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New Straits Times
10 hours ago
- Health
- New Straits Times
SST on private healthcare may drive up cost
ISKANDAR PUTERI: The newly imposed six per cent expanded Sales and Service Tax (SST) on private healthcare services for non-citizens could quietly inflate medical costs across the board, raising real concerns over affordability, equity and long-term system resilience. Gleneagles Hospital Johor chief executive officer and regional chief executive officer of Southern and Eastern IHH Malaysia, Dr Kamal Amzan, said that while the government maintains the tax targets medical tourists and expatriates, its ripple effects may land much closer to home. "Healthcare is not made up of standalone bills. It's an ecosystem held together by hundreds of interdependent services," Dr Kamal said. "By taxing services like cleaning, linen supply, lab logistics and security, which are integral to hospital operations — you are essentially taxing the cost of care itself," he told the New Straits Times. These costs are not peripheral. They form the architecture of safe, modern healthcare. Yet under the current tax framework, many contracted support services are now subject to SST — a move that could compound financial pressures on hospitals already grappling with medical inflation, wage hikes and post-Covid service recovery. "Hospitals facing slimmer margins may resort to fee increases, administrative charges, or cuts in services to stay afloat. This isn't reform — it's erosion," said Dr Kamal. This policy arrives at a time when the cost of private healthcare in Malaysia has already outpaced wage growth, with a recorded 12 per cent increase last year alone. In many hospitals, margins are tightening even as expectations for quality and safety rise. "We are taxing the scaffolding of care while pretending the house will still stand," he added. Contrary to popular belief, private hospitals are not the exclusive domain of the wealthy. Middle-income families often rely on them to avoid long queues at public hospitals. Employers turn to private facilities to minimise workplace absenteeism. Many cancer patients move between public and private care as public oncology services buckle under rising demand. "Private hospitals are the pressure valve for an overstretched public system. When access narrows in the private sector due to rising costs, patients will inevitably default to public hospitals — and they're already under immense strain," said Dr Kamal. To avoid that outcome, Dr Kamal urges the government to exempt core hospital services — such as linen supply, lab transport, cleaning and security — from SST when provided to licensed healthcare facilities. "These aren't luxuries. They're the minimum conditions for safe care," he said. The argument isn't about shielding providers from taxes. It's about aligning policy with national goals. The government is trying to rein in medical inflation. Yet this tax expansion works in the opposite direction — quietly raising costs, eroding efficiency and ultimately, reducing access. "We should be reducing the cost to deliver care, not layering it. Taxing the backbone of hospital operations while asking the industry to absorb payor discounts is a contradiction we can't afford." While the government has maintained that medicines and services for Malaysians remain tax-free, stakeholders warn that this new layer of indirect cost will ultimately find its way into patient bills — especially for those on the margins of affordability. "If we're serious about protecting the rakyat from rising healthcare costs, then exempting services that keep hospitals running isn't charity — it's common sense," said Dr Kamal. Because no hospital can deliver modern care without its invisible hands — the ones who clean, sterilise, transport and guard its patients and staff. "We've exempted apples from tax. Maybe that's fitting," Dr Kamal added wryly. "After all, an apple a day keeps the doctor away — especially when seeing one gets more expensive," he added.
New Straits Times
6 days ago
- Health
- New Straits Times
SST on private healthcare may drive up costs
ISKANDAR PUTERI: The newly imposed 6 per cent expanded Sales and Service Tax (SST) on private healthcare services for non-citizens could inflate medical costs across the board, raising concerns over long-term affordability and system sustainability. Gleneagles Hospital Johor chief executive officer and regional CEO of Southern and Eastern IHH Malaysia, Dr Kamal Amzan said while the government insists that the tax targets medical tourists and expatriates; and not Malaysians, yet the ripple effects may hit closer home. "Healthcare is not made up of standalone bills. It's an ecosystem held together by hundreds of interdependent services," Dr Kamal said. "By taxing services like cleaning, linen supply, lab logistics and security, which are integral to hospital operations, you are essentially taxing the cost of care itself," he told the New Straits Times. Dr Kamal, who has written extensively on health system policy, also said under the current service tax framework, many contracted hospitals support services are subject to SST. But unlike the former Goods and Services Tax system, private hospitals are unable to claim input tax credits, which meant the costs were absorbed directly or passed on to patients. The move to impose SST, comes at a time when private healthcare inflation has already outpaced wage growth, with a 12 percent increase recorded last year. He said healthcare providers are grappling with rising medical equipment costs, wage hikes for healthcare workers and delayed treatments post-Covid. "Hospitals facing slimmer margins, may resort to fee increases, administrative charges, or cutbacks in services to stay afloat. "This is not a policy that strengthens the healthcare system. It's a revenue patch that risks further weakening it. "We are taxing the scaffolding of care while pretending the house will still stand. "Contrary to public perception, private hospitals do not serve only the wealthy. Many middle-income families rely on them to avoid long public sector queues, while employers use them to reduce workplace absenteeism. "Private hospitals are a pressure valve for the overstretched public system. When access narrows in the private sector due to rising costs, patients will default to public care. And our government hospitals are already under immense strain," he said. To minimise unintended fallout, Dr Kamal urged the government to exempt core hospital support services such as linen supply, lab transport, cleaning, and security from SST when provided to licensed healthcare facilities. "These aren't luxuries. They are the minimum conditions for safe, modern care," he said. "While the government has maintained that medicines and services for Malaysians remain tax-free, critics argue the new policy amounts to a stopgap solution rather than a long-term fix. "If we must impose taxes on care, let's at least be honest that it's to plug the revenue gap and not pretend its healthcare reform because a system that survives by charging more isn't being strengthened," he added.
