Imagine a land where specialty physicians still hold significant sway, hospitals scurry to secure the latest computed tomography scanners or magnetic resonance imaging equipment, private patients pay their bills in cash, and managed care is merely a storm cloud on the horizon.
It's not imaginary. It's Malaysia.
But this dreamy Southeast Asian healthcare landscape is fading, and Malaysia's days as a refuge for carte blanche fee-for-service medicine appear numbered. Private-sector managed care is expected to hit Malaysia like a typhoon off the South China Sea.
Malaysia stands out as a rapidly modernizing nation with a stunningly futuristic airport and a westernized capital, Kuala Lumpur, which is dotted with giant office towers.
Its authoritarian government, led by Prime Minister Datuk Seri Mahathir bin Mohamad, is pushing economic growth, international tourism and investment in technology. That push is attracting multinational companies and putting pressure on Malaysia's healthcare system to modernize.
Yet Malaysia's course has hit bumps in recent years, including Asia's economic downturn in 1997, which caused its currency to lose nearly half its value and its economy to post a 7.5% decline in the gross domestic product last year. This year, the GDP is expected to increase by 2%, according to the International Monetary Fund and the Asian Development Bank. Political unrest poses an ongoing threat.
The country's extensive public healthcare system can no longer provide free care on demand, prompting an expansion of the private sector.
Rationing is common at the nation's approximately 110 public hospitals, and doctors and other healthcare professionals have fled the public system for better-paying private- sector jobs. Even entrenched government bureaucrats acknowledge that change is needed.
These changes make Malaysia a ripe market for private health plans. Less than 10% of Malaysia's 23 million citizens have any form of private health insurance, but that number is expected to grow.
Fears are brewing that consumers will be hurt in the transition, particularly with the growth of U.S.-style managed-care plans.
Just four years after their 1995 introduction in Malaysia, managed-care organizations have enrolled approximately 600,000 people.
That total is expected to double by the end of next year, according to Chan Foo Yau, president of the Association of Managed-care Organizations of Malaysia. Other estimates put the number of managed-care enrollees at about 300,000.
Two U.S. players, Aetna U.S. Healthcare and UnitedHealth Group, recently entered the market. Britain's largest insurance companies are expected to follow suit, said Pang Hsiang Chye, a Malaysian-born healthcare consultant at Milliman & Robertson in San Francisco.
Overall, 30 or more managed-care organizations have registered with the Ministry of Health to do business in the country, according to officials, although only a handful of those appear to have products on the market.
In May, Minneapolis-based UnitedHealth Group launched a joint venture with the Hong Kong-based subsidiary of insurance giant American International Group, which already offers indemnity insurance in Malaysia. The venture so far has attracted about 1,000 enrollees.
Aetna U.S. Healthcare last year acquired a local managed-care organization called Genesis to build on its existing foundation of life insurance, indemnity insurance and other business in Malaysia. The subsidiary has grown by 40% to about 120,000 enrollees during the past year, the company says, picking up corporate clients such as Citibank, Goodyear Tire & Rubber Co., Hewlett-Packard Co., IBM Corp., National Semiconductor Corp., the Pan Pacific Group of Hotels and Sony Malaysia.
Howard Kahn, vice president of global health business at Hartford, Conn.-based Aetna International, says he expects the plan to grow "by leaps and bounds." Some analysts say plan enrollment could increase to as many as 500,000 members in five years. Malaysia is Aetna's largest market in Southeast Asia so far, surpassing Indonesia, New Zealand and the Philippines.
The country's expanding middle class is producing educated consumers who demand service and modern technology, says Kahn. That's driving interest in private-sector care and inspiring employers and individual consumers alike to turn to insurance companies and managed-care organizations to spread risk and control costs.
But the system is still chaotic. In 1998 Malaysia passed the Private Healthcare Facilities and Services Act, which provides clear guidelines for managed-care organizations, including restrictions on their controls over medical decisions. But the rules often are not followed, according to some sources in the market. Health Minister Datuk Chua Jui Meng recently talked with healthcare industry leaders about his concern that managed-care organizations have breached medical ethics and government guidelines.
Hospitals also face increasing pressure to improve quality, and a voluntary hospital accreditation program is being developed.
Of particular concern are companies that aggressively market health plans through multilevel marketing schemes in which policyholders are recruited to sell managed-care products.
Most aggressive is Integrated Healthcare Management, a Malaysian company that has about 16,000 agents and brokers hawking coverage. IHM claims to have 50,000 enrollees and says it is aiming for 70,000 by year-end. Executive Director Shirley Kwa says the nascent health plan expects revenues to skyrocket to $26 million in 2000 from about $8 million this year.
Predictably, physicians are not happy about the entry of managed care, fearful that their fees will be slashed and new rules imposed. The Malaysian Medical Association has urged the government to step up its oversight of managed-care organizations.
"Right now, the doctors are trying to stop real U.S.-style managed care from coming in," says consultant Chye, who predicts that some managed-care companies will fail to deliver promised services or pay providers.
Some opponents of privatization and managed care insist that their nation places such a high value on equity and equal access that only a publicly financed insurance system could meet its needs.
Milton Lum, M.D., a former president of the Malaysian Medical Association and a passionate critic of managed care, says there is a lack of data about the clinical and financial impact of managed care. "We basically don't know what's happening," he says.
Despite the protests over managed care, some hospital executives acknowledge quietly that they're often eager to sign managed-care contracts or even launch their own plans.
Managed care has not significantly affected hospital reimbursement rates, they say. The country has about 200 private hospitals in addition to public facilities.
Pantai Holdings, a Kuala Lumpur-based company that operates six hospitals, recently diversified into managed care. It owns Pantai Medicare SdnBhd, a 35,000-member plan.
This fall, the Association of Private Hospitals of Malaysia sponsored the seventh annual National Healthcare Conference and Exhibition, which was attended by a delegation of American healthcare executives organized by the Davis, Calif.-based Academy for International Health Studies.
The theme of this year's conference was "Containing Healthcare Costs-Is Managed Care the Solution?"
There, association president and Pantai executive Ridzwan Bakar, M.D., summarized the situation, telling fellow healthcare leaders: "Like it or not, managed care is here on your door stop."