The Healer Needs Healing: Kenanga IB

Malaysia’s current healthcare system is highly imbalanced in terms of the distribution of services, infrastructure, equipment, manpower and geographic locations across the public and private sectors.

Kenanga Investment Bank’s (Kenanga) Sector Update today (Sept 20) said public health facilities cater mostly to the much bigger lower-to-middle income population due to the wider network and low or almost free charges while the higher income patients seek private healthcare providers for faster services.

This has resulted in a severely overstretched public healthcare sector and its workforce. To ensure equitable and sustainable healthcare in Malaysia, the long-awaited national Healthcare White Paper was released, detailing various reforms.

One key aspect is the introduction of a more sustainable health financing model to address the ever-rising needs of the people and escalating healthcare cost.

The key takeaways from the session are: (i) challenges in Malaysia’s healthcare system, (ii) an urgent need to address national healthcare financing to ensure equitable access to healthcare for all Malaysians, irrespective of their income, (iii) a hybrid payor system is the way forward in the Malaysia healthcare system, (iv) opportunities in public-private partnerships, and (v) digitalisation in healthcare.

Challenges in Malaysia’s healthcare. The MMA holds the view that the main challenges in Malaysia’s healthcare stem from:

(i) its dichotomous nature where there is little integration between the public and private health sectors, resulting in an overburdened public health sector while the private sector continues to have excess capacity, (ii) the ageing population (which increases the need for long-term care, demand for consumables and pharmaceuticals and health workforce), and (iii) the rising burden of non-communicable diseases or NCDs such as diabetes, cancers, kidney, cardiovascular and lung diseases (due to lack of preventive healthcare which significantly increase the cost of treatment in the later stages).

These challenges can be overcome with a sustainable healthcare financing encompassing existing sources such as government funding i.e. the Ministry of Health, supplementary funding i.e. the Employees Provident Fund (EPF) and Social Security Organisation (SOCSO), private insurance payments and out-of-pocket payments, and a new source i.e. contributions from the employed and self-employed under a separate scheme.

Ageing population

The average life expectancy of the Malaysian population has been steadily increasing over the decades. A male and female baby born in 1970 would live to the age of 61.6 and 65.6 years old on average, respectively. In 2020, a male and female newborn respectively can expect to live to the age of 72.5 and 77.2 years old on average. Since 2015, and for the first time in Malaysia’s history, the proportion of older persons in the population is higher than the proportion of children below 5 years old.

In 2020, more than 11.2% of the population was aged 60 and above, meeting the definition of an “ageing society”.

According to the Department of Statistics Malaysia, by 2030, 15% of the population is expected to be above 60 years old, making Malaysia an “aged’ society”. Even though Malaysians are living longer, the population is not necessarily living in better health. Based on current trends, an estimated 9.5 years of life expectancy will be spent in poor health due to the incidence of NCDs or chronic diseases.

Kenanga reiterates an Overweight call on the Healthcare sector. They believe private healthcare providers, namely, IHH (OP; TP: RM7.00) and KPJ (OP; TP: RM1.50) will be clear winners of the potential introduction of a national healthcare insurance scheme.

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