Private Healthcare Sector Faces Rising Medical Inflation Pressures, CIMB
Private hospitals currently cater to about 30% of Malaysia's patient load—funded primarily through self-payment, personal insurance, and employee benefits—while the public sector supports the remaining 70%. Dr Kuljit highlighted that Malaysia's healthcare quality remains on par with, or better than, many ASEAN peers, sustaining the nation's appeal as a medical tourism hub.
Medical Inflation Above Global Average
Bank Negara Malaysia (BNM) data shows that medical inflation hit 15% in 2024, surpassing the global average of 10% and the Asia-Pacific average of 11%. Key cost drivers include the adoption of advanced medical technologies, rising medical supply costs, manpower shortages, and overall inflationary pressures.
Between 2021 and 2023, claims in the Medical and Health Insurance/Takaful (MHIT) segment surged 73%, outstripping the 21% growth in premiums. Claim frequency more than doubled to 25 per 100 policyholders in 2023 from 11 in 2018. In response, BNM has capped annual premium increases at 10% until the end of 2026, with hikes staggered over three years.
Dr Kuljit cautioned that prolonged premium caps could prompt insurers to tighten reimbursement terms and limit hospital or treatment options, potentially curbing investment in private healthcare.
To mitigate rising claims, private hospitals are offering negotiated discounts to insurers, which in turn lower out-of-pocket costs for insured patients compared with self-paying patients.
Exploring DRG to Curb Costs
The proposed DRG system would replace the traditional fee-for-service model with fixed prices for treatments based on case complexity and industry benchmarks. APHM is working with the Ministry of Health to collect and standardise data for a private healthcare DRG database. However, implementation challenges remain due to the lack of a universal healthcare financing framework and comprehensive private-sector data.
Globally, DRG models are largely confined to public healthcare systems, with limited adoption in private healthcare. Dr Kuljit noted that complications or additional care beyond the DRG package often create billing and coverage issues in private settings.
Sector Outlook
CIMB Securities noted that KPJ Healthcare Bhd could be more exposed to DRG-related risks, with 98.1% of its revenue derived locally in 1Q25, compared with IHH Healthcare Bhd's 18–21% Malaysian revenue contribution.
The brokerage maintains an Overweight stance on Malaysia's healthcare sector, citing its defensive nature, resilient demand, organic expansion, and favourable demographics. IHH remains its top pick with a Buy rating and a target price of RM8.50, trading at attractive valuations relative to historical and regional averages. KPJ is rated Hold with a TP of RM2.90, as its current share price is seen to have priced in recent operational improvements.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
an hour ago
- New Straits Times
Bursa CEO: Malaysia's capital market resilient, poised for growth
KUALA LUMPUR: Malaysia's capital market remains resilient and well-positioned for growth, Bursa Malaysia chief executive officer Datuk Fad'l Mohamed said. This is supported by strong fundamentals, proactive policies and rising opportunities in strategic sectors. "The strong momentum of initial public offerings (IPOs) reflects the confidence of Malaysian businesses, as they expand and tap the capital market to power their next phase of growth," he said on the sidelines of Invest Malaysia 2025 series (IM 2025) in Singapore today. As at Aug 1 this year, Bursa Malaysia had 39 IPOs listed, a 39 per cent increase year-on-year compared to the same period in 2024, said Fad'l. It maintained lead position in the Asean region for total number of IPO listings, and total IPOs funds raised," Fad'l said. "This demonstrates a thriving market where companies are growing, creating value and offering opportunities for investment. "As a multi-asset exchange, Bursa Malaysia remains committed to enhancing the vibrancy and depth of our markets, to support Malaysia's economic momentum and propel its competitiveness globally," he added. Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz, in his keynote address highlighted that shifting global trade dynamics are reshaping supply chains. This suggests that open economies such as Malaysia and Asean need to be responsive and build resilience. He outlined Malaysia's priorities as Asean chair to strengthen regional resilience and position the region as an investible asset class, while calling for deeper regional economic integration to safeguard the region's growth trajectory in an increasingly fragmented global economy. Tengku Zafrul continued his insights in a fireside chat moderated by Fad'l where the conversation turned to how Asean and Malaysia can navigate external shocks from US-China tariff tensions. He elaborated that there is potential for the region to turn these disruptions into opportunities to position itself as a base for global manufacturers seeking stability and resilience. Malaysia, in particular, has strengthened its edge against regional peers This is supported by disciplined industrial and economic reforms, the development of high-tech hubs in Penang and Kedah, as well as special economic zones aimed at attracting strategic investments in electrical & electronics, EVs, and advanced manufacturing. Tengku Zafrul added that the current period of volatility could serve as a springboard for Malaysia to accelerate its move into higher-value sectors, with the New Industrial Master Plan 2030 (NIMP 2030) providing the long-term policy certainty, targeted incentives, and "safe harbour" measures needed to secure investor confidence. IM 2025 in Singapore is Bursa Malaysia's flagship programme in collaboration with the Macquarie Asean Conference 2025. Since its inception in 2005, Invest Malaysia has expanded its reach globally with 61 Invest Malaysia Away editions hosted in major financial centres worldwide. In 2025 alone, the series made its mark in London (January), followed by the Invest Asean-Malaysia here in June, each reinforcing Malaysia's position as a vibrant and attractive investment destination.
Free Malaysia Today
2 hours ago
- Free Malaysia Today
Provide ‘detailed data' if you want MotoGP extended, says Yeoh
SIC's CEO, Azhan Shafriman Hanif, said that following the decision to give up the hosting rights for the Formula 1 grand prix, Malaysia should not 'make the same mistake with MotoGP'. (EPA Images pic) PETALING JAYA : The government's decision on whether to extend Sepang International Circuit's (SIC) contract to host the Malaysian Motorcycle Grand Prix (MotoGP) will depend on detailed data showing the race's return on investment, says youth and sports minister Hannah Yeoh. While the event had received encouraging support, Yeoh said, SIC must convince the finance ministry that the race provides comprehensive benefits. 'When we invest, we are not signing only in terms of tourism. It should help support the economy and job opportunities for Malaysians,' Bernama quoted her as saying after an event in Putrajaya today. Yeoh said the MotoGP generates about 4,500 temporary jobs annually, but the government also wanted to see long-term benefits, such as skills transfer to Malaysians. 'So, that's why data collection is important, and SIC must ensure that all this is recorded to convince the finance ministry that it is not a waste,' she said. It was reported yesterday that SIC was in talks with rights holder Dorna Sports to renew its MotoGP contract, which expires in 2026. SIC's CEO, Azhan Shafriman Hanif, was also reported as saying that following the decision to give up the hosting rights for the Formula 1 grand prix, Malaysia should not 'make the same mistake with MotoGP'. On another matter, Yeoh expressed confidence in the Malaysian badminton squad ahead of the World Championships in Paris from Aug 25 to 31. She said athletes under the Road to Gold (RTG) programme had the potential to deliver strong performances, but cautioned against injuries owing to the tight competition calendar. Among the shuttlers in the RTG programme are Aaron Chia-Soh Wooi Yik, Goh Sze Fei-Nur Izzuddin Rumsani, Man Wei Chong-Tee Kai Wun, Pearly Tan-M Thinaah, Chen Tang Jie-Toh Ee Wei and Goh Soon Huat-Shevon Jemie Lai. Separately, 80 athletes will represent Malaysia at the SEA Deaf Games in Jakarta, competing in six sports – futsal, athletics, badminton, tenpin bowling, chess, and table tennis.
Free Malaysia Today
2 hours ago
- Free Malaysia Today
China's top diplomat Wang arrives in India
China's foreign minister Wang Yi is expected to meet prime minister Narendra Modi during his three-day visit to New Delhi. (AP pic) NEW DELHI : China's top diplomat landed in neighbouring India on Monday, seeking to bolster long-fraught relations in the face of intense pressure and tariffs from the US. Foreign minister Wang Yi held talks with his counterpart Subrahmanyam Jaishankar and is also expected to meet prime minister Narendra Modi during his three-day visit to New Delhi. Modi, according to Indian media, might also visit China this month. India's foreign ministry said in a social media post that 'important engagements of the India-China special representatives and on bilateral relations' were scheduled over the next two days. The world's two most populous nations are intense rivals competing for influence across South Asia and fought a deadly border clash in 2020. But caught in global trade and geopolitical turbulence triggered by US President Donald Trump's tariff war, the countries have moved to mend ties. Restarting border trade across their icy and high-altitude Himalayan border is expected to feature high on Wang's agenda. Its resumption would be significant for its symbolism and follows agreements to return direct flights and issue tourist visas. India is also part of the Quad security alliance with the US, Australia and Japan, which is seen as a counter to China. Modi calls 'friend' Putin Warming ties between China and India come as relations between New Delhi and Washington are strained. Trump has issued an ultimatum for India to end its purchases of Russian oil – a key revenue source for Moscow's war in Ukraine – or Washington will double new import tariffs from 25% to 50%. Modi said Monday he spoke to 'my friend' Vladimir Putin, with the Russian president 'sharing insights' on his Alaska summit with Trump last week. 'India has consistently called for a peaceful resolution of the Ukraine conflict and supports all efforts in this regard,' the Indian premier wrote on social media. Indian hopes that the Alaska meeting would ease US tariff pressure were tempered earlier Monday by US trade adviser Peter Navarro. 'If India wants to be treated as a strategic partner of the US, it needs to start acting like one,' he wrote in a sharply worded column in the Financial Times. 'India acts as a global clearinghouse for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs,' he wrote. 'The proceeds flow to India's politically connected energy titans and, in turn, into Vladimir Putin's war chest,' he added, in an apparent swipe at India's big refiners, which include tycoon Mukesh Ambani. Navarro said the 50% tariff – due to begin on August 27 – will 'hit India where it hurts'.
