Changing Paradigms in Malaysian Health Care: What future managed care portends for Malaysian doctors

Dr David KL Quek

dquek@pc.jaring.my or drquek@mailcity.com

"The archetype of a profession with an ethical creed and special privileges based on service to society and intellectual advancement is still best personified by the physician as healer and scientist, freed from narrow self-interest by the expectation of earning a generous income from a grateful citizenry."

Thomas E Getrzen; Health Economics: Fundamentals and Flow of Funds; 1997, John Wiley & Sons, Inc. New York: p 17

As of end March 2000, some 49 Managed Care Organizations have been formed and registered in Malaysia. The spiralling growth of these MCOs attest to the belief that Malaysia’s health care system is moving towards some great paradigmatic shift which somehow benefits their existence.

In many ways, this is hardly surprising. Our Health care expenditure has reached a critical mass, which now must be reckoned with. Many entrepreneurs have almost suddenly awakened from their fitful slumber and rapaciously realized that the time is now ripe for the pickings—healthcare spending can become another tasty morsel for corporate dealing and wheeling.

The many contradictory messages on corporatization and privatization by the government, have whetted rather than stifled the appetites of would-be players who have jumped into the bandwagon of trying to apportion for themselves larger and larger slices of the healthcare pie. Perceived uncertainty and vulnerability in the sea of change only serves to attract various sharks and predators of opportunity.

It appears that only the inherent players have been left out of the loop. Worse, the intended benevolent purpose has now become so perverted that the patient on the receiving end has been left in a lurch, carrying the short end of the stick of managed care plan—some so skimpy and inadequate, that it is a shame it is allowed at all.

In their usual if not totally immersed roles as direct providers of healthcare—doctors have once again been relegated to being bit players, and pawns in the game of one-upmanship. Does anyone else care, for that matter? Have we lost our collective voice?

Are our opinions and views as a profession no longer relevant? Does not our concept and vision of the healthcare climate of the nation, matter, or is it slowly amounting to naught? Or are we reaping what we have sown by being too complacent, too individualistic, about these earthshaking moves, for too long? Are we becoming irrelevant in a changing society where we no longer can be counted to do the right thing?

Will our professionalism become at risk of transforming into that of circumscribed skilled craftsman dictated to, by the real powers of business and global conglomerates? Crudely put, will we be relegated to being just skilled labourers and artisans, eking out our living at the beck and call of managers and corporate players? Am I painting too bleak and pessimistic a picture? Or has this scenario already arrived?

Why indeed is Malaysia so enamoured with the entry of Health Maintenance Organizations (HMOs) and managed care into our healthcare equation? Why is a cost-containment system that is raking up storms of protests, even in the USA, (and adopted no where else in the world!) so warmly embraced by our government and authorities that be? In spite of its growing presence in the last 30 years there, healthcare cost has continued to climb to its present 15% of the gross domestic product—some US$1.5 trillion! There were only 33 HMOs in 1970 but 546 in 1994, peaking in 1987 with some 700! Despite this huge spending and flirtation with managed care, some 43 million Americans are presently left uninsured with no access to medical or health care.

Compare this with Malaysia, where almost everyone has reasonable access to health care. True, the government is presently the largest provider of this service, some 60-70% are being treated in public hospitals and health care centres, under a heavily subsidized scheme. Where else can one get a coronary bypass surgery for a maximum of RM 500? A liver transplant for RM 500? Of course, taxpayers indirectly pay for this. Of course, there is also some degree of wait-listing and rationing of healthcare particularly of expensive tertiary care. But no one Malaysian is deprived of reasonably affordable care, to date, save for some heroic and super-specialized therapies or surgeries.

This is truly amazing because, in Malaysia the healthcare spending is already among the lowest in the world, at 3% of the gross domestic product. We have been spending so little and have been providing such great productivity in terms of healthcare returns that it makes us wonder why we are embarking on such a perilous and uncertain road of managed care.

"Medicine has now turned into the proverbial Leviathan, comparable to the military machine or the civil service, and is in many cases no less business- and money-oriented than the great oligopolistic corporations."

Roy Porter: The Greatest Benefit to Mankind – The Medical History of Humanity: 1997, WW Norton & Co, New York, chapter 20, p628.

What then is the attraction of the Managed Care Paradigm? In purely economic terms, our current indemnity fee-for-service model is the least constrained form of financing, which is conceivably the main unchecked area for potential abuse of limited resources. Existing and previous insurance schemes on the other hand, are purely passive financiers, which do not have sufficient control of whatever charges they are billed with. In theory, in the managed care paradigm, such financial responsibility for medical and health care is shifted to the MCO—hence, it has a very strong incentive to provide care efficiently. In order to compete then, the MCO must provide both quality and cost benefits.

With this model, a more stringent evaluation process is employed, known as the utilization review (UR). This evaluation process is meant to be restrictive and hence to possibly cut down on unnecessary and unproven expenses related to healthcare. Some common UR procedures include: second opinion, pre-certification (approval before elective surgery), pre-admission testing (requirement for outpatient investigations so that patients spend fewer days in hospital), concurrent review (regular evaluation to authorize continued stay in hospital), database profiling (scrutiny of services provided by doctor or hospital to curb excessive patterns of utilization), intensive care management (individual and close attention on high-paying cases), generic substitution, discharge planning (facilitating rapid transfer home), retrospective review (evaluation post-discharge to deny payment on any medically unnecessary services), audits (ensuring that all services billed were actually performed).

Undoubtedly all these are laudable processes, which can help reduce cost, but in practice there have seen serious breaches of what constitutes good medical practice. Arbitrary denials, delays in approvals for expensive medications, tests or hospitalizations, severely truncated hospital stays, poor supervision of the case-control nurse or medical review, late or non-payment of services actually rendered on whimsical grounds, etc. It is no wonder that victims of such mismanagement have protested so loudly. More worrying is the trend to exclude enrollees who are elderly, with genetic disorders, those chronically ill, psychiatric patients, etc. Who will take care of these potentially more expensive patients to look after?

Notwithstanding this, the managed care model for health care is now well entrenched in the USA, despite serious attempts to further protect the patients against such excesses and unethical conduct. Alas, too many large business and insurance corporations have too much influence in the political scene, and this has prevented any realistic review and overhaul of this much-maligned model. It is not difficult to understand why. Over the past decade or so, these companies have seen their fortunes escalate beyond their wildest dreams. Just consider the scale of this model run amuck.

Fortune 500 (17 April, 2000) recently released data on the top 1000 largest corporations in the United States. Among the Health Care group there were 35 companies within the top 1000. Their total revenues for 1999 were more than 190 billion dollars, with the largest—Aetna, having a turnover of 26.4 billion and the next five largest with over 10 billion dollars, each—these include Cigna, UnitedHealth group, Columbia/HCA Healthcare, Yenet Healthcare, and Humana. Importantly, profits ranged from US$249 millions for Yenet Healthcare to US$717 millions for Aetna and a staggering US$1.77 billion for Cigna!

Of course, some of the other companies are also heavily indebted, with Sun Healthcare group, Integrated Health Services and Mariner Post-acute Network posting losses of more than US$1.7 billions each!! One begins to wonder how these companies would survive, and if they would be bailed out in the long term. More importantly, if these companies fold-up what happens to their members who have paid and contributed to these health plans. What is surprising is that as a group, the 35 corporations together made an overall net loss of more than US$2.034 billions for the year 1999.

So healthcare management is not necessarily a sure thing, as many in Malaysia are supposing it to be. For those of us in the know, we are amazed that so many companies are still jumping into the scene without adequate planning or long-term vision.

It is from studying the American model and debacle, that we have sounded the alarm for caution against the unbridled entry of the MCO model into Malaysia. However, despite the negative posturing of the MMA vis--vis the MCO paradigm, our Malaysian authorities have been surprisingly unconvinced. These negative reports on the failure and miscalculations of the MCO paradigm were dismissed as biased, because the we have been perceived as being self-serving to protect our own turf and territory.

Disappointingly, with the perceived tacit if not complicit encouragement of the government, the seed of managed care has been allowed to germinate in Malaysia. Consequently, the past 3 to 4 years has seen such a rash outcropping of self-styled MCOs, most with purported linkages to insurance companies.

These are now offered to the public as attractive packages which apparently cover myriad medical expenses at selected healthcare facilities (except, of course, that fine print minutiae of exclusions were conveniently obfuscated!). Up to the present time there has been no mechanism to protect the unwitting purchaser of such glossily attractive if disingenuous plans.

Therefore, the time is perhaps ripe for some action to be taken. For medical practitioners and the authorities concerned (i.e. the MOH), there has been increasingly a clarion call for better regulatory mechanisms or legislation, to encompass all these concerns—the safety and protection of the patient and his welfare, being the ultimate goal. Over the recent years, the MMA has stridently become the strongest and most vocal advocate for protecting our patients’ interests and their legitimate health concerns (Health For All – Reforming Health Care in Malaysia, 1999).

There is another area of concern that we have to consider. This is the uncertain viability of the MCO model. In historical terms, most of the private hospitals in Malaysia have been posting very marginal profits for years, with a sizeable number losing money but kept afloat by charitable trusts and philanthropy. Only a few star players have consistently been profitable and even there the profit margin has almost never exceeded 10%. A reasonably well-run hospital might make on average of 5-6% which is pathetically a poor return for most investors, compared to other businesses. It is reported that on average American MCOs make about 5% profit, with another 15-20% off the top being channelled to administrative expenses and managers!

However, there can be no denying that the size of our healthcare spending is growing, and at about 1.5 to 2 billion ringgit annually, it is certainly attractive enough for players to gamble on the prestige of adding a medical centre to their diversified interests. These entrepreneurs could conceivably be tempted to experiment with the hope and hype that skimming off some of the spending from the middle or the top, might still be worthwhile.

After all, ironically, the medical practitioners at these hospitals or medical centres have always made good money, without previous constraints, or so they thought. Riding on the concerns of overcharging, exorbitant or unchecked fees, perhaps even perceived excessive investigations and surgeries, these managed care groups disingenuously slip into the middle-man position with the hype that they can cap further the rising costs, while at the same time collecting a fee for the effort. Alas, the only groups shortchanged would be the patients under their plans, and the doctors themselves!

But memories for such fall-outs or debacles even in Malaysia, are often conveniently short-lived. Have we forgotten that one managed care company, which only 2 years ago, failed so miserably to live up to its obligations that nearly all the medical centres in the Klang Valley, effectively barred their enrollees from any service? Order was only restored when the parent corporation itself undertook and reimbursed the backlog of unpaid bills. Doctors, panel clinics, and hospitals were all repaid, albeit some as late as 14-18 months! Will this delaying and delinquent tactic be the way of the future experience of medical establishments, inexorably entangled with such third party payers or MCOs?

Another health plan management group recently folded its operations after owing a huge debt to innumerable clinics and hospitals. Some speculation has it that this came about because it had a parting of ways with its insurer. No matter the actual failure, the losers were the contributing members. Will this scenario be re-enacted again in the future when one party or the other, find their bottom-lines stretched beyond fiscal prudence to stay afloat? Who will protect the patients and the enrollees who have subscribed to these plans?

Many third party payers (TPPs) and MCOs are already becoming delinquent with impunity. From personal experience, delays in reimbursement up to 9 months to one year have already taken place, despite reminders, pleas, and even threats of barring further service. Some have been withholding reimbursement on unbelievable excuses of lost invoices, bills, inadequate documentation, etc. Some credit-control officers of these TPPs, even have the cheek to ask incredulously if the doctors who complained, wanted their continued custom—as if being on their panel was a big deal! I had to remind them that I am not ever registered on their list of panels, and that the patient just happened to fall ill under their schemes, which have been purchased by their employers or corporations.

It is good to know that in the United states, doctor groups in several class actions, have begun suing some of these MCOs for deliberate delay in reimbursement, despite the contractual processing time of less than 60 days. It is perhaps time for doctors here likewise to consider this legal option. At the very least some recourse for late payment interests should be allowed, but punitive measures are probably needed to expedite the demise of such bad business tactics.

What indeed if any are the fiduciary responsibilities of such MCOs, to their clients i.e. the patients and also to the doctors, the contracted providers? Do we have adequate regulations or laws to ensure that such MCOs behave themselves? Can or should we allow these MCOs to be set up without these safeguards in place? Surely we must be more accountable, and the government can be more responsible and circumspect.

Heavy penalties while being a needed deterrent, are not enough, because a bankrupt company cannot repay anything. What is needed is perhaps a tightening of the ease of setting up many fly-by-night MCOs? A huge re-insurable premium with a Central Bank may be a mandatory requirement, which can then serve to protect plan-buyers. Better still, scrap all such plans for managed care until some final scheme is devised which encompasses all these safeguards.

The MMA has been urging for a National Health Financing Scheme which will hopefully cover all Malaysians, and which the government of Malaysia will guarantee. With a statutory or mandatory contribution into either the EPF or SOCSO schemes, this could become a realistic option. This will be the best hope for Malaysians.

We urge the government and people of Malaysia to resist the temptation to seek some easy way out i.e. short-term healthcare plans, with no foreseeable continuity into the future, especially beyond the elderly age group. We must actively lobby the government to work harder towards finding a just and equitable solution, to ensure universal and comprehensive health care coverage for all Malaysians into the next century.

"Every health services system has two main goals. The first is to optimize the health of the population by employing the most advanced knowledge about the causation of disease, illness management, and health maximization. The second, and equally important, goal is to minimize the disparities across population subgroups to ensure equal access to health services and the ability to achieve optimal health." Starfield 1992

March 2000

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