In its recently launched “Factbook 2024,” the Association of Private Hospitals Malaysia (APHM) presents compelling evidence that the frequently cited figure of 12.5% medical inflation attributed to private hospitals may not accurately reflect the realities of healthcare costs in the nation.

The association emphasizes the critical distinction between healthcare cost increases and medical inflation. The commonly referenced statistic does not account for year-on-year inflation of identical items but rather reflects the broader increase in healthcare expenses. Notably, costs associated with specific medical technologies, such as X-rays, typically rise by only 3% to 5% per annum—comparable to the Consumer Price Index (CPI) and annual inflation rates observed globally. This increase is primarily influenced by rising electricity tariffs, maintenance costs, staff salaries, and the increasing financial burden from medico-legal court judgments.

The report further highlights the impact of new medical technologies, particularly the rise of robotic surgery and newer therapies for cancer in Malaysia oer the last two to three years. While these innovative solutions significantly enhance patient outcomes and the quality of care, they also contribute to overall medical costs due to substantial investments in technology, specialized staffing training, and associated expenses.

Similarly, the introduction of novel medications incurs additional costs. It is important to note that most private hospitals in Malaysia have adopted Electronic Medical Records (EMR) systems and are progressing into Artificial Intelligence (AI) applications, which require substantial annual maintenance investments.

Additionally, the study underscores that Malaysia’s healthcare costs remain among the lowest in the region. Given this relatively low-cost base, the introduction of innovative technologies results in higher percentage increases compared to established markets where healthcare costs are already 2 to 3 times higher than those in Malaysia. Consequently, this reality must be considered when assessing
claims regarding medical inflation.

The Association points to the Diagnostic-Related Group (DRG) based payment scheme and Case-Mix Group (CRG) as potential strategies to help mitigate medical inflation. However, APHM remains skeptical about the effectiveness of these measures worldwide as no healthcare system has shown significant control of medical inflation with these methods, citing the consistent trajectory of increasing advanced medical technology that aims to improve healthcare delivery.

In conclusion, the 2024 Factbook of the Association of Private Hospitals Malaysia calls for a reassessment of medical inflation narratives and urges stakeholders to focus on understanding the true factors influencing healthcare costs in the country.