Healthcare Blooper of the Year – Malaysian edition

This blog was meant to be for an international audience, but by request from one of the blog’s avid followers, I am presenting the Malaysian equivalent of ‘blooper of the year’. Several candidates came to mind…the ex-Health Minister episode, the conviction and jail sentence of a doctor for noncompliance to the PHFS Act and the gaffe by the Deputy Minister in stating that doctors have a licence to kill.

But the winner is….the proposal to privatise the National Heart Institute by a Malaysian public-listed company.

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The National Heart Institute of Malaysia - a model of corporatisation as a prelude for all public hospitals?

For international readers, a quick 101 : Malaysia has a unique healthcare system – public and private. The two entities are separate and distinct so that  staff cannot work in both sectors. The public hospitals are  almost totally subsidised by tax-payers and is accessible by all citizens at practically no charge. The private sector is profit-orientated with  approximately two-thirds of its patients funded by third-party payors while the rest pay out-of-pocket.

So what makes this deal unique? After all, this sounds similar to the extensive NHS privatisation exercise carried out since 2006 in the UK which drew much fanfare. Well, the National Heart Institute in Malaysia (NHIM) started life in 1992 as a corporatised entity. In essence, the government retained the physical assets (the balance sheet) and parceled out the operations (P&L- profit & loss accounts) to a state-owned entity, MOF Inc. The P&L has remained healthy and it is believed to have over USD 70 million in cash assets. In short, the Institute seems profitable.

So what’s wrong with the deal? Plenty..

1. When the NHIM started in 1992, its vision and mission was to be a centre of excellence with equal time devoted towards training and research & development(R&D) as towards service to patients. As it is, due to the busy patient service workload, NHIM has strayed away from its original objectives. Today, R&D is almost non-existent. Can privatisation remedy this? It is doubtful, as R&D is hardly profitable in the near-term.

2. Transferring a corporatised entity to a privatised entity means, amongst other things, looking for an alternative source of funding for the 85% of its patients who are now almost completely subsidised by tax-payers. This will cut into the P&L like a hot knife into butter and melt away the profits, especially in the absence of a comprehensive national health insurance scheme. Who is going to finance these group of patients under privatisation? Surely not the tax-payers! Otherwise,why privatise at all?

3. Unknown to many, NHIM is already classified as a  private hospital under the 1998 Private Hospital Facilities and Services Act. This adds to the confusion as, in many ways, it works and runs like a public hospital despite its categorisation as a private hospital.

4. Despite the above misgivings, NHIM has been operationally viable and relatively successful. The privatisation proposers have not given solid reasons as to how the Institute will benefit should it be privatised.

5. It is clear that the views of all stakeholders were not obtained prior to the somewhat premature announcement of the takeover. I am given to understand that even top management were left in the dark.

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The privatisation team

The decision-makers in government  have since sidelined the proposal; but there are many other ways that a public-listed company can work together with the Institute. One is to form a strategic partnership instead of a takeover. For instance, by  establishing heart units country-wide funded by the public-listed company and using IJN technical expertise and training, the service workload can be minimised and the company  hopefully achieve a decent profit in the medium term.

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4 responses

  1. All responsible citizens should unite and block this proposal, not because it’s the PM’sDollah Badawi’s treachery, though that’s reason enough, but because it goes against the spirit of an accountable and decent government in providing for the best possible medical facility for its people. If there’s any decency in Dollah Badawi’s heart (and Musa Hitam’s) he wouldn’t go through with these, but we cannot take the risk that he hasn’t.

  2. Your article gives a deeper insight than anything thats reported in the media. As a follower of your blog, I also noticed you were among the first to highlight the melamine issue, way before the mainstream media did.
    Thanks for the contribution…and keep it coming!

  3. Dear Doc,

    R&D in Malaysia is almost non existent, a lot of common technologies of today were the fruit of research of 10-15 years ago.

    Kudos to the dedicated IJN staffers, it is also because of them, IJN has become what it is today, and providing quality healthcare to the average folks; it even has surplus assets. R&D maybe is not there, but I believe its existence has helped trained countless specialist that save lives of many normal folks, one of the few instances I said my Tax Dollar properly spent. For the corporations to try to come in and hijack it… nothing but words of shame to them. I probably will not be using it , but I still prefer my tax money to spend on it so that our own Pakcik and Makcik get to use it and live longer to see their cucu and cicit growing up to become someone great.

    -woody

  4. Me too… I really prefer to have my tax money funding NHIM even though I never used their services (perhaps). Good article…

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