Ban Hospital IPOs?

Malaysia’s medical cost inflation of 12.6% in 2023 is significantly higher than the global average of 5.6%. However, banning private hospitals from going public may not be the solution to rising medical costs. This idea was mooted by Bayan Baru Member of Parliament Sim Tze Tzin, who urged the government to prevent private hospitals from going public to curb profit-driven healthcare. He also suggested that Khazanah Nasional Bhd and the Employees Provident Fund consider delisting the private hospitals that they have stakes in, making them fully government-owned. 

Sim cited South Korea’s ban on hospital operators from undertaking initial public offerings (IPOs) as an example, stating that hospitals should prioritise saving lives rather than pursuing higher profits. Granted that South Korea’s ban on hospital operators going public has allowed its citizens access to high-quality healthcare services and low insurance premiums. But the country has its own set of problems too, primarily low reimbursements that make many hospitals financially inoperable.

 Source: https://en.wikipedia.org

 

In Malaysia, many Bursa Malaysia-listed healthcare providers are raking in record profits, leading to increased scrutiny over rising medical costs. For instance, shares of KPJ Healthcare Bhd recently hit an all-time high after posting record profits in financial year 2024 and rewarding shareholders with a special dividend. In contrast, IHH Healthcare Bhd saw a decline in its full-year results, dragged by foreign-exchange losses, higher staff costs and increased depreciation charges. Regardless of their financial conditions, it may not be wise to penalise hospitals for doing well.

 

No hospital, whether public-listed or privately held, would provide healthcare services without profitability driving it. Only government hospitals can do so, but they are unable to cope. Doctors and nurses at public hospitals are reportedly overworked and underpaid, often turning to private hospitals for better pay.

 

The government should consider building more hospitals and raising the wages of medical practitioners. But where will the money come from, as this can further strain the country’s finances? It can do a private-public partnership and set a new network of hospitals that are between public and fully private, a modified UMSC model.

 

Like education, medical care is a basic necessity provided by the government. Ideally, these social services should not be privatised. But for efficiency, ingenuity, innovation, private sector participation is helpful. Getting the balance right is the key.

 

Reference:

Banning hospital IPOs won’t curb rising costs, The Star, 8 Mar 2025