Private healthcare poised for major step up with new system
KUCHING: Private healthcare operators in Malaysia are poised for a major step-up in revenues and profits if a government-backed national health insurance system becomes a reality here.
The funding needs for the sector are on a constant upward trajectory simply due to the growing population, aging population, a longer life expectancy and cost inflation. AmInvestment Bank
hurdles for a national health insurance system remain who would be contributing, by how much and the legitimacy of free riders in the system.
Meanwhile, on the outlook of Malaysia’s healthcare sector, AmInvestment pegged a ‘neutral’ view on the private healthcare sector in 2018.
“The local private healthcare sector has an added catalyst, which are the medical tourism backed by its highly competitive medical charges and hospitalisation costs, a generally English- speaking population as well as various incentives provided by the government,” it said.
Over the short term, it said, private healthcare operators in Malaysia would also benefit from the strengthening ringgit against the dollar, as costs of key inputs such as drugs, medical supplies and medical equipment are denominated in US dollar.
On the other hand, it cautioned that as in the case of 2017, private healthcare operators in Malaysia would continue to face wage inflation in 2018, and some shortterm pain for long- term gain, such as start-up losses from new hospitals.
“We may upgrade our ‘neutral’ call for the sector to ‘overweight’ should there be a surge in patients due to outbreaks of pandemic diseases, lower-than-expected startup losses at new hospitals, valueaccretive mergers and acquisitions (M&As), and a national health insurance system materialises in Malaysia.
“In contrast, we may downgrade to ‘underweight’ should there be a significant dropout of patients from private hospitals due to economic reasons, higher-than-expected, and prolonged start-up losses from new hospitals.”