A global leader: Rising medical tourism points to the industry’s strengths

Recently ranked among the top countries in the world for medical services, Malaysia boasts a strong health care sector backed by government investment and engagement with the private sector. A February 2014 review by International Living, a travel journal, gave Malaysia 95 out of 100 points for quality of care and expertise of practitioners. With that score, the country came in third, behind only France and Uruguay.

Medical tourism, too, is high and growing. As marketing efforts and the spread of information on the internet have boosted Malaysia’s reputation on the world stage, the number of such tourists has been steadily climbing – at the latest count, from 617,000 in 2012 to about 700,000 in 2013. While citizens of Malaysia are entitled to universal coverage under a public system, private providers are seizing opportunities to invest in the industry. Health spending made up only 2.2% of GDP in 2013, yet growth has been strong, largely due to private investment and the government’s encouragement of public-private partnerships (PPPs). “It is the most stable industry in the world, and there is no end to demand,” Rick Evans, chairman of Columbia Asia, told OBG. “Profit margins for hospitals in Malaysia are adequate if you know what you are doing.”

The Private Sector

Malaysia has been moving toward a transformation in health care, from state control to private-sector involvement, according to Dr Safurah Jaafar, director of the family health development division at the Ministry of Health (MoH). “We have been talking about various ways to partner with the private sector for a long time, but traditionally medical care has been publicly funded,” she told OBG. “Recently, however, we have begun outsourcing services to the private sector.” The earliest PPPs were introduced through drug supply, and from there eventually branched out into cardiac centres and other specialty clinics. As demand increases for doctors, hospitals, specialised clinics, geriatric care and clinical research, many investment and partnership opportunities are opening across a sector that is already a global leader in performance.

Main Health Issues

Although non-communicable diseases have now surpassed communicable ones as the bigger concern in Malaysia, both kinds persist in the region. One example of the latter is dengue fever. Spread by the Aedes genus of mosquito, this infectious disease is a common threat in Malaysia, Indonesia, the Philippines, Singapore and other countries with humid, tropical climates. As of early September 2013, it had been officially diagnosed in 19,267 patients in Malaysia and claimed 39 lives, up from 15,118 cases and 27 lives claimed for all of 2012, according to Dr Helmi Yahya, the deputy minister of health. It affects far more than this, however – a full 22% of the population encounter it in some form, according to Yahya. In July and August 2013, the MoH launched new efforts to combat the disease by targeting the Aedes bug itself.

Malaysia is also mulling new ways to address noncommunicable health issues. Obesity, diabetes, cardiovascular disease and kidney disease are all increasing in conjunction with lifestyle changes and greater consumption of processed foods throughout Asia. In 2011, the National Health and Morbidity Survey reported that Malaysia had South-east Asia’s highest occurrence of diabetes – one in five adults over age 30 – and its greatest number of overweight people.

A Global Problem

In line with global trends, Malaysia’s main public health concerns are shifting from transmissible illnesses to non-communicable diseases (NCDs) – primarily diabetes and cardiovascular disease. Diets are becoming more and more based on high-calorie, low-nutrient foods, which are usually cheaper and more convenient for low-income households or working individuals with less time to prepare fresh meals, and diagnoses of NCDs tend to rise with GDP around the world. Meanwhile, lifestyles are increasingly sedentary in countries like Malaysia, where more people are able to afford cars and more public spaces are equipped with escalators and moving walkways. Obesity, poor nutrition and even longer lifespans are putting people at an ever higher risk of contracting NCDs. In recent decades, the MoH has made great strides with initiatives that have reduced the spread of infectious illness. Now, the public health agenda is turning to tackle NCDs by partnering with the private sector.

Geriatric Care

As its population lives longer, Malaysia is also coping with an increased need for geriatric care. According to Dr N.K.S. Tharmaseelan, president of the Malaysia Medical Association (MMA), the average life expectancy in Malaysia is now 72 years for men and 80 years for women. Out of a population of 30m, 8% are elderly, according to the MoH, and many of these require either in-home care or the services of residential facilities. Demand for nursing homes, already strong, is expected to increase sharply in the years to 2020.

For the public sector, the challenge will lie in balancing quality and affordability. The MoH is working with the Department of Social Welfare to funnel limited resources where they are most needed, according to Jaafar. One example is the 1Malaysia Family Care programme, where state agencies, non-governmental organisations and local charities partner to organise volunteers who deliver aid to the elderly, the handicapped and the impecunious. “We look for geriatric patients who are unattended and cannot afford access to care,” she told OBG, “and are focusing resources on developing caretakers who can provide treatment for free to those in need. It is very resource-intensive, however, so we can only focus on those who are very poor and unable to get access to care.” Burgeoning demand in this area is ripe for private-sector initiatives.

Health Care Budget 

In 2013, the government allocated RM22bn ($6.9bn) to the MoH, according to the minister of health, Dr Subramaniam Sathasivam. Of that total, 60% went to pay the salaries of the industry’s 230,000 employees and 32% was spent on pharmaceuticals. As Tharmaseelan of the MMA noted when the 2014 budget was released, Malaysia spends far less on health as a portion of GDP than other countries in the region – 2.2% in 2013, compared to the ASEAN average of 10%. If Malaysia is to reach all of its development goals by 2020, the health sector will need to see a greater share of state funding. The government is aware of the benefits of a healthy population for a nation’s economy, as decades of MoH initiatives have shown. Four-fifths of the population have access to health care within 5 km, according to Jaafar.

For the 10-20% who are in remote areas, the government provides mobile clinics via land, water and air on a monthly or bi-weekly basis. “We understand that, especially in urban areas, people are coping with economic struggles,” Jaafar told OBG. “Providing free health care to these people ensures that the population is productive.” The government’s holistic approach has helped combat disease and Malaysia’s mortality rate. “Increasing access to care, hospital numbers and quality of services is a textbook prescription and this is something that has been successful in Malaysia,” she said.

Specialisation

Complementing public-sector initiatives, the private health care segment has grown in recent decades due to increased investment and competition. As GDP per capita rises and more people are educating themselves about health concerns through social media and other resources, many are choosing to pay for private services or subscribe to health insurance plans that cover specialist care. Because of long wait periods at public hospitals, more Malaysians are seeking faster and more customised care from private doctors, clinics and hospitals. According to Qualitas Health, 65% of Malaysians now visit private clinics for primary care needs. Most general practitioners at private clinics currently earn RM7000-9000 ($2185-2809) a month, 70% of this on average going to overhead.

One highlight of private-sector expansions is DKSH Business Unit Healthcare, which recently opened a distribution centre for medical products. Targeting 13,000 clients, the 12,000-sq-metre centre is the first to be certified by Good Distribution Practice for Medical Devices, a supply-chain management standard, and will service pharmacies, hospitals, dental clinics and other medical institutions, CEO Dr Joerg Wolle told the Pharmaceutical Business Review in May 2014.

Investment in a range of other specialisations took place in 2013. Vista Laser Eye Centre, for one, announced plans to open five new branches within three years. Company sales totalled RM22m ($6.9m) for 2013, and the growing medical tourism segment bodes well for providers of laser eye surgery.

In another development, halal vaccines are now the focus of a joint effort between the Halal Industry Development Corporation and an unnamed Saudi Arabian partner. Within three years, the team of partners aims to produce vaccines for meningitis, hepatitis and meningococcal that will be acceptable under the standards of Islam. The project will receive $100m of investment and was promoted by the government during World Halal Week in April 2014, Mustapa Mohamed, minister of international trade and industry, told Bernama, the state news agency.

Medical Tourism 

Malaysian health care tourism saw 15.8% growth in 2013, with most patients coming from neighbouring Indonesia and Singapore, the International Medical Travel Journal reported in May 2014.

In Penang alone, the industry made revenues of RM370m ($115.5m) in 2013, up 20% on 2012.

Several initiatives are driving further growth. Overseas trade fairs, web portals and kiosks at both the Kuala Lumpur International Airport and Penang International Airport, are helping to boost Malaysia’s public image and draw increasing numbers of medical tourists from across the globe. The Malaysia Healthcare Travel Council (MHTC), for its part, uses call centres and email support to recruit potential medical tourists, offering services in Bahasa Malaysia, Bahasa Indonesia, English, Mandarin, Japanese and Arabic. It also hosts domestic conferences for providers from around the world who are interested in learning about how to facilitate medical tourism. In 2013, most attendees visited from Yemen, Saudi Arabia, the UK and Iran. According to MHTC, there are great opportunities for health care providers in the global phenomenon of medical tourism.

Differentiation

For medical tourists, Malaysia has three main draws. The first is lower costs, especially for Americans and Europeans. Second, the waiting list is much shorter than, say, at the average UK hospital, depending on the treatment sought. Third, because most insurance plans do not cover cosmetic or dental surgery, it is often cheaper for patients to have a procedure done in Malaysia, even while paying for travel and accommodations, than in their home countries. “For the same amount someone would pay in the US or the UK, one can seek the same treatment in Malaysia and enjoy a holiday at the same time,” Wong Kee Mun, head of research and informatics at MHTC, told OBG.

Another reason Malaysia is a popular medical tourism destination is the availability of Western and Eastern medical techniques that can be combined for custom care. This has become especially appealing to women giving birth, as acupuncture and traditional massage are widely available as complementary medicine.

A final reason is because of confidence in the high standards the government maintains. “Medical tourism in this country is backed by the government, and Malaysia promotes it through its MoH,” Shobena Singam, manager of public relations and call centre at MHTC, told OBG. “It plays an important role in ensuring that private health facilities in this country adhere to all the necessary safety and quality requirements by regulating them through an act of Parliament, the Private Healthcare Facilities and Services Act 1998 and Regulations 2006. Public and private hospitals must abide by the same standards. This helps ensure the quality of medical providers and the professionalism of specialists. Therefore, there is always assurance of quality care in medical tourism offerings in Malaysia.”

Tourism Malaysia, a state promotion agency, aims to see 28m overseas tourists visit the country in 2014, an increase from 25.7m in 2013. Since the medical tourism industry makes up a significant portion of visits, the prospects for reaching this goal are strong, even in the wake of the tragedy of Malaysia Airlines flight MH370, which since its disappearance on March 8, 2014 has posed a challenge to the success of tourism initiatives.

Malaysia earned RM509.8m ($159m) from 578,403 medical tourist patients in 2011, according to the International Medical Travel Journal. Thailand and Singapore, also ASEAN countries, are Malaysia’s top two competitors in the industry. Developing the nation’s primary and preventative care services first and foremost, according to Dr Subramaniam, would do much to boost Malaysia’s status in the region.

Pharmaceuticals

Exports of medicines have been growing at about 12% per year, most going to ASEAN and North Africa, according to the Malaysian Organisation of Pharmaceutical Industries. Even so, Malaysia exports only 10% of its generics, a figure the industry would like to see grow to 40-50%. To do so would require new collaboration between public and private sectors.

Over the past decade, the government’s engagement with industries has seen a “quantum leap”, according to Leonard Ariff Abdul Shatar, president of the Malaysian Organisation of Pharmaceutical Industries. Ten years ago, Malaysia often entered into trade agreements or set new policies with very little consultation with the private sector. In recent years, however, there has been more interaction, making it much easier for industry voices to be heard. “We can see some of our recommendations being translated into policies, though it is still a work in progress,” Shatar told OBG. “The government is moving in the right direction, but translating that into the operational side is where issues tend to occur. It will take some more time for policies to be correctly interpreted and implemented.”

Clinical Research 

Malaysia is also advancing in the field of clinical research, with the government aiming to have 1000 new and ongoing industry sponsored research (ISR) trials conducted annually by 2020. In 2013 195 new ISR trials were approved by local institutional review boards, according to Clinical Research Malaysia (CRM), a state-owned non-profit. In 2012, the top therapy that was a subject for clinical research was endocrinology, with 25 trials, followed by oncology (22), respiratory (20), neurology (15) and psychiatry (15).

As for why Malaysia is often chosen as a site for such research, CRM credits the abundance of qualified doctors and nurses and the quality of regulations overseen by the National Pharmaceutical Control Bureau, a supervisory entity. Another reason is marketing. “A lot of decisions on where to do clinical trials are driven by which countries the company wants to market the drug to,” Mohamed Ali bin Abu Bakar, CEO of CRM, told OBG. “Countries like China, for example, want to see that the study was conducted within their borders before it will grant market access to a producer.” While population is an important determiner, he says it is not the only one: Taiwan, with less people than Malaysia, does more trials due to greater demand for pharmaceuticals.

The Malaysian generics industry is worth about RM1.2bn ($375m) and the total industry is worth around RM4bn ($1.2bn). The biggest challenge, according to Shatar, is meeting domestic regulatory standards while staying competitive on an international platform. Throughout Asia, efforts are under way to raise standards, and this ensures a more level playing field. In Malaysia standards and quality are high, but competition is a challenge when strong domestic production is met with restrictive export regulations.

Outlook

To propel the sector forward, Malaysia needs to sharpen its focus on the education and training programmes needed to train and retain qualified medical professionals. “Production of medical graduates should match the country’s projected needs for manpower,” Abu Bakar Suleiman, president of International Medical University, told OBG. “The MoH, through the Malaysian Medical Council, looks after the registration process to enable medical graduates to practice. It should also maintain the quality of medical practice.”

As Malaysia edges toward its goal of being a developed country by 2020, the administration of PM Najib is making a priority of the health care sector. With the ASEAN Economic Community single market set for launch in 2015, the Malaysian health industry needs to prepare for an increased flow of workers and stiffer competition in segments like medical tourism. Higher standards and quality should be the sector’s aim as it tackles new public health concerns and begins to adapt.

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The Report: Malaysia 2014

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