Is Private Healthcare Thriving?

Malaysian private hospital operators are expected to have another year of growth. But the country grapples with a 15% medical inflation that exceeds global average.

The two largest private hospital chains in Malaysia by bed count – IHH Healthcare Bhd and KPJ Healthcare Bhd – are government-linked. IHH, which owns brands like Gleneagles, Pantai and Prince Court, is 37% owned by Khazanah Nasional Bhd and the Employees Provident Fund, combined. Meanwhile, the Johor government’s Johor Corp is the single-largest shareholder of KPJ with a 45% stake.

 

Source: https://en.wikipedia.org

Based on World Bank data, Malaysia had two hospital beds per 1,000 population in 2020. This is much lower than the average for upper-middle income nations at 3.7 beds, while the average for high-income countries was even higher at 5.4 beds. If private hospitals are taken out of the equation, the country could lose nearly 30% of its hospital beds. 

In 2022, private hospitals contributed 17,780 licensed beds, while the majority 45,167 beds were in the public hospitals. By 2028, Maybank Investment Bank Research (Maybank IB) forecasts private hospitals to add almost 4,000 beds, raising the total to 21,770 beds. As for the public sector, hospital beds are also expected to increase albeit at a smaller quantum of nearly 2,800 beds to 47,946 beds.

IHH is also looking to add about 300 beds over the next three to five years through ongoing asset enhancement initiatives across its hospitals. Overall, IHH has set a bed expansion target of 4,000 beds by 2028, with nearly half of them in India. Beds in Malaysia will increase by 1,300. As for KPJ, it plans to raise its bed count to 5,000 by 2028.

IHH and KPJ enjoyed a net profit margin of 11% and 9% respectively in the financial year ended Dec 31, 2024. Pre-tax profit margins are even higher at 15.4% for IHH and 13.5% for KPJ. Meanwhile, Cengild Medical Bhd and TMC Life Sciences Bhd reported a net profit margin of 16.6% (pre-tax margin: 23.7%) and 11.7% (pre-tax margin: 15.2%) respectively in the financial year ended June 30, 2024. Cengild runs a hospital in Bangsar South treating gastrointestinal and liver disease.

Some private hospitals in Malaysia will benefit more from medical tourism, such as IHH’s Island Hospital. About 60% of its patients are medical tourists, mainly from Indonesia, attracted by the oncology services.

Beyond medical tourists from abroad, more Malaysians are also expected to use private healthcare facilities, leading to a growing patient inflow into the private healthcare system. In particular, IHH and KPJ are the clear winners of the increasing patient inflow. According to Maybank IB, IHH and KPJ make up 18% and 27% of total market share of private inpatient admissions in 2023, respectively.

Despite the positives of the private hospitals sector, challenges will include change of payment system for hospital care, rising costs and pushback on medical fees charged to clients.

Reference:

Private healthcare thriving, Ganeshwaran Kana, Star Biz7, 28 Apr 2025