Doctors & Private Health Care:
Challenges & Conflicts within the Confines of Business in Malaysia
By Dr David KL Quek
[Part of oral presentation at APHM International Healthcare Conference & Exhibition, June 4, 2014]
Accepted for Publication in Asian Hospitals & Healthcare Management
Private Healthcare – Expanding Influence
Private health care in Malaysia now commands some 22 percent of the total available hospital beds in the country. What that began as small scattered urban physician-led medical centres in the 1970s have now grown into huge conglomerates of hospital chains, some of which are now public-listed. Some 40-50 percent of these private hospital groups (IHH Healthcare, KPJ Healthcare, Ramsay Sime Darby Healthcare, Columbia Asia, etc.) are controlled or owned by Government-Linked Corporations and/or by our own national sovereign fund i.e. Khazanah Nasional Berhad. Healthcare portfolios now account for some 10.9% of Khazanah Nasional Berhad.
You might ask what all this has to do with the practice and the ethos of hospital care and its interactions with physicians? The private sector hospitals now look after 1 in 4 of all acute hospitalised patients in the country. To most people however, including government, media and citizens alike, private healthcare has become quite expensive. Costs have been escalating year on year, beyond the usual estimates of consumer price index for the country.
From the tables below, it would seem that for this small percentage of private care, 76.8% of the payment mechanisms are out-of-pocket, totalling 34.2% of the Malaysia’s total health expenditure! Nationally, insurance and third party payers contribute less than one-quarter of private health care costs, meaning that most patients using the private health sector, pay on their own, out of pocket.
Of the total OOP payments, some 46% are spent for hospitalisation costs, the other 54% for ambulatory outpatient services. According to the recently updated WHO Malaysian National Health Accounts, 70% of health insurance expenditure is spent on hospital care. Between 2000 and 2007, private hospital insurance funds in Malaysia grew from 12.5% to 14.7% of private expenditure. However, in many private hospitals these days, 60-70% of private hospital bills are reimbursed by third party payers.
Health reimbursement – Growth of Third Party Payers (TPPs)
Hence, greater attention are being paid to third party payers who command to some extent, what, where and how much healthcare services, they would be willing to pay for. TTPs therefore control reimbursements including exerting rigorous documentation delays, possible denial of services, based on previous histories of poor outcome or higher payouts (out of the norm) when compared with other like facilities.
Competition indeed is the benchmark of these increasingly savvy business-oriented managed care organisations. They dictate which insured patient gets what treatment and from where. Thus, it is understandable why hospital administrators bend backwards to accommodate these bigger healthcare buyers, often offering bulk discounts for purchases of services based on simple bargaining, goodwill, of give and take, akin to many commercial undertakings.
Conversely, physicians have construed these as fee-splitting particularly when their professional fees have been bundled into the discussion for greater volumes of business. But, it is hard to tease away this sort of contractual irregularity. Is this some form of negotiated mutually-acceptable business contracted services or is this outright fee-splitting?
Of course there is a real danger that using these bigger payer-players, physicians might be bullied into an unacceptable form of forced submission to accept the worst possible terms of the contract—‘take it or leave it’ scenarios have been exerted on those who baulk at such ‘negotiations’. Thus, this is also the rationale why the Malaysian Medical Council stand has been, that physicians and private hospitals must not engage in these sort of unfair bulk purchase discount practices, because ultimately due to lower fees (for gains), lower service quality could result, with the patients being at the losing end of this bad bargain!
However, some physicians at smaller private hsoptials have unhappily lamented that they have been coerced into agreeing to collective discounted fees not withstanding that they have been promised greater volume of services.
This is where many physicians fail to recognise and grasp the financial niceties and constrictions or the uglier business side of healthcare. Hence, conflicting tensions between administrators and physicians continue to simmer… For bigger private healthcare facilities and conglomerates, as the larger volumes are marketed and ‘traded’ for ‘bulk’ purchase of healthcare services, more of these negotiations, over and above the heads of physicians, would be the norm.
Healthcare Conglomerates Call the Shots
So why does larger private hospital ownership matter? They most certainly do, because they do need to justify their larger existence and outlays, and guarantee their bottom-lines. These private hospital chains to some extent, dictate the profit-orientated approach to healthcare, often with corporate demands for higher double-digit returns on investments (ROIs).
Parkway Pantai revenues grew by 13 % to RM3.9 billion, and EBTIDA by 32% to RM968.8 million in 2013.6 Therefore, CEOs in these privatised concerns are given notice to achieve similar targets, year in, year out! Thus, not surprisingly, it has been suggested that the recent inflationary trends of private healthcare have been fuelled by GLCs’ forays into owning and aggressive investments in the healthcare sector.
But high profile investments into the private healthcare market leads to higher corporate expectations and costlier administrative processes too. With greater expected Return on Investments (ROIs), ‘governance’ and bigger administrative oversight, higher platforms and standards of fiduciary accountability, competitive amenities, acquisitions and other quality safety mechanisms have to be enhanced in tandem.
So besides greater numbers of administrative personnel and its inherent costs, capital and infrastructural expenditure, there would have to be other unique healthcare-related quality assessment and compliance oversight, through agencies such as JCI and/or MSQH, besides the other technical ISO standards. These aspects are often oblivious to the physician whose remit appears to be purely focused on work alone! Thus, differing goals of healthcare stakeholders invariably lead to physician-management conflicts!
Therefore, hospital conglomerates tend to compete by dictating the terms and conditions of what physicians working under their jurisdictions are expected to perform and to deliver. There’ve been cynical if oblique complaints that huge investments into private healthcare industry, have led to aggressive marketing and overutilization of diagnostic and therapeutic amenities and services; these been openly encouraged, even incentivised! Thus, this commoditisation and commercialisation of private health care creates more conflicts between healthcare providers and the administrators / owners.
As healthcare services become more complex and expensive, more and more people are resorting to third party payers (TPPs): health insurance companies or employer-provided reimbursement managed care organisations (MCOs). For private care hospitalisations these days, the quantum of third party payers now approaches 70 to 75%. Self-paying only contributes to around 25 to 30%.
Thus, more TPPs are demanding greater scrutiny of healthcare requests, enforcing more denial of service or partial payments, and mandating more elaborate if tedious auditable reporting, all adding to the growing tension of private healthcare malaise for both the administrator and the physician.
Changing Landscape of Patient Empowerment
As an insider for more than 30 years in medical practice, my perspective is understandably slanted toward that of the medical professional. But it would be foolhardy to purely focus on just physician practices, rights and autonomy alone.
The current scenario of near-universal World Wide Web access to information has created a climate quite different from just 2 decades ago. Then, physicians rule the roost. Physician ‘knows best’ paternalism dictates what patients need: to test, to treat, to operate, to cure. This information asymmetry or doctor-patient knowledge gap is slowly but surely diminishing.
These days, patients are more knowledgeable, increasingly demand their rights. They are not averse to second or third opinions, and they place their own interests first and foremost. But not only patients, the medical-legal fraternity, the healthcare payers are also demanding for more accountability, on patient safety and quality issues. Everyone now expects a fairer healthcare deal (at the best prices!), where patient harm is frowned upon and expected to be as low as possible!
The axiom of ‘Primum non Nocere’ (first do no harm) for physicians is now de rigueur!
Physician Scrutiny amidst Patient Safety & Quality Assurances
So what are we to do? As the immediate-past 2-term Chair of a Medical and Dental Advisory Committee and an elected Malaysian Medical Councillor for the past 10 years or so, I’ve been given that rare if unpleasant privilege to glimpse into the seedier side of medical miscommunications, medical errors and mishaps including incompetent care. But this exposure has helped me to focus more sharply on mounting patient grievances for unsatisfactory healthcare experiences and outcomes; including physician lapses and errors.
Let’s face this squarely and bluntly. Whenever we audit or scrutinise any processes (particularly when a fault has been charged) there would be bound to be exposed worms in the cracked woodwork! So I would readily admit that it is hard to pass muster on all counts, unless our systems and processes are flawless! Thus, as inquiries mount to decipher the arcane perspectives of medical practice, we (council members, experts and medical litigation lawyers) have been forced to hunker down to scrutinise how doctors, allied healthcare providers and their facilities have been functioning—looking for avoidable errors, mishaps, weaknesses and failures, where preventable negligence aspects might be exposed.
We’ve been tasked to look into standards of care to see if these meet the ethical obligations of not just bare minimum or competent care, but of empathetic but appropriate care and attention to safety as well. So it behooves every physician to be extra vigilant, and get his or her processes, expertise, knowledge and skills, communication and clinical results spot on.
Don’t wait to be hauled up for an inquiry and/or a medico-legal challenge! Which leads to the next surrogate performance measure: quality and safety accreditations. These are not just acronyms for pride, they are there for improving systems and processes, to reduce errors to a tolerable minimum, to protect the patient, the physician and the healthcare facility!
Hence, the mandated surrogate application of hospital safety and quality accreditation exercises (Joint Commission International JCI, Malaysian Safety for Quality in Health MSQH), so much the bane and scorn for many a hospital physician. Of course it’s true that we already have the very restrictive and punitive private health care facilities and services Act and Regulations that has stifled our medical practice, so say many a practitioner! Why do we need so much oversight?! We are being too straitjacketed by too many rules, it is lamented. Physician frustration has been growing globally.
Recently, an orthopaedic surgeon, Dr Daniel Craviotto has lamented that: 
“We as physicians continue to plod along and take care of our patients while those on the outside continue to intrude and interfere with the practice of medicine. We have let nearly everyone trespass on the practice of medicine. Are we better for it? Has it improved quality? Do we have more of a voice at the table or less?
Are we as physicians happier or more disgruntled then 2 years ago? 5 years ago? 10 years ago? Once we're gone, who will speak up for our profession and the individual physician in the trenches? The politicians? Our medical societies? Our hospital administrators? I think not. Now is the time for physicians to say enough is enough.
“I don't know about other physicians but I am tired—tired of the mandates, tired of outside interference, tired of anything that unnecessarily interferes with the way I practice medicine. No other profession would put up with this kind of scrutiny and coercion from outside forces. The legal profession would not. The labor unions would not.”
Our physician autonomy has indeed been corroded… it is hard to be a physician these days! True, but sadly current reality bites must be considered. Although the angst expressed by Dr Craviotto is understandable, his various points of contention can be debated. Allowing the modern physician these days to a totally free run of his practice is no longer a given, nor is this the best option to assure quality care, at best lowest costs. Unfortunately. Our carefree days of doing everything our heart desires, no longer count for much when quality assurances and longer term outcomes are measured, systematically.
Physician Responsibility & Oversight vs Patient Safety
Physicians free from oversight are more likely to deviate from tested clinical pathways based on his or her individual idiosyncrasies, belief in their own inflated personal skills and their dubious selective memories. And it has been shown over and over again that physicians like any other human professionals are as likely to perform based more for personal gain, than that for the patient, i.e. this warped vested interest, moral hazard, needs to be tempered by some Leviathan code of ethics!
So, like it or hate it, these ‘standards’, quality and safety policies and exercises will be here to stay. Not just because hospital owners want this, but health authorities worldwide too expect this to be the norm. In fact during the Bush administration in 2006, Senator Hillary Clinton and Barack Obama wrote just that paper for endorsing greater patient safety initiatives to help reduce medical litigation costs.
The ultimate goal, of course, is patient safety, which should never be second guessed, least of all by the physician or healthcare provider who is conflicted by virtue of their profession. Therefore, there must be a reorientation in our ethos toward healthcare. We have to create a new paradigm shift in the spirit of our healthcare culture, community aspirations that places patient safety and interests first! But clearly there would be conflicting aspirations and goals between one party and the next, between physicians and administrators/owners!
Physician-Administrator/Owner Conflicts & Changing Dynamics
Hospital administrators would often resist reforms that they feel would impinge on their bottom-line to cover large fixed costs, while they would be averse to trying too hard to change physicians’ behaviour toward appropriateness use of medical technology or medications or reducing costs, for fear of reducing turn-over revenue.
Physicians themselves are also self-interested for financial and non-financial reasons. Physicians fear that talk of accountability and appropriateness of care would standardise their approaches to care, to restrict them to rigid clinical practice guidelines, subject themselves to too much outcome measurement and peer review, thereby reducing their autonomy, as well as capping their income. Thus both are invariably opposed to too much ‘reform’ for better more cost-effective healthcare models and innovations!-->
But increasingly many physicians working in the private sector feel extremely frustrated at being hamstrung by what appears to be the widespread inadequacy and incompetence of employed allied health personnel. Hospital administrators appear to be blasé about this, preferring to function on ‘make-do’, ‘just enough’ cost-efficiencies and bottom-line ROIs, which just rankles the physicians all the more!
This is especially so with the perennial problem of questionable quality nurses. Nurses form the ‘elegantly silent’ backbone of the hospital experience—the face-to-face encounters, the monitoring and their first contact interpretations, hence the timely and appropriate informed referral to further physician interaction, are critical in any hospitalisation experience.
Poor or inaccurate documentation or interpretation of patient features, delays in recognition of changes in vital signs or deterioration of monitored data, or failure of nursing attention, all affect patient safety and increase medical mishaps leading to poorer outcomes. However, in the eyes of many physicians, this conundrum appears to be consistently underplayed and compromised by the inactions or excuses of management.
It appears that most urban areas teeming with hospitals have severe problems with adequacy of competent staffing, particularly of good nurses. Hence the frequent movement and pinching of nurses from one centre to another contributes to discontinuity of consistent care and standards of care, that endangers patients.
But are health improvement measures just one-way regulatory or systems processes affecting the hapless physician, who just happens to be the easiest whipping boy for regulatory or administrative action? Are hospital administrators and owners exempt from the regulatory and punitive reach of the law, in order to improve safety concerns?
Would JCI and/or MSQH accreditation be sufficient to exculpate these corporate managers, who might seemingly be at odds with the complaining or whistle-blowing physician, by sweeping the proverbial dusts under the carpet?
This appears to be addressed in some recent judicial rulings. Recently, a judge has imputed that hospital medical directors in charge would be held answerable and vicariously liable to charges of negligence when systems failure occur, particularly when these result in poor patient outcomes or deaths. An ill patient transferred in from a neighbouring hospital was left inappropriately attended to at an emergency department for many hours, and not properly triaged, resulting in gross delay in treatment, leading to her preventable demise. The entire broken process of triaging and systems of referral or management pathways would now be scrutinised for negligent care.
Hopefully with this new sort of ruling, hospitals particularly private sector ones, would be more amenable to get their systems in place and not shirk behind the oft-repeated excuses of staffing shortages and unavoidable shared common experiences!
Below are two self-explanatory tables depicting the conflicting tensions that invariably exist in the dynamics of hospital practice between physicians/healthcare providers and administrators/owners.
So there must be continually evolving basic bottom-line agreements and clearer roles for doctors, administrators and/or policy makers of the private health care sector. There must be greater understanding as to the dynamics of this provider-administrator tension and conflict. Administrators and managers should explore with physician leaders on how private hospitals can best harness the intellectual potential of doctors, particularly in instilling committed leadership toward greater involvement and attention in improving patient safety. They should mutually agree upon how they can garner all-party support toward developing more inclusive patient safety and quality measures, scorecards and policies.
Conclusions… a reorientation of ethos?
Doctors in private health care settings must re-align themselves and their outlook beyond just declaiming their competence, autonomy and of course, their right to make money and make a living! We must work toward better institutional partnership, ownership and shared common identity.
But management must make greater efforts to accommodate the needs and aspirations of doctors beyond merely providing them a place to practice in peace. Similarly physicians need to become more involved and immersed in more patient-focus practice and quality-assurance system processes, to ensure high quality and appropriateness of care, amidst the changing dynamics of more stringent health policymaker oversight and greater more demanding patient expectations!
It is essential that we develop more inclusive physician-collaborators in quality and patient safety strategies to include as many, if not every one, of the healthcare provider work force—tapping into our usual nursing support staff, technicians and other allied personnel, even clerical documentation executives.
We need to get as much feedback from all stakeholders to become willing collaborators and partners in institutional policy making. Piece-meal, ad hoc, knee-jerk, disparate or confrontational approaches only derail the commitment toward better overall outcomes for all concerned.
As physicians we need to re-orientate and reformulate our professional and ethical obligations, beyond our own vested interests! We need to refocus on the patient and his or her interests, because ultimately, patients are our sine qua non or raison d’être for the practice of medicine!
Finally, it would be appropriate to conclude as Reinertsen has6
“We are losing our clinical autonomy in part because the public has learned that the basis for it, the full power of our scientific knowledge, is not being consistently applied for their benefit. We will not regain that autonomy by lamenting its loss, or by making shrill cries to preserve it.
“The most effective approach, the professional approach, would be to join together with our colleagues, in venues large and small, to decide on and apply the best science together, as a profession. The Zen paradox of clinical autonomy is that by giving it away to our colleagues, we gain it as a profession.”
 Quek DKL. Private-Public Partnership in Healthcare for Malaysia. Jan 16, 2009. http://dq-essays.blogspot.com/2009/01/private-public-partnership-in.html
 Khazanah Nasional Berhad. Creating Value through our Investments. http://tkr.khazanah.com.my/2012/creating-value/
 Chee Heng Leng. Ownership, control, and contention: Challenges for the future of healthcare in Malaysia. Soc Sc Med 2008;66:2145-2156. https://www.academia.edu/3840924/Ownership_control_and_contention_Challenges_for_the_future_of_healthcare_in_Malaysia
 Safurah Jaafar et al, Malaysia Health System review (Health Systems in Transition, Vol. 3 No.1, 2013)– WHO Western Pacific 2013.
 World Health Organization (WHO) (2011) [website]. National Health Accounts: Country Information. World Health Organization, Geneva. Accessed June 2014 [http://www.who.int/nha/country/en/index. html]
 IHH Healthcare Bhd. Committed to Excellence 24/7. Annual Report 2013.
 Reinertsen JL. Zen and the art of physician autonomy maintenance. Ann Intern Med. 2003;138(12):992-995.
 Thomas H. Gallagher, David Studdert, Wendy Levinson. Disclosing Harmful Medical Errors to Patients. N Engl J Med 2007;356:2713-9.
 Health care at the crossroads: strategies for improving the medical liability system and preventing patient injury. Joint Commission on Accreditation of Healthcare Organizations, 2005. (http://www.jointcommission.org/NR/rdonlyres/3F1B626C-CB65-468BA871-488D1DA66B06/0/medical_liability_exec_summary.pdf.)
 JCI. http://www.jointcommissioninternational.org/improve/create-effective-policies/
 MSQH. http://www.msqh.com.my/msqh/manual-and-guidelines
 Private Health Care Facilities and Services Act 1998 (Act 586). PCNB, Malaysia, 1998.
 Private Health Care Facilities and Services Regulations 2006 (P.U. (A) 137/2006). PCNB, Malaysia, 2006.
 Daniel Craviotto Jr. A Doctor’s Declaration of Independence. Wall Street Journal, April 28, 2014. http://online.wsj.com/news/articles/SB10001424052702304279904579518273176775310
 Ezekiel J. Emanuel, Steven D. Pearson. Physician Autonomy and Health Care Reform. JAMA, January 25, 2012 (307) 4:367-8.
 Thomson-Reuters. The 2011 National Physicians Survey: frustration and dismay in a time of change. http://mikemeikle.files.wordpress.com/2011/01/2011-thomson-reuters-hcplexus-national-physicians-survey.pdf. Accessed June 12, 2014.
 ABIM Foundation; American Board of Internal Medicine; ACP-ASIM Foundation; American College of Physicians-American Society of Internal Medicine; European Federation of Internal Medicine. Medical professionalism in the new millennium: a physician charter. Ann Intern Med. 2002;136(3):243-246.
 Clinton HR, Obama B. Making patient safety the centerpiece of medical liability reform. N Engl J Med 2006;354:2205-8.
 Richard A. Culbertson, Philip R. Lee. Medicare and Physician Autonomy. Health Care Financing Review 1996 (18) No. 2:115-130.
 Victor R. Fuchs, and Arnold Milstein. The $640 Billion Question — Why Does Cost-Effective Care Diffuse So Slowly? ,
 Pengarah Hospital Selayang & Ors v. Ahmad Azizi Abdullah James & Ors. CLJ 2013, 3:833-842. [Civil Appeal No: W-01(IM)-388-2011] February 2012
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