PAC: Rising Private Hospital Charges, Not Doctors’ Fees, Driving Health Insurance Premium Increases
KUALA LUMPUR: Malaysia’s Public Accounts Committee (PAC) has concluded that escalating non-professional charges imposed by private hospitals, rather than doctors’ consultation fees, are the primary factor behind rising health insurance premiums.
PAC Chairperson Datuk Mas Ermieyati Samsudin said doctors’ professional fees have remained regulated since 2013, while increases in other medical cost components have continued to push overall healthcare expenses higher.
She said major cost drivers include rising prices of medicines, medical supplies, diagnostic tests, laboratory services and advanced treatment technologies.
The committee also identified higher operating expenses faced by private hospitals—including labour costs, utilities, technology investments, litigation expenses and defensive medical practices—as significant contributors to healthcare inflation.
The findings were presented in the Dewan Rakyat through the PAC report on health insurance premiums and private hospital charges, which was tabled by Kapar MP Dr. Halimah Ali on behalf of the committee.
According to the report, the absence of a standardised billing structure among private hospitals makes it difficult for patients to understand the actual cost of medical treatment.
PAC also found that medicine prices are often used to absorb indirect operational costs such as nursing services and utilities, resulting in higher pharmaceutical charges.
In addition, the committee highlighted the practice of “unbundling,” where basic items such as pillowcases, alcohol swabs and clinical waste disposal are billed separately despite normally being regarded as part of standard room or service charges.
The report further noted instances of price discrimination, with patients using guarantee letters (GLs) being charged higher rates than those paying cash or using reimbursement-based payment methods.
PAC also observed substantial mark-ups throughout the pharmaceutical supply chain, including situations where generic medicines were priced higher than branded alternatives.
The committee said the issue is compounded by the presence of more than 1,500 medicines supplied by only a single registered manufacturer in Malaysia, limiting market competition and allowing higher pricing.
To address these challenges, PAC proposed 17 recommendations, including accelerating the implementation of the Diagnosis-Related Group (DRG) payment system, expanding regulatory oversight of private hospital charges beyond doctors’ fees, and introducing stronger price control mechanisms for medicines and medical devices.
The committee also recommended direct procurement from manufacturers, particularly local producers, to reduce reliance on intermediaries and improve price competitiveness, while Members of Parliament from both sides of the House called for broader reforms to strengthen healthcare affordability, insurance transparency and public healthcare investment.
