Malaysia’s soaring medical inflation: How rising costs are straining public, private healthcare

KUALA LUMPUR, Dec 10 — Malaysia’s healthcare sector is facing a medical cost inflation rate that poses significant challenges for both healthcare providers and patients requiring long-term care.

According to Bank Negara Malaysia, the country recorded a 12.6 per cent medical cost inflation rate in 2023—more than double the global average of

5.6 per cent and an increase from 12 per cent in 2022.

But what does rising medical cost inflation mean for the country’s public health?

Impact on private healthcare

The Association of Private Hospitals Malaysia (APHM) highlighted the rising inflation rate in its 2024 Factbook as a major concern for the industry.

However, APHM president Datuk Dr Kuljit Singh downplayed the reported rate, estimating it to be just above seven per cent, and suggested the figure might be inaccurate.

He attributed the inflation to the high costs involved in upgrading healthcare infrastructure and technologies, such as modern scanners and robotics.

“Medical technologies are quite expensive, and we are getting things that we didn’t have for many years, which in turn inflate medical costs,” he said.

Dr Kuljit emphasised that this issue is not limited to Malaysia, noting similar trends in Thailand and other parts of the world.

“There is no party to blame for the inflation rate as this is a global issue due to improvements to costly healthcare technologies,” he said.

According to him, Malaysia’s dual healthcare system offers a safety net, as private hospitals provide voluntary treatment choices while public hospitals offer subsidised care for those who cannot afford private services.

Dr Kuljit explained that private hospitals are, by design, business entities that allow patients to make voluntary choices regarding their treatment, typically involving fees not covered by government-funded schemes.

“In contrast, public healthcare is mandated to offer services to all citizens using taxpayer funds.

“When public healthcare systems become congested and unable to meet demand, collaborations with private hospitals can provide effective solutions.”

He proposed that the government pursue partnerships with private healthcare providers based on mutually agreed terms rather than imposing regulations aimed solely at making services affordable for low-income patients.

“This approach encourages a cooperative relationship that benefits both public and private sectors,” he added.

Challenges in the public sector

The public sector, on the other hand, is not spared from the challenges of rising medical cost inflation, which places significant pressure on the country’s public health budget.

Consultant public health physician Dr Feisul Idzwan Mustapha said budget constraints limit the public healthcare sector’s ability to scale up or expand services and acquire advanced treatments.

Meanwhile, he added, increased costs in the private sector often result in higher patient charges, potentially reducing accessibility for middle- and low-income groups.

“This scenario could drive more patients toward public healthcare, adding pressure to already overburdened facilities.

“The high inflation could also impact the morale and capacity of healthcare workers, who face larger patient loads with constrained resources,” said Dr

Feisul, who is also the Perak State Health Department director.

A multi-layered issue

Apart from advancements in medical technology, Dr Feisul said the rising prevalence of non-communicable diseases (NCDs) is another contributing factor to inflation, as it drives up costs for diagnostics and long-term care.

“As Malaysia’s population ages, demand for healthcare services, particularly for chronic conditions, increases substantially—further compounded by the already high prevalence of NCDs.

“Furthermore, the general public seems more demanding in their expectations of the level or quality of healthcare services they receive, which may not be cost-effective or based on available scientific evidence,” he added.

Rising prevalence of NCDs worsens the issue

With 2.3 million Malaysians living with at least three NCDs, Dr Feisul said rising medical costs exacerbate financial stress.

“Many in this group belong to the lower socio-economic category and often require lifelong treatment and frequent monitoring.

“Increased out-of-pocket expenses—which are already high in Malaysia—may lead to treatment non-adherence, worsening health outcomes,” he said.

He noted that this disproportionately impacts lower-income groups, who may forgo necessary care due to financial constraints, potentially resulting in higher rates of disability and premature mortality.

The strain on the public health budget

Based on a recent report by the Health Ministry, managing NCDs costs twice the amount of the government’s public health budget.

Dr Feisul said the twin challenges of medical inflation and rising NCD prevalence amplify the burden on government healthcare subsidies.

“The recent report revealed that NCD-related costs are already putting an immense strain on national resources,” said Dr Feisul.

Over time, he said, this could limit the government’s ability to invest in preventive healthcare or infrastructure upgrades.

“It may also increase dependency on the public healthcare sector, exacerbating issues like overcrowding and long wait times—which are already severe pain points for the general public.

“It may also hinder Malaysia’s economic growth due to decreased workforce productivity and higher healthcare spending,” he added.