Pay more for ‘premium' care: Malaysia public hospitals' new scheme under spotlight amid fairness concerns
This is what Malaysia is offering with its latest dual practice healthcare initiative, known as Rakan KKM, or Friends of the Ministry of Health (MOH).
The government has insisted that Rakan KKM will help bump the salaries of healthcare workers in the public sector and retain talent, with excess revenue going towards cross-subsidising healthcare services for all public patients.
But the programme has stirred polarising views among proponents and detractors, who argue that Rakan KKM should not use public healthcare resources.
Experts urged the government to give more details on how it will ensure Rakan KKM does not further burden an already strained public healthcare sector.
MOH should also allay public concerns that the programme could create inequities in access to care, and amount to a privatisation of public healthcare, the experts told CNA.
Despite that, some said it is a necessary shot in the arm for Malaysia's public healthcare sector, which currently charges unsustainably low medical fees and is unable to offer salaries that can compete with the private sector.
For instance, outpatient consultation and specialist fees are RM1 (US$0.24) and RM5 per visit respectively, according to the health ministry's website.
"It's not a perfect system, but we have to make sure that our doctors are paid well enough - they are in the job of saving lives," said Manvir Victor of Vital Signs, an organisation that aims to improve public health in Malaysia.
"But the government cannot come up with the idea without coming out with the details, because everyone is criticising the idea."
Rakan KKM was first announced by Prime Minister Anwar Ibrahim during his Budget 2025 speech last October, when he stressed the need to make the public health service more self-reliant and sustainable.
An initial RM25 million will be allocated to Rakan KKM, with implementation to start at government hospitals with 'high demand and suitable infrastructure', he said then.
The initiative will involve government-linked investment companies (GLIC) to 'provide affordable paid healthcare services for patients', he added.
Rakan KKM will be run by a private limited entity wholly owned by the Minister of Finance Incorporated, the Finance Ministry's (MOF) corporate body.
This means that throughout its operations, Rakan KKM will be owned by the government directly or through GLICs, which may choose to take an equity stake in Rakan KKM Pte Ltd.
Rakan KKM's services will be 'priced above cost' for added income flow into the public healthcare system, but 'below existing private hospital offerings', MOH said on its website.
The programme is reportedly expected to be launched in the third quarter of this year at four hospitals: Cyberjaya Hospital, Putrajaya Hospital, Sultan Idris Shah Serdang Hospital, and the National Cancer Institute.
Criticism of Rakan KKM reached a fever pitch earlier in July, when Health Minister Dzulkefly Ahmad said patients under the programme could cut the queue for elective procedures in public hospitals.
'For elective cases in hospitals, people have to wait long, reportedly six to seven months. If they want to get it faster, they go into our healthcare facilities (under Rakan KKM),' he said on Jul 7 as reported by healthcare policy news site CodeBlue.
While Dzulkefly caveated his comments by saying emergency care will remain equally accessible to everyone in the public healthcare system, the backlash was swift.
USING PUBLIC HEALTHCARE RESOURCES FOR PRIVATE PRACTICE?
The Malaysian Medical Association said on Tuesday that a 'key concern' is whether the initiative may inadvertently create inequities in access to care.
'There is growing apprehension that wealthier patients could be given faster access to services through this model within public facilities,' its president Kalwinder Singh Khaira said in a statement.
'Another pressing issue is regulatory oversight … As this is a government initiative, to be regulated by another arm of the government, public trust in its transparency, accountability, and compliance with healthcare standards must be assured.'
Netizens on social media slammed Rakan KKM for creating a two-tier system for the wealthy, while accusing its ownership structure of muddling what they feel is essentially privatisation.
'Rakan KKM (was) designed by boffins at MOF,' X user Jaafar Ismail wrote on the platform. 'These guys have no understanding of social dynamics at these public facilities where capacity (is) stretched. And they expect paying patients to precede poor citizens.'
Azrul Mohd Khalib, chief executive of the Galen Centre for Health and Social Policy, a Kuala Lumpur-based research and advocacy organisation, said quicker access for a few will impact access for the masses.
'If public patients are having to compete with private paying patients who are paying premium rates for quicker access to the same facilities, services and care, that is inequality and undermines equity,' he told CNA.
'The only way to prevent that is to ensure that Rakan KKM has its own infrastructure, services and staff which run parallel to the public pathway.'
Ilyana Mukhriz, a research associate at Khazanah Research Institute who studies public health, said it 'cannot be denied' that Malaysia's public healthcare facilities face a severe shortage of manpower and an overworked healthcare workforce.
In 2024, Malaysia is projected to face a shortage of over 130,000 nurses, with some states having a nurse to population ratio of 1:417 compared to the national average of 1:282, she told CNA.
"In the face of the limited capacity of our workforce, it is a worry as to whether we will be able to meet the demand for Rakan KKM patients,' she added.
It is worth noting that Rakan KKM is an expansion of Malaysia's full-paying patient (FPP) programme, a dual practice initiative introduced in 2007 that has failed to take off due to limited capacity in public hospitals. And while the FPP is still running, the programme has been scaled back.
What is the full-paying patient programme?
Malaysia's full-paying patient programme (FPP) has been introduced in public hospitals since 2007 to help reduce the loss of government medical specialists to the private sector.
The fees collected are divided between the specialist and the government, Khazanah Research Institute research associate Ilyana Mukhriz wrote in a commentary published by several local news outlets last year.
Under FPP, patients are fully charged for the treatment they receive, while having the option to choose a specialist and enjoy full access to first-class facilities in the public hospitals. However, the costs would still be significantly lower than those in the private sector.
For example, FPPs pay between RM3,000 and RM5,000 for a caesarean section birth at Selayang Hospital. In contrast, this would cost between RM6,000 and RM15,000 in a private hospital.
A non-FPP local patient in Selayang Hospital would generally pay RM100 for a third-class ward, RM400 for a second-class ward and RM1,200 for a first-class ward.
This kind of dual practice system can also be found in other countries such as Australia, France and the United Kingdom. In Singapore, certain doctors in public hospitals can choose to see patients in private clinics or hospitals.
While the system reduces brain drain to the private sector, increases patient choice in public facilities, and generates additional revenue for the healthcare sector, it is not without its challenges.
A 2023 study in Malaysia highlighted that hospitals implementing FPP faced challenges in balancing resource management and serving the public masses.
One of the main issues was the limited capacity of public hospitals to meet increased demand for FPP services. Patients also reportedly did not receive a quality of care matching the payment they made.
Healthcare policy news site CodeBlue reported last October that at least three of 10 FPP government hospitals have stopped offering the services, with the remaining hospitals either in the Klang Valley or the Borneo states of Sabah and Sarawak.
Ilyana noted that in 2019, FPPs accounted for only 0.13 per cent of MOH's total patient encounters, indicating that the 'burden of care may not be significant to detract from other public patients'.
One woman, who only wanted to be known as Aresha, told CNA she opted to pay a few thousand ringgit more for FPP when giving birth to her third child via caesarean section (C-section) at Sungai Buloh Hospital in 2017.
Being under FPP meant she could stay in a private ward with a family member, choose her doctors and get better services.
'As a mum or a woman who was emotionally not stable knowing there could be many complications, having that ward was really helpful,' the 44-year-old homemaker said.
Like FPP, Aresha believes Rakan KKM will give more options for patients who are willing to pay more for specific needs but not at the eye-watering rates of private hospitals.
But she said public hospitals should have policies in place to ensure normal-paying patients are not neglected, and not use poor service standards as an excuse to push patients towards Rakan KKM.
'Like if you really concentrate on the (Rakan KKM) ward, and you cut down on the service other patients are supposed to get. If that is (avoided), then I think it shouldn't be a problem,' she added.
While Khazanah Research Institute's Ilyana noted that Rakan KKM has considered and attempted to address issues faced by FPP, it is hard to definitively say if the latest initiative would have more success.
The fact that Rakan KKM - unlike FPP - has the backing of MOF and GLICs will ensure that some money is channelled back to the healthcare facility and benefit those who are not paying the premium charge, she said.
Rakan KKM also ensures that all healthcare staff are paid. Under FPP, only the specialists are paid, while the rest of the money goes back to a consolidated fund without being earmarked for healthcare.
"However, there is a need to be wary that the chase for profits does not overshadow the public healthcare system's longstanding mandate of providing universal healthcare,' Ilyana added.
"It is key that strict regulations or policies are put in place to ensure that there are quotas or limits to the capacity of Rakan KKM.'
With that said, Ilyana believes one of Rakan KKM's main benefits is its potential to retain specialists, something she said could be seen in other countries that have a dual practice model, such as Australia, France and the United Kingdom.
'Currently, specialists within the public sector in Malaysia are already using their free time and flexi hours to perform locum work to supplement their income in the private sector,' she said, referring to an arrangement that allows specialist doctors to work four days a week with the additional day off used for work in the private sector, in a bid to reduce attrition rates.
'Through Rakan KKM, there is now an avenue for them to utilise their skills in the public system during their non-working hours. This would also not only provide side income for these specialists but also the other auxiliary staff such as nurses who assist in the procedures.'
MOH clarified that healthcare workers who choose to spend their 'extra time' on the Rakan KKM programme stand to earn additional income, while those who choose not to participate in the initiative will not be disadvantaged in any way.
MOH needs to explain what this extra time comprises, Manvir from Vital Signs said, noting that some cardiology specialists were already working until as late as 10pm each day to clear a backlog of cases.
Still, Manvir said Rakan KKM is 'necessary' to retain public healthcare talent, highlighting that Malaysia has some of the best medical specialists in the world who cannot earn more in the public sector due to consultation fees that go as low as RM1.
"They get the most complicated cases, but they don't get to earn more out of it, which is unfair because they have honed their skills over the years,' he said.
"There is a huge gap ... I know so many doctors who were in public (hospitals) who just shut up shop and left for the private sector, and they earn five or 10 times more."
Jason Chong, a healthcare manager, feels public healthcare in Malaysia is "too cheap" and is "killing our government doctors". Rakan KKM is one way of making the sector more sustainable, the 33-year-old told CNA.
When asked about concerns of equity, Chong said "the richer are already getting better services", pointing to widespread claims that patients with the title of Datuk or Datin and those with high-level connections in public hospitals frequently skip queues in getting cheap public healthcare.
But Chong said there must be mechanisms in place to ensure Rakan KKM does not lead the government down a slippery slope of privatising healthcare services in the public sector.
'I support the government in venturing into options for financial sustainability to ensure the needy are attended to, but full privatisation is no different than killing the B40 and senior citizens,' he added, using an official term for the bottom 40 per cent of earners in Malaysia.
Manvir said the government must prevent abuse of Rakan KKM, such as if a VIP patient under the programme walks into a public hospital and requests a doctor to attend to his procedures first during normal service hours.
For patients considering Rakan KKM, there must also be clarity on details like which procedures are covered, what the higher price quantums are, and whether this can be covered by insurance.
Healthcare workers should know when they can perform Rakan KKM procedures, which facilities they can use, and how much more they are getting paid, Manvir said.
He added: "So like I said, the devil is in the details. It needs to be very, very clear.'
IMPROVING COMMUNICATIONS
Khazanah Research Institute's Ilyana acknowledged 'a lot of uncertainty and doubt' surrounding Rakan KKM's actual mechanisms.
The tagging of 'Pte Ltd' to Rakan KKM's operating company became 'an even bigger taboo' for the general public, reflecting what she claimed is a longstanding issue of poor communications strategy within MOH.
'There is a need to get the buy-in of the public, (through) hosting engagements and outreach events to properly educate them on the goals and mechanisms of Rakan KKM,' she added.
"It is important that there is transparency in governance of the programme to ensure that it does not become a profit-driven vehicle for privatisation of healthcare services in the public sector. There also needs to be regular monitoring and open financial reporting to the public."
Dzulkefly - the health minister - took to X on Jul 13 in a bid to quell some of these concerns, reiterating that in an environment of high medical price inflation, Rakan KKM provides 'premium economy value-based healthcare services'.
The initiative will serve as a price benchmark, including for services provided by private hospitals, to moderate medical price inflation for all patients. It will also provide 'appropriate returns' for GLIC shareholders and their members, he wrote.
But Azrul from the Galen Centre said it was 'incredibly optimistic, premature and unfeasible' to expect Rakan KKM to generate excess revenue that can cross-subsidise healthcare services in its first few years of implementation.
The RM25 million seed funding for Rakan KKM will be drained 'quite quickly' as it is supposed to run in four different hospitals, he said.
"It would be unethical and a conflict to share resources such as diagnostic facilities and medicines with the public pathway as this would imply that there is cross-subsidy from the public side to the private wing, which is the opposite to what is intended,' he said.
"How much medical professionals will gain from service in the private wing is also dependent on what services are able to be provided there. Skilled personnel are limited.
'I don't think that Rakan KKM will have any impact in moderating medical inflation, especially if it provides limited services.'
Azrul called on MOH to share the full details of Rakan KKM with the medical fraternity, civil society stakeholders and the media, and not "sporadically through social media posts and media scrums".
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