Should private hospitals be better regulated?

Do you think you are paying more to your private medical hospital – more than you should? Do you feel some medical tests are unnecessary?

There has been a general increase in negligence suits against private hospitals.

Take the recent case of Siow Ching Yee. In March 2010, Siow went to a private hospital for a sinus procedure. Ten days later, he began to bleed. He gargled some ice, and the bleeding stopped. His family brought him to another private hospital. There, a medical officer treated him. The bleeding began again. He was taken into an operating theatre. There, a team of doctors attended to him. Afterwards, Siow suffered permanent brain damage. His family sued the hospital and the doctors.

The courts found both the specialists and the private hospital had been negligent. The HIgh Court awarded Siow RM4.5 million. On appeal, the Federal  Court spoke of the duty of private hospitals to ensure that their doctors and the hospital’s emergency systems were up to the mark.

On the other hand, courts are awarding progressively larger sums of money as compensation. In a recent case, a government hospital had been negligent during the birth of a child.  As a result, the child suffered severe and irreversible brain damage.1 On 17 April 2024, after a consent judgement, the High Court awarded more than RM8 million to the four-year-old child and her mother. 

These increasing trends have impacted private hospitals.

The problem is a three-headed one: first, the increase in negligence cases against private hospitals; second, the increase in the quantum of court-awarded compensations;  and third, the increase in medical costs in private hospitals.

Are these three related to each other? How will each factor affect the costs of medical care? And how do all these,  impact the cost of medical insurance?

We start with what private hospital think about this.

[1].    APHM’s complaint

On at least two occasions, the Association of Private Hospitals Malaysia (APHM) has expressed concerns. It complains that the increased quanta of court awards ‘will increase medical costs’.2

This is not a fair reflection of the issue.

Many factors contribute to the increase in medical negligence cases and increased court awards. But the increase in medical costs is a completely different subject. Yet the factors that drive medical negligence, or indeed, increasing medical costs, can, despite being related, be controlled.

[2].    It is wrong to think that Courts pluck a compensatory figure out of thin air

Courts take the greatest care when awarding damages. If a patient loses a leg because of medical negligence, the court cannot give her back a perfect limb. If she has lost her life, no one can return her life to her.

Courts grant monetary compensation instead: and that is all they can do.

[3]. How much money should the court pay as compensation?

That depends on the type of victim: her age, lifespan, earning capacity, what medical drugs or care she needs, and how much pain and suffering she will endure.

The test is this: the court must put the victim back, in so far as money can do it, in the same position as if she did not have the mishap. This test arose in a landmark case that is 144 years old: Livingstone v Rawyards Coal Co.3[1880] 5 AC 25

The courts have repeatedly said that when awarding compensation, they have no desire to ‘punish doctors’.4

[4]. So why are medical malpractice awards getting higher?

As private healthcare bills increase, compensations have to surge, so as to keep up with increased costs. The one leads to the other. Private hospitals should understand this economic cycle.

[5]. Private hospitals have mushroomed in the last two decades

It is said that ‘It is an over-simplification’ to complain that, ‘the best medical care goes to those who can pay the highest’.

Is it?

[6]. What is a ‘welfare state?

A ‘welfare state’ is not a nation full of beggars beseeching medical care.

It is a system of government where social institutions protect and provide for the well-being of its citizens. 

These social institutions are funded by a fair tax. A responsible government manages these funds effectively and efficiently. In such a state there is a proper distribution of hospitals, doctors, staff, the latest medical equipment and drugs.

Most western and commonwealth countries are, by definition, ‘welfare states’. As is ours.

[7]. When does a ‘medical services gap’ occur?

When a government mishandles its medical resources, state hospitals suffer5 from poor funding, overcrowding and excessive burdens.6

This creates a gap in medical care.8

That gap is filled by private hospitals.

[8]. A medical institution that treats the ills of only those who can afford its services, causes an imbalance

The client base of private medical hospitals is the wealthy members of society.

Who would wish to run an expensive outfit unprofitably? So, profit is the driving factor of private medical institutions.9 In a welfare state, this ‘shift of focus’ changes a hospital’s social role as a caregiver.

[9]. Any system that operates a separate private healthcare creates an economic and social distortion

Private hospitals can ignore, with impunity, the sick and needy in the poorer sections of society. It is the overburdened, under-staffed, poorly equipped government hospitals that face the brunt of that group.

Private hospitals do not advance the cause of a welfare state. Their existence is driven by profit only.  So it is natural that government doctors are greatly motivated to join the private sector.10

This change of focus in private medical care causes tectonic shifts in a nation.

Viewed against this background, when one hears of private hospitals complaining, it sounds illogical.11

[10]. Do most private hospitals charge a disproportionately larger sum for their services?

They do. Why? The proof of the pudding is in the eating.

[11]. LIAM’s Analysis

Recently, the  Life Insurance Association of Malaysia (LIAM) published a three-part article.

One concerned the rate of medical expenses: and how that has increased in Asia. This was a study conducted for the period between 2017 and 2019. This was before COVID-19. The articles quote examples.12’Why do my medical and health plan premiums/contributions keep increasing?’ MHI_NST_Part 2

CountryRate of Increase (2017 to 2019)
South Korea1.4% to 3.4%
New Zealandsteady at 5.4%
Thailand6.4% and 7.0%.
India7.6% to 10.6%
China9% to 10.7%
Malaysia9.0% to 13.1%.
Vietnam11% to 16.3%

Malaysia’s rate of increase is higher than five countries in Asia.  It is four times higher than that of South Korea, and almost thrice that of New Zealand. 

Current figures are expected to be far higher.

[12]. What drives these price increases?

LIAM’s hypothesis is that this is because of ‘improvements in medical technology, new drugs, longer life spans, and an increase in the cost of goods and services’.

This hypothesis is not supported by statistical data.

[13]. In Malaysia, peculiar factors increase the costs of medical care

The sale of drugs – and therefore their price increase – enjoy a level of monopoly in Malaysia that other countries do not suffer from. Otherwise New Zealand would not have been successful in keeping price increases at a steady 5.4% over three years.

Again, there is no law regulating how the cost of drugs should be priced. To be must factor in the influence of big pharma and corruption.

Third, there is little law on how much a private hospital can charge.

[14]. There is no law that adequately regulates how many unnecessary procedures a private hospital can perform

The anecdotal complaint is this: if you visit a private hospital complaining of an illness to your foot, they will run tests on your head, and charge you for it.

It is time the Minister of Health looks into these aspects.

[15]. Increased vigilance of medical insurance companies

These days, insurance companies issuing medical cards have become extraordinarily vigilant. There is a reason for this: some hospitals abuse the medical card system. Some private hospitals pile on unnecessary bills. They charge for unnecessary tests. At least one insurance company has cautioned hospitals not to charge for admission when the patients have been sent off on ‘home leave’.

As a consequence, Insurance companies inevitably demand proof for everything.

This delays medical care to the ailing and needy – even if the patient is financially sound.

[16]. Is there a minimum threshold income that a specialist must bring into a private hospital?

There are also rumblings among some private hospital doctors. Apparently, some private hospitals force a monetary quota on their specialists. Allegedly, each specialist is required to bill a pre-determined amount. Otherwise the specialist would be asked to leave. 

[17]. Are the standards of medical specialists in decline?

The number of medical negligence cases against private hospitals has increased. The size of awards have also multiplied. This hints indirectly at a fall in medical standards and procedures.

But that is only for ‘reported’ cases. What about unreported cases?

[18]. Who monitors these ‘unreported’ cases?

Unreported cases are a mystery. It is not clear who keeps statistics over these; or even if they are legally compulsory. They should be.

Every hospital has a duty to record and report these statistics to the public, the Ministry of Health, the Malaysian Medical Council, or private medical insurers. The reasons are obvious.

[19]. Is there adequate emergency training, equipment, or drugs at private hospitals?

The solution to these hydrae of many heads is better medical training.

Teams of medical staff should be on duty, 24-hours a day. Emergency personnel should be trained to treat the most frequently occurring dangers. These Emergency Procedures should pasted upon the walls of treatment rooms; with phone numbers included. Drugs and equipment should be at hand. In this way, medical staff will know exactly what to do, step-by-step.  

It is true that some hospitals do all this. Yet, the increase in medical negligence cases informs us that the current level of preparedness is  — across the board — quite inadequate.

[20]. Compulsory Medical Insurance for doctors

Professional Indemnity Insurance coverage has only recently13 been made compulsory for every doctor. APHM and MMC seem to think this would increase medical costs. 14

This fear is more apparent than real. 

[21]. Devoted doctors and public-spirited private hospitals

A word about devoted doctors and excellent private hospitals.

Some of our private hospitals do great yeoman service. You know who they are. I go to at least two. And I know of a few others.

For over 65 years, they have demonstrated that they can reconcile two conflicting ideas: balance their books and fulfil their duties to society.

We should not lose sight of them.

But they are a rare breed.




The author wishes to thank Miss KN Geetha, Miss Pavaani, and Mr Basiir Kohar for their assistance.

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