1 care concept caper
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1Care Concept Paper 6 august 2009TRANSCRIPT
CONCEPT PAPER
MINISTRY OF HEALTH
1Care for 1Malaysia:
RESTRUCTURING
THE MALAYSIAN HEALTH SYSTEM
MINISTRY OF HEALTH MALAYSIA
11 AUGUST 2009
1
EXECUTIVE SUMMARY
CONCEPT PAPER FROM THE MINISTRY OF HEALTH
1Care for 1Malaysia:
RESTRUCTURING
THE MALAYSIAN HEALTH SYSTEM
This paper is presented to introduce the concept of a national health system named
1Care, in line with the government‟s 1Malaysia model towards greater unity. Input and
guidance of Economic Council members would help improve ideas in this concept paper.
With the approval of the cabinet, MOH, with assistance from various partner agencies
and stakeholders, will then undertake further systematic planning towards the
development of a full blueprint for the 1Care national health system within a 2-year time
frame. Phased implementation will be introduced with full evaluation and monitoring to
ensure that objectives of the 1Care proposal are achieved.
2. Malaysia‟s health care system is acknowledged internationally as a successful,
modern government-regulated health system that provides effective health services.
Despite the accolades received, Malaysia, like many other countries, is apprehensive
that the present system of health care delivery and financing may not be sustainable in
the long term.
3. The country faces several issues and challenges in order to put the population at
the forefront of health services and to increase the system performance and advance
quality of care. These challenges include ensuring that services provided meet clients‟
need; enhancing performance to improve equity of service; providing higher quality care;
and overcoming limited and mismatched health care resources such as human resource,
financial and physical infrastructure.
2
4. Malaysia‟s health care financing pattern mimics more that of lower and lower-
middle income countries while in reality we are an upper middle-income country striving
for high wage earning status. It is now timely to restructure the system in order to align
performance to the needs and expectation of the nation.
5. 1Care is the restructured national health system that is responsive and provides
choice of quality health care, ensuring universal coverage for the health care needs of
the population through the spirit of solidarity and equity.
6. The proposed restructured Malaysian Health System will retain the existing
strengths of the current system. MOH will be streamlined to focus mainly on governance
and stewardship, and specific community health services. The daily task of patient care
will be devolved under an autonomous Malaysian Healthcare Delivery System with
integration of public and private health care providers and services congruent with the
1Care concept. These changes will lead to more competition between the providers,
higher quality and greater efficiency. The restructured system will be more responsive to
population health needs and expectations through increased autonomy. Some functions
will be placed under independent organisations owned by and accountable to the MOH.
7. The linchpin of the restructured health financing system is the contribution by
individuals and companies into a social health insurance (SHI) fund publicly managed on
a not-for-profit basis. SHI premiums are estimated at 9.5% of household income, with
contributions from the government, employer and employee. Two options in the
proportion of contributions are submitted for consideration. The National Health
Financing Authority (NHFA) will safeguard the integrity of the system, its effectiveness to
control the rate of health care cost increases and ensure the equitable financing and
delivery of health services.
8. Overall spending for health will increase from 4.7% of GDP in 2007 to an
estimated 6.2% of GDP. Nevertheless, government subsidy on health care will reduce
from an estimated 17.9% of TEH in 2007 to 15.6% in the proposed system through
improved targeting of vulnerable population.
Prepared by:
Ministry of Health
6 August 2009
3
Contents
EXECUTIVE SUMMARY ............................................................................................................................ 1
CONCEPT PAPER FROM THE MINISTRY OF HEALTH ..................................................................... 4
OBJECTIVE .................................................................................................................................................. 4
BACKGROUND ............................................................................................................................................ 4
Current Health System ............................................................................................................................ 4
Achievements ........................................................................................................................................... 6
Government‟s Commitment .................................................................................................................... 7
Challenges in the Current Malaysian Health System ......................................................................... 8
FEATURES OF THE PROPOSED RESTRUCTURED MODEL ........................................................ 17
FINANCING ARRANGEMENTS, COST & FINANCIAL IMPLICATIONS.......................................... 22
CAUTIONS AND CONCERNS ................................................................................................................ 28
BENEFITS ................................................................................................................................................... 29
Benefits to the Nation ............................................................................................................................ 29
Benefits to the People ........................................................................................................................... 30
Benefits to Health Care Providers ....................................................................................................... 31
CONCLUSION ............................................................................................................................................ 31
REFERENCES ........................................................................................................................................... 32
ANNEXES ................................................................................................................................................... 34
4
CONCEPT PAPER FROM THE MINISTRY OF HEALTH
1Care for 1Malaysia:
RESTRUCTURING
THE MALAYSIAN HEALTH SYSTEM
OBJECTIVE
1. The objective of this concept paper is to propose a restructured national health
system that will meet and sustain the future needs of the country. It introduces the
concept of 1Care in line with YAB Prime Minister‟s vision of 1Malaysia. 1Care is the
restructured national health system that is responsive and provides choice of quality
health care, ensuring universal coverage for the health care needs of the population
based on the spirit of solidarity and equity.
2. The purpose of tabling this concept paper is to seek input and comments from the
Economic Council members. It is also to get approval to develop a detailed blueprint for
the restructured national health system.
BACKGROUND
Current Health System
3. Malaysia has a dichotomous health care system where comprehensive health
care is offered by a government-led public sector co-existing with a thriving private sector
(Annex 1). The latter caters mainly for the personal care of individuals while the former
provides for both personal care and public health services to ensure overall population
health. There are many different financers and providers of health care serving various
population sub-groups. Nevertheless, the Ministry of Health (MOH) remains the main
provider and financer of health care in the country.
5
4. There are glaring imbalances and mismatches between the public and private
sector in terms of resources and workloads. In 2008, although only 11% of primary care
clinics are publicly owned, they handled 38% of total patient visits. While there are more
hospitals in the private system, the reality is 78% of hospital beds remain within the
public system, attending to 74% of admissions. Through concerted effort, 55% of doctors
are now within the public system. Despite the greater workload for providers in the public
system, more resources are spent through private financing (Figure 1).
Figure 1: Public-Private Sector Resources and Workload (2008)
13.54
12081
2199310
41249
143
38.4
802
16.68
10006
754378
11689
209
62.65
6371
0% 20% 40% 60% 80% 100%
Health Expenditure (RM billion) (2007)
Doctors (excl. Houseman)
Admissions
Hospital Beds
No. of Hospitals
Outpatient visits (m)
Health clinics (with doctors)
Public Private10
5. A national referral system has been established within the MOH to provide a
systematic assessment and treatment of patients, along the continuum of appropriate
care. Patients access primary health care providers as the first point of contact and are
referred up to higher levels as needed. Cases are returned to the primary care providers
for follow-up, once close secondary or tertiary attention is no longer necessary. Despite
some bypassing in the public sector, there is a pre-determined referral system to
secondary or tertiary care, with primary care providers acting as gatekeepers (Annex 2).
However, bypassing is rampant in the private sector where patients self-refer freely into
Source: Health Informatics Centre (HIC)
6
any level of care (Annex 3). The practice of doctor-hopping among certain patients is a
matter of concern, as it does not promote prudent and desired health care practices.
Achievements
6. Malaysia‟s health care system is acknowledged internationally as a successful,
modern government-regulated health system that provides effective health services
(Bloom G & Standing H, 2008). Malaysia has achieved notable successes in health
status and the health sector including:
reduction in morbidity and mortality and increasing lifespan of citizens;
an equitable public health sector;
universal access to a comprehensive government health sector;
an effective safety net for catastrophic expenditure for chronic illnesses;
minimal or no co-payment for services within the public system;
health service focused on health promotion and disease prevention; and
private sector responsive to market forces.
7. Since Independence, Malaysia has achieved great improvement in health as
reflected by certain key health indicators. Life expectancy at birth for both genders has
increased over the years, rising from 56 years for males and 58 for females in 1957 to 72
years for males and 76 years for females in 2006. (WHO, 2007). Infant mortality rate,
which is a good indicator of overall health system performance, reduced drastically to
levels comparable to developed countries. Nevertheless, Malaysia‟s health indicators
have plateaued over recent years, compared to other countries, some of whom invest
more into their health systems (Figure 2).
7
Figure 2 : Selected Vital Statistics, Malaysia 1957-2006
Government’s Commitment
8. The Government of Malaysia (GOM) has been committed, both conceptually and
operationally, to progressively improve the health and quality of life of Malaysians. The
Ministry of Health (MOH) strives to provide accessible, equitable and high quality health
care to the population. Various public documents state the Government‟s role and
responsibility on health, notably the following:
Article 74(1) of the Federal Constitution stipulates that the Federal Government
has the authority to legislate health matters. (GOM, 2002)
Vision 2020 states (among others) the aim to ensure the Nation provides
adequate access to health facilities (Mahathir M, 1991).
Chapter F (Medical 1974) of the General Order for the Civil Services incorporates
the proviso for free medical benefits for civil servants and dependants at public
facilities only (GOM, 2006);
The EPF Act 1991 initiated the Employees Provident Fund (EPF) as a compulsory
savings scheme for non-pensionable employees and includes provision allowing
withdrawal of a portion for medical treatment (GOM, 1991).
8
Malaysia is a signatory to the Universal Declaration of Human Rights (1948)
(General Assembly, United Nations) wherein Article 25 states that “Everyone has
the right to a standard of living adequate for the health and well-being of himself
and of his family, including … medical care and necessary social services, and
the right to security in the event of unemployment, sickness, disability, … in
circumstances beyond his control. Motherhood and childhood are entitled to
special care and assistance”.
Since the Fifth Malaysia Plan, Malaysia‟s 5-year Development Plans have
included statements on cost sharing through health care financing mechanisms to
provide wider choice and better quality of health services. Although efforts to
study the sustainability and eventual introduction of a suitable financing scheme to
replace the present one began in the 1980s, to date they have not lead to
substantive action. Various reasons may have contributed to the inertia such as
timing, political will, readiness of the government, people‟s acceptance and
enabling infrastructure to accommodate the change.
Challenges in the Current Malaysian Health System
9. Despite the accolades received, Malaysia, like many other countries, is
apprehensive that the present system of financing may not be sustainable in the long
term, given the rapid rise in health care spending and the high out-of-pocket proportion
of this spending. Furthermore, the country faces several issues and challenges in order
to put the population at the forefront of health services and to increase the system
performance and advance quality of care. The main challenges are:
to ensure services provided meet clients‟ need;
to enhance greater performance;
to enhance equity of overall service delivery;
to ensure higher quality of care; and
to overcome limited and mismatched health care resources such as human
resource, financial and physical infrastructure.
9
Challenges in Serving the People Better
10. In striving to provide better services to the community, the public health care
system faces the constraints of higher consumer expectations, epidemiological and
socio-demographic shifts towards an aging population and the changing attitude towards
lifestyle, as well as a fairly rigid central administrative structure. The most common
complaint received by the MOH is the long waiting time for services and medical
procedures at all levels of the system. Greater expectations and demands are the
natural evolution of better education, higher income, and more access to information.
Changing trends in socio-demography and disease patterns present a major challenge in
the containment of health care cost (Figure 3 and 4).
Figure 3: Changing Demographic Trends
Source: Department of Statistics
10
Figure 4: Changing Disease Trends in Peninsular Malaysia (1970 and 2008)
11. The elderly are living longer as evidenced by an increase in life expectancy. An
increase in the aged population is associated with an increase in the prevalence of ill
health mainly chronic problems which require long term and continuous care. Elderly
patients are more likely to be admitted with serious and life threatening conditions
entailing high cost. The cost of health care will increase as the elderly population
increases in the future.
Challenges in Achieving Greater Performance
12. While the population has benefited greatly from the publicly funded health system,
there are growing issues of inefficiency in the targeting of limited health funds.
Government spending on public health services benefit even those who can afford to pay
for care leading to leakages of public subsidy. Data from the National Health Morbidity
Survey II (NHMS II, 1996) showed that among the richest quintile of the population, more
than half (54%) still admit into public hospitals. It is necessary to encourage the rich to
utilise public facilities because they provide the much needed voice to counter-check the
system and maintain the critical patient mix. Nevertheless, leakages of public subsidy
can be circumvented if the affluent are required to pay amounts commensurate with
services rendered.
11
13. The issue of limited appraisal and reward for performance in the public system still
needs to be addressed. Poor working conditions, lower remuneration and rewards
coupled with heavy workload contributes to the continuous brain drain of experts and
experienced staff from the public to the private sector and overseas. A less recognised
problem is the high payment charged in the private sector even when care delivered
does not meet acceptable standards. When the MOH tries to tackle such matters
through legislation and enforcement, it is accused of conflicts of interest as MOH itself is
both the regulator and provider of services.
Challenges in Improving Equity
14. In health care, both horizontal and vertical equity are relevant. Those with equal
need should receive equal care, while payment should be according to capacity to pay.
Moreover, such payment should not be required at the time of use but through a regular
prepayment mechanism. Regardless of the wide network of public and private sector
facilities in Malaysia, its distribution is unbalanced. Private facilities are concentrated
mainly in urban areas. Specialist services are available predominantly in larger towns.
Hence, rural communities do not receive comparable services. This has contributed to
the discrepancy of health outcomes between urban and rural population as shown in
Table 1.
Table 1: Discrepancy in health outcomes by geographical location
Source: National Health and Morbidity Survey (NHMS) III, 2006
15. Preferences for seeking care at various facilities are clearly income dependent
(Figure 5). When people earn more, they preferentially switch to seeking private health
12
care. As Malaysia strives towards becoming a high-wage earning country, the relevance
of the public health system, as it exists now, is a major concern. Service charges at
public health facilities (both primary and hospital care) are nominal and may even be
waived on appeal. However, frequent media solicitations for financial assistance for
health care indicate a weakness in the system. There is a need to increase the
responsiveness of the health care system and health providers to meet the needs and
expectation of the population.
Figure 5: Health care Utilisation by Income
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Less than
RM400
RM400 -
RM699
RM700 -
RM999
RM1000 -
RM1999
RM2000 -
RM2999
RM3000 -
RM3999
RM4000 -
RM4999
RM5000 &
above
Pre
va
len
ce
government private
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Less than
RM400
RM400 -
RM699
RM700 -
RM999
RM1000 -
RM1999
RM2000 -
RM2999
RM3000 -
RM3999
RM4000 -
RM4999
RM5000 &
above
Government Private
Hospital careAmbulatory care
Source : NHMS III, 2006
16. Since 2004, private spending on health overtook public spending (Figure 6). The
proportion of private sector expenditure has increased from 24% (Health Services
Financing Study, 1985) to 55.2% (HIC, 2009). This pattern does not augur well for the
health system because it has been shown that when majority of health care is privately
funded, there is less control on health care inflation. Consequently, cost of health care in
such situations will rise even faster (World Bank Institute,2007).
Income Range
13
Figure 6: Public-Private Expenditure on Health, 1997-2007. Real RM Value (2007)
Figure 6: Public Private Expenditure on Health, 1997-2007
Real RM Value (2007)
28
5,6165,806
6,351
7,320
8,7279,083
12,067
11,558
10,271
11,542
13,546
5,658
5,538
5,970
6,5716,824
7,208
10,079
11,740
13,034
14,360
16,6821.51.6 1.7 1.8
2.1 2.1
2.5
2.2
1.9 1.9
2.1
1.51.5 1.6 1.6 1.6 1.7
2.1
2.32.4 2.4
2.6
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Perc
en
tag
e (
%)
RM
mil
lio
n
Year
PUBLIC (RM million) real RM2007 base PRIVATE Public as % GDP Private as % GDP
Source : MNHA (2007) & HIC (2009)
17. Of greater concern is the pattern of spending for health in Malaysia (Figure 7).
Malaysia is noted to have very high out-of-pocket spending. At the time of illness and
vulnerability, people have to ensure that they have enough funds to seek care not only in
the private system, but also in the public system where purchases of certain prescribed
drugs, prostheses and equipment are not subsidised by government funds. This does
not provide adequate risk protection from possible impoverishment as a result of seeking
care during episodes of catastrophic illness such as cancers, renal failure and major
cardiovascular conditions.
14
Figure 7: Ratio of Out-of-Pocket (OOP), Public & Private Expenditures
18. There is some risk pooling mechanism available in the private sector in the form
of voluntary private health insurance (PHI). These commercial for-profit organisations
offer risk-rated insurance packages which are mainly affordable to healthy young
financially independent people. Those who are in most need of financial security when
seeking care such as the elderly who are not economically active and those with long-
term chronic illnesses and pre-existing medical conditions, are unlikely to be accepted as
insurers will deem them as very high risk. The PHI industry has grown tremendously in
Malaysia in recent years. Unfortunately, to the health economist, this spells yet more bad
news as PHI is another proven factor contributing to high health expenditure (World
Bank Institute, 2007).
19. Malaysia‟s financing patterns mimics more that of a lower or lower-middle income
country while in reality we are an upper middle-income country striving for high wage
earning status. In these latter countries, social security infrastructure plays a significant
role to garner private capacity into publicly managed fund-pooling mechanisms. In
Malaysia, statutory bodies such as the Employee Provident Fund (EPF) and Social
Source : World Bank, 2005 COUNTRIES
PER
CEN
TAG
ES
15
Security Organisation (SOCSO) have only a minimal role in providing this social
protection in health financing.
Challenges in Quality of Care
20. The dichotomy of public and private provision has had a major impact on the
quality of care between the two sectors. Variations arise from the significant difference
in infrastructure, such as facilities and equipment, as well as the clinical practice and
competency of providers and ancillary staff. Such variations have significant impact, not
just on perceived quality but more critically patient safety.
21. At the same time, the unregulated growth of medical technology as well as its
ready assimilation into the private sector contributes not only to quality concerns but has
also been proven to contribute to the rising cost of health care (Annex 4). The MOH
Health Technology Assessment (HTA) section reports that of the 115 health
technologies assessed from 2004 to mid 2009, only 33% were recommended for routine
or selected use, 50% were not recommended while the balance should only be used in
the research environment. Although the introduction of the Private Health care Facilities
and Services Act (1998) has addressed some of these concerns, there is a need for a
more concerted effort regarding the control and distribution of technology as an effective
way to regulate the availability, use and equitable distribution of cost-effective technology
to achieve higher quality of care.
22. A challenge to the harmonisation of quality standards and practices across the
health system is the lack of information and data sharing. This is further compounded by
low uptake of information communication technology (ICT) to assist clinical practice and
evaluation as well management practises.
Challenges in Limited Health Care Resources
23. In considering resources for any sector, the main components are generally
human resource, physical infrastructure and financial resource. Despite efforts to
increase the health care provider numbers in Malaysia, the country still lacks a significant
volume. The current doctor-population ratio of 1:1,255 is higher than the WHO
16
recommendation of 1:1000 (Oji, Utsumi & Uwaje, 2005). Moreover, skilled personnel are
not necessarily distributed according to health needs of the nation (Annex 5). Private
facilities in particular, responding to higher purchasing power, are concentrated in urban
areas.
24. Given the volume of patients that utilise public hospitals, it is not surprising that
overcrowding is an issue that frustrates the government‟s efforts to provide more
creature comfort to patients and visitors. MOH primary health care providers treat more
patients with chronic illnesses compared to private general practitioners (GPs) who treat
more „healthy ill‟ (ACG Project Team, 2007). For public sector specialists, about 70% of
their patient workload consists of complex cases, compared to 25% for private sector
specialists (Abu Bakar S. et. al. 1993). In such a stressful environment, it is perhaps not
surprising that there are substantial unhappiness from both clients and staff in the public
sector.
25. Although Malaysia is an upper middle income country, its level of health
expenditure mimics more that of a lower middle income country (Figure 8). The system
is clearly under tremendous pressure. It is time to revamp the situation in order to align
performance to the needs and expectation of the nation. It is time for “business unusual”.
(Mohd. Ismail M., 2009)
Figure 8: Total Expenditure on Health as percentage of GDP for Countries according to Income Level (2005)
17
FEATURES OF THE PROPOSED RESTRUCTURED MODEL
Main Objectives of Restructuring
26. Given the many challenges now facing the Malaysian health system, the
objectives of the proposed restructuring are manifold. The newly restructured system will
have to be BETTER than what Malaysians already enjoy today, with enhancement of
universal coverage in line with the 1Malaysia philosophy. The concept of 1Care ensures
horizontal integration between the public and private sectors and vertical integration
between the various levels of care within the health care delivery system. Through this
integration, the development of a national health system will promote greater technical
and allocative efficiency.
27. Health services will become more affordable through a publicly-managed
prepayment scheme, designed to ensure sustainability and appropriateness of the
system to the needs of a progressive nation. The restructuring will undertake measures
to improve equity in terms of access to better quality of care and financial risk protection.
This includes effective safety nets for catastrophic spending due to illness in a
responsive and caring health care system.
28. It is envisaged that increased personalised and community care will lead to
greater client satisfaction and health outcomes. A more conducive work environment will
eventually lead to the reduction of the brain drain of highly skilled health care personnel
from the country and from the public to the private sector.
Features of the proposed restructured model
29. The proposed restructured Malaysian Health System will retain the existing
strengths of the current system. The role of the MOH will be more streamlined in 3
broad functions:
Governance and stewardship
Selected public health services
Personal health care services devolved to the Malaysian Healthcare Delivery
System (MHDS)
30. Its main focus within the new public health functions would be the governance and
stewardship of the national health system. The role of community health services and
18
the function of communicable disease control are critically important as witnessed by the
current pandemic of H1N1 Influenza 2009 ravaging our country and indeed the world.
This public good will remain protected and guaranteed as it remains within the MOH, but
with a more specialised role. The MOH of the future will be managed as a tight ship of
highly skilled senior experts, functioning cohesively in a matrix organisation.
31. The daily routine of patient care will be devolved under an autonomous Malaysian
Healthcare Delivery System (MHDS). The formation of MHDS will change the health
care system in two major aspects:
the separation of purchaser-provider functions from MOH, allowing the role of
MOH in governing and financing the health system to be more effective and with
fewer issues pertaining to conflict of interest; and
the integration of public and private health care providers and services congruent
with the 1Care concept.
32. In the restructured system, Primary Health Care (PHC) will be the thrust of health
care delivery in Malaysia. This change will result in better collaboration between public
and private providers who now perform on equal footing, utilising similar care pathways
and performance tools; thus leading to higher quality and efficiency. The MHDS will be
more responsive to individual health needs and expectations through increased
autonomy. To this end, some functions will be placed under independent organisations
owned by and accountable to the MOH. These autonomous bodies, which are run by
their own management board, will have the flexibility to engage and remunerate staff
based on capability and performance. Staff and facility performance will also be the main
criteria for service payments.
Functional Relationship of the proposed restructured model
33. The schematic in Annex 6 highlights the functions of the restructured health
system. This paper is designed to introduce the broad skeletal concepts of 1Care and
the restructured health system. The substance of the structure and detailed
organisational arrangements will be developed in a blueprint for the restructured system
when general approval to proceed is secured.
New Public Health Functions
19
34. The New Public Health Functions denoted in the chart includes policy and
regulations, public health services and any other services deemed necessary.
The Policy & Regulation function includes those related to the following:
Policy and Development - responsible to formulate and review all national level
policies related to the health system planning including (but not confined to)
standard setting, quality assurance, guidelines for good practice and adoption of
cost-effective measures, infrastructure development, training needs, research,
ethics, ICT support. These functions will apply to the various scope of health such
as hospital care, disease control, family health, oral health, health promotion,
pharmacy services, nutrition, engineering, and other areas of concern.
Regulatory body – specialised function mainly to formulate and review all
legislations related to health care providers, health care practice and premises,
marketing and use of medical equipment, pharmaceuticals and other medical and
health products. Public Health, Medical Practice, Oral Health, Drug and
Pharmacy, Medical Devices, Health Facilities, Food Safety, Traditional and
Complementary Medicine, and Research. Emphasis will be placed on the clear
delineation of function and responsibility for legislation and regulation so that
oversight and enforcement will be effective and impartial to avoid conflicts of
interest. Where appropriate, different aspects of enforcement may remain within
the MOH or devolved to independent bodies.
Monitoring and Evaluation – to ensure restructuring of the health system will meet
specific objectives. Performance of autonomous bodies will be monitored and
evaluated. Quality and standards established by the Government will be
implemented so that the people receive appropriate and satisfactory health
services. Aspects such as health care provider assessment which encompass
accreditation, credentialing and others will be given attention. Health quality
control implementation will be carried out jointly with professional health bodies. In
areas where there are legislation involving establishing of facilities and services,
such as health care facilities and laboratories, assessment and monitoring in
terms of „zoning‟ or issuance of „certificate of needs‟ will be required. There may
be quota assessment before an approval is given.
35. The Public Health Services function will focus on issues related to the
implementation of community based Public Health Services mainly focused on
Communicable Disease Control, community level disaster management and others.
Communicable Disease Control related services like Public Health Laboratory services
20
will be retained within the MOH. These services will be provided throughout the country
within the existing public health network.
Malaysian Healthcare Delivery System (MHDS)
36. The MHDS will be the implementing arm in the delivery of personal care. It
comprises of several Regional/State Authorities to address regional health needs. They
are responsible for the strategic supervision of the following functions:
developing plans for improving health services in their local area,
making sure local health services are of a high quality and are performing well,
increasing the capacity of local health services so they can provide more services,
and
making sure national priorities for example, programmes for improving cancer
services are integrated into local health service plans.
37. The MHDS does not raise its own funds. Funding of MHDS activities related
directly to personal care will be obtained from the National Health Financing Agency
(NHFA) based on pre-determined criteria set by the NHFA in collaboration with the MOH.
Primary Health Care Trust (PHCT)
38. Primary Health Care Trust (PHCT) is an autonomous agency accountable to the
MHDS. It administers personal care as the key agency to purchase primary health care
services and other levels of services for the region. They are responsible for providing
personal care and preventive services. They oversee and purchase health care services
from independent contractors (Primary Care Providers/Contractors), dentists and
pharmacies. They also commission services from secondary or tertiary care providers
such as hospital services, emergency services, etc.
Primary Health Care Providers (PHCP)
39. Primary health care services will become the foundation of the health services
with strong focus on promotive-preventive care and early intervention. PHCP comprises
medical practitioners and dentists, assisted by nurses and appropriate paramedical
personnel, in public and private clinics operating individually or as registered groups to
provide services under the financing scheme. The primary health care providers who are
21
independent contractors will function as family doctors and dentists, who are
gatekeepers to secondary and tertiary care. Every individual in the population is
registered with a PHCP. Financing of medical services is by capitation with case-mix
adjustments (based on the community‟s health profile). There are also additional
incentives for achieving performance targets and as inducement for working in less
desirable areas. The benefit package of services will be developed and other payment
mechanisms apply for dental treatment and pharmaceutical prescriptions where patients
will make some co-payments when receiving service. These co-payments are instituted
to encourage prudent use of these services. Certain identified groups, such as the poor,
will be exempted from these co-payments.
Hospital Services
40. In the restructured system, patients will be referred by their PHCP to higher levels
of care, except in emergencies. There will be a regional network of autonomous public
hospitals, based on distribution of expertise and sub-expertise available in every
zone/state/district. The PHCT purchases hospital services from either the public network
or private hospitals. The services provided by public hospitals, will be funded through a
global budget based on case adjustments using Diagnostic Related Groups (DRG).
Financing of the private hospitals services is through case-based payment.
National Health Financing Authority (NHFA)
41. NHFA will be an autonomous statutory body, accountable to MOH. It will not be
privatised to safeguard the integrity of the system, its effectiveness to ultimately control
the rate health care cost increases and ensure the equitable financing and delivery of
health services to the Nation. It shall manage both the social health insurance and
general taxation fund for personal health care as a single fund manager. Funds will be
disbursed to the regional/state health authority based on specific and transparent
formulas to cover the personal health care needs of that population. The NHFA will be
accountable for the management of the overall health financing system in close
collaboration with the MOH and MHDS. The main responsibilities of the NHFA include:
Design Benefits Package together with MOH, MHDS and PHCT
Negotiating with government for funding required to provide the agreed benefits
package
Monitor the fiscal performance of agencies within MHDS
22
Independent and Professional Bodies
42. Within the restructured health system, several existing independent and
professional bodies with specific technical functions will be strengthened while new ones
may be established. These autonomous agencies are set up to ensure that the system
will be more responsive to client needs. In some situations, they serve as regulatory
functions for licensing and enforcement.
FINANCING ARRANGEMENTS, COST & FINANCIAL
IMPLICATIONS
43. In the proposed system, current financing arrangements will also be restructured
to ensure better financial risk management, equity in financing of health care, greater
efficiency of government subsidy for health care and accountability of work performance.
The proposed financing scheme moves the current Malaysian financing picture, as
described earlier (Figure 8), more into an upper middle to higher income country pattern.
44. Health care will continue to be financed through a combination of mechanisms but
with greater public financing, thus reversing the trend of private individual financing seen
previously (Figure 6). Major components for health financing will now be publicly
administered social health insurance (SHI) and general taxation, with much smaller
components of private spending. Private spending may consist of out-of-pocket spending
(OOP) to pay the minimal co-payments at point of seeking care e.g. for dispensing of
drugs and dental treatment within the SHI benefits package, and for services not covered
by SHI. Private spending will also include voluntary top-up private health insurance (PHI)
and corporate spending for employees for coverage of high end care and other non-SHI
covered items.
45. SHI contribution in the proposed system is mandatory with contributions for the
premiums raised from employer, employee and the government of Malaysia (GOM). The
whole population of Malaysia has to subscribe to SHI with no avenue to opt-out from the
system. This will ensure a high level of risk pooling and equity in financing for health
23
whereby the healthy will cross-subsidise the ill, the rich cross-subsidise the poor, and the
economically productive cross-subsidise the dependant. SHI premiums are calculated as
a percentage of income and shared by employer, employee and government funding.
This model of nationally pooled financing will further enhance social unity and caring as
per the 1Malaysia concept. To ensure greater equity and lower average premiums, SHI
premiums are estimated through community risk-rating to cover all family members, and
not individual risk-rating as in PHI. The latter will result in unacceptably high premiums
for those with the greatest health care needs and yet have the lowest capacity to finance
this need, and these are mainly the young and elderly. The estimates for financing in the
restructured system are shown in Table 2 below.
Table 2: Estimates for financing for the restructured system
Estimated Annual Cost to Finance Malaysian Health System (RM)
Expenditure for personal health care (PHC, specialist & inpatient care)
27.87b
As % of GDP
3.9%
Estimated Total Expenditure on Health with 5% administrative charge (Includes personal health care, public health, training, research, private insurance etc.)
44.23b
As % of GDP
6.2%
Per capita expenditure for personal health care
984.44
Per capita expenditure for all health services
1,562.60
SHI Premium for personal health care
972.44
SHI Premium for average household (HH)
4,181.50
SHI Premium as % of average household income
9.5%
46. All estimates are made based on the assumption of population averages for
annual utilisation and cost. Primary health care visits are estimated for 6 annual visits per
person. Specialist clinic visits are estimated on 0.78 utilisation rate and inpatient care on
0.09 utilisation rate (NHMS II). The Malaysian population is estimated as 28,306,700
(Department of Statistics, 2009). Average household size is 4.3 persons per household
24
(Department of Statistics, 2006). Unit cost estimates are RM40, RM317.39 and
RM5088.16 for a primary care visit, a specialist visit and an inpatient episode
respectively. A low 5% administration is estimated for the running of the system at
steady state capitalising on economies of scale and prudent government management.
47. Funding contributions by employer and employee is a key feature of SHI as a
move towards greater social solidarity. There is no accepted gold standard on how to
apportion government, employer and employee contributions to SHI premiums (Annex
7). We propose 2 options in funding contribution of either 2/3 employer and 1/3
employee participation as the preferred Option 1, or 50:50 contribution as Option 2.
Option 1 is recommended given that majority of income tax collection for Malaysia is
raised through corporate tax rather than personal income tax and companies are already
spending substantial amounts privately to provide health care benefits to their
employees. The 2 options are presented schematically in Figure 9. Nevertheless, these
figures remain preliminary estimates and further analysis and estimates will be
recalculated when the decision is taken to proceed further with the planning for
restructuring.
Figure 9: Funding options for Employer-Employee contribution to SHI Premiums.
48. With the proposed financial restructuring and the expansion of the social security
fund for health, beyond the current minimal health care spending through organisations
such as Employee Provident Fund (EPF) and Social Security Organisation (SOCSO),
public financing will increase from about 44% of total expenditures on health (TEH) to
25
76% of TEH, if the whole Malaysian population participates in the SHI programme. This
is demonstrated in Figure 10.
Figure 10: Main Sources of Health Financing
49. International experience has shown that countries with majority public funding for
health care is better able to control the rate of health care cost increases through greater
financial management, economies-of-scale and the bargaining power of a monopsony
not-for-profit organisation. Comparative analysis of the financing arrangements for both
the current and the restructured health system is made in Annex 8.
50. The GOM remains committed to funding of health services in the restructured
system but with better targeting of beneficiary groups. This will reduce the use of
precious government funds by those of higher income who can afford to fund their own
health needs. Thus government subsidies for health care will be targeted to vulnerable
groups. Through general taxation, the GOM will subsidise funding of primary health care
services for the whole Malaysian population. At the same time, government will also
subsidise SHI contributions for identified vulnerable population groups such as the poor,
26
disabled, and the elderly. As the largest employer in the country, the government will be
expected to contribute to the insurance premiums of government pensioners, civil
servants and five dependants. The GOM will also fund for various other components
particularly items which are public goods and merit goods such as community health
measures e.g. communicable disease control, health education, environmental health
issues and in-service training for public health care providers. Funding for other items
such as public infrastructure development and research will be through MOH budget.
Estimates for these commitments are shown in Table 3.
Table 3: Estimates for Government Spending on Health in the Restructured
System
51. Therefore, in line with proposal to inject sufficient funds into the health system,
government spending for health will increase from 2.11% of GDP in 2007 to an
estimated 2.85% of GDP (or from RM13.6billion to RM23.4billion in 2007 RM value).
However, government subsidy on health care will reduce from an estimated 17.9% of
TEH in 2007 to 15.6% in the proposed system through better targeting of vulnerable
population. In absolute quantum, the reduction in subsidies of about 2.3% of TEH is
almost RM1billion.
52. The linchpin of the restructured health financing system is the contribution of
private spending by individuals and companies into a national fund that is publicly
27
managed on a not-for-profit basis. This arrangement under the National Health Financing
Authority (NHFA) will not be privatised to safeguard the integrity of the system and its
effectiveness to ultimately control the rate of health care cost increases and ensure the
equitable financing and delivery of health services to the Nation.
53. Funds to pay for SHI premiums may come directly from employer and employee
contributions as monthly salary deductions, and also through direct contribution by non-
formal sector workforce (possibly at a reduced rate to be estimated later). Other possible
sources of fund raising may include EPF dividends, EPF contributions and SOCSO
funds. In line with other government plans to look at contributory pension schemes
(pencen bercarum) for civil servants, it is conceivable that civil servants will also
contribute towards their own SHI premiums as per private employers. If the programme
is adopted, another possible source of funds may come from the Kumpulan Wang
Amanah Pencen (KWAP).
54. PHI has been developing steadily in Malaysia providing some risk pooling for
health care amongst the higher income population. Current private spending for health
of 56% of TEH in 2006 (41% OOP, 8% PHI and 7% corporate and other spending
sources) will ultimately be reduced to 23% of TEH in the reformed system at steady
state. Private spending will not disappear completely as this component allows for the
continued development of PHI in specific niche areas as a voluntary top-up to the
mandatory SHI programme. Individuals and corporations may also choose to fund other
aspects of health services particularly the extra hotel-level comforts through some OOP
payments or company expenses.
55. For catastrophic spending on conditions not covered in the SHI benefits package,
other existing sources of funding will be utilised. Such sources include the MOH Health
Welfare Fund and the government grants given to specific non-governmental agencies to
provide specific services such as the National Kidney Foundation, AIDS Foundation,
National Heart Foundation and the National Cancer Council (MAKNA).
28
CAUTIONS AND CONCERNS
56. This paper is presented to introduce the concept of a national health system
termed 1Care in line with the government‟s 1Malaysia policies towards greater unity. In
presenting this paper to the Economic Council (EC) it is expected that EC members will
provide valuable input and guidance to improve the skeletal plans towards restructuring
the Malaysian health system.
57. With the consensus of the Economic Council and approval of the cabinet, the
MOH, with assistance from various partner agencies and stakeholders, will then
undertake further systematic planning towards the development of a full blueprint for the
1Care national health system within a 2-year time frame. Upon development, phased
implementation of the programme will be introduced with full evaluation and monitoring
to ensure that the objectives of the 1Care proposal are achieved.
58. Given the scale of the restructuring, it is imperative that change is managed
effectively at all levels of stakeholders. With further development of the blueprint many
more deliberations with interested parties and stakeholders including the community will
be undertaken to ensure that a solid and widely accepted proposal emerges, taking into
consideration various aspects of concern. A realistic time frame for phased
implementation is required to ensure that the requisite manpower, infrastructure and ICT
needs and challenges are addressed. Appropriate training for health care personnel
such as training in management of public providers and managers in preparation for
greater autonomy has to be conducted. Effective change management will entail initial
injection of investments particularly for the restructured public system in order to
compete with the private sector on similar footing.
59. In preparation for expanding the 1Care concept expounded in this paper, a
comprehensive review of existing statues and documents will be undertaken to identify
and streamline existing legislations and regulations on the government‟s role and
responsibility.
60. It is understood that restructuring towards greater efficiency in health delivery may
require rationalisation of services in some regions and its development in others to also
address equity issues. Payment mechanisms, incentives and market signals will lead to
29
change in the distribution of health facilities and the desired changes to ensure higher
quality health care practices.
61. Planning and execution of the 1Care plan will occur over the longer term. Whilst
the current economic socio-political and global situation may be of concern to effect such
changes in the short term, nevertheless it is expected that the EC will recognise that now
is the ideal time (and indeed it is warranted) to prepare the necessary groundwork.
BENEFITS
Benefits to the Nation
62. The development of a national health system will strengthen national unity
through a 2-prong process in which:-
social solidarity is fostered through SHI contribution specifically addressing
marginalised segments of the population in accordance with the 1Malaysia effort.
There are cross subsidies by the rich to the poor, the healthy to the sick, and the
economically productive to dependants and enhancement of corporate social
responsibility through employer contribution; and
the 1Care concept emphasises the ethical delivery of health care, employing
welfare and extra-welfare economic principles to tackle the obvious market
failures of the health system for better efficiency and at the same time, addressing
equity issues that troubles the system.
63. This programme will stimulate the health care market through increased health
care spending aligned with Malaysia‟s upper middle income status. With enhanced
public-private integration there will be increasing productivity and system
responsiveness.
64. The policy will capitalise on the liberalisation and globalisation of the health
care market and ensure that Malaysia’s health care system remains competitive
with the ability to attract highly skilled medical personnel and support health care travel.
At the same time, public funds and subsidies will not benefit foreigners at the expense of
the Malaysian people.
30
65. The restructured system reduces unnecessary dependence on government
fund by decreasing the leakage of government spending to those who can afford. This
segment of society will contribute through SHI allowing better targeting of limited
government subsidy. As mentioned previously, in 2007, government subsidy for
personal health care services was 17.9% of total expenditure on health (TEH). With the
proposed restructuring, this will be reduced to 15.6% through better targeting of
vulnerable groups, despite enhancement of services.
66. The proposed system will improve financial safety nets for lower and middle
income groups through better risk management. There is reduction of direct out-of-
pocket spending (OOP) at point of seeking care by prepayment and coverage of the
poor, disabled and elderly through general taxation. Through SHI, the paying population
gains from the large pool of contributors. There will be lower insurance premium and
wider benefits. There is assurance that no one is denied coverage due to any existing
illnesses or has to pay substantial individually risk-rated premiums due to ill health.
67. Public management of majority of the health expenditure will ultimately contain
the rapid growth in health care cost and inflation. 1Care promotes greater efficiency
through various means such as higher quality of care, more cost-effective measures,
reducing duplication and increasing competition by attending to the inherent failures of
health care market.
Benefits to the People
68. This proposal was developed with the ethos of serving Malaysians better.
Through 1Care, people will get more access to both public and private providers in a
move to bring about personalised care nearer to home.
69. At the point of physical and economic hardship during illness, individuals are not
faced with the concern of paying large sums or setting up deposits with the guarantee of
minimal co-payments at the point of seeking care. With prepayment into the SHI
scheme, there is assurance of access for vulnerable group, and addresses the demand
and expectations of the middle-income segment of the Malaysian population. The
restructured system has at its heart the pledge to improve quality of care delivered and
client satisfaction.
31
70. In the end the pursuit is for greater health outcomes for the community, thus
ensuring the means to higher work productivity and the ability to pursue individual life
choices.
Benefits to Health Care Providers
71. The restructuring will bridge the gap between remuneration and workload among
health workers in the public and private sectors. Eventually, the problem of public sector
workers migrating to the private sector (brain drain) can be overcome. The restructuring
optimises the existing health practitioners in the public and private sectors. The lack of
health staff interested in serving less desirable areas can be addressed through the
provision of specific incentives. Training and credentialing mechanisms will be
developed to ensure all health practitioners have the appropriate competency, in line
with the care standards to be determined.
CONCLUSION
72. Malaysia‟s health system has been recognised internationally as an excellent
system. However, current and future challenges will affect the sustainability and
relevance of the system. Therefore, the restructuring of the country‟s health system is
critical. The proposed health system will have several clear advantages. Citizens, health
practitioners and the government will obtain multiple add-on benefits. The 1Care concept
is in tandem with the 1Malaysia philosophy to foster greater cohesiveness of the
Malaysian population through the national health system.
73. The Economic Council is requested to consider and approve the proposed
concept of 1Care through Restructuring of the national health system to enable the
Ministry of Health to further its blueprint development.
Prepared by:
Ministry of Health
7 August 2009
32
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34
ANNEXES
ANNEX 1
Current Malaysian Health System
35
ANNEX 2
Access to Health Providers in Malaysia
Oth
ers
Other agencies & Private sector
PR
IMA
RY
HEA
LTH
CA
RE
SECO
ND
AR
Y/TE
RTI
AR
Y CA
RE
MOH
Estate
Ora
ng
Asl
iFa
cilit
ies U
nive
rsit
y H
osp
ital
s
Priv
ate
Hos
pit
als
GPs
Med
ical
Cor
ps
Rural/Community Clinics
1 : 4,000 population
Health Clinics/Centres
1 : 20,000 population
Hospitals without
Specialists
Hospitals without
Specialists
Hospitals with
Subspecialty
Hospitals with
Specialists
ANNEX 3
Access to Health Providers in MalaysiaO
ther
s
Other agencies & Private sector
PRIM
AR
Y H
EALT
H
CAR
ESE
CON
DA
RY/
TER
TIA
RY
CAR
E
MOH
Estate
Ora
ngA
sli
Faci
litie
s
GPs
Rural/Community Clinics
1 : 4,000 population
Health Clinics/Centres
1 : 20,000 population
Hospitals without
Specialists
Hospitals without
Specialists
Hospitals with
Subspecialty
Hospitals with
Specialists
By passing
Priv
ate
Hos
pita
ls
Uni
vers
ity
Hos
pita
ls
Med
ical
Cor
ps
36
ANNEX 4
MEDICAL DEVICE AND EQUIPMENT IMPORTS IN MALAYSIA (2001-2007)
Source ??? Not Frost and Sullivan
37
ANNEX 5
Number of Clinics and Hospitals by State, June 2009
State Clinic
Hospital
MOH* Private MOH Private
Johore 352 805 11 28
Kedah 281 336 9 11
Kelantan 251 185 9 3
Malacca 86 278 3 4
Negeri Sembilan 143 261 6 7
Pahang 306 222 10 8
Penang 88 483 6 20
Perak 288 619 14 13
Perlis 39 32 1 0
Selangor 189 1510 10 41
Terengganu 172 154 6 1
Sabah 270 301 22 3
Sarawak 203 303 20 9
WP Kuala Lumpur & Putrajaya
14 960 2 30
WP Labuan 11 9 1 0
Total 2729 6458 130 178
* MOH : Health Clinics and Community Clinics only
38
Annex 6
35
Functional Relationship in the Restructured Health System
39
ANNEX 7
Country Year %
GDP
SHI funds
(multiple/
single)
%
population
covered
Contribution
(% income)
Employer Employee
HIGH INCOME COUNTRIES
Australia 2005 9.7 Single
(Medicare) All
Residents 1.5-2.5% Nil 1.5-2.5%
Japan 2002 8 Multiple 99% 8 4 4
Korea 2007 5.6 Single payer
(NHIC) 97 4-5% 2 2
Taiwan 2004 6.17
Single Payer (Bureau for
NHI) 99 4.55 (10% by
govt.) 2.7 (60%) 1.4 (30%)
France 2008 11.1
(2008) Multiple (17) 100 19.6 12.8 6.8
Germany 2008 10.7 Multiple
(319) - 2003 99.8 16 8 8
United Kingdom 2008 9.4
National Insurance
(Social Security) 100 (NI)11 (NI)12.8
Netherlands 2008 9.2 Multiple 98.5 7.2 4.8 2.4
Hong Kong 2006 5.5
(2002) Nil Nil Nil Nil Nil
MIDDLE INCOME COUNTRIES
Malaysia 2007 4.7
SOCSO (Employment
Injury & invalidity) 16.8 2.25 1.75 0.5
Indonesia 2002 2.8 Multiple 10 2.5 (ASKES) 2 0.5
Chile 2004 6.1 Single 86 7 Nil 7
Philippines 2005 3.3 Single 73 2.5 1.25 1.25
Costa Rica 2003 7.1 Single public 88 15 9.25 5.5
Thailand 4 Multiple Mixed 4.5
(Govt. 1.5) 1.5 1.5
Mexico 2002 6.2 Multiple 51% 9.5 6.95 2.95
Nigeria 2005 3.9 Single na 15 10 5
Tanzania 2002 8.7
Multiple (Main - NHI
fund) na 6 3 3
Mongolia 2002 4.3 Single 77.3 4% (max) 2 2
40
Annex 8
Comparative data of selected countries on Total Expenditure on Health (TEH)
GDP per capita
US $
TEH per
capita TEH as %
of GDP
Govt. HE
(% of
TEH)
Public
HE (%
of TEH)US $
Mid Malaysia (MNHA) 7,221* 245 4.3 44.2 44.6
Mid Malaysia (New)** 7,221* 445 6.16 46.1 76.9
High Japan 38,443 2,936 7.6 14.6 81.3
High Rep of Korea 19,115 973 5.9 11.4 53.0
Mid Thailand 3,869 98 3.5 56.0 63.9
Mid Colombia 5,440 201 7.3 33.6 84.8
Low Vietnam 1,051 37 6.0 17.0 25.7
Low Indonesia 2,254 26 2.1 37.0 46.6
Low Kenya 895 24 4.5 41.9 46.6
High Singapore 37,600 944 3.5 26.5 31.9
High Taiwan 17,040 1561 6.17 9.0 66.5
Mid Mexico 10,211 474 6.4 17.3 45.5
Source: WHO (2006)
•2008 Figure** Based on proposed system