IHH On Managing Healthcare Price Increase In Challenging Environment

By Niam Seet Wei

KUALA LUMPUR, May 13 (Bernama) -- With the West Asia conflict showing no sign of abating, Malaysians may have to brace for rising healthcare costs and continued inflationary pressures, said IHH Healthcare Bhd Malaysia chief executive officer Dr Kamal Amzan.

“Given rising medical costs and current global volatility, I don’t think it is sensible to expect prices to remain unchanged this year.

“And it is also difficult to expect costs to rise at the same pace as before, given current market volatility,” he told Bernama in an interview recently.

The United Kingdom-based insurance broker Aon Plc said in its 2026 Global Medical Trend Rates Report that Malaysia’s medical inflation rate is projected to rise to 16 per cent in 2026 from 15 per cent in 2025.

Similarly, MBSB Research forecast medical inflation in the country to increase 16 per cent in 2026 due to the brain drain of doctors and nurses, as well as rising drug prices.

No Immediate Impact From West Asia Conflict

On the impact of the West Asia tensions which escalated in late February 2026, Dr Kamal said IHH, which operates an 18-hospital network in Malaysia, has not seen any immediate disruption.

“For now, we don't see any acute shortage of (drug) supply. But that is not the only cost component we are looking at,” he said.

He cautioned that electricity tariffs and fuel subsidies could pose additional cost pressures should the conflict persist, as fuel prices would also impact its ambulance operations.

Balancing Costs With Value-based Healthcare

To balance rising costs with value-based healthcare, Dr Kamal said IHH is adopting new care models such as ambulatory care, where patients are treated and discharged on the same day.

“Patients can return to work earlier and require fewer days of medical leave,” he said.

He added that investments in technology and automation were also necessary to improve efficiency and reduce reliance on manpower.

“For IHH, it is more about improving efficiency than bringing down costs,” he said.

On medicine costs, he said IHH is leveraging volume synergies through collective negotiations across its hospitals while also increasing the use of generic drugs alongside original medications.

“These are among the measures to ensure inflation remains manageable,” he added.

MHIT Plan a Commendable Step

Concurring that medical costs would inevitably rise each year, Dr Kamal described the government’s move to introduce the base medical and health insurance/takaful (MHIT) plan as a commendable step.

He said MHIT aimed to achieve three key objectives, beginning with first, changing Malaysians’ mindset towards healthcare spending through the introduction of co-payments, which remain uncommon in many insurance products.

“Without co-payments, when you go into a hospital, you expect everything to be free.

“But with co-payments, Malaysians will think twice about whether they should go straight to the hospital or visit a general practitioner (GP) first. It’s a mindset shift,” he said.

Second, he said, the initiative aims to increase insurance penetration so that more Malaysians can obtain coverage, which could help ease congestion at public hospitals.

Third, he noted that MHIT would introduce a Diagnosis-Related Group (DRG) reimbursement system, where hospitals receive fixed payments based on standard diagnosis and treatment codes.

“This DRG system, I think, will help manage inflation, although to what extent, I don’t know,” he said.

The base MHIT plan is part of the Health Ministry, Finance Ministry and Bank Negara Malaysia’s (BNM) Revamp, Enhance, Strengthen, Expand and Transform (RESET) strategy to address medical inflation and strengthen Malaysia’s healthcare system.

According to the white paper released in January 2026, a pilot implementation is expected in the second half of 2026 ahead of its market introduction in early 2027. The voluntary protection plan will offer a standardised annual coverage limit of RM100,000, rising to RM150,000 for individuals above 60.

Is RM150,000 Annual Coverage Sufficient?

Asked whether the RM150,000 annual limit would be sufficient, Dr Kamal said its effectiveness would depend largely on the success of preventive healthcare efforts in Malaysia.

“Early detection through screening lowers treatment costs, while late intervention can significantly increase expenses. That is another driver of medical inflation,” he said.

He also stressed the need for a more integrated healthcare data system, noting that many clinics and hospitals still operate in silos, resulting in fragmented patient records and duplicated treatments.

“All the GPs should operate in one system, private and public, so that when a patient walks into one clinic, the doctor knows what happened before,” he said.

Dr Kamal noted that countries such as Singapore, Australia and the UK had implemented more integrated healthcare systems, although he acknowledged that such a system would be challenging to implement in Malaysia due to interoperability and data integration issues.

Malaysia Year of Medical Tourism 2026

While 2026 marks Malaysia’s Year of Medical Tourism, the ringgit has also strengthened, appreciating about 3.2 per cent against the US dollar year-to-date from RM4.0515 at the close on Jan 2, 2026, to RM3.922 on May 11, 2026.

Despite acknowledging that a stronger ringgit would raise costs for international patients, Dr Kamal shrugged off concerns over its impact on Malaysia’s medical tourism competitiveness.

“Costs will go up, but the real question is whether our prices will outpace those in neighbouring countries. From the looks of it, no,” he said.

He remained optimistic about the sector, noting that Malaysia continued to offer strong value compared with neighbouring countries, while medical tourist arrivals continued to rise.

According to him, IHH accounts for about one-third of all medical tourists in Malaysia, with Indonesians making up the largest group, followed by patients from other Southeast Asian countries such as Cambodia, Thailand and Vietnam, as well as Bangladesh, the Middle East, and digital nomads and travellers from Western countries.

“We are a very popular market for medical tourists. One-third of all medical tourists in Malaysia are our patients. Can you believe that?” he said with a smile, adding that they were genuine overseas medical travellers and not expatriates residing in Malaysia.

Malaysia Operations To Remain Key Earnings Contributor 

Moving forward, Dr Kamal expects Malaysia’s operations to continue contributing significantly to the group’s earnings despite current global headwinds.

“We are quite optimistic about the growth this year, and Malaysia is definitely one of the key drivers for the IHH group,” he said, but declined to provide specific growth projections. 

IHH’s 2025 annual report showed its Malaysia earnings before interest, taxes, depreciation and amortisation (EBITDA) at RM1.30 billion for the financial year ended Dec 31, 2025 (FY2025).

Its EBITDA in Singapore reached RM1.70 billion, Turkiye and Europe at RM1.70 billion, India at RM800 million, while China was at RM100 million in FY2025.

-- BERNAMA