The Malaysian Public Accounts Committee (PAC) tabled a report in Parliament today calling for an independent statutory Private Healthcare Commission to tackle inflation and billing issues in the private healthcare sector [1, 2, 3, 4, 5].
The PAC found that medical inflation is mainly driven by non-professional charges from private hospitals, such as medicines, consumables, laboratory tests, equipment, and advanced technology. Doctors’ professional fees have been regulated since 2013 and are not a major contributor to rising costs, PAC chairman Datuk Mas Ermieyati Samsudin said. She explained, "The main contributor to medical inflation was not private doctors' professional fees, which have been strictly regulated under Private Healthcare Facilities and Services Act 1998, since 2013. Instead, it is driven by the surge in non-professional charges imposed by private hospitals, including supplies, equipment, medicines, laboratory tests and high-end technology, which are not subject to any form of regulation." [2]
The report highlighted that private hospitals use aggressive billing tactics. They engage in "unbundling" charges, separately billing patients for items like pillowcases, clinical waste disposal, and alcohol swabs that normally come included in room fees. Dr Halimah Ali, a PAC member, said, "The PAC found the practice of unbundling charges for basic items such as clinical waste disposal, pillowcases, and alcohol swabs, which should have been included in the room charges." She added that medicines and supplies are often marked up by as much as 300% to cover other operational costs not directly billed. [4, 5]
Imported medicines dominate the private sector, making up 94% of medicines used. More than 1,500 drugs have only one registered manufacturer in Malaysia, creating monopolies that contribute to high prices, according to the report [2, 5]. Enforcement of retail medicine price displays began only this year under the Price Control and Anti-Profiteering Act 2011, aiming to improve transparency [2, 5]. Yet patients using Letters of Guarantee (GLs) sometimes face higher charges than cash or pay-and-claim customers. [4, 5]
Health insurance and takaful premiums have surged 40% to 70% in recent rounds, leading some policyholders to drop coverage due to costs [3, 4, 5]. The PAC cited fragmented oversight across multiple agencies as a major problem. Bank Negara Malaysia regulates insurers and takaful, the Ministry of Health oversees facilities but lacks billing control, and third-party administrators (TPAs) remain largely unregulated [1, 3].
PAC members and experts call for a new regulator with a consumer protection mandate and powers to oversee hospital charges, standardize billing, regulate insurance premiums, investigate pricing discrepancies, publish data, and enforce penalties. Galen Centre CEO Azrul Mohd Khalib said, "The government should establish an independent statutory Private Healthcare Commission with an explicit consumer-protection mandate." [1]
The PAC noted that amending the Private Healthcare Facilities and Services Act 1998 alone is insufficient without a dedicated regulator with enforcement powers and adequate resources [1, 3]. The report also criticized closed risk pools in insurance that shift healthier customers into new portfolios while burdening long-term policyholders with rising premiums [3, 4].
Malaysia plans to phase in the Diagnosis-Related Group (DRG) system from 2026 to improve clinical efficiency and reduce procedure-driven profits, under the RESET reform framework [2, 3]. The PAC emphasized the need for an integrated national Electronic Medical Record (EMR) system to support these reforms [2].
The PAC report marks a decisive step toward structural reform. The government is expected to consider the establishment of the Private Healthcare Commission and related legislative changes following this June 25 report.
