services will be GST exempt. The hospital is unlikely to allow that as that would mean that they cannot hire and fire the doctor at will..
So there are solutions. But the private hospitals do not like these solutions as it would mean less profit, or less control over their doctors.
Basically, private hospitals want their cake and eat it. In the meantime, get the doctors to do their dirty work and sue Customs.

 Doctors, wake up please.


Winston Yap said...

Doc, I really don't understand your article.
I understand that the healthcare practitioners have always objected to the GST in the case of all healthcare services.
Now, it appeared that this is acceptable.
Can you please clarify?

hmatter said...

FPMPAM objects because it will increase healthcare cost. Also the list of drugs exempted is small and inadequate. The bigger giants who object are Private Hospital Owners. If each Private Hospital have 100 doctors and each doctor earns about RM 50K a year, private hospitals will have to pay each doctor RM 36K AND SO 100 Doctors equals RM 3.6 million. This amount is significant. So private hospitals are trying to make doctors sue Customs. Individual doctors should have no issue except more paperwork.