Interview: Amiruddin Abdul Satar and Ahmad Shahizam bin Mohd Shariff
How attractive is the aged-care subsector?
AMIRUDDIN ABDUL SATAR: The geriatric care system in Malaysia is catching up with the Western world, although we have a 20-30 year gap in between. In Asian culture, parents expect their children to look after them in the later stages of life. However, as a result of globalisation, retirement systems in the East are aligning with those in the West, with the younger generation here emulating the lifestyles of their Western counterparts. The trend is gradually moving towards aged-care facilities or retirement homes. Alternatively, rising incomes are allowing retirees the option to decide where, and in what manner, they would like to retire, taking some of the burden off the younger generation. Geriatric care is still a fairly new industry in Malaysia, as we are still in the midst of establishing a viable funding model. It is a question of affordability, as not everyone has RM5000-10,000 ($1393-2787) a month to put themselves or their parents into a nursing home. If you have private medical insurance, you can put yourself into care, but medical insurance is limited by certain restrictions. Once there is a proper model in place, investment will flow in and insurers will be able to offer a suitable package. We do not have a social security programme for pensioners.
SHAHIZAM BIN MOHD SHARIFF: We are having conversations with people who are interested in investing in aged-care, as there is room for hospitals to collaborate with these facilities, and their tenants will have a higher likelihood of requiring acute care. However, geriatric care is still at an early stage of development, and, depending on the nature of the investment, there may not yet be sufficient demand for these services. People may not understand or appreciate the proposition, though this is changing, and the question of funding remains in doubt. In addition, there are no definitive qualifications in Malaysia for aged-care workers. We as a country have a shortage of experience in managing and taking care of residents in aged-care facilities.
How could regional integration increase Malaysia’s pool of qualified specialists?
SHARIFF: Despite all of the talk regarding the AEC, when it comes to professions the single market is very restrictive. The licensing regime for foreign doctors entering Malaysia operates on a case-by-case basis. Every time a hospital needs to hire a foreign specialist, it must justify why they are needed, and why this specialist cannot be recruited from within Malaysia. Of course licensing needs to be regulated, but when a foreign doctor could be the pre-eminent expert in a particular field and there still would not be any guarantee that this person could practice in Malaysia, there need to be changes. As long as they are qualified and have experience, there is no reason why we should not employ a doctor from India or China, for instance. It is not as if Malaysia has an oversupply of health care specialists; indeed, in some areas we currently have a shortage.
SATAR: The ASEAN Economic Community (AEC) is meant to bolster integration, but every country has its own accreditation process for each professional field, and there are also language issues to consider.
If we look at Thailand, for example, there are very few Thai-speaking Indonesians and Malaysians, and the same issue can be said with Indonesia. Shortages can vary from discipline to discipline. There are specialisations in which Malaysia has sufficient supply. However, in areas such as neurology, radiology, pathology and geriatrics there are shortages, which has led to collaboration between the Malaysian government and the private sector to train more specialists. This is a significant challenge as the country has a surplus of medical graduates annually. Around 2500 medical students graduate each year from local public and private universities, with another 2000 from foreign universities. The challenge will be to identify those qualified candidates and train them for in-demand specialisations.
What are the main challenges for Malaysia in becoming a leading destination for medical tourism?
SATAR: While Malaysia possesses a significant cost advantage over Thailand and Singapore, we cannot replicate Thailand’s edge as a leisure tourism destination. Nonetheless, we can leverage our advantages in terms of cultural synergy with the Middle East. Capacity is the main stumbling block, but the sector is expanding rapidly, creating capacity primarily for local demand, but also for foreign patients.
As part of the Economic Transformation Programme, the government has assisted the sector by providing tax allowances for investment in facilities designed specifically for medical tourism. We are also targeting markets in East Africa, in particular Somalia, Ethiopia and Kenya, which are untapped and have a lot of potential. The GCC is another source of potential, though Malaysia is playing catch-up in the Gulf relative to Thailand and Singapore. Indonesia continues to be a reliable market, and we see potential from China, especially among its Muslim population.
SHARIFF: Singapore is what you typically call an acute care hub for patients with serious illnesses; it serves the entire region and has a large concentration of experienced specialists. Thailand is more of an elective care hub for straightforward procedures such as hip replacements, while Malaysia is somewhere in-between. However, health care is a local service, and the only reason patients travel internationally is that they are not comfortable with their domestic alternatives. As ASEAN markets such as Indonesia improve their health care services, Malaysia and Thailand will need to find a niche to sustain themselves in the long run. Our greatest challenge is that we are still underserved for our own population. Specialists are already in high demand locally and do not have any added incentives to see foreign patients. Unlike in Singapore, doctors here have a maximum ceiling on charges for treatment. Without such flexibility, the challenges related to foreign patients, especially language, logistics or payment, are not worth taking on when there is already a stream of local patients.
To what extent is health care inflation a concern?
SHAHIZAM: To run a hospital you need people trained in knowledge-specific areas. Costs will continue to escalate, as there are limited numbers of specialists and their training is expensive. Malaysian nurses, for example, whose international mobility is greater than doctors due to less stringent permit requirements, will often find better-paid opportunities abroad. The recurring challenge for all private hospitals is that, after three or four years in employment, a junior nurse will have enough experience to find a higher-paid job overseas. Private hospitals here must therefore raise salaries to retain junior nurses, and this is where a lot of health care cost inflation stems from. Another issue is excessive investment in technology. Malaysia is not at that stage, but in more developed markets such as the US, there is a point where increasing investments in technology are not matched by an equivalent uptick in outcomes.
SATAR: After a decade of double-digit growth, we are seeing a slowdown in disposable income and the propensity to spend. Nonetheless, growth is still respectable, despite the decline in oil prices and, depreciation of the ringgit. Even in the last recession we achieved solid growth numbers, indicating some inelasticity of demand for private health care. Public hospitals are also continuing to struggle to cater to people’s needs, while private medical insurance penetration is low with room to grow.
Corporations continue to offer medical benefits for their employees. Beyond the expected 5% per annum medical inflation rate, there should not be too much concern. At the same time, currency depreciation may impact the price of drugs and medical devices such as CT/MRI scanners, which are imported.