International Business Review


Non-Economic Handicaps in Malaysia's Medical Tourism
Good Business and the Standard of Healthcare Delivery

by IBR Malaysia
15 July 2015

Since the benefits of medical tourism were first identified in Malaysia during the 1997-1998 Asian financial crisis, further boosted through the 2010 Economic Transformation Programme (ETP)  an initiative to transform the country into a high-income industrialised nation by 2020  welcoming foreigners to Malaysia for health-related visits has increasingly become a significant part of the national economy (see The Doctor will See You Now in Volume 106 of International Business Review). However, in addition to its economic benefits, there are a number of non-economic factors that have to be considered to effectively drive medical tourism in the country.

Data from the Malaysian Ministry of Health (MOH) indicates that between 2010 and 2013, foreign patients to Malaysia increased from 393,000 to 770,000 with financial receipts also rising from RM379 million to RM690 million. Meanwhile, according to the Performance Management and Delivery Unit (PEMANDU),  which is tasked with managing the ETP,  medical tourism is expected to generate RM35.5 billion in GNI and create 181,000 new jobs to cater to 1.9 million medical tourists by 2020.

Exploiting the Industry

These medical tourists are and will be predominantly catered to by the private sector. This may have unwittingly created a two-tier healthcare system in the country; the private sector that caters to high-paying Malaysians and foreign medical tourists, and the public sector that provides services to everyone else. This by itself is not exactly a problem, as it is the same in many countries around the world. The issue here is about the standards in the delivered care.

While public and private medical centres in Malaysia have to be approved by the MOH and the Malaysian Society for Quality in Health (MSQH), private hospitals go a step further, as catering to a foreign market requires a standard that is of international acceptance.

The most popular accreditation agency is the US-based Joint Commission International (JCI) which ensures stringent healthcare industry measures and standards are adhered to in many countries around the world. This creates the impression that private hospitals offer better services, primarily to medical tourists, than government-owned ones to locals.

Another problematic issue in medical tourism is one highlighted by Dr Milton Lum, a member of the board of Medical Defence Malaysia  a non-profit organisation which provides medico-legal counselling and healthcare educational resources. In the feature, Dr Lum points out vexing issues in organ transplantation and assisted reproduction involving religion, morals, ethics and culture.

He adds that many of these issues such as reproductive tourism, where the service is assisted reproduction  have little or no regulations internationally, posing a significant risk to women's health in general and reproductive health. An unsavoury practice is the trade in human organs (usually kidneys), with exploitation of the vulnerable who are tricked or coerced into parting with their body parts. Although most governments have stepped in (to put an end to this), the practice continues in some countries,wrote Dr Lum.

Local Service

However, the medical tourism situation in the country is not dismal. According to the report, Medical Tourism in Malaysia: How Can we Better Identify and Manage its Advantages and Disadvantages? in the US National Library of Medicine (NLM), while more healthcare centres in Malaysia are increasingly promoting their medical tourism facilities and services abroad, around 95% of their clientele are Malaysians. This is in addition to the fact that foreign tourists also include healthcare seekers with foreign passports already resident in the country, possibly for other reasons.

Writers of the report Meghann Ormond, Wong Kee Mun, and Chan Chee Khoon also argue that private and corporatised hospitals medical tourism revenue, therefore, is viewed as helping to not only sustain but also upgrade these facilities for the benefit of local private healthcare users, providing Malaysians with alternatives to crowded public health care provision.They add that investment in medical tourism infrastructure is considered to generate demand for goods and services in allied sectors (such as clinical research and development, pharmaceuticals, and medical equipment).

In addition, fears that the price of private healthcare in Malaysia may become too exorbitant for locals, since they are more attuned to medical tourists, may be exaggerated. For one, the charges have to be set competitively enough, even for foreigners, if the country aims to take on already popular medical tourism destinations such as Thailand and India. Also, the lower, subsidised fees in the public healthcare sector will help regulate, to some extent, price increases in the private sector.

Essentially however, while the medical tourism sector already contributes to the national economy, to be truly beneficial to the economy in the long term, it will need to be regulated by the government with policies that ensure equitable distribution of resources between private and public sector healthcare providers to better cater to the country local population.

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