Analysis of Private Healthcare Industry in Malaysia

Analysis of Private Healthcare Industry in Malaysia

Operations Management


 Perform an analysis of private healthcare industry in Malaysia using a suitable strategic analysis tool and present outcomes for next 3 years from operations management point of view,

Health Sector of  Malaysia

The government’s Health Ministry is responsible primarily for healthcare in Malaysia. Malaysia usually has an efficient, comprehensive healthcare system with two different kinds of healthcare – both government-owned, universal, and co-existing private.

The public and private sectors are split between the healthcare systems in Malaysia. Public health funds are significantly financed by the government and patients pay a minimal amount for treatment, whereas patients themselves, employers and insurance companies pay full rates for private health care services. In Malaysia, during the past ten years, there have been significant increases in the number of (specialists’) hospitals, clinics, and operations in the field of health, both public and private.

The health sector of Malaysia has an estimated worth of approximately $8.4 billion, with total health care spending projected to be around 4.75% of its gross domestic product (GDP). Government and private funds now contribute to about 55% and 45% of overall health spending, respectively, in Malaysia. The Ministry of Health in the public sector is the country’s leading government department responsible for health services.

The focus in the medical industry is on healthy expansion. Compared with other nations in the area, the Malaysian private healthcare industry is well-developed. For both Malaysians and tourists, several amenities are provided (Gandolf, 2020).

Strategic Tool Analysis: PEST Analysis


Government laws and legal matters involve political considerations. It sets forth official and informal regulations to be implemented by a hospital. Tax policy, labour and tourism are examples of political issues. Malaysia’s medical tourism is one of the world’s finest and most private hospitals have globally recognized medical tourism quality and standards. In our country, the rate of development in medical tourism has been rapidly increasing because of the cheap cost advantage and the improvement in some international hospitals of high-quality new healthcare providers.

The healthcare industry in the province of Malaysia is heavily governed by the law on private healthcare facilities and services. It governs all of our country’s private health facilities and services. Under this Act, permission must be obtained before a new private health institution may be set up. In order to guarantee justice and honesty in the provision of health care to patients, the government sets stringent regulations regarding the quality of treatment and safety. The aim of the guidelines is to achieve our goal of ensuring justice, honesty, and honesty for patients in their excellent healthcare service.

Political and government regulations may have a good or bad impact on any company. Thus, any government rules or regulations in the healthcare sector may threaten KPJ, since we are a member of that business. It is really regarded as a danger to KPJ since, owing to changes in laws, it may force us to alter our company plan. It may impact the whole sector and KPJ healthcare adversely (UKEssays, 2018).


A country’s economic circumstances are mostly affected by the policies of politics and governments. In other words, every government action will indirectly influence the economic circumstances of the entire nation. Economic development has slowed considerably in Malaysia, something KPJ should be aware of. That is because, in terms of operations and profitability, the economic state of KPJ is affected.

Income and buying power disposable by customers will fall since business is poor. During the economic crisis, most customers can not necessarily attempt to reduce some healthcare costs, including medical checks. Installed as a price customer, customers will be better equipped to provide services to customers at a cheaper price rather than choose the best provider. For KPJ, therefore, it is essential to acquire market share to establish a suitable and cheaper price.

In the context of the economic crisis, the KPJ shareholder usually cancels out his whole share since he/she may refuse to accept the danger of losing his/her money. KPJ may not have sufficient money to grow the company when significant shareholders disburse their shares, and it will be hard for KPJ to invest in innovative technologies that assist patients. KPJ may lose competitive advantages in relation to its rivals because of inadequate funding. KPJ has to assess the cost and benefit of all costs and reduce overhead and expenditures, such as staffing costs in conjunction with layoffs, in order to achieve a competitive edge that would win trust from all investors. However, employees who are unemployed are anticipated to cause health professionals who do not have enough time to perform their jobs to overwork, as compared to previously, they will do more work. Health professionals will thus spend less time and take care of more people than they have ever been. As a consequence, healthcare providers may neglect to some essential extent and make medical mistakes that may lead to a rise in misconduct.

The total cost of KPJs is affected by inflation in Malaysia. Inflation increases the material prices as well as the price of medical equipment. In addition, KPJ workers are going to attempt to negotiate better wages. All of these variables will raise the cost of KPJ’s operations. The profit margin for KPJ will thus be smaller, since KPJ has to produce more revenues to cover higher costs.


Today, social awareness is heightened as a consequence of the increased level of people’s incomes and education in healthcare compared with the past. This will lead to an increase in demand for excellent health services. This improves the growth of the health sector and therefore increases our profitability and profits for the KPJ business. Therefore, with the growth of the healthcare sector, our KPJ goal of providing clients with excellent health care services may be accomplished.

As more and more individuals have the highest degree of education, they are more concerned about their physical health problems since they have more information. You will also attempt to accept the therapy for your health condition as quickly as possible because of your health awareness. For example, they go to the hospital frequently or bring their family to the body to check whether it’s healthy.

Furthermore, improvements in society’s financial level will lead them to high quality health services. The country’s steady economic development improves society’s income level. That will make it easier for them to spend on private health services, which provide better health services compared to public health services, and thus lead society straight to private health services.

Increases in the proportion of certain diseases in society also influence the growth of health services. Drug and drug misuse problems pose a major concern in Malaysia, as Chinese adolescents and young people get more involved in the abuse of drugs dubbed “ecstasy,” and this has led to increased HIV/AIDS in the nation. Increases in the numbers of migrant workers coming from rural or impoverished nations may lead Malaysia to illnesses such as TB, flu, and dengue fever. A stressful lifestyle, such as pressure on the job, will therefore produce high blood pressure and raise the chance of a heat attack. Moreover, the poor habit of eating foods like alcohol and cigarettes will raise the risk of chronic illnesses such as diabetes, hypertension and cardiovascular diseases. Recent national health and morbidity studies indicated that 15% of Malaysians are fat, up 1% between 2006 and 2010. Nearly half of Malaysian adults are overweight. Moreover, breast cancer is one of the major causes of mortality in Malaysia, as the National Cancer Registry, Malaysia, 2002, states that it is a frequent women’s illness. The healthcare industry in Malaysia will benefit from this.

In addition, increasing Malaysia’s ageing population would also help promote Malaysia’s healthcare industry. The population is 2% higher in Malaysia and the share of the population over 65 is forecast to increase in terms of global demographics from 5% to 8% in 2010-2020. The increasing number of people in an older society implies that diseases of ageing, such as Alzheimer’s disease, high blood pressure and cardiac disease that need long-term treatment or rehabilitation, will rise.

These reasons may be reasonably regarded as important possibilities to expand the healthcare sector, such as KPJ, which aims to offer customers with high quality healthcare. To accomplish this purpose, KPJ must be fair, honest, and honest with its aim of providing health services in order to broaden its range by increasing demand for excellent healthcare in the future (Gandolf, 2020).


For all kinds of companies, including our healthcare businesses, technological elements are extremely essential. Greater technological awareness will enable KPJ to enhance its efficiency and respond rapidly to changing environments. The health sector must have technology to enhance its efficiency and effectiveness in carrying out its operations.

Advances in IT enable KPJ to enhance the quality of their medical activities. The healthcare industry has to produce a lot of medical information about its patients. If done on paper, there is not sufficient storage to store all the data and the risk of missing essential information is increased. For this purpose, the Electronic Medical Record (EMR) has been implemented by KPJ to minimize administrative labour and mistakes. This is a digital document that may assist KPJ in maintaining all details about the medical history of its patients and the system. Compared to papers, information may be readily searched by the officer when a patient joins this system. KPJ therefore makes diagnostic and treatment decisions more effective by reducing needless effort and time. It is extremely essential to properly manage your medical history. If there is an error, KPJ will make the incorrect choice about the patient’s medical care. The lives of their patients may also be threatened.

Besides, KPJ requires the IT system to improve the internal process by setting up an internal network system. In order to get the required information, IT may serve as a communication mechanism between nurses, doctors, or other individuals who are certified to access the system. The internet is always used to update this information. They also contribute to improving information sharing efforts amongst stakeholders. For example, workers in KPJ may rapidly get messages from the internal hierarchy through the internal network system. Doctors may also submit their instructions to the nurse and the nurse can then immediately react to the order without any mistakes, since a written order is clearer than an oral command.

KPJ needed a number of medical facilities, including an MRI scanner and CT scanning, to assist them in the delivery of medical services. KPJ may not be able to provide patients with a decent care service without high-technology medical services, because the current medical service is more technologically dependent. A well-administered medical facility may help decrease medical time.

In the healthcare sector, technology plays a significant role. KPJ should spend more on research and research to improve their medical skills and also assist them in altering their administrative tasks quickly to minimize errors and errors that damage their company’s image.

Outcomes for next 3 years from operations management point of view

The best practices in supply chain and operations management can help health care providers cope with the surge in patients and supply shortages. They will help them create a comprehensive strategy aimed at both the demand-and supply-side roots of the problem.

A pandemic generates an enormous demand shock for health care systems already running at close to full capacity. While social-distancing measures, travel restrictions, and shelter-in-place orders are effective in dampening demand, they are only part of the solution. It is still necessary to manage the way patients enter and proceed through the various nodes of the health care delivery system.

Managing flow means proactively shaping how, when, and where among these nodes, patients (both infected and uninfected) receive care. During the Covid-19 outbreak, hospitals were forced to redesign patient flow in real time, grappling with such issues as: Which care can be moved from a hospital to an alternative setting (even the home)? Which procedures for which patients can be safely postponed? What policies do we put in place to determine how long patients (those with and those without Covid-19) need to stay in the hospital or utilize an ICU?

Health administrators should adopt two concepts to help relieve system congestion:

Know system interdependencies and unexpected implications.

Private Health care systems include many linked care areas and requirements are not independent across them. Demand for infant delivery facilities, for example, stimulates demand for postpartum and newborns. System interdependencies may lead to unexpected effects of changes in one component of the system.

Taking a system approach also implies that suppliers should look beyond their own walls at the available resources, bottlenecks, and capacity. Stressed hospitals concentrate their emphasis naturally on hospital resources (like beds and medical staff). But they risk overlooking the limitations of community and domestic healthcare service providers with already extended manpower and infrastructural capabilities. Yes, transferring non-critical patients from the hospital to home care helps free the hospital for critically sick people, reducing the risk of infection. However, to monitor and coordinate such care, this approach must be supplemented with suitable facilities and technology (e.g., mobile care units and telemedicine capacity). If this isn’t the case, later or otherwise, more patients in their native country may end up needing hospitalization or critical care.

Short-run demand forecast.

If demand explodes and systems are overloaded, the attempt to predict demand may appear useless for one or two weeks. After all, how does it vary whether a system is over-used by 25 or 50%? Both look awful. However, when systems are overburdened, minor changes in the number of cases per week may have a great effect on the use of resources by a hospital. While no prediction is flawless, having a certain insight into short-term future demand offers hospitals and other healthcare facilities the chance to proactively plan patient flows (e.g., pursue preemptive diversionary strategies).

There is now enough worldwide data concerning the infection rate of Covid 19 and its impact on local service providers, so they can make rough but useful short-term forecasts, considering the population density, the policies for distancing social rights, and the daily testing rates which can be reached, the time it takes for testing, etc.

Focus on Information, Fast Decision-Making, and Learning

The Covid-19 crisis tested worldwide the medical and administrative skills of health institutions. Addressing the operational stresses caused by this crisis calls for consistent, comprehensive, systematic efforts spanning both demand and supply. Private Health managers need to concentrate on information, rapid decision-making, and education to execute such initiatives.

 Information is Everything. Each activity we have suggested above has to do with high-quality and high-speed information. You cannot predict the flow of patients without good information, such as the number of tests performed, the number of individuals affected, where they are, where they are, with whom they have been in touch etc. Without adequate knowledge of current demand and supply across various areas of the system, you can not anticipate the consequences of new patient flow methods. Without knowledge of future demand, use rates, and current inventory levels, you can not anticipate the next bottleneck. It is not only for clinical reasons that test capacity and rotation are important, but also because they offer information required to prepare and adjust operational strategies proactively.

Fast Decision Making. Covid 19 assaults with a speed dictated not by regulations of the government, bureaucratic rhythms and manipulations of politics, management systems or institutional norms. It is of little use for management operators operating health-care systems to have high-quality and timely information and not to react promptly to this information.

The problem confronting health care management is to balance the benefits of centralized coordination and information sharing with the need for flexibility and responsiveness of front-line doctors and nurses. Hierarchical systems are insufficient during quick-moving crises that tend to be sluggish in the best circumstances. Good leadership in a crisis is about giving the front lines the tools and the decision-making powers they need to rapidly address and understand the issues.

Concentrating on learning. Almost by definition, an organization is brought into unknown territory by a crisis. On a flight and under tremendous pressure, the current playbooks must be revised. Everything that we mentioned above needs us to deal with questions that cannot be answered in full or that change every day. It is not an option to wait for precise knowledge.

Under these circumstances, a number of tests and failures are carried out. Failures are an unavoidable result, not an ineptitude, of trying anything new. Learning from experiments, including what has been done, is essential, but it can only happen if the organization’s leadership provides an atmosphere that is psychologically secure and transparent. The healthcare organizations that effectively combat Covid-19 may not necessarily have the correct solutions but can learn the most quickly.

Question 2

Propose TWO (2) ideas to increase sales and/or reduce operating cost for private healthcare industry in Malaysia.

  1. Use IT to Reduce Cost

Private Healthcare industry is being challenged by the widespread, unstructured, and continuously increasing quantity of evidence. Data are continuously sent through linked sensors, monitors and instruments in real time. By 2016, there were projections of 4.9 million patients in the globe using remote monitoring instruments. 19 Even in 2010, one billion gigabytes of data had to be managed in an average US hospital. From 2014 to 2020, the number of data will increase by 50. Combined with an increasing demand for doctors and payers to access, analyze and exchange data, it is obvious why healthcare companies must consider moving to cloud-related solutions from their historically fragmented technological architecture (Accenture, 2015).

Today, however, IT systems and their ideas frequently work too rigidly, are independent and are not linked. “The system structure makes it difficult to create binding communication channels just amongst actors that are directly engaged, if not impossible,” A.T. Kearney wrote (Scheel O., 2011). “Skillful support for treatment for the patient must be created across current care boundaries. The correct administration of the procedures is only guaranteed by properly coordinated processes inside the system.” The authors stated that third-party communication procedures should be avoided by using lean information flows that lower interfaces and save expenses.

In many nations, the legal restrictions on the collection, storage and distribution of data are a significant barrier, which impede technologically possible development leaps and reduced costs for the administrative sector and elsewhere. For example, Germany presently prohibits a comprehensive net of databases and access to these services for privacy reasons (Scheel O., 2011). This is a matter addressed by national and European efforts (e.g., eHealth – safe digital communications in healthcare) to provide a technically and legally solid basis.

In order to increase efficiency, counterbalance overall cost due to complexity and promote transparency, a thorough and adaptable digitization of hospital operations is required.

An Asian case study demonstrates how structural and IT efforts contribute to reducing overhead spending and also to improving the result and overall financial performance of hospitals. In 2008, the Health Minister of Singapore established the Integrated Care Agency, in order to improve the provision of long-term care, especially for the rising elderly of the city state. The Singapore Integrated Patient Care (SPICE) initiative included a community program that uses local healthcare centers, as well as home care services to help the community treat frail elderly rather than a hospital, and Holistic Patient Care, a program that provides palliative care in patients’ houses. Eligible patients are properly allocated to one of the two programs via Electronic Hospital Records (EHRs). Funding options, including funded monthly payments, enable providers to pool and divert resources towards care reforms, which enhance results and facilitate patient transfers to suitable care environments. Aged Care Transition teams are supported in the financing model to assist guarantee coordinated care following release in the hospital. The teams comprise of transition coordinators that have access to national EHRs that are connected to the registrations of patients, monitor all patients involved and turn them into an optimum care center from the hospital. The transition coordinators handle patient reference and offer integrated case management information to other providers with a special emphasis on hospital users of high intensity.

The result was positive. Over 30 days of hospital readmission rates have been decreased by the aged care transition teams. SPICE has reduced the number of visits by its people to the emergency department by half. The annualized savings of almost $11 million from the Aged Care Transition Program were 17,000 hospital days (McClellan M., 2015).


  1. Streamline Bureaucracy

Worldwide, hospital operators are burdened by excessive bureaucracy and complexity. Even an apparently simple task such as filling out a prescription is full of unforeseen complications. In the US, for example, 786 distinct methods may be done, including many healthcare experts and technological channels. Clinicians have a significant administrative burden dealing with the needs of many different health benefit programs (InstituteOfMedicine, 2012).

Optimizing the recording and invoicing of services is one of the best ways to save on overhead expenses. In Germany, for example, discharge charges include proper coding diagnoses and processes, which also involve inserting such data into the software for information about the hospital are a major cause of the high administrative burden of medical personnel. The hospital administration personnel should then further conduct this lengthy manual procedure.

Due to the huge number of transactions and the substantial difference in cost between manual and electronic transactions, the potential for major cost reductions is tremendous. Healthcare professionals assessed typical expenses per transaction for a manual transaction in excess of $5 and for every computerized process in excess of $1.60. Findings reveal that U.S. providers of health care can save around $7 billion each year by translating six routine business transactions from a manual through to electronic (i.e. claims submission, verification of eligibility and benefits, prior authorization, claim status inquiry, payments and sending advice). This means an average 86 percent saving potential in comparison to manual transaction expenses.

Billing is a major source of hospital expenses and attempts to recover bad debt. Hospitals who teach the billing process to their patients are more likely to have patients who cooperate, preventing prolonged conflicts and bad debt. Arete, a global management and consulting firm, Director and Healthcare Analyst Chad Sandefur, says that it is vital for patients to acquire this expertise. Through educating employees on collaboration and early training, surprises are removed when invoices arrive, and the paid component is facilitated (McClellan M., 2015).

Another alternative would be to externalize payment receipts from car insurance and compensation schemes for employees. Hospitals should consider outsourcing comp and car insurance management to health-billing services providing parties, managing correspondence from attorneys, and negotiating reimbursements and other administrative responsibilities in order to reduce their health-related revenue cycle (RCM) costs, says Pro Medical. “So, 54 percent of financial healthcare leaders think outsourcing RCM may enhance effectiveness and promote fiduciary well-being, according to Black Book Market Research (ProMedical, 2016).”

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