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PRIVATE HOSPITALS

RECOMMENDATION REPORT

August 2014

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PUBLISHED BY: MALAYSIA PRODUCTIVITY CORPORATION Lorong Produktiviti, Off Jalan Sultan 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel : 603 – 7955 7266 / 7955 7050 / 7955 7085 Faks : 603 – 7957 8068 / 7955 1824 / 7954 0795 Emel : marketing@mpc.gov.my Website : http://www.mpc.gov.my Perbadanan Produktiviti Malaysia 2014 All right reserved No part of this publication may be reproduced, stored in retrieval system or transmitted, in any form or any means, electronics, mechanical, photocopying, recording, or otherwise, without prior permission of Malaysia Productivity Corporation. Disclaimer This report has been prepared by Malaysia Productivity Corporation from sources believed to be reliable but no responsibility is accepted by Malaysia Productivity Corporation, its employees, consultants, contractors and/or agents in relation to the authenticity, origin, validity, accuracy or completeness of, or for any errors in or omission form, the information, statements, forecasts, misstatement of facts, opinion and comments contained here in. ISBN NO 978–983–2786–25–2

PRODUCTIVITY AND REGULATION

Productivity is the only driver of income growth that is unlimited, as opposed to resource exploitation or increase in population and labour force participation, each of which faces natural limits. The potential for productivity growth to generate higher income for Malaysians makes it a natural and important consideration for decision makers. As such the continuing need to stimulate productivity rightly remains at the forefront of government policies. Regulation is the lifeblood of a modern, well-functioning economy. Almost all regulations have the potential to impact on productivity, either through the incentives which they provide to businesses to change operating and investment decisions, or more directly through their impacts on compliance costs. It is inconceivable to think of a modern economy functioning without regulation. However, poor regulation can cause frustration and unintended consequences, or simply add red tape that adds nothing useful to the economy, society or the environment.

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FOREWORD

Through regulation the government can leverage its policy interests on businesses.

Regulation can contribute to a range of social, environmental and economic goals.

However, in practice, many regulations are not implemented efficiently or cost-

effectively, and some regulations do not even adequately achieve the ends for which

they are designed. Poor regulatory regimes invariably result in unnecessary

regulatory burdens which will stifle business growth.

In the 10th Malaysia Plan, the Malaysia Productivity Corporation (MPC) is mandated

to review those regulations affecting the conduct of business in Malaysia with the

view to modernize business regulations. This is crucial in order for the country to

move towards its aspiration of becoming a high-income nation. Towards this, MPC

has embarked on review of existing business regulations with the focus on the 12

National Key Economic Areas (NKEA) which have been identified as having high

growth potential.

In this study, the research team led by Mr. Goh Swee Seang has been asked to

examine the regulatory regimes of the healthcare services sector with the aim of

recommending options to remove unnecessary regulatory burdens. For this particular

study, the focus is on the private hospital sector as this is deemed a high value

added, high knowledge-based and growing sector.

The study emulated the approach used by the Australian Government Productivity

Commission (AGPC) and the team was guided by a regulatory expert previously from

the AGPC, Ms. Sue Holmes. The team selected a sample of private hospitals across

the country and carried out interviews with the senior management personnel to

identify the issues of concern relating to the various regulations imposed upon the

operation of private hospitals. From these issues and using principles of good

regulatory practices, the team then formulated feasible options for further

deliberation. These issues and options will be subjected to public consultation with

relevant stakeholders in order to develop concrete recommendations to reduce

unnecessary regulatory burdens on private hospitals.

In the course of the study, MPC benefited greatly from discussions with some private

hospitals, government officials and business organizations. Valuable input and

feedback were received from the AGPC expert, members of the Healthcare

Consultative Panel of MPC and other interested parties. MPC is grateful to all those

who assisted it.

The study was conducted in MPC Head Office by the Regulatory Review Directorate

led by Mr. Zahid Ismail and overseen by me.

Dato’ Mohd Razali Hussain

Director General, MPC

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CONTENTS

FOREWORD ........................................................................................................................................................................ iii

ABBREVIATIONS ............................................................................................................................................................ viii

GLOSSARY ............................................................................................................................................................................. x

OVERVIEW ........................................................................................................................................................................ xiii

RECOMMENDATIONS .................................................................................................................................................. xix

CHAPTER ONE: ABOUT THE REVIEW ...................................................................................................................... 1

1.0 About the Review ......................................................................................................................................... 1

1.1 What MPC has been asked to do.................................................................................................... 1

1.2 The 10th Malaysia Plan: Modernising Business Regulation ............................................... 2

1.3 The approach and rationale of this review .................................................................................. 3

1.4 Conduct of the study .............................................................................................................................. 4

1.4 Structure of the report ........................................................................................................................... 1

CHAPTER TWO: HEALTHCARE INDUSTRY VALUE CHAIN ............................................................................. 3

2.0 Sector Analysis on Healthcare Industry ............................................................................................ 3

2.1 Healthcare Industry in Malaysia ............................................................................................................ 4

2.2 Healthcare Industry Value Chain .......................................................................................................... 5

2.3 Macroeconomic Performance .............................................................................................................. 10

2.4 Growth of Private Hospital Sector ...................................................................................................... 14

CHAPTER THREE: BEST PRACTICE REGULATIONS AND REGULATORY BURDENS .......................... 21

3.0 Cost of Regulation ..................................................................................................................................... 21

3.1 What are Unnecessary Regulatory Burdens? ............................................................................. 23

3.2 Regulation of the Private Hospitals ................................................................................................... 24

3.3 Sources of Unnecessary Regulatory Burden ............................................................................... 27

3.4 Best Practice Regulation ........................................................................................................................ 28

3.5 Regulatory approaches: Prescriptive-based, Performance-based, Principle-based and

Process-based Approaches to Regulatory Design ....................................................................... 31

CHAPTER FOUR: HEALTHCARE REGULATIONS IN MALAYSIA .................................................................. 33

4.0 Regulatory Overview of Healthcare in Malaysia ......................................................................... 33

4.1 Historical development of the Existing Framework ................................................................... 33

4.2 Current Legislative Arrangements ..................................................................................................... 36

4.3 Regulators and Other Relevant Bodies........................................................................................... 41

CHAPTER FIVE: THE BURDENS OF LICENCE RENEWAL ............................................................................... 50

5.0 Regulatory Burdens in the Private Hospital Sector ................................................................... 50

5.1 Licence Renewal ........................................................................................................................................ 51

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5.2 Issue No. 1: Application Documentation ......................................................................................... 52

5.2.1 Option No. 1: No change and continue with the existing practice ................................. 52

5.2.2 Option No 2: Using information technology ........................................................................... 53

5.2.3 Option No 3: Moving from “evidence-based” to “information-based” by removing

duplication of requirements by different regulators within the MOH ......................... 53

5.2.4 Recommended Option to Resolve Issue No. 1 ........................................................................ 54

5.3 Issue No. 2: Complying with Licensing Requirements ............................................................ 54

5.3.1 Option No. 1: No change .................................................................................................................. 56

5.3.2 Option No. 2: Review the PHFS Regulations 138/2006 and Adopt Best

International Practices .................................................................................................................... 56

5.3.3 Option No. 3: Transparency through Continuing Education on Licensing

Requirements ...................................................................................................................................... 57

5.3.4 Recommendation to Resolve Issue No. 2 ................................................................................. 57

5.4 Issue No. 3: Dealing with licensing officers (on-site inspections, audits, or surveys)

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5.4.1 Option No. 1: Transparency through Separating Auditing from Licence approval 58

5.4.2 Option No. 2: Transparent Standard Operating Procedure .............................................. 59

5.4.3 Option No. 3: Establishing a Help-desk ..................................................................................... 59

5.4.4 Option No. 4: Providing Appeal Provisions ............................................................................. 59

5.4.5 Recommended Options to Resolve Issue No. 3 ...................................................................... 59

5.5 Issue No. 4: Fragmented Processes ................................................................................................ 60

5.5.1 Option No. 1: No direct action ....................................................................................................... 60

5.5.2 Option No. 2: Redefining the regulatory oversights functions ........................................ 60

5.5.3 Recommended Option to Resolve Issue No. 4 ........................................................................ 61

5.6 Issue No. 5: Annual Practising Certificates for Healthcare Professionals ..................... 61

5.6.1 Option No. 1: No change to existing practice .......................................................................... 61

5.6.2 Option No. 2: Online Registrations ............................................................................................. 62

5.6.3 Option No. 3: Revamping the APC concept and practice ................................................... 62

5.6.4 Recommended Option on APC ...................................................................................................... 62

5.7 Concluding Remarks ................................................................................................................................ 62

CHAPTER SIX: THE BURDENS IN PLANNING APPROVALS, WORKFORCE REGULATION, MEDICAL

ADVERTISING AND REGULATED MEDICAL FEES ............................................................................................. 64

6.0 Regulatory Burdens in Private Hospital Sector 2 ....................................................................... 64

6.1 Issue No. 1: Planning Approval for renovation, upgrade, extension, etc. ...................... 64

6.1.1 Option No. 1: No change and continue with the existing practice ................................. 64

6.1.2 Option No 2: Eliminate Planning Approval for minor renovation ................................. 64

6.1.3 Option No 3: Adopt Risk-based Approach for Planning Approval ................................. 65

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6.1.4 Recommended Option to Resolve Issue No. 2 ........................................................................ 65

6.2 Issue No. 2: Workforce Quality ............................................................................................................ 65

6.2.1 Option No. 1: Maintain existing practice .................................................................................. 67

6.2.2 Option No. 2: Monitoring Education Quality by the MOH ................................................. 68

6.2.3 Option No. 3: A Formula for Supply-Demand Balance ....................................................... 68

6.2.4 Recommended Option No. 3 to Resolve Issue on Workforce .......................................... 68

6.3 Issue No. 3: Approval for Advertisement and Advertising Materials ................................ 68

6.3.1 Option No. 1: Maintain existing practice .................................................................................. 69

6.3.2 Option No. 2: Electronic means of submission and application ..................................... 69

6.3.3 Option No. 3: Change the approval application to notification using ICT................... 69

6.3.4 Recommended Option No. 3 .......................................................................................................... 69

6.4 Issue No. 4: Regulated Medical Fees .............................................................................................. 69

6.4.1 Option No. 1: No change but review the Thirteen Schedule periodically ................... 71

6.4.2 Option No. 2: Remove the regulation on medical fee together with government

sponsored patients ............................................................................................................................ 71

6.4.3 Option no. 3: Revamp the PHFS Regulations 138/2006 to reduce fixed overhead

costs of private hospitals ................................................................................................................ 71

6.4.4 Recommended options: long-term solutions from Option No. 2 and 3 ....................... 71

6.5 Other Issues .................................................................................................................................................. 72

6.5.1 Export of Healthcare Services (Health Tourism) .................................................................. 72

6.5.2 Personal Data Protection ................................................................................................................ 72

6.5.3 MSQH Accreditation .......................................................................................................................... 72

6.5.4 Information and Reporting ............................................................................................................ 72

6.6 Concluding Remarks ................................................................................................................................ 73

CHAPTER SEVEN: FEEDBACK FROM REGULATORS AND OTHER STAKEHOLDERS .......................... 75

7.0 Presentation to the Healthcare Consultative Panel (HCP) of MPC .................................. 75

7.1 Feedback from the HCP Members .................................................................................................... 76

7.2 Feedback from the Licensing Authority of the Ministry of Health (CKAP) ..................... 77

7.3 Concluding Remarks ................................................................................................................................ 80

REFERENCES .................................................................................................................................................................... 82

APPENDIXES ..................................................................................................................................................................... 84

Appendix 2.1: Healthcare Services and Related Sectors MSIC2008 ............................................ 84

Appendix 4.1: Analysis of Act 586 .................................................................................................................... 86

Appendix 4.2: PHFS Regulations 138/2006: Requirements for Private Hospitals .................. 89

Appendix 4.3: Regulatory Regimes for Healthcare and Health-related industries .................. 91

Appendix 5.1: Summary of Survey Output................................................................................................... 94

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Appendix 5.2: Validation Response on Survey Output .......................................................................... 98

Appendix 7.1: Reports of Meeting with the MOH .................................................................................. 101

Appendix A: Study Methodology (Presentation by Sue Holmes) .................................................. 103

Appendix B: Study Questionnaires and Conceptual Framework .................................................. 111

Appendix C: APHM Members List ................................................................................................................. 114

Appendix D: Summary of Interviews Output ............................................................................................ 125

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ABBREVIATIONS

AGC Attorney General’s Chambers

AHIA Australasian Health Infrastructure Alliance

AHP Allied Health Professionals

AMM Academy of Medicine Malaysia

APC Annual Practising Certificate

AGPC Australian Government Productivity Commission

APHM Association of Private Hospitals Malaysia

BNM Bank Negara Malaysia (Malaysia Central Bank)

BOMBA / JBPM Fire and Rescue Department Malaysia

CKAPS Cawangan Kawalan Amalan Perubatan Swasta (Private Healthcare Practice Control Branch)

CPD Continuous Professional Development

DCA Drug Control Authority

DG Director General

DOE Department of Environment

DOS Department of Statistics

DOSH Department of Occupational Health and Safety

EPF Employees Provident Fund

EPU Economic Planning Unit, Malaysia

ETP Economic Transformation Plan

GDP Gross Domestic Product

GRP Good Regulatory Practises

HCP Healthcare Consultative Panel of MPC

HRDF Human Resource Development Fund

IT Information Technology

JCI Joint Commission International

JPJ Road Transport Department

LG Local Government

LHDN Lembaga Hasil Dalam Negeri (Inland Revenue Board)

MAB Medicine Advertisements Board

MATRADE Malaysia External Trade Development Corporation

MDB Medical Device Board

MDC Malaysian Dental Council

MDI Malaysia Department of Insolvency

MEGB Masterskill Education Group Berhad

MHTC Malaysia Health Tourism Council

MISC2008 Malaysian Standard Industrial Classification 2008

MITI Ministry of International Trade and Industry

MMA Malaysian Medical Association

MMAB Malaysia Medical Assistants (Registration) Board

MMB Malaysia Midwives Board

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MMC Malaysian Medical Council

MNA Malaysia Nurses Association

MNB Malaysia Nursing Board

MOC Malaysian Optical Council

MOH Ministry of Health

MOHR Ministry of Human Resources

MOT Ministry of Tourism

MPB Malaysian Pharmacy Board

MPC Malaysia Productivity Cooperation

MSIC Malaysia Standard Industrial Classification

MSQH Malaysian Society for Quality in Health

MYCC Malaysia Competition Commission

NDPC National Development Planning Committee

N.E.C Not elsewhere classified

NGO Non-Governmental Organization

NIOSH National Institute of Occupational Safety & Health

NKEA New Key Economic Area

NSR National Specialists Registration

OECD Organisation for Economic Co-operation and Development

PEMUDAH Special Taskforce to Facilitate Business

PHFS Private Healthcare Facilities and Services

PIC Person-In-Charge

PTPTN National Higher Education Fund Board

RIS Regulatory Impact Statement

RR Regulatory Review

RURB Reducing Unnecessary Regulatory Burden

SC Securities Commission

SL1M 1Malaysia Training Scheme

SME Small and Medium Enterprises

SOCSO Social Security Organisation

SOP Standard Operating Procedure

SPAD Land Public Transport Commission

SSM Suruhanjaya Syarikat Malaysia (Companies Commission Malaysia)

ST Suruhanjaya Tenaga (Energy Commission)

TNB Tenaga Nasional Berhad

UKAPS Unit Kawalan Amalan Perubatan Swasta

UNU United Nations University

WHO World Health Organization

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GLOSSARY

Annual Practising

Certificate (APC)

Any fully registered person who desires to practise as a medical

practitioner after the thirty first day of December of any year

shall, not later than the first day of December of that year, make

an application in the prescribed form and shall pay the

prescribed fee for a certificate to practise as a medical

practitioner during the ensuing year (Act 50).

Grandfathering Grandfathering is allowing an existing operation or conduct to

continue legally when a new operation or conduct would be

illegal.

Healthcare

professionals

The "healthcare professional" includes a medical practitioner,

dental practitioner, pharmacist, clinical psychologist, nurse,

midwife, medical assistant, physiotherapist, occupational

therapist and other allied healthcare professional and any other

person involved in the giving of medical, health, dental,

pharmaceutical or any other healthcare services under the

jurisdiction of the Ministry of Health.

Licensee A "licensee" means a person to whom a licence to operate or

provide a private healthcare facility or service other than a

private medical clinic or private dental clinic granted under

paragraph 19(a) of Act 586

Occupational

licensing

Occupational licensing is a process whereby entry into an

occupation requires the permission of the government, and the

state requires some demonstration of a minimum degree of

competency.

Person-In-Charge The "person in charge" means a person possessing such

qualification, training and experience as may be prescribed and

who shall be responsible for the management and control of the

private healthcare facility or service to which a licence or

registration relates (Act 586).

Primary care Primary care is the term for the health care services which play

a role in the local community. It refers to the work of healthcare

professionals who act as a first point of consultation for all

patients within the health care system.

Private Hospitals Under Act 586 “private hospitals” means any premises, other

than Government hospital institution, used or intended to be

used for the reception, treatment and care of persons who

require medical treatment or suffer from any disease or who

require dental treatment that requires hospitalization.

Regulation Any laws or other government ‘rules’ which influence the way

people behave. It is not limited to primary or delegated

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legislation; it also includes ‘quasi-regulation’ (such as codes of

conduct, advisory instruments or notes etc.) where there is a

reasonable expectation by governments of compliance.

Regulatory Impact

Statement (RIS)

The RIS is a document prepared by the department, agency,

statutory authority or board responsible for a regulatory

proposal following consultation with affected parties, formalising

and evidencing some of the steps that must be taken in good

policy formulation. It requires an assessment of the costs and

benefits of each option, followed by a recommendation

supporting the most effective and efficient option. It must be

incorporated into the assessment process used by all areas of

government responsible for reviewing and reforming

regulations.

Secondary care Secondary care is the health care services provided by medical specialists and other health professionals who generally do not have first contact with patients, for example, cardiologists, urologists and dermatologists.

Tertiary care Tertiary care is specialized consultative health care, usually for

inpatients and on referral from a primary or secondary health

professional, in a facility that has personnel and facilities for

advanced medical investigation and treatment, such as a tertiary

referral hospital.

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Key Points

MPC which has been mandated to facilitate the implementation of the National Policy on the Development and Implementation of Regulations has taken the initiative to carry out this regulatory review with the aim of reducing unnecessary regulatory burdens on the healthcare sector. The focus of this first initiative is on the review of regulations on private hospitals.

The private hospital sector has grown over the last thirty years and today we have today around 220 licensed private hospitals in the country. In the past, regulatory control of private hospitals was limited until the Private Healthcare Facilities and Services Act 1998 (ACT 560) was enforced in 2006. With this Act licensing requirements are stringent with resulting increased in unnecessary regulatory burdens.

The objective of MPC is to uncover and report the areas which are of most concern with private hospitals and provide recommended options for further reviews and discussions with interested parties.

The first concern is the need to reduce the burdens in the application for renewal of hospital operating licence, which has to be renewed every two years.

The second is on the highly prescriptive nature of the Private Healthcare Facilities and Services Regulations 138/2006 which has posted heavy burden on the licensing process.

The third concern is on the difficulty with dealing with the licensing officers to follow-up on the licensing as the process can take up to or more than six months.

Fourthly, the licensing requirements integrate the other regulatory regimes from other regulators. The present practice of the principal regulators creates heavy burdens on licence renewal.

The fifth concern is on the renewal of the Annual Practicing Certificate, on which the licensing requirements require evidential proof. This compound the heavy burden of the hospital licence renewal. These five concerns contribute to a lot of unnecessary regulatory burdens in the licensing of private hospitals.

The sixth concern is on planning approval for the physical improvement and/or expansion of facilities, which is onerous creating unnecessary regulatory burdens on private hospitals.

The seventh concern is on the quality of new medical professionals coming into employment are of concern to the sector. The imbalance in the market supply-demand for medical professionals is contributing to the concern.

The eighth concern is on the approval for advertising and advertising materials. The application is expensive and burdensome.

Lastly, there is the issue on regulated medical charges. This does not post any regulatory burden but the business is concern with the restrictiveness to innovation and competition.

The report explained these concerns raised by the private hospitals and proposed options for further deliberation with interested parties.

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OVERVIEW

The healthcare sector is large comprising many types of businesses. From a value

chain perspective, there are three distinct value chains: two product value chains –

pharmaceuticals and medical devices - and a service value chain.

Regulation of pharmaceuticals comes under the purview of the Pharmaceutical

Services Division of the Ministry of Health (MOH). There are various Acts and

Regulations governing the value chain, from the manufacturing of drugs, import and

export, distribution, storage, retail, advertisement, usage, consumption, recall and

disposal.

While pharmaceuticals have been regulated since independence, the regulation of

the medical device value chain is very recent. The Medical Device Act came into

existence only in 2012 and the Medical Device Regulations 2012 have only been

enforced since July 2013. The regulatory purview comes under the Medical Device

Board of the MOH.

The healthcare services value chain is complex having many different kinds of

facilities and services and specializations. It ranges from the simple ubiquitous

stand-alone medical clinic, to dental clinic, to specialist, to the most complex of

private hospitals providing secondary and tertiary acute care services. Apart from

private hospitals, there are also other healthcare facilities and services such as the

medical laboratories, hemodialysis centres, nursing homes, ambulatory care centre

and blood banks.

The government has always been the primary provider of primary, secondary and

tertiary healthcare to the public and continues today. However, the cost of providing

public this healthcare has increased over the years. In the eighties the government

started to encourage the establishment of private healthcare services, in particular,

private hospitals to take up part of the burden. Private healthcare services are mainly

for those who can afford out-of-pocket payment and so is able to cater for the ever

growing group of higher income population.

Although private healthcare started to grow in the eighties, there was no specific

governing regulation for private healthcare facilities and services until the Private

Healthcare Facilities and Services Act 1998 (Act 586). Even so, the Act 586 was

then only enforced in 2006 with the gazette of the Private Healthcare Facilities and

Services Regulations 137/2006 and 138/2006. Many of the existing private hospitals

could not totally meet all the new requirements of the regulations. However, they

were given “grandfathering rights” to continue operation and to work towards

meeting the regulatory requirements. All new establishments since then must meet

all the stated regulatory requirements.

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Generally, Malaysians enjoy universal access to healthcare services, where

everyone has access to public healthcare services. Many of the public hospitals are

equipped with some of the latest medical technology and provide many specialist

treatments. However, they are generally overloaded and waiting time for some

services can be unacceptably long.

There are now 220 licensed private hospitals in the country, some of them having

the latest medical technology by international standards. They also provide many

types of specialist treatments also with international standards. While the medical

fees are generally high and only the higher income group can afford the out-of-

pocket medical charges, the private system nevertheless reduces the burden of the

public healthcare system. For example, the MOH Health Facts 2013 shows that

admissions to private hospitals represented nearly 30 per cent of total admissions for

the year 2012.

At the macro level, the population-to-healthcare resources ratio is still on the low side

when compared to the high-income economies. The key indicator of the number of

hospital beds per 1000 population current stood at 1.8 which is well below many

countries until today. The government has been targeting 2.0 in its effort to increase

healthcare services capacity in the country.

Achieving the target 2.0 beds per 1000 people is not going to happen any time soon,

at least not from private sector investment. A separate study has shown that the lead

time for establishing a new functional private hospital is more than four years. A

significant portion of the lead time involves dealing with government regulations.

Planning approvals for hospital construction may take more than two years and

licensing the hospital requires no less than six months.

The good healthcare system in the country is partly due to the established regulatory

system that has evolved from the previous British system. In a sense, we are

blessed with this heritage and at the same time cursed with the difficulty of changing

it. A system that has worked over time is difficult to change even if it is unnecessarily

burdensome and limiting progress. The slow growth of the number of private

hospitals in the country over the last seven years could be a testimony to this.

Until recently, the regulatory regime in the country has not kept up with global good

regulatory practices. However, with the launching of the National Policy on the

Development and Implementation of Regulations in July 2013, regulators will have to

follow a set of principles and processes for good regulatory practice. In the

meantime, MPC has been given the mandate in the 10th Malaysia Plan to review all

existing business-related regulations with the aim of reducing unnecessary

regulatory burdens to business. This study on reducing unnecessary regulatory

burdens in private hospitals is one of the on-going reviews.

Some regulatory burdens are necessary for the government to achieve national

policy objectives. There are three broad areas that comprise the “regulatory burden”

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on business - time, effort and costs expended in complying with government

regulatory and taxation requirements. The main dissatisfaction has been the

increased amount of the paperwork involved and costs associated with the taxes,

levies and fees. Then there are the negative impacts on firms’ productivity arising as

significant amount of resources has to be allocated to compliance activities instead

of business activities. There are also a variety of other non-economic costs involved

such as stress and frustration in dealing with the regulatory systems.

Although regulation imposes some burdens on business, concern arises when the

burdens necessarily reflect inefficiency in the regulatory regime and point to the

existence of “unnecessary regulatory burdens”. Unnecessary burdens arise from:

excessive coverage of the regulations, including ‘regulatory creep’ — that is,

regulations that encompass more activity than was intended or required to

achieve their objectives

subject-specific regulations that cover much the same ground as other

generic regulation

unduly prescriptive regulation that limits the ways in which businesses may

meet the underlying objectives of regulation

excessive time delays in obtaining responses and decisions from regulators

rules or enforcement approaches that inadvertently provide incentives to

operate in less efficient ways

unwieldy licence application and approval processes

unnecessarily invasive regulatory behaviour, such as overly frequent

inspections or requests for information.

Unnecessary regulatory burdens stifle productivity, undermine business

competitiveness and increase consumer prices, leading the chronic economic

inefficiencies. As a result, more developed nations are moving to regulations that

have been formulated through a Best Practice Regulation process to achieve policy

objectives and reduce the unnecessary regulatory burdens on business.

A regulator plays an important role in regulatory regimes by encouraging compliance

through education and advice, as well as enforcing laws and regulations through

disciplinary means. When regulators are transparent and accountable in their

enforcement role and have incorporated good guiding principles into their operating

systems they will both assist the achievement of policy goals and impose minimum

necessary burden on business. This is pertinent in regulating the healthcare industry,

and in particular, the private hospital sector.

Since all the regulations on healthcare services have not been crafted using

established principles of good regulatory process and since existing regulators do

not follow established good regulatory practice principles, there are many

unnecessary regulatory burdens in existing regulatory regimes. It is through a

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thorough regulatory review of existing practices that these burdens could be

uncovered and eventually removed for the progress of business.

To uncover the unnecessary regulatory burdens in the operation of private hospitals

a number of private hospitals in various states were interviewed in this study. The

study emulated the approach used by the Australian Government Productivity

Commission and a former regulatory specialist from the AGPC was engaged to

provide advice to the team. From the issues uncovered, various options for their

resolution were formulated using the principles of good regulatory practice and

principles for process improvement. This draft report is being released in order to

validate these issues and options with interested parties in order to firm up the

proposed recommendations for the government to reduce unnecessary burdens.

Licence Renewal

The main issue on licence renewal for private hospitals is in dealing with the principal

regulator. Under the current regulation, private hospitals have to apply for renewal of

their operating licence every two years. They experience the pain of achieving

licence renewal for at least six months as the regulation requires that they have to

submit the renewal application not less than six months before the licence expires.

There are five areas that contribute the most to unnecessary regulatory burdens in

licence renewal. Firstly, there is a huge burden in the preparation of application

documents demanded by the regulator. Each of three to four thousand sheets of A4

size paper needs to be endorsed as a “true copy” by a senior manager, and in two

sets. Some of the documents are redundant - for example, the certified “true copy” of

the Annual Practicing Certificates as evidence is already with various regulating

bodies such as the Malaysian Medical Council, the Malaysian Nursing Board, the

Malaysian Dental Council, and the Malaysian Pharmacy Board. The overheads in

time, costs, administrative and managerial resources and the coordination efforts in

preparing the submission documents are a huge burden to hospital management.

Secondly, the current regulation, the Private Healthcare Facilities and Services

Regulations 138/2006 is very prescriptive in its requirements. It prescribes

(examples given in italics) the spatial details in precise dimensions (…door to toilet

adjoining patient room shall have 0.9 metre minimum clear opening…), the layout of

facilities and clinical processes and their work flow (… where two or more beds are

intended to be placed in a room or ward, the beds shall be arranged to allow spacing

of beds at 1.5 metres clear space between beds and shall be at least 0.9 metre from

any wall), the human resources requirements for every service (…the ratio of the

nursing staff and personal care aide to patient is not less than one to two), the

requirements of air conditioning, ventilation ( for newborn nursery…have a minimum

ventilation rate of twelve air change per hour which is provided by mechanical supply

and exhaust air systems…), noise control and lightings, the supplies requirements,

even the type of hand washing dispenser, the number and ratio of nurses to beds or

patients (…nurses’ station shall not serve more than thirty-six beds to ensure that the

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healthcare delivered to all patients is not adversely affected or compromised.), and

many other detailed prescriptions for operating a hospital. All these unduly

prescriptive regulations limit the ways in which the private hospital may meet the

underlying objectives of the regulation. The hospital management and medical

professionals have little incentive left to develop innovative means to improve

efficiency and clinical effectiveness – all their efforts are on meeting these

prescriptions.

Thirdly, dealing with the licensing officers and hospital surveyors or auditors also

proves to be a challenge for the licensee. Getting consistent input from different

licensing officers is challenging as a result of the unduly prescriptive regulation and

also the unwieldy licence application and approval processes. The difficulty of getting

to the right person in the Ministry frequently results in excessive time delays in

obtaining responses and decisions from the regulator. The amount of information

required in the submission and the frequent requests for more information only

exacerbate the burden.

Fourthly, there are many units involved in the licensing process. From the

perspective of the licensees there is serious fragmentation in the process as they

have to deal with different officers. Each has its own information requirements and

this results in a communication nightmare for the licensee.

Lastly but not least, is the requirement for medical professionals to apply for Annual

Practicing Certificates (APC). Although the maintenance of the APC is an individual

responsibility, the need for the hospital to manage the APC of their personnel

contributes to the licensing burden. There are over a hundred thousand medical

professionals (medical doctors, dentists, nurses, pharmacists, medical assistants,

and other allied health professionals) who have to get their APC done yearly. This is

a tremendous waste of human effort and a lot of government resources which could

be used for more productive activity.

Planning Approval

Apart from the big regulatory burden in licence renewal, there are other burdensome

issues for private hospitals. From the experience of the licensee, the planning

approval for changes to facilities is as complicated as for building a new hospital and

doing a major expansion to an existing building. The regulator does not practice a

risk-based approach and treats all planning approvals alike. Even minor

improvements require planning approval stifling the capacity of many hospitals to

carry out continuous improvements in their facilities.

Occupational Licensing

Occupational licensing of medical professionals has the objective of maintaining

standards of competency and professionalism. Physicians licensing comes under

Medical Act 1971, Nurses under the Nurses Act 1950, Midwifes under the Midwifery

Act 1966, Medical Assistants under the Medical Assistants (Registration) Act 1977,

xviii

Dentists under the Dental Act 1971 and Pharmacists under the Registration of

Pharmacists Act 1951. Only the Allied Health Professionals (e.g., Occupational

Therapists, Audiologists, Medical Laboratory Technologists) are not subjected to any

regulation.

Quality of Medical Professionals

There has been increasing concern on the quality of medical professionals, in

particular, doctors and nurses. There is concern that the proliferation of private

medical education is affecting the quality of medical graduates. Private hospitals are

concerned about some recently educated nurses whom they claim to be below

expectations. Another concern is the training of medical doctors. It seems that the

output of medical graduates is higher than the current availability of houseman

positions in public hospitals.

Regulation of Advertising

Another regulatory burden is the control on business advertising. Although there is a

need to control unsubstantiated claims and offerings, businesses report they cannot

be innovative and grow their customer base when they cannot promote their

products and services, especially where they are competing with suppliers from

other countries who are not so constrained. The tension between the traditional

notion on how healthcare services are to be provided and the new idea to grow the

private healthcare industry is at odds. The regulator and business has to sit down

and re-evaluate this traditional notion to move forward.

Regulation of Medical Charges

Medical charges for private healthcare are high because the costs for establishing

and maintaining healthcare facilities and services are high. Regulatory burdens add

to the overheads of private healthcare services. Medical consultation and treatment

procedural fees charged by the specialist physician represent only a fraction of the

total medical treatment costs to the patient. While regulating medical charges will

lower the total medical costs to the patient this acts as a disincentive to innovation in

medical treatment.

While this study is still at the exploratory stage, the findings provide opportunity to

develop options for further deliberation and debate so that interested parties can

comment on or suggest recommendations for the government to move forward.

Some of the key options are presented in the next section.

xix

RECOMMENDATIONS

From the analysis of unnecessary regulatory burdens on private hospitals various

options are formulated for further deliberation by interested parties. These options

formulated based on some of the principles of good regulatory practice and on the

principles of process improvement.

1. Reduce the burden on applications for licence renewal.

Submission of information is necessary for approvals however the need to submit

evidences would create unnecessary burdens for the licensee, particularly when the

authority already has the evidences. Further, since the licensing authority, in this

case, the Medical Practice Division: Private Medical Practice Control Section

(CKAPS) of the MOH, surveys the facilities and services, the evidences could be

checked at the site.

2. Review and re-design the PHFS Regulations 138/2006

Since the regulation has been enforced in 2006, a review would be warranted. The

highly prescriptive nature of the regulation is stifling to the business. Many countries

have moved away from unduly prescriptive regulation that limits the ways in which

businesses may meet the underlying objectives of the regulation. The trend is to craft

more performance-based regulation supported by system-based accreditation for

management practices. Together with the review, there should be continuous

education for business on how to comply with the numerous requirements of the

regulation. The Medical Practice Division: Private Medical Practice Control Section

(CKAPS) of the MOH will be the key authority to look into this regulation.

3. Reduce difficulty in dealing with licensors

The short-term solution is to set up a Help-desk facility by the Medical Practice

Division: Private Medical Practice Control Section (CKAPS) of the MOH for dealing

with private healthcare providers. This will alleviate uncertainty experienced by the

licensees. For the longer term, the recommended options are (a) establish a

transparent Standard Operating Procedure for the licensing process where the

licensee could track the progress of her application and would feel assured of getting

her licence approved, and (b) establish an appeal mechanism in the current

regulatory regime for private hospitals whereby licensees could dispute any

unreasonable demands by the licensing officers. A formal and independent tribunal

can be established to arbitrate on any disputes.

4. Dealing with fragmented processes

The other regulatory oversights functions should be assumed to be effectively carried

out and the licensing processes should only involve random and sampling

inspections on these oversights functions during the licensing surveys of the

hospitals. For example, there should be sampling inspection of APCs, fire and safety

xx

certificates, and other necessary fitness certificates during the on-site survey to

ensure that the licensing requirements are adequately maintained. Any observed

non-compliance should then be corrected followed by appropriate corrective action

by the hospital management. The Medical Practice Division: Private Medical Practice

Control Section (CKAPS) of the MOH could be the main facilitator of this issue.

5. Doing away with the application for renewing APC

The renewal of APC can be made automatic with only notification by the medical

professionals, in which case, there is no need for issuance of the annual certificate –

only the original certificate on the first-time application. The regulator can maintain an

on-line register of APCs for the public reference. What the regulators need are the

annual fee and the updates of information e.g. CPD updates. This will remove the

extensive burden on private hospitals licence renewal with regard to APCs because

all the required information would be available in the on-line register. The various

professional boards and councils, such as the Malaysian Medical Council, Malaysian

Dental Board, the Malaysian Nursing Board, and others should review this.

6. Planning Approval for Renovation, Upgrade, Extension, etc.

A risk-based approach would be a suitable option for approval for improvement of

hospital facilities. There should not be a “one-size-fits-all” process in a competitive

environment. What is more important is that there should be reliable lead time for

planning approvals that would facilitate the hospital in its management planning.

Large variation in lead time leads to uncertainty and results in unnecessary burdens

to the hospital management. The Medical Practice Division: Private Medical Practice

Control Section (CKAPS) of the MOH should review this process.

7. Quality of Medical Professionals

Although the quality of education may be a crucial issue here, the root cause for this

problem is likely the imbalance between supply and demand on healthcare human

resources. When the supply growth is higher than the demand growth, then the

unemployment and underemployment situation arises with costly consequences in

terms of waste of trained and knowledge resources. It is recommended that the MOH

and MOE work together to formulate an appropriate policy to achieve this demand-

supply balance in healthcare human resources in the country.

8. Approval for Advertisement and Advertising Materials

Since the guidelines for advertisement has been established and accessible in the

Pharmaceutical Services Division web-site, and also that the MAB is educating the

healthcare business through seminars (example: Seminar on Vetting Medicine

Advertisement, on 29 October and 3rd December 2013) MAB could consider

changing the regulatory regime from approval to notification (with enforcement).

Notification could be made on-line. In this manner, private hospitals will not need to

wait for approval and the regulator could sanction them should they fail to comply

with the guidelines.

xxi

9. Regulated Medical Fees

Increasing the prices of necessary services has always been a sensitive public

issue. Thus any attempt to remove regulated medical fees will incur public outcry.

However, it is known that the medical consultation and/or treatment fees are only a

fraction of the total hospital costs to a patient. Many countries however, have

removed the regulatory control of medical fees. This could be considered a possible

option. However, other options would be to curtail escalating medical costs, and

regulators could play an important role here by reducing regulatory burdens to

hospitals. Regulators could work together with the APHM and the medical

association to control hospital charges through more self-regulation. However,

controlling the medical charge does not impose unnecessary burden but just a policy

instrument of social interest.

These are nine proposed options for further deliberation and debate by interested

parties in the quest to reduce unnecessary regulatory burdens in private healthcare

services. The options are at the preliminary stage of analysis and require more

detailed consultations to firm up the recommendations for the government and

regulators to act upon.

1

CHAPTER ONE: ABOUT THE REVIEW

1.0 About the Review

Regulation has grown as an unprecedented pace in Malaysia over recent decades.

There are regulations that were formulated way back even before independence

which are still being enforced. Until recently no systematic effort has been made to

review the relevance and effectiveness of existing regulations, even though new

regulations are being formulated. This has been a response to the needs and

demands of an increasing affluent and risk-adverse society and an increasingly

complex global economy. Good and well implemented regulations deliver economic,

social and environmental benefits but they also impose substantial costs. Some

costs are the unavoidable secondary impact of pursuing legitimate policy objectives

although a significant proportion is not. In many cases, the costs have exceeded the

benefits. Moreover, regulations have not always been effective in addressing the

objectives for which they were designed, including some regulations designed to

reduce risk.

The growing recognition of these costs and other deficiencies of regulation have led

the government to decide that major reforms have to be made. An early focus of

such efforts was the removal of many regulations that are obsolete and not relevant

anymore. Further waves of reform will follow, and this review is one of such that is

focused on the regulation of key economic initiatives and regulatory compliance

burdens generally.

1.1 What MPC has been asked to do

The 10th Malaysian Plan has mandated MPC to carry out regulatory review in view of

making it easy to do business in Malaysia. This review process will draw on the

expertise and perspectives of public sector and private sector leaders, who will help

identify key issues and the appropriate solutions. Figure 1.1 below illustrates the

regulatory review framework of MPC.

Mandated in the 10th Malaysia Plan specifically, MPC will [2]:

Review existing regulations with a view to removing unnecessary rules and

compliance costs. Regulations affecting NKEAs will be prioritised;

Undertake a cost-benefit analysis of new policies and regulations to assess

the impact on the economy;

Provide detailed productivity statistics, at sector level, and benchmark against

other relevant countries;

Undertake relevant productivity research (e.g. the impact of regulations on

growth of small-medium enterprises (SME));

2

Make recommendations to the Cabinet on policy and regulatory changes that

will enhance productivity; and

Oversee the implementation of recommendations.

Figure1.1: MPC Regulatory Review Framework

Source: Malaysia Productivity Corporation: www.mpc.gov.my

The government has formalized and institutionalized mandate given to MPC with the

introduction of a national regulatory policy through the policy document National

Policy on the Development and Implementation of Regulations. This document was

formally launched by the Chief Secretary of the Government of Malaysia in July

2015.

The objective of the national policy is to ensure that Malaysia’s regulatory regime

effectively supports the country’s aspirations to be a high-income and progressive

nation whose economy is competitive, subscribes to sustainable development and

inclusive growth. The policy is to ensure a regulatory process that is effective,

efficient and accountable as well as to achieve greater coherence among policy

objectives of government [3].

1.2 The 10th Malaysia Plan: Modernising Business Regulation

The Government recognizes that the regulatory environment has a substantial effect

on the behaviour and performance of companies. Innovation and private sector

participation in the economy require a regulatory environment that provides the

necessary protections and guidelines, while promoting competition. Too often,

Malaysian firms face a tangle of regulations that have accumulated over the years

Modernising Business

Regulation

Improve Existing Quality Regulation

Vertical Approach (MBL)

Horizontal Approach (SSRR

& MSRR)

Thematic (WBDB)

Ensure New Quality Regulation

Adequacy Criteria

Gate-keeper

Transparency & Accountability

Methodology:

Baseline study

Analysis and propose solution

Monitoring implementation

Main activities:

Develop Gate-keeper function Develop function of Quality Regulation Audit

Develop Adequacy Criteria

3

and now constrain growth. At the same time, regulations that would promote

competition and innovation are absent or insufficiently powerful.

Malaysia has consistently improved its regulatory performance over the last few

years as can been seen from its ranking in the World Bank Report on Doing

Business, see Table 1.1 below. To maintain a top-10 overall competitive ranking the

country has to continuously improve its regulatory performance. In the 2014 report,

Malaysia has made impressive progress with its overall ranking from number 12th to

sixth position. This has been the result of the efforts in reforming the regulations in

areas such as dealing with construction permits, starting a business, getting

electricity and resolving insolvency. Although the overall ranking in doing business

has improved there is much to do to ensure sustained position in the top-ten ranking

[2].

Table1.1: Malaysia’s Competitiveness Performance in Doing Business Report

Indicator

Malaysia’s ranking with other countries

2014 2013 1012 2011

Overall 6 12 18 23

Starting a business 16 54 50 111

Dealing with construction permits 43 96 113 111

Getting Electricity 21 28 59 60

Registering property 35 33 59 59

Getting credit 1 1 1 1

Investor protection 4 4 4 4

Paying taxes 36 15 41 39

Trading across borders 5 11 29 28

Enforcing contract 30 33 31 60

Resolving insolvency 42 49 97 57

Source: World Bank Doing Business Reports.

To achieve this goal, the Government will begin with a comprehensive review of

business regulations, starting with regulations that impact on the NKEAs.

Regulations that contribute to improved national outcomes will be retained, while

redundant and outdated regulations will be eliminated. These reviews are being led

by the Malaysia Productivity Corporation (MPC), which has been restructured to

ensure it has strong capabilities and resources. MPC will be comprised of relevant

expertise from business and academia. Its work will complement the efforts of

PEMUDAH.

1.3 The approach and rationale of this review

The government has identified 12 National Key Economic Areas (NKEAs) to focus

the economic growth towards a high-income nation. The NKEA will be the driver of

economic activity that has the potential to directly and materially contribute a

quantifiable amount of economic growth to the economy.

4

The NKEAs were chosen on the basis of their contribution to high income,

sustainability and inclusiveness. An initial set of 12 potential NKEAs have been

identified comprising 11 sectors and one geographic area - Kuala Lumpur. Kuala

Lumpur was chosen because it accounts for almost one-third of Malaysia’s total

GDP and urban agglomeration can be a major driver of economic growth. One of the

NKEAs is the private healthcare which is the focus of this study.

In particular, the private hospital sector has been chosen as it is high added value

and fast growing business that also has huge export potential. The private hospital

business is a large investment business, hugely complex in nature, technologically

evolving, needed high level knowledge workforce and a highly regulated business.

The hospital business directly impacts upon the safety, health and wellbeing of the

customer-patients of which the general public has particular interest.

A significant portion of this study will be based on literature reviews of laws and

regulations in the country, past studies made by more mature regulatory review

agencies such as the Australia Government Productivity Commission, policy papers

and reports, statistical reports and research literatures within the country and official

web-sites of relevant professional bodies, non-governmental organisations,

regulatory agencies and business organizations. The other portion of the study will

come through direct interviews and consultations with private hospitals, professional

bodies, associations and regulatory agencies involved in the sector.

The first part of the study will be to establish the key areas which the private

hospitals viewed as the more burdensome. This will record the views and

experiences of the regulatory burdens from which improvement options could be

formulated. A public consultation paper will then be produced for the second part of

the review – the public consultation. During this part of the study consultations will be

carried out with both the provide hospitals, their associations, health professionals

and their professional bodies and the key regulatory agencies. The consultation

process will provide the necessary feedbacks for the final report.

1.4 Conduct of the study

The investigations have involved collection, review and analysis of data and

information from two sources: secondary data from literature reviews and primary

data from interviews with key stakeholders.

Secondary data which were reviewed and used as inputs for this study are from

many sources and are classified as follows:

a) Research papers published by international agencies and other countries

such as the World Bank, the Australian Government Productivity Commission.

b) Local research papers and reports commissioned by the government such as

Economic Planning Unit (EPU) commissioned reports and Ministry of

5

International Trade and Industry (MITI) commissioned reports. Reference to

these papers will be cited in this report.

c) Laws of Malaysia, the various Acts and Regulations relevant to Private

Hospital operations, healthcare professionals and health tourism.

d) Statistical data relating to the health care sector will be from international

sources and local sources, primarily the World Bank, Ministry of Health

Malaysia publications, Department of Statistics Malaysia publications.

e) Information from local government agencies, quasi government bodies,

professional bodies, private businesses and the relevant associations on

policy matters, news, reports and statistics for analysis and inputs to this

study. Much of this was accessed from their web-sites and the sources will be

listed in the final report.

Primary data collection will be through the public consultation process involving

interviews of key stakeholders comprising the business players, representatives of

professional bodies and the regulators. The business players in this study will be

primarily the private hospitals which are licensed by the Ministry of Health (MOH)

and who are members of Association of Private Hospitals Malaysia (APHM) and

members of the Malaysia Health Tourism Council (MHTC).

The study is being carried out in two stages: the exploratory stage to prepare the

draft paper and the option stage to verify the feasible options formulated to achieve

the aim of the study. An interview brief was prepared for dissemination to the

selected respondents (private hospitals) and with the assistance of the AGPC expert,

a list of relevant questions was developed for the one-on-one interviews with the

respondents. The respondents were selected from the members of APHM. The

listing of these key stakeholders interviewed will be included in the final report.

From these inputs, detailed analysis will be made at three levels:

a) at the individual level where the principal researcher will carry out his/her

analysis on the inputs and draft a discussion paper for further deliberations,

b) at the team level (various researchers) where the inputs and discussion paper

will be deliberated and analysis to achieve further insights,

c) with the expert from AGPC, Ms. Sue Holmes who will provide expertise inputs

and insights.

After the analysis, the final report will be written by the principal researcher and will

then be subjected to review by the by research team before submission to MPC.

Figure 1.2 below summarizes the study process for this research.

1

Figure1.2: Summary of Study Process.

Source: Author

1.4 Structure of the report

This report on the Review of Unnecessary Regulatory Burdens (RURB) has been

organized into six chapters, starting with this introductory Chapter One. Here, the

rationale of the review is highlighted and the approach to the study imitates the

Australian Government Productivity Commission (AGPC) methodology. An

Australian expert previously with the AGPC was engaged by MPC to provide the

advisory input to the study team throughout the study duration.

In Chapter Two, the overview of the healthcare sector is analyzed via the value-

chain concept. The value chain for the healthcare industry is mapped out and this is

used as the guide to identify the businesses in the industry. Reference is made to

the Malaysia Standard Industrial Classification 2008 Version 1 on this. This led to the

decision to focus on the private healthcare services sector, in particular the private

hospitals. The chapter also show the macro-economic performance of the healthcare

services sector over the period 2006 to 2012.

Conceptualize the industry Value Chain

List all Acts and map them onto the Value Chain

Scoping & Target Selection

Develop a list of questions

Conduct interviews

Analyse Information gathered

Draft report (with proposed options)

Workshops and other feedback

Final Report

CONSULTATION & EXPERT’S

ADVICE (From AGPC)

LITERATURE REVIEW INPUTS

(e.g. Reports; Articles & Statistics)

2

Chapter Three deals with the rationale of regulating the healthcare services sector,

and in particular the private hospital sector. This chapter looks at regulatory burdens

and the potential sources of unnecessary regulatory burdens. There are four

regulatory approaches; prescriptive-based, performance-based, principle-based and

system-based, which would affect the final outcome of regulations. From these arise

the various regulatory costs that impact on the different key stakeholders.

Chapter Four gives the overview on the development of the regulatory regimes for

healthcare services in the country with the focus on those pertinent to the private

hospitals. The chapter traces the historical development of the regulatory regime for

private hospitals leading to the current governing regulations, the PHFS Regulations

138/2006. In the development of this governing regulation, the chapter gives some

background on the overarching intent of the government in regulating the healthcare

services. The chapter concludes with the big picture on the regulatory regimes for

the private hospital across its value chain.

Chapters Five and Six present the analysis and findings of the study. Options are

proposed for the regulatory issues of concern. Although the study identified nine

issues, five have been selected as being the pertinent regulatory issues of most

concern. Chapter Five covers the issue relating to operating license renewal for

private hospitals. Here five interrelated issues that pose heavy regulatory burdens

are analyses and the potential options to ameliorate them are proposed. Chapter Six

analyses the other four regulatory issues and also proposed options to ameliorate

them. This chapter also explains on the other issues raised in the study but are not

treated as key concern.

All the key findings of the six chapters are summarized in the overview and the

recommendations at the beginning of this report. The chapters are organized in the

manner that the relevant references and appendices are incorporated at the end of

the chapter for easy reference of the reader. In other words, each chapter stands on

its own.

3

CHAPTER TWO: HEALTHCARE INDUSTRY VALUE CHAIN

2.0 Sector Analysis on Healthcare Industry

Since independence until the early 1980s, primary healthcare was provided by the

public sector with a few Christian Mission Hospitals and Chinese charity hospitals.

With exception of the ubiquitous medical clinics, usually in the urban areas, health

care is almost totally provided through the national budget by the federal

government.

With increasing income after 1980, particularly in the urban areas, the demand for

private health care services increased. With international influences and government

policy intervention, the health care sector grew in complexity with the growth of the

private sector health care providers.

During the mid-term review of the Sixth Malaysia Plan, there began a shift in the role

of the Health Ministry “towards more policy making and regulatory aspects as well as

setting standards to ensure quality, affordability and appropriateness of care.” Then

in the 7th Malaysia Plan (1996-2000) the government “will gradually reduce its role in

the provision of health services and increase its regulatory and enforcement

functions.”

The 7th Plan clearly outlined the changing role of the government in health care, to

reduce its provider role and increase its regulatory role. However, the objective of

regulating the private health sector was not being realized due to insufficient legal

framework. It was only with the passing of the Private Health Care Facilities and

Services Act 1998 (Act 586) that provided this legal framework. However this Act

586 was only implemented in May 2006, after the Private Health Care Facilities and

Services (Private Hospitals and Other Private Healthcare Facilities) Regulations

2006 (P.U. (A) 138/2006) was gazetted [1a].

The government’s welfare policy of equitable and accessible health care for every

Malaysian conflicts with some aspects of its promotion private investment in

healthcare. An obvious example is that Section 9 of the Act 586 empowers the

regulating authority to dictate the location for private healthcare facilities and

services, in particular private hospitals. While the regulator tends to focus on

improving equity of access to healthcare across the nation, businesses want to

locate their hospitals where the greatest demand is. Often, this is where there is high

population density and/or high-income earners reside. Hence the conflict, regulators

often want to site new hospitals in remote areas while investors often want to site

them in urban areas [2].

4

2.1 Healthcare Industry in Malaysia

The healthcare industry is complex one because there are multiple aspects to

human health. To arrive at an adequate analysis it would be pragmatic to view the

health sector in different perspectives, notably from the perspectives of products, the

services and facilities, the human resources and the supporting services. As the

industry has a direct impact on the human wellbeing, the industry tends to be highly

regulated. Central to this regulatory environment is the people - the regulators,

health professionals, patients and investors.

From the products perspectives, there are three different aspects to healthcare

products: pharmaceuticals, medical devices and food, each of these has its own

regulatory requirements. Each of these three aspects has different product

dimensions for regulatory control. The product perspective has three different

aspects, pharmaceutical, medical device and food, each of these has its own

regulatory requirements. Pharmaceuticals have been classified into drugs, cosmetics

and traditional medicines. Medical devices are categorized into four classes, A to D

depending on the impact on users. Food involves different production stages from

the field to the plate: farming, manufacturing and processing of agricultural produce

and food services (both selling of final food products and restaurants, etc).

With regard to services .there are different types of services and service providers

and operating with different types of facilities. The Health Ministry has classified

services according to the different types facilities from which they operate: hospitals,

homes, laboratories to clinics. Each of these has different regulatory requirements

and controls, the most complex being the hospitals which provide multiple services

and possess different types of facilities. Facilities which are closely tied to the

services provided have their own control dimensions such as safety, operation and

maintenance and final disposal.

The provision of health care services crucially depends on specially qualified human

resources. This, in turn, means that maintaining a good healthcare system in the

country is crucially dependent on how well the training, assessment and

accreditation of professional human resources are regulated. The current regulatory

regimes for the key health professionals are provided for by the established Acts and

Regulations, for example medical practitioners (medical doctors) come under the

Medical Act 1971, nurses under the Nurses Act 1950, midwives under the Midwifery

Act 1966 (Act 436), medical assistants under the Medical Assistants (Registration)

Act 1977 (Act 180), dentists under Dental Act 1971 (Act 51) and pharmacists under

the Registration of Pharmacists Act 1951. New bills are being drafted to regulate

other categories of healthcare professionals such as allied health professionals (32

categories) and medical specialists (current registered with the National Specialist

Register).

5

Supporting services include the financiers (insurance, employers, social security

services), the logistics providers (for medical tourism) and the intermediaries which

provide the links between the consumers/patients and the medical service providers

(hospitals, clinics). An overview for the healthcare regulatory environment is as

illustrated in Figure 2.1 below.

Figure 2.1: Healthcare Regulatory Environment

Source: Author

2.2 Healthcare Industry Value Chain

The value chains for products, service facilities, human resources and supporting

services are illustrated in Figures 2.2.

The theoretical bases for analysis for the product perspective will be the Value Chain

Analysis, for the service facilities and that of human resources perspectives will be

the Life Cycle Value Chain Analysis and that of the supporting services will be the

Network Relationships Value Chain Analysis. These analytical approaches will

enable a systematic and conceptual mapping of the businesses, regulators, the

regulatory requirements and relevant regulatory issues.

The conceptual value chain does not reflect the total health system of the country. It

only considers the healthcare system, the businesses that are involved in providing

Pharmaceutical Drugs Cosmetics TMC

Medical Device 4 classes (A,B,C,D)

Food

Manufacturing Agriculture Services

Human Resource Doctors Nurses Dentists Etc.

Facilities

Surgical Cardiovascular Diagnostic imaging Etc.

Services Hospitals Homes Laboratories Etc.

Public

Consumer

Patient

Supporting Services Finance/Insurance Intermediaries Others

6

the treatment and care to the human patients. For example, the food and other

businesses are not included here.

The food sector is itself highly complex and normally treated as a separate sector for

analysis from that of the health care sector and will be so treated in this study. The

food value chain can have serious impact on the health sector from various aspects.

From the diseases aspect we have seen the serious negative consequences on

human health from Foot and Mouth disease, bird influenza (H1N1), swine fever,

SARS, mad cow disease and the like. Food poisoning and contamination is another

serious impact from the food chain that frequently causes mass poisoning from the

like of Salmonella and E-coli. Another serious aspect is the use of banned

substances and chemicals in food processing that may result in long-term

consequences such cancers and birth defects.

Figure 2.2: Healthcare Industry Value Chains

Health Care Products Value Chain [3&4]

Service Facilities Life-Cycle Value Chain

Human Resources Life-Cycle Value Chain

7

Supporting Services Relationships Value Chain

Source: Author

It would be pragmatic to combine the separate value chains in order to view the

healthcare system holistically. The total healthcare system value chain would then

look like the illustration in Figure 2.3. The human resource dimension is not treated

separately as it is incorporated within this total health care value chain.

The types of businesses related to the total healthcare chain can be determined

using the Malaysian Standard Industrial Classification 2008 (MISC2008) [5]. The list

is given in Appendix 2.1.

Figure 2.3: Concept of the Total Healthcare Value Chain

Source: Author

8

Table 2.1: MISC 2008 Classification of Hospitals and Related Activities [5]

Class Item Description MSIC 2000

861 Hospital activities

8610 Hospital and maternity home activities

86101 Hospital activities 85110p

86102 Maternity home services (outside hospital) 85110p

862 Medical and Dental practice activities

8620 Medical and dental practice activities

86201 General medical services 85121p

86202 Specialized medical services 85121p

86203 Dental Services 85122

8690 Other human health activities

86901 Dialysis Centres 85110p

86902 Medical laboratories 85121p

86903 Physiotherapy and occupational therapy service 85192

86904 Acupuncture services 85199p

86905 Herbalist and homeopathy services 85193

86906 Ambulance services 85194

86909 Other human health services n.e.c. 85121p

Source: Extract from MISC 2008

The intended focus of MPC has been on services liberalisation, and in this particular

case, on healthcare services sub-sector, the study will target the healthcare services

(patient-focus) portion of the total healthcare system value chain. Even then, health

care services involved many types of different businesses, from simple single

operator general medical clinics, to specialist medical clinics, medical laboratories

and testing services, nursing homes, until the most complex multi-discipline private

hospitals. All these healthcare businesses are highly regulated under various Acts.

For the healthcare service business, the healthcare regulatory regime tends to take

business cycle perspectives; from business establishment to operation and

maintenance to growth and expansion to closure or sale of the business, as

illustrated in Figure 2.4 below.

To establish a private hospital, for example, the interested party has to get the

planning approval from the Ministry of Health first. The application of the private

hospital license has to be made within three years of this approval. The operating

license for private hospital is valid for a maximum of two years and the application for

renewal has to be made at least six months before the expiry of the existing license.

For expansion (alteration, improvement, addition, renovation, etc.) the hospital has to

go through the planning approval, and submit the existing license for endorsement

within 14 days upon completion of the expansion. For the closure or disposal of the

hospital, the operator has to notify the regulator not less than 30 days of this

intention and then surrender the license.

9

Figure 2.4: Healthcare Services Regulatory Regime

The study will focus specifically on private hospitals with the aim of reducing

unnecessary regulatory burdens on them. The private hospital business is chosen

because in order to narrow the study to a manageable scale. It is also the most

complex business entity and the most regulated of healthcare services — this is

because it involves a variety of disciplines and functions in it operations. The

MSIC2008 codes for hospitals and the related activities (up to 5-digit level) are

summarized in Table 2.1 above.

Table 2.2: Analytical Framework

PERSPECTIVE ANALYTIC REGULATORY DIMENSION DATA

Products:

Pharmaceutical

Medical Device

Value Chain Analysis

Pre-Market

Place-on Market

Post Market

Business players & associations

Regulators

Acts & Regulations

Standards & Guidelines

Research & other Reports

Interviews & Statistics

Issues & complaints

Services & Facilities

Life-Cycle Value Chain Analysis

Formation/Establishment

Operation & Maintenance

Expansion/Change ownership

Human Resources Life Cycle Value Chain Analysis

Pre Employment

During Employment

Post/Change Employment

Supporting services Relationships Network Value Chain Analysis

Intermediaries/Tour agencies

Financing/Payers/Logistics

Patients (Local/Foreign)

Service Providers (Hospitals/Clinics) Source: Author

With the identification of the businesses of interest, the analytical framework can be

formulated to guide the regulatory review process. This is illustrated in Table 2.2

above.

10

2.3 Macroeconomic Performance

Traditionally Healthcare in the country is provided mainly by the government and this

“welfare-oriented” policy has not changed, although in the Seventh Malaysia Plan the

government made the move to promote private healthcare services in the country.

The policy logic is that average income has improved and there are those who are

prepared to pay out-of-pocket for better “quality” services by private healthcare

providers. The escalating cost of healthcare on the government has also been a key

factor to shift this burden to the private sectors.

Generally, Malaysia has a growing and relatively competitive healthcare economy.

However, key statistics showed that the country has much to do to reach the

comparable healthcare status of a high income economy. The comparative

indicators to compare Malaysia with the average performance of the world in general

and the high income Organisation for Economic Co-operation and Development

(OECD) countries in particular will give some indications of the country’s standing.

However, the global picture on healthcare expenditure tells a different story.

Malaysia’s health expenditure as a per cent of GDP (3.6 per cent of GDP for 2011) is

relative low by the world average and lower still when compared to the high-income

countries (see Figure 2.5). On the per capital basis, our indicator is even lower,

about a third of the world average and only 6.3 per cent of that of high-income OECD

countries. This begs the question on whether the government is spending enough for

healthcare. We can also interpret that the potential for future growth as our per

capital income rises is very bright.

Figure 2.5: Health Expenditure as Per cent of GDP

Source: World Bank: http://data.worldbank.org/indicator

Figure 2.6 tells us that the percentage of government expenditure to the total hovers

around 55 per cent but experienced an unusual drop to 45.7 per cent in 2011.

0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011

Per

cent of G

DP

Health Expenditure As per cent GDP

High income:OECD

World

Malaysia

11

Probably, this is due to higher private sector investments in private hospitals. In any

case, public expenditure on health is still lags behind that of the world in general and

that of the high-income economies.

Figure 2.6: Health Expenditure USD per Capital

Source: World Bank: http://data.worldbank.org/indicator

The hospital beds indicator (per 1,000 people) in Malaysia was last reported at 1.80

in 2010, according to a World Bank report published in 2012. Hospital beds include

inpatient beds available in public, private, general, and specialized hospitals and

rehabilitation centres. In most cases beds for both acute and chronic care are

included (Figure 2.7).

Figure 2.7: Hospital beds per 1000 population in Malaysia

Source: World Bank Report 2012.

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

2006 2007 2008 2009 2010 2011

Cu

rren

t U

SD

Health Expenditure Per Capital

Highincome:OECD

World

Malaysia

USD5492.3

USD949.7

USD346.0

12

Although the government started to promote private healthcare sectors in the 7th

Malaysia Plan, the number of hospital beds per 1000 people indicator started to drop

from the peak value of 2.56 in 1985. The indicator stabilised somewhat at about 1.8

since year 2000.

Figure 2.8: Growth of Medical Professionals

2006 2007 2008 2009 2010 2011 2012

Growth rate (%)

Doctors 21937 23738 25102 30536 32979 36607 38718 12.75

Dentists 2940 3165 3640 3567 3810 4253 4558 9.17

Pharmacists 4292 4571 6397 6784 7759 8632 9652 20.81

Nurses 47642 48916 54208 59375 69110 74788 84968 13.06

Source: MOH Health Fact 2006-2013*

What can be concluded from these statistics is that the growth of healthcare services

has not commensurate with economic growth of the country. On one hand this

means that healthcare services growth is not meeting the demand of a growing

higher-income population and perhaps also an aging population. On the other hand,

there is large potential for growth in healthcare services and in particular, the private

hospital sector.

Another aspect on the importance of the healthcare services industry is the

contribution to employment of knowledge workers. These knowledge workers

generally represent the higher income group, particularly the specialists or those with

specialist skills.

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2006 2007 2008 2009 2010 2011 2012

Doctors

Dentists

Pharmacists

Nurses

13

The growth of the number of medical professionals has been impressive over the

last seven years. Figure 2.8 shows that the high six-year average growth rates for

pharmacists at 20.8 per cent, nurses at 13.1 per cent, Doctors at 12.8 per cent and

dentists at 9.2 per cent.

On the medical professionals to population ratios, the rate of change has been

improving across the four key professions over the last seven years as can be seen

in Figure 2.9 below. The rate of change is highest for pharmacists at -7.7 per cent

followed by doctors (-5.8 per cent) nurses (-5.1 per cent) and dentists (-4.1 per cent).

For medical doctors and nurses, the trends look like reaching the plateau of a

middle-income economy.

Figure 2.9: Medical Professional to Population Ratio

2006 2007 2008 2009 2010 2011 2012 Rate of change

(%)

Doctors 1214 1145 1105 927 859 791 758 -5.8

Dentists 9061 8586 7618 7936 7437 6810 6436 -4.1

Pharmacists 6207 5945 4335 4137 3652 3355 3039 -7.7

Nurses 559 556 512 477 410 387 345 -5.1

Source: MOH Health Fact 2006-2013*

However, further comparative analysis as in Table 2.3, the ratios are still far from

satisfactory. The ratio for doctors at 1:835 (2010) is still below the world’s average at

1:710 (2009). Here we are only nearly comparable to the middle-income economies

at 1:806 (2009). We are still far from the high-income economies like Australia,

United Kingdom and the United States of America. As for nurses, the ratio at 1:306

(2010) is better than the world’s average at 1:351 (2009) and even better than the

middle-income economies at 1:449 (2009). Again when compared with high income

economies, we are still a long distance away.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2006 2007 2008 2009 2010 2011 2012

Doctors

Dentists

Pharmacists

Nurses

14

Table 2.3: Doctor-to-Population & Nurse-to-Population Ratios

Doctors Nurses

2009 2010 2009 2010

MALAYSIA 1:835 1:306

World Average 1:710 1:351

High-income Countries 1:362 1:137

Middle-income Countries 1:806 1:449

Australia 1:260 1:104

United Kingdom 1:365 1:99

United States 1:412 1:102 Source: World Bank: http://data.worldbank.org/indicator

In theory, we can improve up our supply capacity to produce more medical

professionals. However, the supply has to match the demand side of the

employment equation. Medical professionals such as doctors and dentists have the

opportunity for self-employment but such is not so for nurses. The recent experience

where many private institutions started producing nursing graduates has resulted in

a glut of unemployed nursing graduates. The demand side will depend on the growth

of hospitals in the country.

2.4 Growth of Private Hospital Sector

In the earlier years from 1980 to 2000, the number of private medical facilities

experienced the highest growth from 50 to 224. Although the figures include nursing

and maternity homes, the bulk of these facilities were private hospitals. During the

period the number of private hospital beds also grew from 5.8% share of total beds

to 28.4 in 2001. The rapid grow of the sector has been fuelled primarily be the rapid

rise in national income. [1b].

Over the last seven years from 2006 to 2012, the number of private hospital grew

from 199 to 209 with an average growth rate of a mere 0.8 percent. For the same

period, the number of private hospital beds grew from 11206 in 2006 to 13568 in

2012 with an average growth of 3.7 percent. The higher growth rate of beds is

probably due to hospital expansion of existing hospitals and larger hospitals being

established during the period. Although the physical growth rate has been positive,

the growth rate has not been overly impressive (see Figures 2.10 and 2.11).

15

Figure 2.10: Registered and Licensed Private Hospitals

2006* 2007 2008 2009 2010 2011 2012 Growth %

Private Hospitals 199 195 209 209 217 220 209 0.84 [* Note: Estimated by deducting the number of nursing homes, maternity homes and hospice for year 2006]

[**Note: Health Fact 2012 & 2013 statistics are for year 2011 & 2012 respectively]

Source: MOH-Health Fact 2007 to 2013**

The relatively slow growth rate could be due to various reasons, the main being that

it is a highly regulated business. For example, it takes more than four years to

establish a new private hospital, from planning, to construction and final operation.

The gestation period to breakeven for a new hospital can be long unless it is already

an existing known brand name, such as the KPJ group or the Pantai group of

hospitals. However, this slow and steady growth will continue and a few more private

hospitals are expected to come into operation by 2015.

The constitution of private hospitals has grown in complexity over the last few years

with the emergence of large corporate groups like the IHH Healthcare, a holding

company under Khazanah Nasional, which is listed in Bursa Malaysia or the KPJ

Healthcare group under Johor Corporation, also listed in Bursa Malaysia. These

large corporate groups managed chain of hospitals within the country and

internationally. The significance of such corporate groups in the growth of private

hospitals and in particular, the export of healthcare services will require a separate

study.

There are two generic aspects of private hospitals, the for-profit and the not-for-profit

private hospitals. The not-for-profit hospitals are not investor-owned and they are

usually governed by a board of directors who give their service voluntarily, or do so

because they are part of a religious group. They generally operate on the same

basis as any other for-profit private hospitals, except that they have a charitable

mission.

180

185

190

195

200

205

210

215

220

225

2006 2007 2008 2009 2010 2011 2012

Private Hospitals

16

Figure 2.11: Growth of Private Hospital Beds

2006 2007 2008 2009 2010 2011 2012 Growth %

Beds 11206 11291 11689 12216 13186 13568 13667 3.66 [**Note: Health Fact 2012 & 2013 statistics are for year 2011 & 2012 respectively]

Source: MOH-Health Fact 2007 to 2013**

The not-for-profit hospitals have earlier origins than the for-profit hospitals. The Tung

Shin Hospital and the Lam Wah Ee Hospital are firmly embedded in the history of the

Chinese community, tracing their beginnings to the late nineteenth century. The

Penang Adventist Hospital, run by Seventh Day Adventist Christians, was started

before the Second World War, while Assunta Hospital, Hospital Fatimah and Mount

Miriam Hospital were established by Christian missionaries in the post-war period.

Recent growth in the number of non-profit hospitals is limited, particularly since the

proliferation of for-profit hospitals [1b].

The majority of private hospitals are for-profit. Some of them were originally small

ventures begun by a group of medical doctors, but have since been sold to large

public-listed companies. Examples of this are the Penang Medical Centre (PMC),

started by a group of doctors in 1973, later sold to the Gleneagles group, and Pantai

Hospital, established in 1974, and later sold to the Pantai conglomerate. Other

examples are the Tawakal Hospital, established in 1984 and the Ipoh Specialist

Hospital, established in 1981in 1981, both eventually taken over by KPJ Healthcare

[1b].

Some private hospitals were established in conjunction with the interests of property

developers who developed housing estates as large townships. To make the

township attractive as a residential centre, hospitals and colleges were also

developed in the township. SJMC is owned and operated by Sime Darby, the

conglomerate that also developed the Subang Jaya housing estate, while Sunway

11206 11291

11689

12216

13186

13568 13667

10000

10500

11000

11500

12000

12500

13000

13500

14000

14500

15000

2006 2007 2008 2009 2010 2011 2012

17

Medical Centre is managed by Sunway City Bhd., a corporation involved in housing

development in Sunway [1b].

Out of the 220 licensed private hospitals, 113 of them are listed as members of the

Association of Private Hospitals Malaysia web-site (http://www.hospitals-

malaysia.org). The distribution of these hospitals across the country is illustrated in

Table 2.4 above. Almost all of these hospitals are located in cities and major towns

of the states.

Table 2.4: Distribution of Private Hospitals in Malaysia

State <50 beds 51-100 beds 101-200 beds >200 beds Total

Johor 8 3 2 1 14

Kedah 0 2 2 0 4

Kelantan 2 0 1 0 3

Melaka 0 0 1 2 3

Negeri Sembilan 1 3 1 0 5

Pahang 0 3 0 0 3

Perak 3 2 1 2 8

Pulau Pinang 4 2 3 3 12

Sabah 1 1 1 0 3

Sarawak 4 2 1 0 7

Selangor 11 7 5 4 27

Kuala Lumpur 10 3 5 6 24

Total 44 28 23 18 113

Source: Association of Private Hospital Malaysia (Membership list)

Growth of Private Healthcare Professionals

The private hospital sector has contributed significantly to the employment of

knowledge workforce in the country. Figure 2.12 illustrates the private healthcare

workforce for four critical professionals. It could be seen that the growth of

employment for nurses has been large over the last three years with the 5-year

average growth of 17.9 per cent from 2006 to 2011. The growth for private medical

practitioners has been steady at five percent. The growth of private sector dentists

was a mere 2.9 per cent while that of pharmacists, there was a dropped by 0.4

percent.

Although the that macro-ratios do not place Malaysia at the level of the more

developed and high-income economies, the country cannot rammed-up the

production of medical professionals without balancing the demand side of

employment, as discussed earlier. Apart from this balancing act, there is the issue of

quality and specializations. The quest to produce more professionals must not be

made at the expense of lowering the standards of medical education or the qualifying

level of intake. The healthcare industry not only requires high quality workforce but

18

also more with specialist skills, both for medical doctors and nurses. Specialist

doctors and nurses with additional post-basic skills are in high demand.

Figure 2:12: Growth of Health Professionals in Private Hospitals

2006 2007 2008 2009 2010 2011 2012 Growth %

Doctors 8602 9440 10006 10344 10550 10762 11240 5.11

Dentists 1572 1625 1718 1709 1755 1801 1894 3.41

Pharmacists 3403 3321 3327 2907 3149 3344 3744 1.67

Nurses 13044 12766 15633 14315 21118 24725 28879 20.23 [**Note: Health Fact 2012 & 2013 statistics are for year 2011 & 2012 respectively]

Source: MOH-Health Fact 2007 to 2013**

Exports of Healthcare Services – Health Tourism

Health services can be exported in three ways. Foreigners can seek treatment in the

country, health professionals can temporarily move overseas to provide their

services, or healthcare professionals based in the country can provide information

and/or advice to clients located overseas [6]. In this study, we are concern with

foreigners coming to Malaysia specially to seek treatment in the private hospitals

here. We are not looking at our medical professionals who have moved overseas to

practices (specialists, nurses and other health professionals), but rather to look at

bring these professionals back to the country to practice here.

Private hospitals early foray into serving foreign out-of-pocket paying patients went

way back in 1998. There is great potential in health or medical tourism as many

foreign countries are looking at other alternatives due to the rising medical costs in

their home countries. In others like Indonesia, there are high-income individuals who

are looking for better medical services which are not conveniently available their

home countries[7]. Mahkota Medical Centre in Melaka, for example, was one of the

early pioneers in health tourism. It has established itself well in the Indonesian

8602 9440

10006 10344 10550 10762 11240

1572 1625 1718 1709 1755 1801 1894

3403 3321 3327 2907 3149 3344 3744

13044 12766

15633 14315

21118

24725

28879

0

5000

10000

15000

20000

25000

30000

35000

2006 2007 2008 2009 2010 2011 2012

Doctors

Dentists

PharmacistsNurses

19

market with six foreign offices there to cater for almost 30 per cent of its current

business.

Figure 2.13: Health Tourists

Source: MTHC; www.mhtc.org.my

Health tourism has grown quickly over the last five years after MOH established a

health tourism promotion unit in 2005. MOH started the campaign to brand

Malaysian health tourism with the launching of the Malaysia Healthcare logo and

tagline "Quality Care for Your Peace of Mind' in June 2009. This led to the

establishment of the Malaysia Health Tourism Council (MHTC) in 2009 under the

ambit of MOH. The purpose of MHTC is to streamline healthcare travel service

providers and industry players in both private and government sectors so as to drive

the industry to greater heights[8].

Over the last five years (2007-2012) the health tourists grew by an average of 19.4

per cent see Figure 2.13 above. The majority health tourists were from Indonesia

which recorded 57 per cent in 2011[7]. The health tourism revenue, although is only a

small portion of the total tourism revenue of Malaysia, is a significant contribution to

GDP and has grown by 30.1 per cent over the last five years (2007-2012), see

Figure 2.14 below. The total health tourism revenue is expected exceed RM600

million in 2012.

The costs for medical procedures in Malaysia are relatively competitive with many

countries, Table 2.5. Together with the good tourism infrastructure and being a

relatively lower cost for many services, Malaysia is a competitive health tourist

destination. Indonesian health tourists feel comfortable in Malaysia because of

common language, foods, religions and the convenience of travel here.

20

Figure 2.14: Health Tourism Revenue

Source: Penang Monthly: www.penangmonthly.com

In general Malaysian private hospitals are well equipped and staffed adequately to

serve the local and international needs. Malaysian healthcare providers, particularly

those in health tourism, have quality health care accreditations. Most of the private

hospitals and medical centres have local accreditation by the Malaysian Society for

Quality in Health (MSQH)[10]. According to the Association of Private Hospitals

Malaysia (APHM) who has 113 registered members, 33 of their members have the

local MSQH accreditation and six have the Joint Commission International (JCI)

quality accreditation.

Table 2.5: Medical Tourism Procedure Cost Comparison in USD

Malaysia USA India Thailand Singapore Korea

Heart Bypass $12,000 $130,000 $9,300 $11,000 $16,500 $34,150

Heart Valve

Replacement $15,000 $160,000 $9,000 $10,000 $12,500 $29,500

Angioplasty $8,000 $57,000 $7,500 $13,000 $11,200 $19,600

Hip Replacement $10,000 $43,000 $7,100 $12,000 $9,200 $11,400

Hysterectomy $4,000 $20,000 $6,000 $4,500 $6,000 $12,700

Knee Replacement $8,000 $40,000 $8,500 $10,000 $11,100 $24,100

Source: Wellness Visit: www.wellnessvisit.com

204

254

299 288

378

511

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012

RM

Y m

illio

ns

HealthTourism Revenue in RMY millions

21

CHAPTER THREE: BEST PRACTICE REGULATIONS AND REGULATORY BURDENS

3.0 Cost of Regulation

There are multiple costs in regulation to achieve policy objectives. These costs impact

upon businesses, consumers, the government and the community in general (Figure

3.1). What is important is that the benefits accrued from achieving the regulatory

objectives must be greater that the total cost of regulation.

Some regulatory costs are inevitable as can be viewed as the price of the benefits

which the regulation brings. High quality regulation is both effective in address an

identifiable problem and efficient in terms of minimizing unnecessary compliance and

other costs imposed on the community. The best regulations achieve their objectives

and at the same time deliver the greatest benefit to the community. By contrast, poor

regulation may not achieve its objectives and can impose unnecessary costs, impede

innovation, or create unnecessary barriers to trade, investment and economic

efficiency. Given the pervasiveness of regulations in the country, it is not surprising that

regulation and red-tape continue to impose significant compliance costs [1].

Direct compliance costs can include the time taken to comply with regulations, the need

for additional staffing, the development and implementation of new information

technology and reporting systems, external advice, education, advertising,

accommodation and travel costs. As well as having a direct impact on regulated

businesses and individuals, compliance costs also impact indirectly on the community,

by changing pricing and distorting resource allocation, impacting on international trade

and delaying the introduction of new products or services. There remain concerns that

such costs are excessive [1].

In an international study in 1998, the OECD estimated from survey responses that

taxation, employment and environmental regulations imposed over $17 billion (2.9 per

cent of GDP) in direct regulatory compliance costs on small and medium-sized

businesses in Australia. The cost components are:

employment regulations accounted for 40 per cent (OECD average was 35 per

cent);

compliance with tax regulations accounted for 36 per cent (OECD average, 46

per cent); and

environmental regulations accounted for 24 per cent (OECD average, 19 per

cent) [1].

Two categories of compliance costs of most concern for businesses as illustrated in

Box 3.1. It has been known that there are serious concerns on the time it takes to do

paperwork and the difficulties understanding the obligations and keeping up with

compliance changes. The paperwork burden is increasing to a point that businesses

are questioning the value of staying in business.

22

Figure 3.1: Multiple Costs of Regulation

Source: Research Report , AGPC (November 2008)

The more advanced countries like Australia have taken measures to improve the cost-

effectiveness of regulations and to reduce compliance burdens and red-tape. These

measures include [3]:

the increased adoption of performance-based regulation;

the consideration and adoption of implementation options that minimize red-

tape;

the improvement of regulatory services through the employment of new

technology;

increased electronic publication of regulatory information;

licence reform and reduction;

streamlining of government paperwork requirements;

privatization of certification functions; and

business focus groups and pilot test programs

Deadweight loss arising from distortions caused by regulation: •prices • access

Uncertainty impacts: • defensive behaviour • inertia • resistance to innovation

Delay costs: • deferred investment • change in competitive position • underutilisation of

Time and other costs to discover and comply with regulatory requirements: • internal resources • external resources

Fees and charges levied by government

Administrative costs to government agencies

Costs should be minimised for any given benefit achieved

Net cost to government expenditure (cost to taxpayers)

Cost to business and consumers (depends on ability to pass on costs to consumers)

Costs to the economy in forgone economic activity (return to capital and to labour

Ben

efits of regu

lation

need

to exceed

costs

Types of costs Who bears the costs

23

Box 3.1: Categories of Compliance Costs

Categories compliance costs

Paperwork compliance costs

These costs include the costs imposed on the administrative structures of a business

due to filling out forms and providing information. It also includes costs such as

record keeping costs and the cost of obtaining advice from external sources in the

course of providing information.

Non-paperwork compliance costs

These costs include human capital and physical investment costs, costs of modifying

output to conform to regulations, capital holding costs associated with regulation

induced delays in business projects, costs associated with dealing with inconsistent

and duplicative regulation across jurisdictions, and the cost of time spent in meeting

regulatory requirements such as audits and inspections.

Source: Research Report , AGPC (November 2008)

3.1 What are Unnecessary Regulatory Burdens?

As the country moves towards the national aspiration of a high-income and developed

economy, the government will be facing the challenges of conflicting economic and social

objectives which are aimed to benefit the community generally. Good regulations and

good regulatory regime will be necessary to achieve the balance. The healthcare sector,

and in particular, the private hospitals which are highly regulated will have to meet these

challenges.

There are sound reasons for much regulation. It can reflect and enforce the community’s

values and the rights of the individual. It can reduce risks to people’s health and safety

(such as through consumer policy), address discrimination (such as with equal opportunity

laws), and protect the environment from overuse or degradation. Regulation is also part of

the institutional architecture for markets to work efficiently, including by establishing

property rights and enforcing contracts [2].

Much regulation is aimed at addressing sources of market failure — asymmetric

information; monopoly power; externalities, and public goods. Market failures can reduce

productivity, result in over- or under-production relative to community preferences, and

distort consumption and production decisions. Regulation can also reduce social and

environment risks. However, regulation to correct market failures or to address risks, still

needs to be efficient and effective, with the benefits of such corrections outweighing the

costs of implementing and complying with the regulation [2]. In addressing market failures,

policy makers should be wary of creating government failures.

Regulation can be used to protect some producers at a cost to others, favour the use of

some resources relative to others, and benefit some consumers over others. In some

24

cases such changes are intentional and desirable — for example, to look after vulnerable

consumers and the environment to encourage longer-term sustainability. However, in

other cases, there may be no merit in this; the costs imposed can be considerable and not

justified by the benefits [2].

3.2 Regulation of the Private Hospitals

From a national perspective, governments impose regulations and taxes for a variety of

reasons — but their underlying purpose is to benefit society as a whole by serving and

balancing economic and social goals. Economic regulations are principally intended to

improve the efficiency of markets, while social regulations are intended to protect social

values and rights. A third type of regulation — administrative — controls how a

government collects, manages and allocates funds and property [3].

Regulations are requirements imposed by governments that influence the decisions and

conduct of businesses, other organisations and consumers. They may also restrict the

range of activities that are undertaken. Expressed most succinctly, best practice regulation

achieves worthy objectives at least cost. Over the years, analysts have identified the more

important characteristics which regulation must satisfy to pass this test (Box 3.2).

The usual regulatory instrument used for private hospitals is licensing. The objectives of

this control are primarily for:

ensuring the quality and safety of private hospital services, and/or

ensuring the provision of the “right” level of hospital services, and

ensuring universal accessibility through an appropriate geographical distribution of

those services and an appropriate cost structure.

Box 3.2: Reasons on Need for Regulations

The need for regulations

Externalities

The problem with externalities is that the persons giving rise to the external effects

do not take them into account. The role for government in such cases is to make the

parties to the externality–creating activity take these effects into account in their

decision making, thus forcing them to adjust their activities or behaviour to reflect

optimal or socially acceptable levels. Regulation is a tool by which the externality can

be made a direct concern of the relevant party.

Uncompetitive markets

If markets are not competitive, they will not operate efficiently. Some of the factors

that can lead to uncompetitive and inefficient markets include:

barriers to entry

small number of suppliers or a sole supplier

25

information constraints.

Therefore the role for government is to take steps to create more efficient markets or

to regulate so as to approximate efficient outcomes.

Social objectives : equity and consumer protection

There are many situations where governments intervene in a market in the pursuit of

social objectives. These include redistribution of income, consumer protection, public

health and safety, law and order, cultural objectives and the preservation and

protection of environmental resources. In many instances governments will choose

to pursue a particular social goal at some cost to economic efficiency. (Source:

Victorian ORR, 1995.)

Source: Staff Research Paper, Industry Commission Australia (December 1997)

There are also non-regulatory mechanisms to promote quality and safety, such as;

quality accreditation scheme like the local MSQH accreditation or the international

JIC accreditation;

the strong commercial and ethical incentives for hospital operators and doctors to

ensure safety and quality standards are maintained; and

contractual requirements with health insurances or other health funds, which

typically contain quality requirements, including accreditations [4].

Private hospital licensing for facilities and services

Through licensing controls, regulators can exercise significant control over the nature of

private hospital services and hospital conduct. The controls usually cover a range of

matters including:

location, type of patient or service, and the number of patients or beds,

maintenance and improvements, for instance no renovations, alterations or

extensions to hospitals can be undertaken unless approved,

the type or character of the licensee, for example, the licensee must be of ‘good

character and repute’, be a ‘fit and proper person’ and must have ‘sufficient

material and financial’ resources. The licensee must be a registered medical

practitioner, management and staffing,

for example, hospital must comply with minimum nursing staff to patient ratios and

mix of nursing staff requirements,

premises, facilities and equipment, for example, there are provisions relating to

room access and size, as well as to ablution, electrical, air-conditioning, cooking,

ward, storage, cleaning, laundry, maternity and surgical facilities,

registers and records. There are requirements to document and keep patient’s

medical history and supporting ‘prescribed information’, reporting and notification

of information.

26

Hospital administrative practices and policies Hospitals must establish and

document administrative and operational policies, processes and procedures for

all their functions and services.

Licensing also include a range of miscellaneous requirements covering such things as

patient rights, medical and procedure fees, fire safety and emergency evacuation,

storage and handling of drugs and chemicals, waste management and disposal, food

safety and infection control. Private hospitals regulation may also specify compliance with

other legislations and/or regulations [4].

Healthcare occupational licensing

For healthcare providers, occupational or professional licensing is a norm. Medical

practitioners, dentists, pharmacists, nurses and other healthcare professionals are

subjected to regulatory licensing to practise. Occupational licensing is intended to raise

standards and provide a better guarantee to users of the service. This is especially

important when consumers are infrequent participants in a market and so may have

inadequate information about the market.

Another important reason is that occupational licensing in healthcare is necessary to

exclude incompetent or dishonest practitioners before they do damage rather than

dealing with the consequences of their actions later. However, occupational licensing has

serious cost impacts on the healthcare business and raises costs to consumers [5].

Private hospital planning control for licensing

Licensing arrangements include planning controls which cover the location of private

hospitals, the nature of services available in them, and the number of beds. Underlying

these controls are concerns that relying solely on the market to determine locations and

level of private hospital services could lead to inappropriate outcomes, such as over-

investment in, and use of, private hospitals and a geographical distribution of hospitals

skewed in favour of urban areas [4].

Among the planning criteria considered when assessing new licence applications are (a)

the suitability of the location taking into account of the availability of other community

facilities and the safety and amenity of the environment, and (b) whether the new facility

would result in ‘over-supply’ of private hospital services in an area.

There are several related rationales for these controls, including:

Facilitating ‘orderly’ industry development, particularly through reducing the level of

unused bed capacity in private hospitals,

Promoting equitable access to private hospital services,

Guarding against supplier-induced demand, and

Containing healthcare costs by limiting access to expensive, high technology

equipment.

27

3.3 Sources of Unnecessary Regulatory Burden

Like many developing countries, we have been developing and implementing regulations

following the practices of past administrations and often to address immediate problems

without considering all their impacts. We follow what the previous generation has done

without following principles of good regulatory development and practices. We have not

even reviewed regulations that have been in force in any structured manner. As such we

are experiencing problems with our regulatory systems, such as:

overuse of inflexible regulations

rapid growth of regulations

a sense of being “over-regulated”, while still recognizing the need for regulations to

achieve desired economic and social outcomes [3]

a large stock of regulations with urgent need of review.

There are three broad areas that comprise the “regulatory burdens” on business.

They are:

1. Time, effort and financial costs involved in complying with government regulatory

and taxation requirements. The main dissatisfaction has been increased irritation

with the paperwork and compliance burden associated with the taxes and

regulations;

2. The negative impacts on firms’ productivity arising from disincentives, distortions

and duplication caused by these government requirements; and

3. Variety of other non-economic costs involved (Box: 3.3).

Box 3.3: Regulatory Burdens

Defining the regulatory burden on business

We define the regulatory burden as the costs imposed on businesses by the

regulatory framework — which consists of legislative, regulatory and taxation

measures. These costs or burdens include:

the costs involved in meeting the substantive requirements of the regulatory framework;

the administration and paperwork costs involved in complying with the regulatory framework;

the costs arising from the disincentives, distortions and duplication attributable to the regulatory framework; and

other costs (such as psychological stress) associated with compliance.

Source: Staff Research Paper, Industry Commission Australia (December 1997)

Regulatory burdens are often necessary for the government to achieve national policy

objectives for the continuous development of the country. However, when regulations are

poorly written or enforced or inefficiently implemented, regulatory burdens will exceed

what is necessary to achieve desired objectives, giving rise to “unnecessary regulatory

burdens” [6].

28

Unnecessary burdens might arise from:

1. excessive coverage of the regulations, including ‘regulatory creep’ — that is,

regulations that encompass more activity than was intended or required to achieve

their objective

2. subject-specific regulations that cover much the same ground as other generic

regulation

3. prescriptive regulation that unduly limits flexibility such as preventing businesses

from using best technology, making product changes to better meet customer

demand or meeting the underlying objectives of regulation in different ways

4. Overly complex regulation

5. Unwieldy licence application and approval processes

6. excessive time delays in obtaining responses and decisions from regulators

7. rules or enforcement approaches that inadvertently provide incentives to operate in

less efficient ways

8. an overlap or conflict in the activities of different regulators

9. inconsistent application or interpretation of regulation by regulators

10. unnecessarily invasive regulatory behaviour, such as overly frequent inspections or

requests for information [7].

3.4 Best Practice Regulation

Policy objectives can be achieved by regulatory or non-regulatory means. The OECD has

identified various characteristics on good regulations (see. Box 3.4).

Box 3.4: Good Regulations

What is ‘good’ regulation? According to the Organisation for Economic Cooperation and Development (OECD), ‘good’ regulation should:

serve clearly identified policy goals, and be effective in achieving those goals

have a sound legal and empirical basis

produce benefits that justify costs, considering the distribution of effects across society and taking economic, environmental and social effects into account

minimise costs and market distortions

promote innovation through market incentives and goal-based approaches

be clear, simple, and practical for users

be consistent with other regulations and policies

be compatible as far as possible with competition, trade and investment-facilitating principles at domestic and international levels.

Source: OECD (2005)

There is, of course, other mix of options including self-regulation, quasi-regulation or co-

regulation [8] to achieve the same purpose. Regulations that have been formulated through

a Best Practice Regulation process can achieve policy objectives without imposition of

unnecessary regulatory burdens on business.

29

There are a number of characteristics which are likely to indicate that regulations are well

written and less likely to impose unnecessary burdens on business. The checklist for good

quality regulations is given in Box 3.5 [9].

Box 3.5: Regulatory Quality

Checklist for assessing regulatory quality

Regulations that conform to best practice design standards are characterised by the

following seven principles and features.

Minimum necessary to achieve objectives o Overall benefits to the community justify costs o Kept simple to avoid unnecessary restrictions o Targeted at the problem to achieve the objectives o Not imposing an unnecessary burden on those affected o Does not restrict competition, unless demonstrated net benefit

Not unduly prescriptive o Performance and outcomes focused o General rather than overly specific

Accessible, transparent and accountable o Readily available to the public o Easy to understand o Fairly and consistently enforced o Flexible enough to deal with special circumstances o Open to appeal and review

Integrated and consistent with other laws o Addresses a problem not addressed by other regulations o Recognises existing regulations and international obligations

Communicated effectively o Written in ‘plain language’ o Clear and concise

Mindful of the compliance burden imposed o Proportionate to the problem o Set at a level that avoids unnecessary costs

Enforceable o Provides the minimum incentives needed for reasonable compliance o Able to be monitored and policed effectively

Sources: OECD (1995); Office of Regulation Reform (Vic) (1996); Council of

Australian Government (1997); Australian Office of Regulation Review (1998); and

Cabinet Office (UK) (2000c).

Source: Staff working Paper, Australian Productivity Commission (July 2003)

A regulator plays an important role in regulatory regimes by encouraging compliance

through education and advice, as well as enforcing laws and regulations through

disciplinary means [2]. Enforcing regulations, however, with established principles of good

practices can enhance regulatory practices to achieve policy objectives. The New Zealand

30

Treasury has established guiding principles to achieve best regulatory practices as given

in Box 3.6.

Box: 3.6: Principles for Best Regulatory Practice [9]

The Principles for Best Regulatory Practice

1. Proportionality: the burden of rules and their enforcement should be proportionate to the benefits that are expected to result. Another way to describe this principle is to place the emphasis on a risk-based, cost-benefit regulatory framework and risk-based decision-making by regulators. This would include that a regime is effective and that any change has benefits that outweighs the costs of disruption.

2. Certainty: the regulatory system should be predictable to provide certainty to regulated entities, and be consistent with other policies. There can be a tension between certainty and flexibility. A principles or performance-based regime that provides for safe harbours such as deemed-to-comply standards tries to resolve this tension, but ensuring both attributes are optimally reflected is a challenge.

3. Flexibility: regulated entities should have scope to adopt least cost and innovative approaches to meeting legal obligations. A regulatory regime is flexible if the underlying regulatory approach is principles or performance-based, and policies and procedures are in place to ensure that it is administered flexibly, and non-regulatory measures, including self-regulation, are used wherever possible.

4. Durability: closely associated with flexibility; the regulatory system has the capacity to evolve to respond to new information and changing circumstances.

5. Transparency and Accountability: reflected in the principle that rules development and enforcement should be transparent. In essence, regulators must be able to justify decisions and be subject to public scrutiny. This principle also includes non-discrimination, provision for appeals and sound legal basis for decisions.

6. Capable Regulators: means that the regulator has the people and systems necessary to operate an efficient and effective regulatory regime. A key indicator is that capability assessments occur at regular intervals, and subject to independent input or review.

7. Growth Supporting: economic objectives are given an appropriate weighting relative to other specified objectives. These other objectives could be related to health, safety or environmental protection, or consumer and investor protection. Economic objectives include impacts on competition, innovation, exports, compliance costs and trade and investment openness. A regime embodies this attribute if the identification and justification of trade-offs between economic and other objectives are explicit parts of decision-making.

Source: New Zealand Treasury: http://www.treasury.govt.nz/economy/regulation/bestpractice

When regulators are transparent and accountable in their enforcement role and they have

incorporated good guiding principles into their operating systems there will be a less

31

burden on business. This is pertinent in regulating the healthcare industry, and in

particular, the private hospital sector.

Government Initiative in Best Regulatory Practice

The Government has recently implemented the initiative on best regulatory practice with

the launching of the document on National Policy on the Development and Implementation

of Regulations. This policy document applies to all federal government ministries,

departments, statutory bodies and regulatory commissions. It is also applicable for

voluntary adoption by state government and local authorities. The policy document spells

out the objective, operating principles, responsibilities, requirements and process for the

regulatory process management.

The national policy also specifically mandates the Malaysia Productivity Corporation

(MPC), through its responsibility to the National Development Planning Committee

(NDPC), to implement the functions of the national policy. MPC is to assist in the

coordination for implementing this policy [11].

The Best Practice Regulation Handbook was launched together with the national policy.

This handbook provides the detail guidance on carry out best practice regulation – the

systematic process to the development of regulations. Basically, a regulator has to carry

out regulatory impact analysis (RIA) and produced a comprehensive report, the

Regulatory Impact Statement when it is introducing any regulation that may impact upon

businesses. MPC role here is to ensure that the RIS is adequately prepared before it is

submitted to NPDC for further action [12].

3.5 Regulatory approaches: Prescriptive-based, Performance-based, Principle-based and Process-based Approaches to Regulatory Design

A common approach for regulating particular activities is the use of rules or standards.

There are four main categories:

prescriptive rules focus on the inputs and processes of an activity, specifying the technical means used in undertaking an activity. They are rules which prescribe how an outcome is to be achieved where the focus is on the methods of operation or inputs (as in the mandatory installation of speed limiters or restrictions on vehicle engine capacity);

performance-based rules performance-based rules which specify a particular outcome without prescribing the method to be used to achieve it (as in a speed limit of 60Kph);

principle-based standards outline the desired outcomes by specifying the spirit or

broad intention of the regulation and require interpretation according to the

circumstances (requiring drivers to travel at a speed ‘appropriate to the conditions’

or ‘not in a manner dangerous’); and

system-based or process-based; or management-based regulations where

businesses develop their own risk management strategies which are audited by

regulators [5 & 6].

32

The temptation for a regulator is to lay down a prescriptive rule that must be adhered to.

This encourages certainty, particularly in the short term, and will suffice when dealing with

issues for which limited alternatives exist for achieving the objective of the regulation

(such as outright prohibitions). Against that though, a major problem with prescriptive rules

is that they can limit flexibility in meeting regulatory objectives and can retard innovation.

Other problems with prescriptive rules are that they can be rendered superfluous by

technological change or encourage wasteful by-passing tactics by industry [5].

Such ‘black letter’ prescriptive rules are falling out of favour because regulators will never

be as smart as those they seek to regulate. Regulators limit themselves when they define

behaviour by prescription. Business who has met the limits of prescribed behaviour will

take it as meeting their obligations, and behaviour which falls outside their limits, whether

fitting the intent of the law or not, is acceptable. At the other extreme, business may take

the prescribed limit as a challenge “to find ways to get around it” [5].

Malaysia has traditionally followed the prescriptive approach in regulation, more so in

areas where safety and health is concern. However, there is now interest in pursuing the

performance-based rules as is being done in other benchmarked countries like Australia.

Performance-based rules are most suited to areas for which the desired outcome is easily

quantifiable. In specifying the desired outcome, individuals and firms can seek out the

optimum cost for achieving it.

However, performance-based rules also have their limitations. Firstly, while allowing firms

flexibility in achieving an objective, performance rules provide no flexibility in the objective

itself. For example, emission controls generally specify a maximum amount that can be

emitted from a particular factory, but the effect on the receiving medium will vary

according to a variety of factors, including weather conditions, time of day, and the level of

emissions from other factories at the same time. Secondly, as with prescriptive standards,

once an individual or firm has met the performance-based standard, there is little incentive

to go beyond that standard even when it would be socially desirable. For example, firms

may reduce emissions to levels prescribed in a performance standard but would have little

financial incentive to reduce them further, even if further reductions could be achieved at

little cost [5].

Apart from both prescriptive-based and performance-based rules, some regulators have

considered the use of principle-based standards. The use of principle-based standards

assumes that the detailed preventative rules cannot possibly anticipate and proscribe the

inexhaustible variety of human heartlessness and negligence, and at the same time will be

often be harshly over inclusive. From this perspective, the appropriate strategy is to draft

broadly worded statutes and regulations, laced with words such as “reasonable” and “so

far as feasible,” enabling regulatory officials to “custom tailor” regulatory requirements and

penalties to particular enterprises and situations [5].

33

CHAPTER FOUR: HEALTHCARE REGULATIONS IN MALAYSIA

4.0 Regulatory Overview of Healthcare in Malaysia

There are generally two key aspects of private healthcare regulation: regulating private

healthcare facilities and regulating the medical profession. The particular concern is issues

of equitability and accessibility and the quality of healthcare services.

In healthcare, there is imperfect information since consumers have only limited

understanding of what will or will not restore health, while the provider has much better

information on what the patient requires and usually has influence over what is supplied

and consumed. The challenge for the regulator is to deal with this information asymmetry

and protect the patient-consumers. Another issue is the implicit understanding between the

professions and the state that the professions will ensure safe and competent services in

exchange for the exclusive rights to provide these services. The concern here is that the

professions may use their powers to further their own interests, rather than that of the

general public basing on the principal-agent theory. The challenge for the state is to

identify regulatory mechanisms and structures that are effective in protecting public

interest [1].

4.1 Historical development of the Existing Framework

The principal-agent theory also known as the agency theory is important in regulating

healthcare professionals. In healthcare services, the patients have scan knowledge or

information on the treatments provided by the healthcare providers. They are at the

“mercy” of the healthcare professionals placing their trusts on their advice and treatment.

There is always the concern that the providers will place their personal interest above that

of the patients to their detriment. With his concern the healthcare professionals are

regulated through occupational licensing.

Occupational Licensing of Healthcare Professionals

Healthcare professionals have been regulated since before the country’s independence.

The earliest of the healthcare professions acts was the Nurses Act 1950 (Act 14) which

was amended in 1985. The Registration of Pharmacists Act 1951 (Act 371) was the next to

be enacted to be followed by the rest as shown in Table 4.1. There are other healthcare

professionals who are not yet subjective to occupational licensing. These are the Allied

Health Professionals (AHP). The Ministry of Health have identified 23 types of AHP and

are working on the regulations to regulate them.

With occupational licensing of the healthcare professionals, the regulators assume the role

of principal who ensures that the safety and rights of the patient are protected. The

requirements ensure that only competent professionals with adequate and recognized

qualifications get into the system. The regulatory control legitimizes the professionals by

ensuring that incompetent, unqualified and fraudulent individuals do not get into the

system. In a sense this provides these licensed professionals exclusive rights to practise.

34

Table 4.1: Regulation of Healthcare Professionals

No. Professions Acts & Regulations Regulators Licensing

1 Medical practitioner (Doctors) & specialists

Medical Act 1971 (Act 50) Malaysian Medical Council

Registration & Annual Practicing Certificate

2 Dentists Dental Act 1971 (Act 51) Malaysian Dental Council

Registration & Annual Practicing Certificate

3 Nurses Nurses Act 1950 (Act 14) & Nurses Registration Regulations 1985

Malaysia Nursing Board

Registration & Annual Practicing Certificate

4 Midwives Midwifery Act 1966 (Act 436)

Malaysia Midwife Board

Registration & Annual Practicing Certificate

5 Pharmacists Registration of Pharmacists Act 1951 (Act 371) & Registration of Pharmacists Regulations 2004

Malaysia Pharmacy Board

Certification of Registration & Annual Retention of Registration

6 Medical Assistants

Medical Assistants (Registration) Act 1977 (Act 180)

Medical Assistants (Registration) Board

Annual Certificate of Registration

7 Opticians & Optometrists

Optical Act 1991 (Act 469) Malaysian Optical Council

Registration and Annual Practicing Certificate

8 Allied Health Professionals (32 categories)

Bill has been drafted. Registration required by 2011.

Source: Author

These healthcare professionals are required to be registered formally with the regulators

and apply for a practicing license to practice. The license needs to be renewed yearly with

further provisions that the professionals achieve certain level of continuous professional

development (CPD). This ensures that the professionals keep up with current development

in knowledge and practice in their respective fields.

Private Hospital Licensing

The regulation for private hospitals was first established in 1971 with the enactment of the

Private Hospitals Act 1971 (Act 43). The requirements then were not as stringent as the

Act of the day as the explicit objective then was on the protection of the rights and safety of

patients. There were then few private hospitals in the country and those in existence then

were generally not-for-profit type of private hospitals established by religious organizations

as such as Assunta Hospital, the Penang Adventist Hospital, Hospital and Mount Miriam

Hospital to name a few. The others are the Chinese community-based charity hospitals

such as the Tung Shin Hospital in Kuala Lumpur and the Lam Wah Ee Hospital in Penang.

35

However, after the 1980s, with the privatizing policy and the healthcare policy re-

alignment, the government encourages the setting up of private healthcare facilities and

services to complement the public healthcare services. With the new policy focus, the

establishment of private for-profit hospitals grew quickly. The number of private healthcare

facilities then grew from 50 in 1980 to over 200 by year 2000. Unfortunately the then

Private Hospitals Act 1971 lacks to teeth to adequately regulate these private healthcare

facilities and services from various policy concerns.

Before 2006, the main Acts under which private hospitals were regulated are the Local

Government Act 1976 (Act 171), the Private Hospitals Act 1971 (Act 43) and the Atomic

Energy Licensing Act 1984 (Act 304). For the Federal Territory of Kuala Lumpur, Putrajaya

and Labuan, there is the Federal Territory (Planning) Act 1982 (Act 267). The Local

Government Act 1976 provides local governments with regulating powers and functions

largely relating to the efficient use of land and on the liveability of the environment. The

governance is based on the Uniform Building By-laws 1984. However these laws and

regulations are about standard local government planning and building procedures and are

not specific to healthcare facilities.

The Private Hospitals Act 1971 then provided the governance of private healthcare

facilities including the private hospitals. The regulatory control was through licensing and

inspection of the healthcare facilities: private hospitals, nursing homes and maternity

homes. An issued or renewed license was valid for a year. Together with this Private

hospitals Act, the Atomic Energy Licensing Act 1984 provided regulatory control and

licensing of radiation equipment and use of radioactive materials and for the establishment

of standards, liability for nuclear damage and related matters. However, this Act did not

provide adequate provisions to regulate all private healthcare facilities and services, such

as medical and dental clinics, day surgeries, clinical laboratories, haemodialysis centres,

ambulance services, and hospice. These limitations and omissions are addressed in the

new Act, the Private Healthcare Facilities and Services Act 1988 (Act 586) [1].

The two main institutions involved in regulating private hospitals are the Ministry of Health

(MOH) and the local authorities. Regulatory control is achieved through licensing. In

establishing a private hospital, there is the need to construct the building and approval

planning is necessary from the local authority. The process often referred to as dealing

with construction permits involves the application for development order, a type of building

license, followed by approvals for building plans and finally the issuance of certificate of

completion and compliance. Act 568, however, also empowered MOH in planning approval

for the pertinent requirements of a private hospital. This is explicitly stated in Section 9 of

the Act.

Once the planning approval is obtained, the licensee has to complete the building and then

apply for the operating license from MOH within three years as is explicitly state in Section

14 of the Act. To qualify for the operating licensing the hospital has to meet all the

regulatory requirements prescribed in the Private Healthcare Facilities and Services

(Private Hospitals and Other Private Healthcare Facilities) Regulations 2006 [P.U. (A)

36

138/2006]. Within these regulations, there is also the ‘license for installation and usage of

radiation equipment’ issued by the Radiation Safety Unit of the MOH.

4.2 Current Legislative Arrangements

In general, policymakers’ concerns with private healthcare are accessibility, equity and

quality care. Achieving these objectives can be complex and it is difficult to formulate

performance measures for them as they are multi-faceted and multi-dimensional.

Depending on the context, there can be different dimensions to them. Malaysia’s approach

has been to formulate prescriptive regulations as in the PHFS Regulations 138.

Accessibility

From the World Health Organization’s (WHO) definition, accessibility to health services

can take four dimensions which encompass “availability, accessibility, affordability and

acceptability”. The Government aspiration on this is to achieve universal accessibility on

healthcare for the population.

In general, the government has been quite successful in achieving universal accessibility

to all Malaysians through public healthcare facilities and services. Public hospitals are

generally available in all states, cities and towns across the country to ensure that primary,

secondary and even tertiary care is accessible. Unfortunately, high demand for this

“welfare-oriented” service has created overloading in the public hospitals resulting in long

waiting times and the perception of poor services.

For the services of private hospital where out-of-pocket payment is the norm in Malaysia,

accessibility is confined to the higher income group. Although medical fees are somewhat

regulated for medical consultation and medical procedure, the total treatment charges for

private healthcare services is relatively hefty and unaffordable to more ordinary Malaysians

(see Figure 4.1).

While the WHO “Health for All Strategy” seeks to achieve access by all to a minimum

standard of health services according to need, not according to the ability to pay, this is

difficult to implement in the for-profit private hospital sector unless government directly

subsidises costs for patients. For-profit private hospitals have the obligations to provide

quality care and at the same time to ensure a reasonable return-on-investment to the

shareholders.

37

Figure 4.1: Income Distributions in Malaysia

Source: World Bank Report [http://www.tradingeconomics.com/malaysia/gini-index-wb-data.html]

Quality care

Quality can be viewed from different perspectives. It can be defined in the light of the

provider’s technical standards and patients’ expectations and even from the clinicians’

perspectives, which equate quality in patient care to the improved clinical outcome.

Improved outcomes mean lower mortality and better neurological function. To the patients,

however, quality is more than optimum outcome, as increasingly, the nature of experience

is as important. Quality is subjective and multidimensional, and includes patient safety,

effectiveness of treatment, patient-centred service, timeliness and efficiency [2].

Asymmetric information and the principal-agent theory

Besides the concerns for accessibility and quality care, there is also the dilemma of

information asymmetry. This is particularly serious in healthcare in spite of the profusion of

information on the Internet.

With the commercialisation of healthcare and the increasingly competitive environment in

healthcare business, patients as consumers of healthcare services do not have adequate

knowledge nor expertise to make informed judgements about the quality of care. They

have to place their trust on the well-informed professional provider [3]. They depend and

delegate decision making to the attending professional healthcare provider. To protect the

consumers the principal-agent theory is applicable here, with the regulator acting as the

principal to ensure the safety and protect the rights of the patient.

The Private Healthcare Facilities and Services Act 1998 (Act 586)

The Private Healthcare Facilities and Services Act 1998 (Act 586) Gazette on 27th August

1998, but only came into operation on 1st May 2006 with the issuance of the Private

Healthcare Facilities and Services (Private Hospitals and Other Private Healthcare

Facilities) Regulations 2006 [P.U. (A) 138/2006] (referred here as PHFS Regulations 138).

This regulation provides for the licensing of private hospitals and other private healthcare

facilities to ensure that the minimum acceptable standards are complied with the

51.40

8.72

13.7

21.49

4.69

46.00

51.45

8.65

13.72

21.64

4.54

46.21

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Top 20% Second 20% Third 20% Forth 20% Lowest 20% GINI Index

2007

2009

38

provisions of the legislation together with the mandated accountability of private healthcare

providers towards patient safety, the upholding of patient rights, and the assurance of

quality care. The stringent provisions under Act 586 stipulated the mandatory approval and

licensing of all private hospitals and other private healthcare facilities and services for the

protection of patients and the accessibility of healthcare consumers in the country [2]. The

analysis on the focus of the Act 586 is given in Appendix 4.1.

The Private Healthcare Facilities and Services (Private Hospitals and Other Private

Healthcare Facilities) Regulations 2006 [P.U. (A) 138/2006]

The PHFS Regulations 138 is a highly prescriptive regulatory instrument with the aim of

addressing the concerns discussed above. It comprises 434 separate regulations and 13th

schedules. It is organized into 29 parts covering both private hospitals and other

healthcare facilities and services as defined in the Act 586. The summary of the relevant

parts of the regulations for private hospitals is listed in Box 4.1 below. More details of these

regulations are in presented in Appendix 4.2.

As many management system practices and clinical protocols have been prescribed in the

regulations, any non-compliance on any of these prescribed requirements constitutes an

offence. For example, Part III of the Regulations 2006 encompassing Regulation 11 to

Regulation 20 mandates the planning of the organisation and management of the private

hospitals and other private healthcare facilities or services. Under Regulation 11 stipulates

that all private healthcare facilities and services shall have a plan of organisation outlining

the staff and practitioners in the facility and the chain of command. Further as provided

under Regulation 13 the Person-In-Charge (PIC) is responsible on the employment of

qualified healthcare professionals including foreigners registered under the law and

recognised by the Director General of Health. Besides, the licensee or PIC of a licensed

private healthcare facility or service shall not indulge in any form corrupt practice of fee-

splitting and shall ensure that all healthcare professionals do not practise fee spitting too.

Any person who contravenes these sub-regulations commits an offence and shall be liable

on conviction to a fine not exceeding ten thousand ringgit or to imprisonment for a term

not exceeding three months or both.

Box 4.1: Relevant PHFS Regulations for Private Hospitals

Parts of Requirements of PHFS Regulations 138 for Private Hospitals: II

III IV V

VI VII

VIII IX X

XI XII

XIII XIV XV

XVI

:

: : : : : : : : : : : : : :

Application for approval to establish or maintain or license to operate or provide private healthcare facilities or services and other applications Organization and management of private healthcare facilities and services Policy Registers, rosters and returns Grievance mechanism Patient medical record Consent Infection control General provisions for standards of private healthcare facilities or services Standards for Obstetrical or Gynaecological care Standards for newborn nursery facilities Standards for paediatric patient care Standards relating to Anesthesia Standards for surgical facilities and services Special requirements for critical care on intensive care unit

39

XVII XVIII

XIX XX

XXI XXII

XXIII XXIV XXV

XXVI

XXVII XXVIII

XXIX

: : : : : : : : : :

: : :

Special requirements for emergency care services Special requirements for pharmaceutical services Special requirements for central sterilizing and medical-surgical supply facilities and services Standards for dietary services Special requirements for blood bank services, blood transfusion services or blood donation programme Special requirements for haemodialysis facilities and services (Applicable in some hospitals) Standards for rehabilitation facilities and services (Not applicable) Standards for specialist outpatient facilities and services Standards for ambulatory care (Not applicable) Special requirements for radiological or diagnostic imaging services and radiotherapy and radioisotope services Standards for private nursing homes (Not applicable) Special requirements for hospice and palliative care services (Not applicable) Miscellaneous (other facilities, ancillary services, fee schedule and penalty)

Source: PHFS Regulations 2006 [P.U. (A) 138/2006]

The burden of accountability on business is speciality defined in the responsibility of the

licensee and particularly in the PIC. The penalty for offences includes hefty fines and/or

imprisonment, which makes the PHFS Regulations 138 to be perceived draconian control.

Policy Objectives of the Government as in the National Healthcare Plan

The Malaysian Government and in particular the Ministry of Health (MOH) recognise the

rising expectations and demands for quality healthcare and better accessibility to services.

The Ministry believes that it has some control over the supply of health services but not on

the demand for healthcare services. The issues to the Ministry continue to be inequity of

access to health services, inappropriate interventions and treatments as demanded by

patients or induced by providers, varying quality and standards of care and costs that

cannot always be effectively controlled. The issues are summarized in Box 4.2.

Box 4.2: Summary of Issues

Healthcare delivery

Public-Private Dichotomy and other Structural Factors

Accessibility to Services

Responsiveness Quality and Standards of Care

Variation in Quality\Pursuit of Affordable World Class Quality and Standards of Care

Inappropriate Utilization Rising cost of care

Inefficiency

Increasing demand for health services in institutions

Wasted resources Cost drivers

Wealth

Epidemiological transition

Facing emerging/re-emerging infectious diseases

Demographic transition

Technology Financing the system

Financial crisis Health awareness and lifestyle

Knowledge – behaviour gap

Community’s reluctance to take ownership of health issues

Insufficient number of health promotion workforce

Lack of supportive environment Empowerment of individuals and communities

Constraints in implementing healthy public policy

40

Weakness of legislation and enforcement

Policies of other Ministries not in line with MOH

Lack of public awareness

Weaknesses in programme implementation

Constrains in empowering women and specific risk groups

Lack of supportive environment

Lack of resources

Organizational issues Information and communication technology

Inadequate integrated planning of health information system

Lack of health informatics expertise (subject matter and technical experts)

Inadequate infrastructure

Lack of standards Research

Human Capital Development

Mismatch of Supply and Demand

Source: Country Health Plan, MOH

The Ministry continues to be concerned about the quality of care, service standards and

high fee charges in the private health sector. It desires further integration of primary,

secondary and tertiary services through strong public and private partnerships and

strengthening the enforcement of the Private Health Care Facilities and Services Act 1998

(Act 586). The variation of quality of care is believed to be due to inadequate regulations

and/or enforcements over health professionals and hospitals.

Bearing in mind these issues or challenges, MOH has instituted six strategic directions in

the 10th Malaysia Plan:-

1. Competitive Private Sector as Engine of Growth

2. Productivity and Innovation through K-economy

3. Creative and Innovative Human Capital with 21st Century Skills

4. Inclusiveness in Bridging Development Gap

5. Quality of Life of an Advanced Nation, and

6. Government as an Effective Facilitator.

Through these strategic directions, the Ministry aims to achieve quality healthcare and

active healthy lifestyle in the country. The desired outcome is the provision of and

increased accessibility to quality health care and public recreational and sports facilities to

support active healthy lifestyle. The summary of MOH Key Result Areas and Strategy is in

Box 4.3 [4].

Box 4.3: MOH Strategies and KRAs

Key Result Areas

1. Health sector transformation towards a more efficient and effective health system in ensuring universal access to healthcare

2. Health awareness and healthy lifestyle

3. Empowerment of individual and community to be responsible for their health

Strategies

1. Establish a comprehensive healthcare system and

recreational infrastructure

2. Encourage health awareness & healthy lifestyle activities

3. Empower the community to plan or implement individual

wellness programme (responsible for own health)

4. Transform the health sector to increase the efficiency and

effectiveness of the delivery system to ensure universal

access

Source: Country Health Plan, MOH

41

The understanding of these policy objectives as laid out in the Country Health Plan will

hopefully give us some understanding and appreciation of the motivation of MOH in its

regulatory role of the private hospital sector though budgetary instruments are also

important to achieve some of these results. The reader should refer to the Country Health

Plan: 10th Malaysia Plan 2011-2015 for further details on MOH policy objectives.

4.3 Regulators and Other Relevant Bodies

The regulatory regimes for health in Malaysia are very extensive and complex and range

across three levels of government and involve many different ministries, agencies, and

departments. The principal regulator is the Ministry of Health (MOH). The comprehensive

list of the licensing, permits, approvals and registrations is given in appendix 4.3 (in

Bahasa Malaysia). However, the primary focus of this report is on regulatory aspects of

Private Hospital operation by the MOH.

Operating a private hospital is a complex business and the current regulatory regime

makes it even more complicated. To establish a hospital business from planning to

building to commissioning and licensing will take no less than four years. The investor has

to deal with numerous Acts and Regulations and interacts with many regulators at the

federal, state and local government levels.

Table 4.2: Business Life Cycle Regulations

Business Life

Cycle

Acts and Regulations Regulatory bodies

a) Start up Starting a business

Companies Act 1965 Registration of Business Act 1956

Companies Commission Malaysia (SSM) Ministry of Domestic Trade, Co-operatives, and Consumerism

b) Operation/ Expansion

Dealing with construction permits

Town and Country Planning Act 1976 Uniform Building By-laws 1984

Local and municipal councils, Ministry of Housing and Local Government Note: Kuala Lumpur, Putrajaya and Labuan come under a different Act and Ministry.

Fair trade Competition Act 2010 Price Control and Anti Profiteering Act 2011

Malaysia Competition Commission (MyCC), Ministry of Domestic Trade, Co-operatives, and Consumerism

Utilities Fire Services Act 1988 Water Services Industry Act 2006 Electricity Supply Act 1990

Fire and Rescue Department (BOMBA), Ministry of Housing and Local Government National Water Services Commission (SPAN), Ministry of Energy, Green Technology and Water Energy Commission (Suruhanjaya Tenaga – ST & Tenaga Nasional Bhd. – TNB)

Paying taxes

Income Tax Act 1967 Service Tax Act 1975, Sales Tax Act 1972 Assessment Tax (Local councils)

Inland Revenue Board (LHDN), Ministry of Finance Royal Malaysian Customs Department, Ministry of Finance Local and municipal councils, Ministry of Housing and Local Government

Trading across borders

Customs Act 1967, Excise Act 1976, Customs Duties order 1996 Exchange Control Act 1953

Royal Malaysian Customs Department, Ministry of Finance Central Bank Malaysia (BNM)

Employing workers

Employment (Amendment) Act 2011 Industrial Relation Act 1967 Minimum Wages Order 2012 Minimum Retirement Age Bill 2012 Employees Provident Fund Act 1991

Ministry of Human Resource Employees Provident Fund (EPF) Social Security Organisation, (SOCSO), Ministry of Human Resource Human Resource Development Fund (HRDF)

42

Employees’ Social Security Act 1969 Pembangunan Sumber Manusia Berhad Act 2001 Occupational Safety and Health Act 1994

Ministry of Human Resource National Institute of Occupational Safety & Health (NIOSH) , Ministry of Human Resource

Ownership of property

National Land Code 1965 Strata Titles Act 1985 EPU Guideline on the Acquisition of Properties (foreign investment)

Ministry of Housing and Local Government Department of Director General of Lands and Mines (JKPTG), Ministry of Natural Resource & Environment Economic Planning Unit (EPU), Prime Minister’s Department

Getting credit/ raising fund

Anti-Money Laundering Act 2001 Capital Market & Services Act SC Guidelines on Private Debt Securities SC Guidelines on Sales Practice of Unlisted Capital Market Products

Bank Negara Malaysia Securities Commission (SC)

Protecting investors

Malaysian Code on Corporate Governance 2012 Bursa Malaysia Listing & Trading Requirements

Bursa Malaysia (Bursa)

Enforcing contracts

Contracts Act 1950 Stamp Act 1949 Specific Relief Act 1963

Attorney General’s Chambers (AGC)

Winding-up/ Receivership

Bankruptcy Act 1967 Malaysia Department of Insolvency (MDI)

Note: Author’s addition in ‘bold italic’

Source: MITI-PwC Report 2013 [1]

For example, Table 4.2 illustrates the general regulatory requirements that any business

incorporations in Malaysia will have to comply with.

For a private hospital, there are other regulatory requirements that have to be met. These

are covered by the various health and medical Acts and Regulations that have been

introduced over the years. Health regulations in Malaysia is extensive and expansive,

covering the total health business value chain, including food, beauty products and

services, and other health related activities.

The health regulatory regime is relatively matured and well developed and is well aligned

with World Health Organization standards and requirements. The health regulatory regime

continues to be improved with the introduction of new regulations and the continual

reviews of existing regulations in line with new challenges in healthcare, economic

development, development in medical and pharmaceutical technology and societal and

demographic changes. For example, the Ministry of Health has on first July 2013

implemented the Medical Device Act 2012 (Act 737) and the accompanying Regulations

2012.

Apart from health regulations, the Ministry continues to develop and formulate new policy

and operational guidelines for industry to self-regulate their activities. The Ministry web-

site has a listing of 36 Acts and Regulations on the healthcare sector under its purview

and 15 policy papers for health professional reference. It has also published some 50

guidelines and electronic books for reference by both public and private hospitals.

Prior to 1998, there is no specific regulation to govern the planning, establishment and

operation of the private hospital business. The regulations on private hospitals were the

same as that of public hospitals. In 1998, the Private Health Care Facilities and Services

43

Act 1998 (Act 586) was enacted and was implemented on 1st May 2006 with the gazette

of the Private Health Care Facilities and Services (Private Hospitals and Other Private

Healthcare Services) Regulations 2006 [P.U. (A) 138/2006] and the Private Health Care

Facilities and Services (Private Medical Clinics or Dental Clinics) Regulations 2006 (P.U.

(A)) 137/2006]. The MOH is the principal regulator for private hospitals and other private

healthcare facilities in the country. There are also other regulators involved in the private

hospital business as illustrated in Table 4.3.

Table 4.3: Facilities and Services Regulations and Regulators for Private Hospitals

Primary Activity Acts and Regulations Regulatory body

Establishment

Healthcare professionals

Specialists

Medical supplies

Facilities

Medical tourists

Private Healthcare Facilities and Services Act 1998 Private Healthcare Facilities and Services (Private Hospitals and Other Private Healthcare Facilities) Regulations 138/2006 Medical Act 1971 Dental Act 1971 Nurses Act 1950 & Nurses Registration Regulations 1985 Midwifery Act 1966 (Act 436) Medical Assistants (Registration) Act 1977 (Act 180) Registration of Pharmacists Act 1951 & Registration of Pharmacists Regulation 2004

Ministry of Health (various departments) Malaysian Medical Council (MMC) National Specialists Registration (NSR)

Malaysian Dental Council (MDC) Malaysia Nursing Board (MNB) Malaysia Midwives Board (MMB) Malaysia Medical Assistants (Registration) Board (MMAB) Malaysian Pharmacy Board (MPB)

Operations

Services

Healthcare professionals

Specialists

Diagnostics

Treatment

Rehabilitation

Reporting (statistics & incident reporting)

Private Healthcare Facilities and Services Act 1998 Private Healthcare Facilities and Services (Medical Clinics or Dental Clinics) Regulations 2006 Medical Act 1971 Medical Regulations 1974 Dental Act 1971 Nurses Act 1950 Registration of Pharmacists Act 1951 & Registration of Pharmacists Regulation 2004 Optical Act 1991 (Act 469) & Optical Regulations 1994 Medical Device Act 2012 Medical Device Regulations 2012 Atomic Energy Licensing Act 1984 (Act 304) Environmental Quality Act 1974 (Act 1270 Factory and Machinery Act 1967 Fire Services Act 1988 Control of Drugs and Cosmetics Regulations 1984 (for manufacturing license) Statistics Act 1965 (Act 415)

Ministry of Health Malaysian Medical Council (MMC) Malaysian Dental Council (MDC) Malaysia Nursing Board (MNB) Malaysian Pharmacy Board (MPB)

Malaysian Optical Council (MOC) Medical Device Board (MDB) Engineering Department of MOH Department of Environment (DOE) Department of Occupational Health and Safety (DOSH) BOMBA Malaysian Pharmacy Board Department of Statistics (DOS)

Sales & Marketing

Promotion

Brand development

Market development

Medicines (Advertisement and Sale) Act 1956 Medicines Advertisements Board Regulations 1976 Malaysia Health Tourism Council Requirements

Medicine Advertisements Board (MAB) Malaysia Health Tourism Council (MHTC)

Services

Immigration

Transportation

Accommodation

Financial

Immigration Act 1959/63 Insurance Act 1996 Exchange Control Act 1953 Tourism Industry Act 1992 Land Public Transport Act 2010

Immigration Department Malaysia Bank Negara Malaysia (BNM) Ministry of Tourism (MOT) Land Public Transport Commission & Road Transport Department (JPJ)

Source: MITI-PwC Report 2013 [6] Note: Author’s addition in ‘bold italic’

44

The functional responsibilities for regulating the private healthcare providers are shared

between different agencies, whether they are councils, boards, registrars or specialized

departments and divisions, under the umbrella of MOH. These various agencies within

MOH have their established roles defined by the various Acts and Regulations a show in

Table 4.4. [See also Table 4.1 on healthcare professionals’ registration and licensing].

Apart from these regulatory agencies, the private healthcare providers are also being

represented by non-regulatory bodies which play important roles in the development and

growth of the healthcare industry. Many of them have close working relationships with

MOH and provide feedbacks and inputs to the Ministry on their regulatory roles. These

non-governmental organizations (NGOs) represent the voice of its members and liaise

with the Government. They also look into the continuous develop of their members.

Table 4.4: MOH Agencies and Their Legislative Provisions

Agencies Legislative provisions

Medical Practice Division – Private Medical Practice Control Section (CKAPS)

Private Healthcare Facilities and Services Act 1998 [Act 586]

Section 3: Approval and Licensing of facilities other than clinics;

Section 4: Registration of clinics;

Part XIV: Managed Care Organisation; and

Part XVI: Enforcement (Section 87 – 100). Regulations under Act 586: 1. Private Healthcare Facilities and Services (Private Hospitals and Other Private

Healthcare Facilities) Regulations 2006; 2. Private Healthcare Facilities and Services (Private Medical Clinics and Private Dental

Clinics) Regulations 2006; 3. Private Healthcare Facilities and Services (Official Identification Card) Order 2006; and 4. Private Healthcare Facilities and Services (Compoundable Offences) Regulations 2011.

Malaysian Medical Council (MMC)

Section 12 -14 of the Medical Act 1971;

Section 20 of the Medical Act 1971;

Section 29 – 31A of the Medical Act 1971 and Regulation 26-33 of the Medical Regulation 1974;

Second Schedule Medical Act 1971; and

Malaysia Qualification Agency Act 2007 [Act 679].

Malaysia Dental Council

Dental Act 1971 (Act 51)

Malaysia Nursing Board

Nurses Act 1950 (Act 14) &

Nurses Registration Regulations 1985

Malaysia Midwife Board

Midwifery Act 1966 (Act 436)

Medical Assistant Board

Medical Assistant (Registration) 1977 Act [Act 180]

Section 3(1);

Section 6(1), 7(1); and

Section 9(1).

Malaysian Optical Council (MOC)

Optical Act 1991 (Act 469)

Optical Regulations 1994

Pharmacy Enforcement Division (PED)

1. Poisons Act 1952

Section 31: Power of investigation, examination and entry into premise.

Section 34: Sanction to prosecute and conduct prosecution. 2. Sale of Drugs Act 1952

Section 4(1)(a): Power to enter and inspect any place where he has reason to believe that there is any drug intended for sale.

Section 4(1)(b): Power to mark, seal, otherwise secure, weigh, count or measure any drug, the sale, preparation or manufacture of which is or appears to be contrary to this Act

Section 4(1)(c): Power to inspect any drug wherever found which is or appears to be unwholesome or deleterious to health.

Section 4(2)(a): Power to seize any drug wherever found which is or appears to be

45

unwholesome or deleterious to health.

Section 4(2)(b) : Power to destroy any drug wherever found which is decayed or putrefied.

Section 5: Power to demand, select and take samples.

Section 9: Power to call for information.

Power to prosecute and conduct prosecution given by DPP under Section 376 of Criminal Procedure Code.

3. Registration of Pharmacists Act 1951

Section 21(2): power to enter premises to inspect, remove and detain … 4. Medicines (Advertisement and Sale) Act 1956

Section 6B: Power of investigation.

Section 6C: Power of Examination of witnesses.

Section 6D: Power to enter premises.

Section 6F: Sanction to prosecute and conduct prosecutions.

Pharmacy Board Malaysia

Registration of Pharmacist Act 1951; and

Registration of Pharmacist Regulations 2004.

National Pharmaceutical Control Bureau

Control of Drugs and Cosmetics Regulations 1984… Where the Authority (known as the Drug Control Authority, DCA) established under these Regulations, is tasked with ensuring the quality, safety and efficacy of medicinal products through the registration, including quality control, inspection and licensing and post-registration activities. The NPCB acts as a secretariat to the Authority.

Medicine Advertisement Board

The Medicines (Advertisement and Sale) Act 1956 [Act 290]; and

Medicines Advertisements Board Regulations 1976

Food Safety and Quality Division

Food Regulation 1985

Food Hygiene Regulation 2009

Food Analyst Act 2011

Disease Control Division

Prevention and Control of Infectious Diseases Act 1988 (Act 342);

Prevention and Control of Infectious Diseases (Importation and Exportation of Human Remains, Human Tissues and Pathogenic Organisms and Substances) Regulations 2006; and

International Health Regulations 2005.

Source: Author

These key non-regulatory bodies provide additional oversights on the behaviour and

performance of the healthcare providers. The MSQH for example, provides voluntary

quality accreditation for hospitals which assures quality patient care and protection of the

rights of patients. In addition, it follows closely the requirements of the PHFS Regulations

2006. The accreditation process complements the licensing role of the MOH.

The MHTC is under the umbrella of MOH and overseas the promotion of health tourism in

the country. The main agenda of MTHC is to promote the Malaysian healthcare industry

internationally and to develop healthcare into a global export. In this facilitating role it also

ensures that health visitors into the country are protected and receive quality care.

The MMA is another NGO that provides oversight of medical professionals. It has close

liaison with the MMC in particular and other MOH regulators in general. Its oversight role

is complementary to the licensing role of MMC. Together with this is the NSR which caters

for voluntary registration of medical specialists. The MOH recognizes the Specialist

Certification by NSR which is a requirement for licensing the specialist medical clinics. The

certification legitimises the specialty area of the medical practitioner. These bodies also

ensure the continuing professional development of its members as part of the regulatory

requirements. The other professional bodies with similar roles as MMA, although not as

authoritative, are listed in Table 4.5 below.

46

Table 4.5: Key Non-Governmental Bodies in Healthcare Regulation

Bodies Purpose/objective/function

Malaysian Health Tourism Council www.mhtc.org.my

[Note: MHTC was established under MOH with Cabinet approval in 2009]

Mission:

To promote global awareness of Malaysian healthcare facilities and services.

To promote and facilitate the development of the Malaysian healthcare industry so as to penetrate the global market.

Objective: To facilitate public-private sector collaboration so that issues affecting this industry can be effectively addressed to ensure that health visitors have a seamless experience with Malaysian healthcare services.

Malaysian Medical Association http://www.mma.org.my/

[A National Association for

Medical Doctors]

Objective:

To promote and maintain the honour and interest of the profession of medicine

To serve as a vehicle of the integrated voice of the whole profession

To participate in the conduct of medical education, as may be as appropriate

National Specialist Register http://www.nsr.org.my/

Purpose:

To ensure that doctors designated as specialists are appropriately trained and fully competent to practise the expected higher level of care in the chosen specialty. With the National Specialist Register in place, doctors will be able to identify fellow specialists in the relevant specialties to whom they can refer either for a second opinion or for further management. Importantly, the National Specialist Register protects the public and will help them to identify the relevant specialist doctors to whom they may wish to be referred or may wish to consult.

The Academy of Medicine

Malaysia

http://www.acadmed.org.my/

AMM is a professional organisation to assure the maintenance of a high standard of professional and ethical practice. AMM was formed in 1966 and was registered on 22nd December, 1966 under the Societies Act (1966). The Academy of Medicine of Malaysia embraces all specialities in medicine.

Association of Private

Hospitals Malaysia

http://www.hospitals-malaysia.org/

The APHM plays an important role in its objective of helping to raise standards of medical care within the country. Some of the activities geared towards this objective include:-

Ensuring patient safety and quality as a member of the National Patient Safety Council, the Malaysian Society for Quality in Health and the Malaysian Productivity Council.

Working dialogues with public sector agencies including Ministry of Health Malaysia

Participation in National working groups such as MPC, MITI and MATRADE.

Training programs for all Healthcare providers which include the yearly Conference and Exhibition and regular smaller group workshops on clinical and administrative / managerial topics.

Promotion of Health Tourism Activities regionally and internationally with the Malaysia Healthcare Travel Council (MHTC)

Malaysian Pharmaceutical

Society

http://www.mps.org.my/

Among the aims of the Society are:

To promote and maintain the honour and interest of the profession of pharmacy

To encourage and further the development of Pharmacy and Pharmaceutical Education and to foster intra-professional relationship among members.

To improve the Science of Pharmacy for the general welfare of the public by fostering the publication of scientific and professional information relating to the practice of pharmacy and aid in the development and stimulation of discovery, invention and research.

To uphold and enhance the standard and ethics of the profession.

To affiliate an co-operate with any organization as may be deemed desirable in furthering the aims of the Society.

To represent the views of the members in matters affecting the common interest of the profession.

To assist in improving the health services in the country.

To enhance the professionalism of pharmacists, the Society endorsed the Code of Conduct For Pharmacists And Bodies Corporate as established by the Pharmacy Board.

Malaysian Society of

Anaesthesiologists

http://www.msa.net.my/

The Malaysian Society of Anaesthesiologists was founded in 1964. It was initially

Registered as Malayan Anaesthetic Society but changed its name to Malaysian Society of

Anaesthesiologists in the 1970s.

Objectives:

To promote the art and science of Anaesthesiology.

To co-ordinate the activities of Anaesthesiologists.

47

To represent Anaesthesiologists and protect their interests.

To encourage and promote co-operation and friendship between Anaesthesiologists and to do such lawful things as may be indicated or conducive to the attainment of such objects.

To achieve liaison with similar bodies and other specialties in other regions.

Malaysian Nurses

Association

http://www.mna.org.my/

MNA Objectives

To achieve our mission, the Association aims to:-

develop and promote high standards of nursing practice and research.

uphold the image of nursing.

abide by the professional ethics.

be the centre of National and International Nursing networking.

implement and collaborate with other organizations for health promotion.

Malaysian Association of

Medical Assistants

http://www.pppmalaysia.com/

Objectives Of The Association

To cater for the professional interests of medical assistants and to all those having connection with and the practice of medical and health sciences towards helping to sustain standard and work ethics.

To facilitate the exchange of information and ideas by literary, technical and social activities on matters affecting the role of medical assistants in relation to primary health and medical care, emergency medicine, medical/ surgical specialisation and super specialisation and medical management, administration and supervision.

To foster and preserve the unity and aim or purpose of the profession.

To support a high standard of professional ethics and conduct.

To enlighten and direct public opinion on professional aspects in relation to medical and health problems.

To promote the advancement of medical assistants as a profession and to maintain the standard of training, service, education and interests of the profession at all levels.

To voice its opinion and to acquaint the government and other bodies with the policy and attitude of the medical assistants profession.

To promote and participate in social, medical and charitable activities in building an united Malaysian nation.

Malaysian Dental

Association

http://www.mda.org.my/

Affiliations: a) Malaysian Endodontic

Society

b) Malaysian Private

Dental Practitioners’

Association

c) Malaysian Association

of Aesthetic Dentistry

d) Malaysian Oral Implant

Association

Objectives:

To promote the art and science of dentistry

To maintain the honour and interest of the dental profession.

To foster and preserve unity, aim and purpose of the dental profession as a whole.

To hold periodical meetings of members of the association for the discussion of scientific subjects professional matters and social purposes.

To encourage study and research in the field of dentistry.

To support and promote a high standard of ethics and professional conduct.

To enlighten and direct public opinion on dentistry and problems of dental health.

To publish papers, journals and other materials in furtherance of the above objects

Source: Websites of associations and bodies.

Private Hospital Life-cycle Value Chain - Regulatory Regimes

Having identified the various Acts and Regulations the linkage to the business life-cycle

value chain for the private hospital and the resulting regulatory regimes can be

established. This provides an overview of the complex nature of regulatory regimes from

the stage of starting the business, its continuing operation and growth to its eventual

winding-up. The details of the regulatory regime are in Appendix 4.3. Using the business

life-cycle value chain established in Chapter two (see Figure 2.4), the resultant linkage can

be formulated as in Table 4.6. There are four stages to the business life-cycle: a)

Establishment (start-up), b) Operation and maintenance (license renewal), c) Expansion

(growth & improvement), and finally d) Winding-up. Table 4.6 provides an overview of the

regulatory regimes for the business life-cycle for private hospital.

48

Table 4.6: Private Hospital Life-cycle Value Chain - Regulatory Regimes

Acts & Regulations Business life-cycle Regulatory regime (Appendix 4.3)

Establishment

Companies Act 1965

Registration of Business Act 1956

Starting a business Business registration (SSM)

National Land Code 1965

Strata Titles Act 1985

EPU Guideline on the Acquisition of Properties (foreign investment)

Acquiring property (land matters)

Land acquisition and registration (State)

Strata title (State)

Town and Country Planning Act 1976

Federal Territory Planning Act 1982

Uniform Building By-laws 1984

Fire Services Act 1988

Water Services Industry Act 2006

Electricity Supply Act 1990

PHFS Act 1998

PHFS Regulations 138/2006

Establishment of private hospital

Construction of building

Land conversion

Utilities requirements

Dealing with construction permits

Development Order (LA)

Planning Approval (LA)

Land conversion & registration (State)

Approval to Establish (MOH)

Fire safety (BOMBA)

Water & sewerage (SPAN)

Approval for electricity (ST/TNB)

Certificate of completion & compliance (LA)

Contracts Act 1950

Stamp Act 1949

Specific Relief Act 1963

Establishing contracts Registration of contracts

Stamp duties

Operation & Maintenance

PHFS Act 1998

PHFS Regulations 138/2006

Medical Device Act 2012

Medical Device Regulations 2012

Atomic Energy Licensing Act 1984

Environmental Quality Act 1974

Factory and Machinery Act 1967

Fire Services Act 1988

Control of Drugs and Cosmetics Regulations 1984

Poisons Act 1952

Sale of Drugs Act 1952

Medicines (Advertisement and Sale) Act 1956

Operation & maintenance of hospital & healthcare facilities

Operation licensing (MOH - CKAP)

Licensing of medical devices (MDB)

Licensing of radioactive medical equipment (MOH)

Licensing of hazardous waste (DOE)

Passenger lifts safety certificate (DOSH)

Autoclaves & other pressure vessels (DOSH)

Fire safety certificate (BOMBA)

Drugs and pharmaceuticals manufacturing license (MPB)

Approvals for advertisement and adverting materials (MAB)

Medical Act 1971

Medical Regulations 1974

Dental Act 1971

Nurses Act 1950

Registration of Pharmacists Act 1951

Registration of Pharmacists Regulation 2004

Optical Act 1991 (Act 469) &

Optical Regulations 1994

Healthcare professionals o Medical doctors o Medical specialists o Dentist & dental

specialists o Nurses o Midwives o Medical Assistants o Opticians & Optometrists o Pharmacists o Other Allied Health

Professionals

Registrations for all healthcare professionals (various boards/councils)

Annual Practising Certificate for all healthcare professionals, including Allied Health Professionals (various boards/councils)

Specialist Certification (NSR)

Employment (Amendment) Act 2011

Industrial Relation Act 1967

Minimum Wages Order 2012

Minimum Retirement Age Bill 2012

Employees Provident Fund Act 1991

Income Tax Act 1967

Employees’ Social Security Act 1969

Pembangunan Sumber Manusia Berhad Act 2001

Occupational Safety and Health Act 1994

Immigration Act 1959/63

Other employment requirements

Registration of workforce (MOHR)

Registration of Unions (Industrial Relations Department – MOHR)

Registration of employees with SOCSO

Registration of employees with PSMB

Registration of employees with LHDN

Work Permits (Immigration)

Various types of permits on workforce (see Appendix 4.3)

49

Local Government Act 1976

Land Public Transport Act 2010

Other business licensing

Premise License (LA)

Advertising License (LA)

Vehicle Parking License (LA)

Food Premise License (LA)

Vehicle Type Approval (JPJ)

Similar to operation and maintenance

Continuing operation

Private Hospital License is renewable every 2 years.

Other types of licensing are usually on an annual basis

Except for those one-off registrations, all other renewable licenses and certifications are the same of Operation and Maintenance.

Expansion/Growth

(include improvement)

Similar regulations are applicable as for establishing a new hospital

Renovation on building

Up-grading of facilities

Extension of building

Acquiring adjacent land for extension

Similar planning as in dealing with construction permits (LA)

Establishment approval (MOH)

Re-licensing on completion by MOH to include the new facility.

Winding up business

PHFS Act 1998

PHFS Regulations 138/2006

Companies Act 1965

Income Tax Act 1967

Bankruptcy Act 1967

Employment (Amendment) Act 2011

Industrial Relation Act 1967

Closing down

Sales or ownership transfer

Bankruptcy

Surrender of operating license (MOH)

Notification on retrenchment (MOHR)

Receivership processing (MDI)

Registration of company (SSM)

Source: Author

50

CHAPTER FIVE: THE BURDENS OF LICENCE RENEWAL

5.0 Regulatory Burdens in the Private Hospital Sector

The stringent regulation of private hospitals came into being with the enactment of the

Private Healthcare Facilities and Services Act 1998 (Act 586), but was implemented only

on the first of May 2006 with the gazettal of the Private Healthcare Facilities and Services

Regulations (Private Hospitals and Other Private Healthcare Facilities) Regulations 2006,

P.U. (A) 138/2006. As discussed in Chapter Four, this is a highly prescriptive Act

specifying the regulatory requirements for establishing, maintaining and operating a

private hospital. Few regulations are perfectly designed or implemented, and regulatory

burdens arise from different sources. Unnecessary burdens can come about due to

poorly prescribed requirements or from inefficient means of implementation and/or its

processes. Regulatory burdens can increase overall cost to the business and often this is

passed on to consumers. Poor regulatory regimes can impact negatively on the

development and growth of the private hospital sector.

In order to determine the regulatory issues that might be burdensome to private hospitals

feedback was obtained from a sample of private hospitals. This was done by conducting

interviews with senior representatives from a range of selected private hospitals across the

country. Interviews were carried out from May 2013 to August 2013. The private hospitals

were selected from the members list of the Association of Private Hospitals Malaysia

(APHM) which is published on the website www.hospitals-malaysia.org. This chapter

reports on the analysis of these consultations. Depending on subsequent feedback the

final findings of this study may change.

From these exploratory interviews, a total of 27 respondents from 12 organizations (11

private hospitals and APHM) were interviewed. The organizations interviewed were from

Penang (2 hospitals), Selangor (2), Kuala Lumpur (2), Melaka (2), Kuching (2) and Kota

Kinabalu (1).

After the preliminary analysis of the interviews, the research team then verified the

findings with the respondents by getting further comments and inputs from them. The

summary of the feedback from the interviews is given in Appendix 5.1. This was then used

to draft this chapter which proposes options to the key issues raised by the respondents.

The Draft Report provides the basis for a public consultation to be carried out with the key

stakeholders - the private hospitals, medical professionals and the regulators.

From these exploratory interviews nine key issues of regulatory burdens that are of most

concern to the private hospitals related to:

1. the renewal of operating licences

2. the planning approval for facilities improvements (including upgrading renovation,

expansion, any physical changes)

3. approval for advertisements and advertising materials

4. workforce regulation and quality and availability of professionals

51

5. exports of healthcare services (Health tourism)

6. personal data protection

7. Malaysian Standard for Quality Healthcare (MSQH) accreditation;

8. regulated medical fees

9. information and reporting.

The concerns about these key issues (summarized in Appendix 5.1) were sent to those

interviewed for their validation and further input. At the end of August 2013 the responses

that were received were then summarized as in Appendix 5.2. This chapter discusses the

issues relating to licence renewal for private hospitals.

It is important to note that the issues raised were the experiences of the respondents in

dealing with the regulatory regimes and the regulators. They are based on their

perspectives and their experiences with regulations were not all the same. Certain issues

impacted more on some respondents and less on others. This variability in experience

may also reflect inconsistencies in the implementation of the regulatory regimes by the

different regulatory officers. The regulators concerned may not agree with the perceptions

of the respondents and have their own views on the issues. This is to be expected for it

would indicate the gaps on understandings between two parties. It will be important to

understand any differences in perceptions and resolve them in ways that maintain the

effectiveness of regulations while removing unnecessary burdens on business. It is hoped

regulators will provide their views on these matters to MPC.

5.1 Licence Renewal

Operating licensing renewal appears to be the most burdensome aspect of private hospital

regulation. This is because there are many requirements in the governing Act 586 and its

accompanying regulation PHFS Regulations 138/2006.

One aspect is the regulatory requirements as prescribed in the PHFS Regulations

138/2006 and how these regulations have been implemented. Implementation concerns

involve a few different issues. Some issues may be more complicated and may take longer

to study and implement, while some may be taken as “quick-wins”.

Another aspect is the regulatory burdens as reflected: on the basis of the number of

interactions (dealings with regulators) and the difficulty experienced; the cost of each

interaction (direct cost, overhead and opportunity costs); and the waiting time (delays and

their consequences). The regulatory burdens of most concern include:

1. documentation required for renewal application submission (Section 5.2)

2. complying with PHFS Regulations 138/2006 (Section 5.3)

3. dealing with licensing officers (on-site inspections, audits, or surveys) (Section

5.4)

4. fragmented processes among multiple regulators (Section 5.5)

5. annual Practising Certificates for all healthcare professionals (Section 5.6)

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5.2 Issue No. 1: Application Documentation

An application for operating licence renewal requires a lot of documentation, which

involves a huge burden in paperwork and administrative overheads for private hospitals.

An example of the burden for a large private hospital is shown in Box 5.1. Documentation

requirements for personnel are a huge burden. For example, if the hospital has 500

personnel, at least 500 interactions (with regulators) are required to prepare the

documentation for licensing personnel.

Box 5.1: Estimated Costs and other Burdens

This is a feedback from a large private hospital in a state outside Kuala Lumpur: The hospital has over 350 beds with 1500 employees with over a thousand licensed medical professionals (doctors, nurses, dentists, medical assistants, etc). Licence Renewal: 1. Estimate cost of processing and licence fees : >RM10,000; 2. Duration to obtain approval – approx. 9 months; 3. Estimated amount of paper required for submission – 25 reams of A4 paper; 4. All documents are to be submitted in 3 sets and all the Annual Practising Certificates are

required to be certified. This includes certificates for staff from the non-allied health professionals and those in non executive positions. (All board members and senior management personnel also have to obtain the statutory declarations of good standing).

Planning Approval for Renovation 1. Estimate of cost – processing fee of RM1000; 2. Time to get approval – approx. 6 - 9 months; 3. Number of interactions (meetings) with regulators – via tele-conversation; 4. Documentation requires hospital to provide precise drawings. This is costly and time

consuming and of doubtful benefit if the renovations are not major Source: Author (additional input from interviews is added in “italic”)

Documentation requirements include occupational licensing for healthcare professionals

in the form of annual practising certificates (APC). These have to be cleared first by the

various boards, registrars and councils. Should there be a delay in any one of, the

licensing process is delayed. Compounding this burden is the need to submit the

licensing application at least six months before the current licence expires (explicitly

stated in PHFS Regulations 138/2006). A delay in submission results in a heavy fine. The

occupational certificates need to be collected, duplicated (three copies) and each page

as a certified “true copy” by senior management and then collated for the submission.

It takes little imagination to see the administrative and secretarial difficulty and burden of

the documentation process and yet is not clear that it is legally required to fulfil regulatory

requirements nor served a useful purpose. While for non-healthcare professionals,

statutory declarations must be made depending on the number or persons involved it is

quite common to increase costs by a few thousand Ringgits. Considering this burden,

various options might be considered. As well as providing all this written documentation,

the hospitals must also provide the same information over the Internet. So there is

duplication in supplying information.

5.2.1 Option No. 1: No change and continue with the existing practice

There is always the option of making no change and continuing with current practice and

letting the private hospital sector continue to bear the burden (and also the resulting

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administrative burden to the regulators). The situation can only become more costly with

time as more private hospitals and other healthcare facilities come into being and the

regulators become more overloaded than they are now. The long term impact is a lot of

lost opportunities to improve productivity on the non-value added activities such as the

unnecessary paperwork. The burden will continue to be translated into overhead costs

and which ultimately fall onto the consumers, negating the policy objectives of cost

containment, sustainability and affordability. It will continue to reduce Malaysia’s

healthcare export competitiveness and keep costs to local users higher than they need

be.

5.2.2 Option No 2: Using information technology

This would be a relevant solution to any sort of data and information management and

processing. The MOH is in the process of using ICT to carry out information transactions.

An online information submission was being implemented at the time of the interviews.

However, the online system was not easy to use and unstable and the hospitals had to

submit online and at the same time submit documents the current manual way. Going

online and using IT for managing processes without changing and re-engineering the

paper requirement results in increased rather than decreased costs to private hospitals.

The change from “evidence-based” practice to “information-based” practice (see Option

No. 3 below) will reduce the information load and simplify information processing may be

a good example towards successful online application.

Instead information could be compressed into digital form for submission (a USB storage

drive) thereby eliminating the need to produce hard copy documents for submission. This

would significantly reduce the paperwork burden. A total online solution always looks

good and desirable, but it is a highly challenging change. Such solution need to take into

consideration the IT resources of the applicants and the Internet capability of the

applicants’ locality.

5.2.3 Option No 3: Moving from “evidence-based” to “information-based” by removing

duplication of requirements by different regulators within the MOH

The requirement for occupational certificates to be certified as “true-copies” basically is to

ensure validity of the documents, which is termed here as “evidence-based” concept. This

occurs because different arms of government are not coordinating their information

requirements. This results in a duplication of information requirements on business which

is contrary to best practice. Healthcare occupational licences are issued by regulators

within the MOH. In other words, the evidence sought by the private hospital licensing

authority, in this case the Private Healthcare Practice Control Branch (CKAPS) of MOH,

are already held within the MOH such as the Malaysian Medical Council, the Nursing

Board among others. Given they are all regulators within the MOH, the question arises,

“Why does the regulator need to seek such evidences from the licensee?” What the

CKAPS needs is the latest employment information, which can be obtained from these

Councils and Boards for it to cross-verify with the other databases of occupational

licensees. If this was implemented, the total burden of preparing occupational

documentation would be significantly reduced for private hospitals. Hospitals would only

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need to generate their employment information from their human resources databases to

meet the application requirements thereby reducing overhead cost to near zero,

administrative and secretarial processes efforts and time to near zero, and even reducing

the burden of document management significantly for the regulator. The regulator will be

able to reduce their filing and records burden significantly.

5.2.4 Recommended Option to Resolve Issue No. 1

It is recommended that the Medical Practice Division – Private Medical Practice Control

Section (CKAPS) of the MOH pursue Option No. 3 above to resolve the issue on

application documentation involving occupational and personnel certifications. The

regulators should follow the one-government (single-window) policy in dealing with

businesses.

5.3 Issue No. 2: Complying with Licensing Requirements

The governing regulation for private hospital licensing is the PHFS Regulations 138/2006.

The implementation of this regulation in the licensing process integrates all other

regulatory requirements from other regulations such as fire and building safety,

machinery and equipment safety, environment, safety on drugs usage, information

asymmetry, patient rights, public safety and the like. The outcome of integrating all these

into a single licensing process has created complexity and seriously burdens the

licensees and the regulator. For example, the application process and the required

documentation has become highly burdensome, as discussed above. Hence, an

important aspect of this analysis is to look at the requirements of this governing

regulation.

The PHFS Regulations 138/2006 [1]

This document is comprehensively crafted to meet the regulatory intentions for private

healthcare facilities and services. It is also a highly prescriptive regulation. There are some

benefits from good prescriptive regulation. It provides for standardized regulation across

private hospitals - facilitating regulators to be consistent in applying objectively the

prescriptive requirements, at least in theory. Prescriptive requirements are also be helpful

for those who are not well-versed in quality health care, and the minimum specifications

should enable them to achieve the minimum standard for quality care.

However, prescriptive requirements can pose serious challenges to both the hospital and

the regulator. They tend to reduce the motivation to achieve beyond the minimum stated

requirements and innovation may be restricted. An example from the interviews is the

requirements to record all drug prescriptions into a physical register (a bound book). It was

claimed that the auditor refused to accept the electronic register and therefore the

electronic data had to be printed out and bound into a physical register (book). This

example of a prescriptive requirement is from the Poison (Pyschotropic Substances)

Regulations 1989 where Regulation No. 23 on “Form of Register” states that:

Every register required under these Regulations shall:

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a) be in the form of a bound book or in the form which has the written approval of

the Licensing Officer; and

The licensing officer has conveniently ignored the part “…or in the form which has the

written approval…” in her decision.

Prescriptive requirements can go into too much detail imposing rigidity in operations and

can be impracticable to apply. For example in the PHFS Regulations 138/2006,

Regulation No. 151 on “Newborn Nursery Room” specifies that:

(1) A newborn nursery room shall be sufficiently large so that bassinets will stand

at least 15.2 centimetres from the walls and partitions and be spaced at least

0.3 metre apart and aisles used for passageways shall be at least 0.9 metre

wide.

While these requirements may be unnecessarily restrictive in themselves, measurements

of distances, etc. can add an extra burden In this case, questions arise as to whether the

measurement needs to be specified to 0.1 centimetre accuracy. Also, while spatial

dimensioning is a guide for good management practice, when explicitly stated in a

regulation, it becomes an offence in law. There are also other requirements relating to the

physical layout, utilities (water, electricity, telecommunication and sewerage system), air

conditioning and ventilation which are highly prescriptive and explicitly specified in the

regulation.

On this, it is important to understand the differences between regulatory requirements

relating to physical dimensions and the management of dimensions. Regulation specifies

absolute numbers while management deals with variability. Therefore the practical

concept is of a tolerance limit to be used in managing risk. If regulators were transparent

about their concept of tolerance limit in physical dimensioning and the objective being

served by these requirements it would both increase regulatory effectiveness and reduce

unnecessary burdens on business.

Many private hospitals that were established before 2006 did not meet the explicit

requirements of the regulation. As many of the requirements involve the physical building,

they are costly and inconvenient to upgrade. However, this should not be the excuse for

not meeting regulatory requirements for quality care and the MOH has given reasonable

time for the hospitals to make the improvement changes. Also, unless it can be

demonstrated that these precise dimensions must be met to address significant risks, the

idea of grandfathering the regulatory requirements should be applied – this means existing

buildings do not need to meet these requirements unless they undertake renovations.

Newly-built hospitals have less concern with this issue as they are built according to the

explicit requirements. Nevertheless, the prescriptive nature of the regulation is posing

serious regulatory burdens to private healthcare providers which appear to be

unnecessary. To the author’s knowledge, there is scan analysis on the impact of the

governing regulation on private hospitals, except for the recent study of Nik Rosnah and

Lee 2011. The study concluded that full compliance with these regulations remained a

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challenge and they do not contribute to achieving ultimate objectives with regard to the

quality of private healthcare. What are the options then?

5.3.1 Option No. 1: No change

If no affirmative action is taken, negative experiences with regards to complaints, overload

of work, etc. are likely to increase. This will penalise hospitals unnecessarily by requiring

them to satisfy prescriptive requirements which are unnecessary to achieve regulatory

objectives. This, in turn, will restrict growth of healthcare unnecessarily and adversely

impact on the national aspiration of liberalising healthcare and making it an economic

growth sector. If the growth of private hospital services is constrained this will put a

greater load on public hospitals. Taken from the perspective of the total health system,

shifting some of the load from the public hospitals by those who could afford out-of-pocket

payment for private healthcare services will improve accessibility for the middle and lower-

income groups to public hospital services.

5.3.2 Option No. 2: Review the PHFS Regulations 138/2006 and Adopt Best International

Practices

A special study could be conducted to revisit the governing regulation and benchmark with

Australia or another country on private hospital regulation.

In Australia, more requirements for regulating private hospitals are established as

guidelines which are not mandatory while regulations are more performance basede. The

Private Hospital Guidelines – Guidelines for the Construction, Establishment and

Maintenance of Private Hospital and Day Procedure Facilities [3] provide specific

guidance and indicate which requirements are mandatory ans which are “advisory”. The

Australian guidelines have included the notation:

“Formatting of the Guidelines has been designed to assist the user. Bold text

identifies important or mandatory requirements. Mandatory requirements

are identified by the word shall.”

In the glossary of terms:

"shall" - implies that the referenced requirement is mandatory.

"should" - implies that the stated requirement is recommended, but is not

mandatory [1].

Guidelines are like the system standards such as the ISO 9000 Standards and such

Standards are reviewed on a periodic intervals, usually every 5 years; by a Technical

committee, which monitors and studies the use of the Standards over the period.

There is also another guideline, Australasian Health Facility Guidelines, Revision V4.0

(2010), by the Australasian Health Infrastructure Alliance (AHIA) in Australia and New

Zealand for reference by private hospitals. The PHFS Regulations 138/2006, are unlike

Standards in that every requirement is mandatory and not complying with any constitutes

an offence in law. Offences for non-compliance under this regulation would result in stiff

penalties, either hefty fines and/or prison terms. Where the requirements are not crucial to

ensuring a safe health service, they impose unnecessary burdens on private hospitals.

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This option would involve the MOH analysing the conceptual development of this

governing regulation and learning from the experience since its implementation, to make it

more pragmatic, without compromising the policy intent. In some cases, outcome-based,

process-based or performance-based requirements might be considered. Any of these

requirements would provide opportunities for private hospitals to make innovative

improvement to their delivery services and management systems.

5.3.3 Option No. 3: Transparency through Continuing Education on Licensing Requirements

Another way to achieve the policy intent of good quality healthcare is to educate private

healthcare providers on the requirements of the governing regulation and other related

regulations on a continuing basis. This would not only ensure that there is a proper

understanding of the requirements but also, through greater transparency, increase

understanding of the expectations of the licensing officers. Such an initiative would

appropriately be undertaken by the MOH. As it is the authority of the governing regulation

it could provide expert inputs to the private healthcare providers. The licensing authority

should be transparent in its expectation of the licensee and on how it carries out the

licensing evaluation, on its inspection and auditing procedures, and give reasons for what

it is doing. On this, there should also be consistency among licensing officers at all levels

(state and Putrajaya). As the governing Act is so complex, such understanding can only be

achieved through continuing education and communication between regulators and

licensees.

This continuing education is also applicable and necessary for all the officers involved in

the licensing process, in order to ensure common understanding of requirements and

ensuring transparency of regulators actions. This could be termed “calibration” of the

people doing the assessment and evaluation to reduce variations and inconsistencies.

5.3.4 Recommendation to Resolve Issue No. 2

It is recommended that options 2 and 3 should be considered by the Medical Practice

Division – Private Medical Practice Control Section (CKAPS) of the MOH for immediate

action. The PHFS Regulations 138/2006 have been in operation for over seven years and

the MOH and the private hospitals should have sufficient knowledge and experience of it. It

would be consistent with the current initiative on modernising business regulations to

review its contents and incorporate appropriate global best regulatory practices. Option

no. 3 on continuing education of stakeholders should be an on-going exercise as people,

technology and practises change. This is a win-win situation whereby the licensee will

have good understanding of the requirements of the regulations and the expectations of

the implementing authority, and with this understanding the licensee will be able to meet

the expectations and thereby ease the task of the licensing officers.

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5.4 Issue No. 3: Dealing with licensing officers (on-site inspections, audits, or surveys)

There are a number of concerns when dealing with licensing officers which i contribute to

burdens of delays and wasted efforts. One concern is the variation in the assessment

results. There are cases where an assessor cites requirements that are different from

another assessor, or where different levels of strictness are used in assessing whether the

requirements of the PHFS Regulations 138/2006 have been fulfulled. Such variations

create confusions for the licensee and at times result in costly (and possibly unnecessary)

corrections being made. As noted above, the PHFS Regulations 138/2006 is an

extensively prescriptive document covering a wide area of specialties from clinical

management, general management, policy making, human resources management,

medical technology, and different types of other regulations. Ensuring consistency among

different assessors requires careful calibration of assessment competency. Compounding

this is the frequent transfer of officers within the Ministry. Inconsistency in the interpretation

of the prescriptive requirements has been identified as an issue. It has also been cited that

different auditors apply different levels of stringency in assessing requirements.

Communicating with Licensing Officers has always been a hassle for the licensee. There is

always the difficulty of contacting the right person for information, follow-up or consultation.

Hospitals complain that the officer-in-charge for the particular licensing is frequently

unavailable. This is understandable as Licensing Officers are heavily loaded with work as

there are more than 200 licensed private hospitals and other healthcare facilities that the

licensing department has to deal with. Some hospitals find that tele-consultations are

frequently ineffective in resolving issues and have to travel to Putrajaya in person for

consultations, but even then problems might not be resolved in a single visit. This means

additional costs and inconvenience to hospitals. Is the limited business understanding of

the regulatory requirements due to the regulators not transparent in their processes and/or

the requirements?

The need to submit extensive amount of documents for vetting and assessment and then

to carry out on-site audit or assessment, results in a lot of duplication in the licensing

process. Submissions should be for the purpose of preparing the on-site assessment or

inspection programme and most of the information should be assessed on-site. This is

important because with on-site assessment, the auditors see the real thing, particularly

when the period between submission and the on-site assessment may be many months

apart. (Note that the submission has to be made at least six months before expiry of the

current licence).

5.4.1 Option No. 1: Transparency through Separating Auditing from Licence approval

As discussed in the previous section, transparency in requirements and processes would

contribute to reducing burdens and inconveniences for the private hospitals. If the

submissions are made “right the first time” because requirements and processes are

transparent, then the need for consultation would not be limited. Transparency is better

achieved through continuing education than face-to-face consultation between licensee

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and regulator. The principal-agent theory is relevant here and requires limited face-to-face

interactions which might compromise its intent. To many face-to-face interactions between

licensing officer and the applicants may result in conflict of interests or lead to undesirable

practices.

5.4.2 Option No. 2: Transparent Standard Operating Procedure

Good regulatory practice requires the regulator to adopt a Standard Operating Procedure

(SOP) for the licensing process which is also transparent to the licensee. The licensee

must be provided with some degree of assurance that its application will be successful.

Refusal to renew private hospital licences has very serious consequences and must only

occur if the hospital demonstrably poses high risk to good patient care. A hospital

operation cannot simply stop overnight as there are in-patients and long-term follow-up

patients to consider. Because of the costs involved, the licensee needs to know the

criteria, the process and the timing – the process can take up to six months. With a

transparent SOP the licensee could track the licensing progress and take any corrective

actions to achieve the licensing requirements should there be any observed weaknesses

in the hospital system. The details for such a SOP have to be established and it would be

essential that traceability and tracking and promised timelines are built into the total

process.

5.4.3 Option No. 3: Establishing a Help-desk

An immediate action that the MOH can do is to establish a Help-desk facility for resolving

issues over the telephone or through the email. What is important here is to be able to

provide feedback and progress tracking to the applicants and also provide expert inputs to

resolve any issues or areas of non-compliance. The intention of licensing is to ensure that

private hospitals meet the minimum regulatory requirements.

5.4.4 Option No. 4: Providing Appeal Provisions

The licensing renewal process is burdened by the highly prescriptive nature of the PHFS

Regulations 138/2006, the variation of competency of licensing officers and auditors, the

conflicting objectives and business and regulations, the risk level of hazard and the

likelihood to compliance. Such complications would invariably result in differences between

regulator and the hospitals. As many differences may be subjective in nature, it would be

appropriate to have an appeal provisions for licensing renewal. An appeal mechanism

would allow any disputes in opinion or interpretation to be heard fairly and decided by an

independent third party.

5.4.5 Recommended Options to Resolve Issue No. 3

The short-term solution would be to adopt Option No. 3 by the Medical Practice Division:

Private Medical Practice Control Section (CKAPS) of the MOH, i.e. to set up a Help-desk

facility for dealing with private healthcare providers. This would alleviate the uncertainty

experienced by the licensees.

The recommended options for the long term are Option No. 2 and 4 – to establish a

transparent SOP for the licensing process where the licensee can track the progress of her

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application and would feel assured of getting licence approved, or to appeal for any

rejection.

5.5 Issue No. 4: Fragmented Processes

Licensing issues also involve different units, divisions and different regulators within the

MOH itself. To cite some key players, there are the engineering department, the licensing

department, the pharmaceutical services, and the various professional licensing boards

and councils that the licensee needs to interact with throughout the licensing process. In

theory, CKAPS is the single window to the licensing of private hospitals, but the reality is

different. Then there are the other regulators outside of the MOH that the licensee has to

satisfy first before the license application could be made. There are the DOSH, BOMBA,

DOE, JPJ, Immigration, and the local authorities among some of the key players. The roles

of all these players are explicitly or implicitly specified in the governing regulation. These

fragmented processes lead to huge burdens for private hospitals.

5.5.1 Option No. 1: No direct action

To continue with the existing situation means that the private hospitals will continue to bear

the regulatory burdens resulting from the fragmentation in the regulatory regimes.

5.5.2 Option No. 2: Redefining the regulatory oversights functions

Where there is fragmentation it is likely the Local Government licensing authority is

duplicating the oversight functions of other regulators. In many instances, fragmentation

leads to duplications in assessment, evaluation and inspection. In the current situation,

there are a number of regulators that implement various regulatory regimes under various

Acts relating to business operations.

The regulatory oversights for healthcare professionals are provided by their respective

Acts and Regulations, such as the Medical Act for medical doctors, the Dental Act for

Dentists, Nurses Act for nurses, and so forth. The regulatory regimes involve registration

with the various councils or boards and through the issuance of Annual Practising

Certificates. For fire safety, the oversight function is with the BOMBA under the provision

of the Fire Services Act. Regulatory oversights for passenger lifts and pressurised medical

equipment, they come under the Factory and Machinery Act which is the responsibility of

DOSH. Oversight for safety of radioactive equipment and use of radioactive materials for

medical purposed comes under the Atomic Energy Licensing Act under the purview of the

Engineering Department of MOH. The details of these regulators and their oversight

functions are provided in Boxes 4.2, 4.3, 4.4 and 4.5 in Chapter Four.

The oversight function of the private hospitals licensing authority in the MOH is to ensure

that the management, operation and maintenance of private hospitals comply with the

requirements of the PHFS Regulations 138/2006. The MOH need not duplicate the

oversight functions of other regulators. The licensing process is to ensure that the

management systems and the facilities are adequately maintained and in compliance with

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all the established regulations. The private hospital licensing authority has to review this

and ensure that its processes do not duplicate the functions of the other regulators.

5.5.3 Recommended Option to Resolve Issue No. 4

Option No. 2 should be into serious consideration by the Medical Practice Division: Private

Medical Practice Control Section (CKAPS) of the MOH. The other regulatory oversights

functions should be assumed to be effectively carried out and the licensing processes

should only involve random and sampling inspections on these oversight functions in the

licensing audits of the hospitals. For example, there should be sampling inspections of

Annual Practising Certificates (APCs) during the on-site licensing audit to ensure that the

management system for occupational licensing is adequately maintained. Any observed

inadequacy should then be corrected followed by appropriate corrective actions by the

management.

5.6 Issue No. 5: Annual Practising Certificates for Healthcare Professionals

The current practice on this requirement invariably adds significant burdens to the

licensing process for private hospitals. For the individual medical doctors, dentists,

pharmacists, etc. this regulatory regime is of little burden – after all it is only once a year

requirement. However, for a hospital that may have, say 500 healthcare professionals, the

burden of having to monitor and process these certificates for the licence renewal is

significant.

It appears that the expiry of APCs has been standardized at the 31st day of December

each year. The Health Facts 2013 statistics showed that there were 38718 medical

doctors, 4558 dentists, 9652 pharmacists, 11846 medical assistants and 84968 nurses

registered in the country for the year 2012. One can imagine the kind of workload at the

end of each year on the issuance of APCs. Any hiccup in the issuance processing system

will invariably cause problems to the private hospitals.

There has been a suggestion that healthcare professionals apply for their renewal of their

APCs more than six months before expiry of existing APCs so that the renewal of hospital

licences is not affected. This of course is a total disregard to good management practises

in process efficiency, delivery timeliness and the client charter, and disregarding the

objective of APCs.

5.6.1 Option No. 1: No change to existing practice

The regulator could choose to disregard all the consequential burdens arising from the

issuance of APC and let the industry find its own solution to any issues arising. This would

mean the significant burdens on private hospitals would continue.

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5.6.2 Option No. 2: Online Registrations

The obvious solution is to have a totally computerized and on-line system to handle

activities. The use of an integrated on-line system would reduce the burden of application

for renewal of APCs for the healthcare professionals but the initial outlay for such a system

will be high and the maintenance of an online system is generally costly. In any case, it is

necessary to migrate towards such a system in the near future, if it is not already in the

pipeline.

5.6.3 Option No. 3: Revamping the APC concept and practice

An option is to relook at the concept of renewing APCs. What is the purpose of renewing

the certificate? Can it not be an automatic renewal? Application for renewal can be

converted to notification, in which case, there is no need for issuance of a certificate – only

the original certificate on first application. The regulator can maintain an on-line register of

APCs for the public reference. What the regulators need are the annual fee and the

updates of information e.g. Continuous Professional Development (CPD) updates. In this

manner, there will be no more hassle in private hospitals licence renewal with regard to

APCs because all the required information would be available in the on-line register.

5.6.4 Recommended Option on APC

It is always a better to adopt a better solution than to have an improvement on a less

efficient option. In this case, Option No. 3 is recommended as it will be a win-win solution

both for the regulators and the healthcare professionals and the private hospitals.

Changing the concept of operation will eliminate the operational burden for the regulators,

reduce hassles faced by every healthcare professional and reduce the paperwork and cost

burdens for private hospitals, as well as the various boards and councils such as the

Malaysian Medical Council, Malaysia Dental Council, Malaysia Nursing Board, etc. that

issue the APCs.

5.7 Concluding Remarks

As discussed earlier, there are two perspectives on the issue of licence renewal: the

design of the regulations and the implementation or administration of the regulatory

regime. It is not a matter so much of selecting the best options, but to prioritize the

implementation of the relevant options in the most efficient manner. Maybe resolution

would be a more appropriate term than option here, but we shall stick to option as it is the

common term used in regulatory review. For example, the review of the PHFS Regulations

138/2006 ought to be made periodically, say every five years. This is to ensure that it is

up-to-date with changing technology and management practices. Together with this, the

regulatory system and processes should also be reviewed in line with the review of the

regulation. So, these two areas are not options but part of the principles of transparency

and accountability of regulators.

Many of the issues would likely not arise if Good Regulatory Practises (GRP) had been

adopted. GRP is organized on a set of principles which were discussed in Chapter 3,

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where an example of Best Regulatory Practise Principles is illustrated in Box 3.5. At this

point of the discussion, it is important to emphasize two key principles here –

Transparency and Accountability. The definition given in the example cited is as follows:

Transparency and Accountability: reflected in the principle that rules

development and enforcement should be transparent. In essence,

regulators must be able to justify decisions and be subject to public scrutiny.

This principle also includes non-discrimination, provision for appeals and

sound legal basis for decisions.

Here, transparency, to put it simply, means that the business that is being subjected to a

particular regulatory regime must be informed in sufficient detail on:

a) What is being done?

b) How will it be carried out?

c) Why is it carried out in that manner?

d) Who will do it?

e) When will it take place?

Accountability, on the other hand, refers to the responsibility on the regulator to report its

performance and actions to interested parties, and in particular, the directly affected party.

Here it is a matter of telling the interested parties what the affected parties should know. In

other words, regulators must justify their decisions and actions with evidence and rational

explanations. Added to this, there should be an appeal mechanism so affected parties who

disagree with any decisions can appeal. This key principle is conspicuously absent in our

regulatory regimes and needs to be addressed immediately.

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CHAPTER SIX: THE BURDENS IN PLANNING APPROVALS, WORKFORCE

REGULATION, MEDICAL ADVERTISING AND REGULATED MEDICAL FEES

6.0 Regulatory Burdens in Private Hospital Sector 2

The exploratory survey carried out raised nine key issues contributing to the regulatory

burdens on private hospitals. Chapter Five analyses the various issues relating to the

renewal of operating license for private hospitals. This chapter will discuss and analyze

the following issues:

1. The planning approval for facilities improvements (including upgrading renovation,

expansion, any physical changes);

2. Workforce regulation and quality and availability of professionals;

3. Approval for advertisements and advertising materials

4. Regulation on medical consultation and procedure/treatment fees

It has to be noted that the analyses and the resulting explanations could be hypothetical.

As such these would need further verification with other healthcare players and the

regulators in order to add them more substance. These will be done through further

meetings the regulators and further consultation with the players for their inputs to these

analyses in the next stage of analysis. The options are formulated in a kind if heuristic

manner to resolve these difficult issues.

6.1 Issue No. 1: Planning Approval for renovation, upgrade, extension, etc.

The approval for any changes in existing facilities (renovation or upgrading) or expansion

of facilities (extension or addition of new facilities) is of concern to private hospitals as the

process takes too long with too many interactions involved. It appears that there is no

differentiation between minor and major changes as the principle regulator treats all the

approvals the same. When the waiting time for approval takes too long together with an

uncertain lead time it would adversely affect the hospital planning efficiency. Process

uncertainty and unreliability give rise to unnecessary burdens for the private hospitals.

6.1.1 Option No. 1: No change and continue with the existing practice

No action means that private hospitals would continue to bear the burden on uncertainty

and unreliability of the approval process. Continuing with the status quo would add

inefficiency the private hospitals operation and additional cost burden which would

eventually pass down to the consumers. In the long term it would stifle the development of

private hospitals and defeat the national aspiration of universal access, healthcare cost

containment and growth.

6.1.2 Option No 2: Eliminate Planning Approval for minor renovation

Eliminate the need for approval for all renovation of private hospitals facilities and

replacing it with notification. It would be appropriate for planning approval to be required for

new buildings or major extension to an existing building. The rationale being that the

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existing hospital has already gone through the licensing process and has met the licensing

requirements during its establishment. The notification would allow the regulator to plan for

the on-site inspection during the licence renewal.

There could be different categories of approval for upgrading renovation of existing

building (major or minor renovations), for major extension or addition of new facilities or for

construction of new buildings. For minor renovation or upgrading, notification could replace

approval as on-site inspections could be carried out during the licence renewal. This would

enable hospitals to plan and carry out continuous upgrading of existing facilities without

approval uncertainty.

6.1.3 Option No 3: Adopt Risk-based Approach for Planning Approval

The regulator might opt for a risk-based approach to regulating planning approval. Risk-

based methodology takes into consideration the evaluation between the level of hazard

and the likelihood of compliance together with the measures on potential consequences

with their probability to decide on the level or degree of regulatory control needed [2]. There

could be different levels of approvals with different fixed lead time depending on the

magnitude of the changes and the level of hazard. Guidelines for this would be crucial and

this would reduce the burdens of the approval process.

6.1.4 Recommended Option to Resolve Issue No. 2

Option 3 should be pursued as there cannot be “one-size-fits-all” process in a competitive

environment. What is more important is that there should be reliable lead time for planning

approvals that would facilitate the hospital in its management planning. Large variation in

lead time leads to uncertainty and results in unnecessary burdens to hospital

management. The Medical Practice Division: Private Medical Practice Control Section

(CKAPS) of the MOH should consider this recommendation.

6.2 Issue No. 2: Workforce Quality

Occupational licensing is an important regulation for healthcare professionals. High degree

of competence is required in the healthcare services as we are dealing with safety and life

of the patients. The regulatory regime, however, has been a significant burden in hospital

licence renewal. This has been discussed in Chapter Five. The other key concerns are

with regards to the availability specialists and quality of new graduate health professionals.

We are also aspiring to be world-class in healthcare services and therefore the

competitively high standard for quality care must be maintained. These are not only

dependent on the best healthcare technology invested or the management best practices

adopted. High quality, competent and committed healthcare professionals are crucial here.

With the importation and adoption of advanced healthcare technology and new

sophisticated treatments and procedures, specialists’ skills are in great demand. There

have been shortages in specific skills in the industry and it is very challenging to maintain

the balance of available medical facilities with the skilled resources. To compound the

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problem is the frequent “brain-drain”, where specialists in the country are bought over by

better offers elsewhere. The demand for specialists is world-wide. The private healthcare

providers have to compete internationally for specialists healthcare resources. Current

immigration policy frequently becomes burdensome for recruitment of such skilled

workforce from the international market. It takes special created vehicles like the Talent

Corporation and the Iskandar Development Corporation to tackle such burdens.

Commercialization of medical education seems to take its toll on the quality of fresh

graduates in the country, where two areas seem to be of major concern in the current

situation. There are the graduate medical doctors and nurses. Commercial educational

institutions have to grow their market and revenue and also to achieve a certain level of

return on investment. In the past, when there is limited intake by education institutions,

only the best students with the greatest enthusiasm for the specific profession do get into

the institutions. For the medical profession, this natural demand-supply constraint ensures

that only the best students become medical doctors or the most committed students

become nurses.

Another important observation is that even the best students did not make it through their

undergraduate studies. The first year into the course would invariably filter out some of the

less suitable undergraduates. So we would expect that when you intake candidates will

minimum qualifying grades, then there would be more being filtered out in the course.

However, in a commercial context, failing candidates do not make for good business. Here

then lies the tension between business objectives and the need to produce high quality

professionals.

With commercialisation of education, any students with the minimum qualifying grade but

can afford out-of-pocket payment can enter for any professional education. To make it

possible for even those who cannot afford out-of-pocket payment, there are easy

government loans and even commercial loans for this. An example is the listed company

Masterskill Education Group Berhad (MEGB), which provides education for the nursing

profession. The ambitious corporation expanded quickly after its Initial Public Offering

(IPO) of its shares. It has been highly dependent of the government education loans

facilities through the Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN)

[http://www.ptptn.gov.my/] for its intake of students. It started to produce large number of

graduate nurses1. There are also other non-public listed institutions in this business of

medical education. The result is that we have large number of nurses which the private

hospitals do not want because they found that the quality graduates are not up to their

requirements. This has been a hard learning experience for the country.

Note: 1 Author’s Note: The performance of MEGB could be studied from the Bursa Malaysia and other investment

research reports [http://www.bursamalaysia.com/market/]. This public-listed company performance has been disappointing, with the current market price of its share hovering at RM0.50 as compared to the IPO price of RM3.10. Whenever the PTPTN reduces the issuance of education loans, the company suffered in its performance. The current situation of a large number of unemployed graduate nurses has further dampened its market and revenue growth.

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Another aspect from the commercialization of health education is the imbalance between

supply and demand. The drive for growth on higher education in healthcare has not match

adequately the demand side of the equation, particularly for local graduates. Here, the

growth of healthcare facilities, in particular, the private hospitals has not match the supply

side, resulting in excess numbers of graduates, in this case nursing graduates. The

situation may not be so bad for medical doctors or dentists as these professionals can

always be self-employed, and the numbers involved are not that any. Nevertheless,

imbalance is also experience here and will be getting worse in the near future. In this case,

the imbalance is on the availability of houseman positions for fresh graduates to practise.

In the current situation, only public hospitals and teaching hospitals are providing

houseman training for fresh medical graduates.

The entrepreneurs are very good at bringing in educational products into the country as

can be seen from the vast variety of educational offerings over the last many years. We

are also good at re-engineering these products to suit our local demands. Unfortunately

not all knowledge products could be easily introduced effectively. In knowledge products,

there two types of knowledge contents – the explicit knowledge content and the tacit

knowledge content. We tend to import the explicit knowledge content – these being easily

purchased and transferred – but not so for tacit knowledge. Tacit knowledge remains with

the developers and instructors of the knowledge products. Tacit knowledge is gained

experientially through the applications of the knowledge products over time. So when we

bring in knowledge products and use instructors and trainers who do not process adequate

level of tacit knowledge (competence, experience, the research and learning) the end

result would be poor quality graduates. This can be particularly serious for professional

knowledge like healthcare and engineering.

For example, our medical education for medical doctors provided by the older public

universities like University Malaya, are world-class, and recognized by many countries.

Our public universities for medical courses take in only the best students because of

limited enrolment. The best of the best will have to compete for the intakes. Also, these

universities have teaching hospitals – the university hospitals - where medical

undergraduates could gain some form of tacit knowledge. The teaching faculty are highly

qualified with vast amount of explicit and tacit knowledge through their practices,

researches and teachings. The same situation is in the public nursing schools and those

nursing schools of private hospitals. Many of the private medical educational institutions

have limited such resources and teaching hospital facilities.

6.2.1 Option No. 1: Maintain existing practice

It is always possible not to take any positive action to alleviate the current issue. We let the

issue continue and carry out any recovery action on the consequences arising from this. In

other words, we let the market learn experientially, and the government to initiate any

correction or recovery action for any negative situation. For example, the government

initiative to introduce the Skim Latihan 1Malaysia (SL1M) initiative to mob-up the

unemployed graduate nurses in the market.

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6.2.2 Option No. 2: Monitoring Education Quality by the MOH

It is insufficient that regulators approved and licensed educational institutions on the

programmes and resources. Enforcement through on-site monitoring is required,

particularly for professional courses that will have impact on safety and health of the public

in the future. These monitoring must be made by the professionals themselves. As such,

the occupational regulators should be empowered to carry out such on-site enforcement,

or the respective professional bodies are engaged to do this. For example, the Nursing

Board needs to monitor the educational institutions for nursing education like MEGB, or the

Malaysia Nurses Association (MNA) or the APHM engaged to do this. The same should

apply to other healthcare professional education.

6.2.3 Option No. 3: A Formula for Supply-Demand Balance

There ought to be better planning on demand-supply of healthcare professionals in the

drive for growth in higher education. The regulators for both the MOH and the Ministry of

Education (MOE) need to work intimately together in their regulatory enforcement to

ensure an adequate demand-supply balance is achieve, particularly for healthcare

professional education as these knowledge resources are expensive to develop. A suitable

framework or formula needs to be formulated for this control.

6.2.4 Recommended Option No. 3 to Resolve Issue on Workforce

Although the quality of education may be a crucial issue here, the root cause for this

problem is likely the imbalance between supply and demand for healthcare human

resources. When the supply growth is higher than the demand growth, then the

unemployment and underemployment problem arises with costly consequences in terms of

waste in knowledge resources. This is where regulatory control can play its crucial role. It

is recommended that the MOH and MOE work together to formulate an appropriate

regulatory framework to achieve this demand-supply balance in healthcare human

resources in the country.

6.3 Issue No. 3: Approval for Advertisement and Advertising Materials

The private hospitals generally perceived that the current requirements on approval of

advertising materials are burdensome in terms of cost (the fee charge per approval at

RM100.00), the interactions with the Medicine Advertisement Board, the MAB, (particularly

for those hospitals located away from Klang Valley, the lead time (more than one week is

deemed too long for hospital management planning) and the paperwork (need to send

multiple hard copies for approval instead of on-line electronic media). Currently, the

application has to be made to Putrajaya for any approval and submission has to be in hard

copies. The approval process has to go through the MAB meeting chaired by the DG of

Health. Any postponement or cancellation of MAB meeting invariably leads to delay in

getting the approval.

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6.3.1 Option No. 1: Maintain existing practice

The private hospitals have to bear with the current system for processing approval. The

management would need to allow for at least three weeks for the approval of any

applications. The MOH has established and disseminated the guidelines for the purpose

on the web, and the private hospitals should refer to it for its operation. This would reduce

the non-compliance and the associated delay in approval.

6.3.2 Option No. 2: Electronic means of submission and application

An on-line application, submission and approval system is the logical requirements in this

era of ICT. Obviously, this has not been the case as yet.

6.3.3 Option No. 3: Change the approval application to notification using ICT

Since the guidelines for advertisement has been established and accessible in the

Pharmaceutical Services Division web-site, and also that the MAB is educating the

healthcare business through seminars (example: Seminar on Vetting Medicine

Advertisement, on 29 October and 3rd December 2013) MABcan consider the changing the

regulatory regime from approval to notification (and enforcement). Notification could be

made on-line. In this manner, private hospitals will not need to wait for approval and the

regulator could sanction them should they fail to comply with the guidelines.

6.3.4 Recommended Option No. 3

The liberalization process means that regulators need to move from the approval control or

licensing regimes to that of notification and enforcement regimes. As the private healthcare

industry matures, regulators should advance towards a more knowledge work such as

research and development and continuing education of the businesses rather than

continue with the current paradigm of regulatory control. In this manner, they can facilitate

business growth and promote business competitiveness in the healthcare sector. After all,

the Pharmaceutical Services Division of the MOH is well established and a mature

regulator in Healthcare products and services and has established and documented

guidelines and protocols in place as can be seen in its website,

http://www.pharmacy.gov.my/v2/en [see some references below].

6.4 Issue No. 4: Regulated Medical Fees

The regulation for medical fees has been there since private medical healthcare services

enter the economy. As for the private hospitals, the current schedule of medical fees is

established as the Thirteenth Schedule in the PHFS Regulations 138/2006. The schedule

of fees is an important instrument to put monetary value to an otherwise difficult-to-price

service. It provides the medical professionals with a sort of standard pricing for their

consultation services and the different medical procedures. At the same time this provides

some regulatory protection to consumers from over charging in a market where there is

high degree of information asymmetry [8].

“The asymmetry of information makes the relationship between patients and doctors rather different from the usual relationship between buyers and sellers. We rely upon our doctor to act in our best interests, to act as our

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agent. This means we are expecting our doctor to divide herself in half - on the one hand to act in our interests as the buyer of health care for us but on the other to act in her own interests as the seller of health care. In a free market situation where the doctor is primarily motivated by the profit motive, the possibility exists for doctors to exploit patients by advising more treatment to be purchased than is necessary - supplier induced demand…”

One key concern is the need for periodic review on the Thirteenth Schedule to ensure that

changes are aligned to economy and income growth and in keeping up with changes in

medical technology. In recent months there was the call by the Malaysian Medical

Association (MMA), which represents the physician fraternity in the country to review and

revise the medical fees in the Thirteen Schedule. It was reported in the local news that the

proposed increase ranges from 30 per cent to over seventy per cent on the scheduled

rates. Although the MMA has proposed an increase for the consultation fee by 30 percent,

the MOH has counter proposed the increase of 14.4 percent.

In general, the charges for medical services from private medical clinics in the country are

affordable to the lower and middle income groups. However, with continuing inflation, the

consumers are sensitive to any significant price increase. As there were 6675 registered

medical clinics in the country as at end of December 2012 [9], the general practitioner

business can be very competitive. To many general practitioners, the current regulated

fee is not lucrative.

However, the high and escalating costs of private hospital services continue to be a

serious issue with the public, particularly to the middle-income group. When compared to

public hospitals, the cost of specialist treatment at a private hospital could be 50 times

higher than that of public hospitals. The private hospitals could be “creative” in computing

hospital charges. For example, a recent report in the Sunday Star claimed that a 35 days

stay in a private hospital without a major procedure could still run up a medical tab of

RM60,000 [10]. Even with the high charges many private hospitals still struggle to achieve

reasonable returns on investment. The Association of Private Hospitals Malaysia claimed

that the overhead for running a hospital is extremely high. This begs the question on

whether the regulating of medical fees has contained medical costs.

It could be surmised that the PHFS Regulations 138/2006 does contribute to the high

overhead. The prescriptive requirements of the regulations meant that the hospital has to

bear a fixed overhead for its licensed capacity. For example, the number of nursing staff to

patient ratio is prescribed and if the hospital is not running at full occupancy then it has to

bear the full burden of its fixed overheard. Another example is the prescribed

requirements for the emergency care service. This is another cost centre cited by the

private hospitals. The prescriptive requirements of the regulation greatly constrain

managerial innovation to achieve better cost efficiency. It seems that regulating

consultation fee is effective in containing primary care cost by private clinics but is

effective in controlling healthcare charges at the private hospitals.

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6.4.1 Option No. 1: No change but review the Thirteen Schedule periodically

Removing the Thirteen Schedule would be a sensitive issue for the country as the

Malaysian public perceives that price control is necessary to control medical costs. The

control is effective at least for the private clinics at there are few opportunities for

“creative” charges for medical treatment here. This cannot be said for the private hospitals

as there are many opportunities for imposing all kinds of charges for hospital stay and

treatment which are not specified in the Thirteen Schedule.

6.4.2 Option No. 2: Remove the regulation on medical fee together with government

sponsored patients

Countries like Singapore and Australia do not have regulated medical fee, or either the fee

structure is managed by the trade association. This would allow for free competition in the

private healthcare sector. The government could introduce a scheme to use private

healthcare services for the general public with a certain fixed level for medical claims like

the form of medical care in Australia. Such government sponsored patients would improve

the capacity loading of private hospitals enabling them to operate more cost-effectively,

which might lower the total medical costs. This would also achieve the government

aspiration for universal access to private hospital services by the public. Such an initiative

would be a long-term solution and would require further study.

6.4.3 Option no. 3: Revamp the PHFS Regulations 138/2006 to reduce fixed overhead costs of

private hospitals

The prescriptive requirements of the regulation constrain the management from achieving

managerial and cost efficiency in the private hospital operation. Moving towards an

outcome-based and/or a process-based regulation would stimulate managerial innovation

towards cost efficiency in private healthcare. Private entities like the MSQH, APHM and

MMA could have greater role and responsibility in assuring quality healthcare in private

hospitals.

6.4.4 Recommended options: long-term solutions from Option No. 2 and 3

Revising upwards the Thirteen Schedule would continue to be a sensitive public issue yet

not revising it on a periodic basis would stifle the private health services. If private

healthcare providers cannot achieve profitability, then the whole aspiration of growing the

private health sector will fail. There will not be any quick solutions for containing escalating

healthcare costs and as such, multiple initiatives would be needed. The PHFS

Regulations 138/2006 could be reviewed to remove the constraints to managerial

innovation in private hospitals. At the same time, the government could look into utilizing

private healthcare services for the public. On one last note; this issue does not post

unnecessary regulatory burdens in its administration. Rather it is more a policy issue but

regulation is being use to address the public interest.

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6.5 Other Issues

As introduced in Chapter Five, there are other issues nine issues identified from the

survey. This report has considered the top five key regulatory issues. The other issues are

left out of the analysis as they are not direct regulatory issues, as discussed below.

6.5.1 Export of Healthcare Services (Health Tourism)

The key concern to the growth of health tourism has been cited as the logistical

convenience for the patients from their country. If there are direct air connections from the

target country to the city where the healthcare facilities are located, then there will be

more patient arrivals to the hospitals. For example, in the case of private hospitals in

Penang, when there are increased flights to certain city in Indonesia, there has been a

jump in health tourist arrivals. In the case of hospitals in Melaka, the private hospitals have

to provide bus services from Kuala Lumpur International Airport to the hospitals on and

regular schedule. In Sarawak, across the border land travel is the key concern. The

immigration authority limits the number of trips per year for the transport agents who are

engaged by the private hospital.

6.5.2 Personal Data Protection

The newly implemented Personal Data Protection Act has raised cause concerns with

some of the private hospitals. The initial perception of a couple of hospitals interviewed

was that it has increased the requirements on personal data protection to the already

stringent requirements of the current medical regulation. However, the other hospitals

interviewed do not seem to have any issue regarding this as they already have sufficient

control system in place. Their views are that requirements of this new Act do deviated

from what is current practice by the medical profession.

6.5.3 MSQH Accreditation

It is understood from this interviews that the MSQH accreditation complies strictly with the

requirements of the PHFS Regulations 138/2006. The private hospitals surveyed

generally perceived that the auditors for MSQH accreditation follow the regulatory

requirements and in certain areas even exceed the minimum regulatory requirements. The

concern is that when the licensing lead time is too long and this affects the hospital’s

schedule for MSQH audits. The other concern raised is that the MSQH assessors are

medical specialists who come for other competing private hospitals. Here there are

concerns on the loss of business confidentiality and the possibility of biasness in the

assessments.

6.5.4 Information and Reporting

There are various requirements with regards to information and statistical submissions

and other pertinent reporting to the regulators. This would add regulatory burdens that the

industry must bear for the continuing development of the economy. Without good

information or reporting, development and improvement initiatives cannot be effectively

formulated for the continuing development of the industry. The main concern to the private

hospitals is that there is little useful knowledge output from the regulators or rather the

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published statistical reports are out-of-date be of use to the business. For example, a lot of

statistics is collected on prescriptions of medication, but the official statistical reports only

come out five years later. The latest report on medicine, for example, is the Malaysian

Statistics on Medicine 2008 available in http://www.pharmacy.gov.my.

6.6 Concluding Remarks

Even with the availability of information and the ease of accessibility to it, there exists a

high level of information asymmetry in healthcare services. The consumers have to place

their trust on the healthcare providers that is, the medical practitioners for their treatment.

For this reason, it is pertinent that some form of regulatory control is in place to protect the

public. Here the agency theory also known as the principal-agent theory applies, with the

regulator acting as the principal and the healthcare providers as the agent. The regulator

role as the principal is to ensure that the interests of the public are protected. These

interests cover aspects such as patient rights, safety, quality care, the environment and the

charges for the care provided. The regulator maintains a continuous oversight on the

behaviour of the healthcare service providers.

On the same notion, this question then arose: “Who keeps an oversight over the

regulator?” In the general sense, there are various civic societies or bodies that keep some

sort of “birds-eye view” oversight on the government and its regulators. These civic

societies include the professional bodies, the trade associations, the consumer

associations, the media, and many other non-governmental organizations existing in the

country. Some of the healthcare-related civic societies have been listed in Table 4.5 of

Chapter Four. However, these civic societies provide oversights only when issues arise.

There is no institutionalized body to provide oversight on regulatory regimes. The Auditor-

General Office does provide oversights on government agencies, but the focus is more on

the effective and efficient use of government budgets.

To earn stakeholders and public trust, the regulators have to behave based on universally

accepted principles. Transparency and accountability are two key principles which should

always be considered. These principles will provide guidance to regulators on how they

should behave in the interest of the stakeholders and the public. As such these principles

should be established, documented and maintained by the regulators.

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Food for Thoughts

The concept on reducing unnecessary regulatory burdens to business also provides food

for thoughts. Might there be some fundamental flaw in the conceptual objective because it

focuses on the benefits to business and the economy. This begs the question on “What is

it for the administration and the individual government worker?” Clearly, there would be the

resulting improvement in administrative efficiency and regulatory effectiveness. This would

eventually lead to elimination of duplication, redundancy, non-value adding tasks and jobs.

There might be organizational shrinkage, less recruitment, lost of job positions,

redeployment, retraining, transfer and change of jobs. These would not be incentives for

change in the administration. Like any employees the administrative employees would

need to see opportunities for growth, better benefits and income and a better future. This

focus seems to be missing in the Reducing Unnecessary Regulatory Burden (RURB)

concept!

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CHAPTER SEVEN: FEEDBACK FROM REGULATORS AND OTHER STAKEHOLDERS

7.0 Presentation to the Healthcare Consultative Panel (HCP) of MPC

It was decided that the findings of the study be presented to the Healthcare Consultative

Panel (HCP) of MPC to get the experts’ feedback on the analyses and the proposed

options on the regulation of private hospitals. The HCP is represented by key stakeholders

and regulators – International Medical University (IMU - Chairman), KPJ Healthcare

Berhad, Association of Private Hospitals of Malaysia (APHM), Malaysian Society for

Quality in Health (MSQH), Ministry of Health Malaysia, United Nations University (UNU)

International Institute for Global Health, Malaysian Medical Association (MMA), UKM

Medical Centre, Malaysia Investment Development Authority (MIDA), Malaysia Healthcare

Travel Council (MHTC), Malaysia Nursing Board, Ministry of Health (MOH), and Nilai

University. Briefly, the function of the HCP is to advise and provide input to MPC on the

development and productivity issues relating to the healthcare industry. It also encourages

and advises on productivity initiatives carried out by MPC in the healthcare industry such

as the benchmarking programme among private hospitals. As such this RURB study on

private hospitals will be on interest to the panel. The following findings (Box 7.1) were

presented to the HCP Meeting No. 2/2013 on the 1st November 2013 to inform the

members on the issues and the proposed options and to get their feedback.

Box 7.1: Issues and Proposed Options in Private Hospital Regulation

Issue No. 1: Application Documentation

Application for operating licence renewal requires a lot of documentations, which contributes to huge

burden in paperwork and administrative overheads to private hospitals. To compound this burden is

the need to submit the licensing application at least six month before the current license expires

(explicitly state in PHFS Regulations 138/2006). The proposed options are:

Option No 1: No change – continue with the existing practice

Option No 2: Using information technology

Option No 3: Moving from “evidence-based” to “information-based”

Issue No. 2: Complying with Licensing Requirements

The implementation of PHFS Regulations 138/2006, the licensing process integrates all other

regulatory requirements from other regulations such as fire and building safety, machinery and

equipment safety, environment, safety on drugs usage, information asymmetry, patient rights, public

safety and the like. The outcome of integrating all these into a single licensing process invariably

creates complexity and seriously burdens both the licensee and the regulator. The proposed options

are:

Option No. 1: No change – let the change occur organically

Option No. 2: Review the Implementation of PHFS Regulations 138/2006 and Adopt Best

International Practices

Option No. 3: Transparency through Continuing Education on Licensing Requirements

Issue No. 3: Dealing with licensing officers (on-site inspections, audits, or surveys)

There are variations on the assessment results. There are cases where an assessor citing

requirements that are different from another assessor, or that the different level of strictness in the

treatment of the requirements of the PHFS Regulations 138/2006. Such variations create confusions

on the licensee and at times created costly corrections being made. The governing regulation, PHFS

Regulations 138/2006 is an extensively prescriptive. The proposed options are:

Option No. 1: Transparency through Continuing Education

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Option No. 2: Transparent Standard Operating Procedure

Option No. 3: Establishing a Help-desk

Issue No. 4: Fragmented Processes

There are the DOSH, BOMBA, DOE, JPJ, Immigration, and the local authorities among some of the

key players. The roles of all these players are explicitly or implicitly specified in the governing

regulation. This fragmented processes leading to private hospital licensing create huge burdens to

private hospitals. The proposed options are:

Option No. 1: No change or not direct action

Option No. 2: Redefining the regulatory oversights functions

Issue No. 5: Planning Approval for renovation, upgrade, extension, etc

The approval for any changes in existing facilities (renovation or upgrading) or expansion of facilities

(extension or addition of new facilities) is taking too long to process and too many interactions are

involved. It appears that there is not differentiating between minor and major changes renovation. The

proposed options are:

Option No. 1: No change and continue with the existing practice

Option No. 2: Eliminate Planning Approval

Option No 3: Adopt Risk-based Approach for Planning Approval

Issue No. 6: Occupational Licensing and Workforce Quality

With commercialisation of education, any students with the minimum qualifying grade but can afford

out-of-pocket payment can enter for any professional education. Commercialization of health

education is the imbalance between supply and demand. The drive for growth on higher education in

healthcare has not match adequately the demand side of the equation, particularly for local

graduates. The proposed options are:

Option No. 1: No change to current practice

Option No. 2: Monitoring Education Quality by the MOH

Option No. 3: A Formula for Supply-Demand Balance

Issue No. 7: Approval for Advertisement and Advertising Materials

Current requirements on approval of advertising materials are burdensome in terms of cost (the fee

charge per approval at RM100.00), the interactions with the Medicine Advertisement Board, the MAB,

(particularly for those hospitals located away from Klang Valley, the lead time (more than one week is

deemed too long for hospital management planning) and the paperwork (need to send multiple hard

copies for approval instead of on-line electronic media). The application has to be made to Putrajaya

for any approval and submission has to be in hard copies. The proposed options are:

Option No. 1: No change to current practice

Option No. 2: Electronic means of submission and application

Option No. 3: Change the approval application to notification using ICT

Source: Author

7.1 Feedback from the HCP Members

Various HCP members gave their feedback on the findings presented to the panel. The

Chairman maintained that patient safety and treatment outcome is most important in

private healthcare services. He reiterated that it is also important that existing regulations

are reviewed continuously to ensure that they meet with changing requirements of the

healthcare industry.

Feedback from APHM Representative

1) The President of APHM gave his feedback on various issues. On the government

initiative on the SL1M programme for unemployed graduate nurses, he reported

that there private hospitals did not get good response from the group. Many have

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turned down the offer as they are already employed elsewhere with better wages

than the training allowance.

2) APHM also raised the concern on the availability of houseman positions for new

medical graduates. The output of medical graduates has exceeded the capacity of

public hospitals to provide houseman positions. Unless the houseman training

capacity is increased, the supply of new medical doctors will affect the demand.

3) On various approval certifications from other regulatory agencies such as DOSH,

BOMBA, and others, the APHM stand that is that MOH oversight on these are

necessary to ensure patient safety at the private hospitals. He reiterated that he

observed that many public hospitals do not maintained these requirements

because there is lack of such oversight.

4) On the issue of approval of advertisement materials, the panel was informed that in

some countries patients’ testimonials were being used. This is not allowed here.

Feedback from the MOH Representative

1) The MOH recognizes some of the issues raised and have been working on

reducing these burdens to business. The regulator has been trying out the online

submission for documentations and is in the process of ironing out the teething

problems. At the moment, the online licensing renewal for private clinics has been

successfully implemented.

2) On the submission of certified copies of APC, the regulator is already looking into

the submission of personnel information rather than the certified evidences as

required in the present practice.

3) On the inconsistencies in assessments by licensing officers, the MOH recognizes

the problem, particularly with constant turnover of officers. The MOH has been

making efforts to provide continuous training and supervision to new officers.

Comments from the HCP Chairman

The Chairman generally agrees with the feedback given by the members. He

reiterated that the regulator should periodically review the regulations to keep up

with the expectations of business and consumers.

7.2 Feedback from the Licensing Authority of the Ministry of Health (CKAP)

The focus of the meeting with officers from the licensing authority of the MOH represented

by comprising Dr. Ahmad Razid Salleh, Director, Administration, Dr. Afidah Ali, Deputy

director, CKAPS, and Dr. Alicia Liew Hsiao Hui, KPP, CKAPS (MOH), is to obtain

clarification and understanding on the rationale and intent of the regulatory requirements

and administrative processes involved in the regulation of private hospitals. A copy of the

presentation made to the HCP was given to the regulator for reference. Specific questions

of interest were then posed to the regulator and the recorded feedback is given in

appendix 7.1. The analysis is reported below. The author’s views are given in italic.

78

1) The Six-month Application Lead Time

From the regulator’s perspective, the long lead time is to facilitate the private

hospitals to meet the licensing requirements. The long lead time is to reduce the

probability of delay in the issuance of the licence due to any compliance issues.

Should the applicant experience any non-compliance issue, the lead time will be

necessary for the applicants to make corrections non-compliance. However, the

good intention of the regulator has created the sense of uncertainty and anxiety on

the applicants.

A good tracking and monitoring system would help alleviate the uncertainty and

anxiety for the applicants. An online system where the applicant can track (and

monitor) the progress of their applications will help the applicant to manage their

compliance issues. At the same time, such a system will ensure that the licensing

officers are not subjected to undue interruptions to their work.

2) Online Computerize Application

The MOH has already implemented the online licence renewal application for

private medical clinics. It is aiming to do the same for the case of private hospitals.

However, the MOH is has poor initial trail of this application with the private hospital

and is experiencing budget constraint to develop a more robust system. In the

meantime it is trying to develop the system with internal resources (by the IT

division of the MOH).

The view is that it is easier to develop the less complicated system for private

clinics as the amount of application information to capture is small. The amount of

information to capture for private hospitals will be a few hundred times more than

that of a private medical clinic and as such the system will be very much more

complicated. Also, the reliability of the Internet in various parts of the country is

poor. Applicant will likely experience interruption in the data entry process when

large amount of data need to be input.

3) On the necessary to capture large amount of data during the application

On the question - why the applicant needs to submit large amount of data in the

application as the site audit or survey will be carried out during for the licensing?

According to the MOH, certain data are required (specified in the regulation) that

the MOH need to update its database and also this information form the basis for

the issuance of licence. Another point is that the site audit assesses and evaluates

other aspects of the hospital system that are not submitted in the application.

It is important that pertinent data are captured for the licensing process. Data

capture can be reduced if only data on changes are captured. In other words, only

data for updating the licensing requirements are captured. This would reduce the

repeat submission of same data in the application process.

79

4) Difficulty with dealing with licensing officers

The issue of the difficulty of contacting the right person at the MOH for consultation

on application issues is recognize by the MOH. As such, the MOH has schedule

special-client day on every Friday of the week where applicants can meet with the

regulators to sort out any issues they may have.

This is a good initiative by the MOH to be a facilitating regulator.

5) On continuing education of the private hospitals

The MOH currently does not have any allocation for such a programme. The limited

personnel resources will not be able to cope with this. However, the MOH has

carried out one-off briefings in the past to update the private hospitals on

compliance issues.

The MOH could consider using external resources for such continuing education. It

could engage business association such as APHM and MMA to support the

continuing education programme for regulatory compliance.

6) On the approval for advertisement

We were informed that there has been proposal to amend the Medicines

Advertising Regulation to put the responsibility of advertisement approval to CKAP.

This will integrate the private hospital regulation to a single authority in the MOH.

This would be a good integration effort to have all approvals under one licensing

authority as the requirements for advertising for private hospitals are different from

medicine advertisement. However, there need to be some amendment to the

existing PHFS Act 586 and the PHFS Regulations 138/2006.

7) On the planning approval for upgrade, renovation and extension

The team was informed that the approval process is much simpler than that of the

planning approval required for the establishment of a new hospital. The planning

approval is required as the upgrade, renovation or extension will require change in

the licence details.

8) Annual Practicing Certificates

Although the occupational licensing of medical practitioners (physicians, nurses,

midwifes, medical assistants, dentists, pharmacists) are the purview of the various

councils and boards and govern under their respective Acts, any issues relating to

the licensing processes will affect the licensing of the private hospitals. The APCs

are important to hospital licensing because they define the place of occupation of

the professionals and the positions and responsibilities they hold with respect the

hospital. Currently, the legal definition for Annual Practicing Certificates is on the

year ending on the 31st day of December. This means that at the end of each year

these councils and boards will be busy processing thousands of renewal

applications. Thus there is the usually yearend jam for APCs renewal.

80

It does not appear that the various occupational regulators for medical

professionals (MMC, MDC, MNB, MMB, MMAB and MPB) have the incentive to

change the existing regulations.

9) Certified Copies of Annual Practicing Certificates (APC)

The rationale on the need to submit certified copies of APC in the licence renewal

application was posed. The MOH realized the burden of having to prepare these

documents, particularly for large hospitals which employ hundreds of medical

professionals. The MOH informed that it is reviewing this requirement and

proposing to change from this evidence-based input to a more efficient information-

based input, where applicant will only have to submit the staff information, but

certified true and accurate in the application. This is also a recommended option

from this study.

7.3 Concluding Remarks

Firstly, the short 2-hour meeting has given valuable understanding on the regulatory and

administrative rationale and intent of the regime. However, the time constraint did permit a

more comprehensive review with the regulator. Continuing consultation will be made with

the regulators at the next phase of the study – the Public Consultation phase.

The private healthcare business is highly regulated and this is important to ensure

adequate oversight is made to protect the consumers in terms of patient safety, quality

healthcare and patient rights. In business the focus on cost efficiency and revenue

generation or profitability can be strong motivation to disregard these protections. As such,

the regulator such as the MOH has the important oversight role to ensure that private

healthcare providers behave in an acceptable manner.

To achieve patient safety certain specified minimum requirements with regards to the

movement of patients must be met. This is to ensure that ambulatory patients can be

move quickly and safely out of the hospital building during an emergency such as fire.

Even within the building, patient must be able to be move quickly and along the safest and

shortest route during a medical emergency. As such, location, layout and flow

considerations become paramount to a good hospital system.

Quality health care can be achieved when all the key resources of people, materials,

treatment and supporting facilities, utilities, the physical environment and standards for

work processes are effectively organized and managed for systemic and integrated

efficiency. A specialist medical centre, for example, must have the required resident

specialists, it must have reliable treatment and supporting facilities, it must maintain the

environment that will support adequate treatment and recovery, and other supporting staff

and professionals. All these make the private hospital business a highly complex entity

with high overheads and maintenance costs. There will always be the tension between

maintain a high standard for healthcare and the need to control cost and generate

81

revenue. The quest to generate revenue may motivate private healthcare business to

provide unnecessary treatments to patients.

For private hospitals, the licensing renewal ensure that the MOH provide adequate

oversights to protect the consumers and at the same time to maintain the country

healthcare system to international standards. The current regulatory regimes and the

regulators have proven their effectiveness in the oversight control. Nevertheless, the

existing regulations need to be reviewed and the implementation processes and be

improved to reduce and/or eliminate unnecessary regulatory burdens on private

healthcare business.

82

REFERENCES

Australia Government Productivity Commission, Identifying and Evaluating Regulation

Reforms, Research Report, December 2011

Australia Industry Commission, Exports of Health Services, Report No. 16, 5 December

1991

1. Wellness Visit: www.wellnessvisit.com

2. Malaysian Health Tourism Council: www.mhtc.org.my

3. Penang Monthly: www.penangmonthly.com

4. Malaysian Health Tourism Council: www.mhtc.org.my

Australia Industry Commission, Regulation and its Review: 1994-1995, September 1995

Australian Productivity Commission, Identifying and Evaluating Regulation Reforms,

Research Report, December 2011

Australian Productivity Commission, Performance Benchmarking of Australian Business

Regulation: Cost of Business Registration, Research Report, November 2008

Australian Productivity Commission, Performance Benchmarking of Australian and New

Zealand Business Regulation: Food Safety, Research Report, December 2009

Australian Productivity Commission, Private Hospitals in Australia, Commission Research

Paper, 1999

Australasian Health Infrastructure Alliance (AHIA) in Australia and New Zealand (2010),

.Australasian Health Facility Guidelines, Revision V4.0,

www.healthfacilityguidelines.com.au

Christina Chin, Choking from high medical fees & When doctors can’t even afford a

Proton, Focus, Sunday Star,13 October 2013

Commissioner of Health, Western Australia, Private Hospitals Guidelines, Guidelines for

the Construction, Establishment and Maintenance of Private Hospital and Day

Procedure Facilities, 3rd Edition 1998, Facilities and Asset Branch, Department of

Health, WA

Department of Statistics, Malaysia, Malaysia Standard Industrial Classification 2008

Version 1

Geetha Vaithyanathan (Research Analyst), Pharmaceutical Supply Chain Dynamics, April

2011, Beroe Inc. http://www.beroeinc.com/

Government of Malaysia (2010), Tenth Malaysia Plan: 2011-2015, the Economic Planning

Unit, Prime Minister’s Department

Government of Malaysia (2013), National Policy on the Development and Implementation

of Regulations, Malaysia Productivity Corporation

Government of Malaysia (2013), Best Practice Regulation Handbook, Malaysia

Productivity Corporation

Government of Malaysia, National Policy on the Development and Implementation of

Regulations, July 2013

Healthcare in Malaysia (2007): The dynamics of provision, financing and access, Edited

by Chee Heng Leng & Simon Barraclough, Routledge Malaysian Study Series

Part 1: Paper 1: Regulating Malaysia’s Private Health Care Sector, Nik Rosnah Wan

Abdullah

83

Part 1: Paper 5: The growth of corporate health care in Malaysia; Chee Heng Leng

and Simon Barraclough

Ian Bickerdyke, Ralph Lattimore, Reducing Regulatory Burden: Does Firm Size matters?,

Industry Commission Australia, Staff Research Paper, December 1997

Investment Climate, World Bank Group, Nuts & Bolts: Technical Guidance for Reform

Implementation – Introducing a risk-based approach to regulate business, The World

Bank

Laws of Malaysia, Private Health Care Facilities and Services Act 1998 (Act 586), Date of

operation 1st May 2006, Ministry of Health Malaysia

Malaysia Productivity Corporation (2013), Handbook on Reducing Unnecessary

Regulatory Burdens: Core Concept.

Ministry of Health Malaysia (2010), Country Health Plan, 10th Malaysia Plan, 2011- 2015,

Government of Malaysia, www.moh.gov.my

Ministry of Health Malaysia, Private Health Care Facilities and Services (Private Hospitals

and Other private Healthcare Facilities) Regulations 2006, P.U. (A) 138/2006, 1 April

2006

Ministry of Health Malaysia, Health Facts 2013

New Zealand Treasury: http://www.treasury.govt.nz/economy/regulation/bestpractice

Nik Rosnah Wan Abdullah and Lee Kwee-Heng, Impact of the Private Healthcare

Facilities and Services Act 1998 (Act 586) and Regulations 2006 on the Medical

Practice in Corporate Private Hospitals, OIDA International Journal of Sustainable

Development 02:09 (2011)

Office of Health Economics, 12 Whitehall, London, Third Edition, The Economics of

Healthcare, http://oheschools.org/ohech3pg4.html

PricewaterhouseCoopers - Ministry of International Trade in Industry Malaysia (Revised

Final Draft), Study on Domestic Regulations to Enhance the Competitiveness of

Malaysia’s Services Sector, 18 March 2013

Pharmaceutical Services Division, MOH, Medicine Advertisements Board Regulations

1976, P.U. (A) 283/76, http://www.pharmacy.gov.my/

Pharmaceutical Services Division, MOH, Medicine Advertisements Board Policy and

Decision (Services), http://www.pharmacy.gov.my/

Pharmaceutical Services Division, MOH, Advertising Guidelines for Healthcare Facilities

and Services, http://www.pharmacy.gov.my/

Pharmaceutical Services Division, MOH, Seminar on Vetting of Medicine Advertisement,

http://www.pharmacy.gov.my/

Pharmaceutical Services Division, MOH, Client Charter’s Achievement 2010,

http://www.pharmacy.gov.my/v2/en/content/clients-charter-achievement-2010.html

Steven Argy and Matthew Johnson, Mechanism for Improving Quality of Regulations,

Australia in an International Context, Australia Productivity Commission, Staff

Working Paper, July 2003

World Health Organization (2007), Medical Device Regulations; Global Overview and

Guiding Principles, WHO Library Cataloguing-in-Publication Data

84

APPENDIXES

Appendix 2.1: Healthcare Services and Related Sectors MSIC2008

Class Item Description MSIC 2000

2100 Manufacture of pharmaceuticals, medicinal chemical and botanical

products

21001 Manufacture of medicinal active substances to be used for their

pharmacological properties in the manufacture of medicaments

24230p

21002 Processing of blood 24230p

21003 Manufacture of medicaments 24230p

21004 Manufacture of chemical contraceptive products 24230p

21005 Manufacture of medical diagnostic preparation 24230p

21006 Manufacture of radioactive in-vivo diagnostic substances 24230p

21007 Manufacture of biotech pharmaceuticals 24230p

21009 Manufacture of other pharmaceuticals, medicinal chemical and botanical

products n.e.c

24230p

2660 Manufacture of irradiation, electro medical and electrotherapeutic

equipment

26600 Manufacture of irradiation, electro medical and electrotherapeutic

equipment

33110p

3250 Manufacture of medical and dental instruments and supplies

32500 Manufacture of medical and dental instrument and supplies 25199p, 33110p

4642 Wholesale of pharmaceutical goods and toiletries

46421 Wholesale of pharmaceutical and medical goods 51391p

46422 Wholesale of perfumeries, cosmetics, soap and toiletries 51391p

4772 Retail sale of pharmaceutical and medical goods, cosmetic and toilet

articles in specialized stores

47721 Stores specialized in retail sale of pharmaceuticals, medical and

orthopaedic goods

52310p

47722 Stores specialized in retail sale of perfumery, cosmetic and toilet articles 52310p

7210 Research and experimental development on natural science and

engineering

72103 Research and development on medical sciences 73105

72104 Research and development on biotechnology 73109p

8220 Activities of call centres

82200 Activities of call centres 74991p

8292 Packaging activities

82920 Packaging activities on a fee or contract basis, whether or not these involve

an automated process

74950

8412 Regulation of the activities of providing health care, education,

cultural services and other social services, excluding social security

84122 Administrative health care services 75122

861 Hospital activities

8610 Hospital and maternity home activities

86101 Hospital activities 85110p

86102 Maternity home services (outside hospital) 85110p

862 Medical and Dental practice activities

8620 Medical and dental practice activities

86201 General medical services 85121p

86202 Specialized medical services 85121p

86203 Dental Services 85122

8690 Other human health activities

86901 Dialysis Centers 85110p

86902 Medical laboratories 85121p

85

86903 Physiotherapy and occupational therapy service 85192

86904 Acupuncture services 85199p

86905 Herbalist and homeopathy services 85193

86906 Ambulance services 85194

86909 Other human health services n.e.c. 85121p

8710 Residential nursing care activities

87101 Homes for the elderly with nursing care 85191p, 85312p

87102 Nursing homes 85191p

87103 Palliative or hospices 85199p

8720 Residential care activities for mental retardation, mental health and

substance abuse

87201 Drug rehabilitation centres 85316

87209 Others residential care activities for mental retardation n.e.c. 85319p

8730 Residential care activities for the elderly and disabled

87300 Residential care activities for the elderly and disabled 85312p

8790 Other residential care activities (the activities may be carried out by

government offices or private organizations)

87901 Orphanages 85311p

87902 Welfare homes services 85311p, 85315,

85319p

87909 Other residential care activities n.e.c. 85313, 85314,

85319p

8810 Social work activities without accommodation for the elderly and

disabled carried out by government offices or by private organizations

88101 Day-care activities for the elderly or for handicapped adults 85329p

88109 Others social work activities without accommodation for the elderly and

disabled

85329p

8890 Other social work activities without accommodation n.e.c.

88902 Child day-care activities 85325

88909 Other social work activities without accommodation n.e.c. 85322, 85324,

85329p, 91993p,

91999p

941 Activities of business, employers and professional membership

organizations

9411 Activities of business and employers membership organizations

94110 Activities of business and employers membership organizations 91110

9412 Activities of professional membership organizations

94120 Activities of professional membership organizations 91120

Source: Department of Statistics, Malaysia Standard Industrial Classification 2008 Version 1

86

Appendix 4.1: Analysis of Act 586 1. Analysis of Approval for establishment and maintenance, License-to-Operate and Inspections (Premise,

Services & Facilities) Private Health Care Facilities and Services Act 1998 (Act 586)

Date of operation 1st May 2006, Ministry of Health Malaysia

Process Theory Analysis

Input Output

Policy Objectives/Outcomes (MOH Country Health Plan 2011-2015)

1. Integrated public-private health services delivery 2. Universal Access - equity of access – physical ease of access (including cost containment) 3. High quality and safe care (including sustainability, compliance to quality standards and responsive to population needs)

Act/Regulation Control Instrument/type

Prescribed Requirements & Process

Documents/Information Policy assessment/ Regulatory Burdens

Section 8:

Approval to

establish or

maintain

Approval in

writing by DG:

Location

Services & facilities

Acute beds

1. Formal application 2. Application fee 3. Submission of

comprehensive plans:

1. Prescribed application forms 2. Comprehensive plans:

a. Site plan b. Building layout plan c. Architectural & engineering plans d. Specifications of facilities e. Manpower arrangements f. Personal & company details

(statuary declaration) g. Other information as determined by

DG.

MOH Perspectives:

Patients’ rights to quality, safety, accessibility and equitability of health care

Social/public and national interest

Assessment criteria

for private hospital

establishment:

30 Km radius

Multi-discipline: 2 beds/1000

Types of facilities/services

Future projection 3 years

Health Plan 2011-

2015:

Towards a more efficient & effective health system

Equity of access – physical ease of access

High quality & safe care

Equity of access – financial

Cost containment

Compliance to quality & standard

Responsive to population needs

Section 9: Matters to be considered before approval to establish or maintain is granted.

As in Section 8 1. Nature of facility or service

2. Facilities or services available

3. Need for facility or service

4. Future need for the facility or service

5. Any other matters deemed relevant.

Market feasibility study report

Section 14. Application for a licence to operate or provide to be made within three years.

Time limit on approval granted in Section 8

Written application to DG

Application with justifications.

Section 15. Application for licence to operate or provide.

License to operate (2 years limit)

1. Formal application 2. Prescribed form

and manner 3. Prescribed fee 4. Specified

information and documents

5. Any additional information within prescribed time

6. Subject to inspection (Section 16)

1. Prescribed forms & manner 2. Prescribed fee 3. Information, particulars & documents 4. Additional information as required by

DG

Section 16. Inspection of premises.

Licence to operate

1. On-site inspection of premises

2. Inspection facilities.

3. inspection of operations and maintenance

4. Within three years of planning approval or extension

1. Building layout plans, design, construction and specifications and information submitted in planning approvals.

2. Inventory of equipment, apparatus, instrument, material, article, sample or substance or any other thing found in the premises

3. Registers, rosters, records, policies, standard operating procedures, clinical practice guidelines or the management

Section 22.

Duration and

renewal of

licence to operate

or provide

Licence to operate; renewal every 2 years

DG may vary the

1. Formal application 2. Prescribed form &

manner 3. Prescribed fee 4. Specified

information & documents

1. Prescribed forms & manner 2. Prescribed fee 3. Specified information, particulars &

documents 4. Additional information as required by

DG

Process

87

terms or conditions

5. Subject to inspection (Section 16)

2. Analysis of Operational Responsibilities: Operation, Registration, Reporting and Notification [Part VI: Responsibilities of a Licensee, Holder of Certificate of Registration and Person In Charge]

Act/Regulation Control Instrument

Prescribed Requirements

Documents/Information Policy assessment

Section 31. Responsibilities Section 32. Person in charge.

Section 33. Change of person in charge

Section 34. Personal care aide.

Operation:

Person in charge

Personal care aide

1. Registered by law person in charge

2. Qualified and with experience

3. Periodic inspection of facility by owner

4. Notify DG within 14 days on change of person in charge

Person in charge:

Prescribed qualification, training and experience

Registered person

Prescribed duties and responsibilities

Notification of change

Competent person with valid practicing license

Ensure accountability

To ensure quality health care and safety of patients

Protection of patients’ rights

Section 35. Policy statement.

Prescribed policy statement

Make available to patients

Documented policy statements

Section 36. Patient grievance mechanism.

Plan of grievance mechanism

Established plan and procedure

Documented plans and procedures

Section 37. Incident reporting.

Reporting to DG Incident reporting Incident reports

Section 38. Emergency treatment and services

Availability of emergency services

Emergency measures, procedures and services

Defined nature and scope.

Established measures, procedures and services.

Section 53. Conditions for closure,… healthcare facility or service

1. Notify in writing to DG

2. Directives of DG

3. Surrender of license

1. Notify DG not less than 30 days.

2. Compliance to DG directives

3. Immediately upon discontinuance.

1. Written notice of intention to DG 2. Indicate compliance to DG

directives 3. Surrender of certificate

PART X - BLOOD BANK

Section 57. Import and export natural human blood and blood product.

Application of import & export certificate.

Prescribed fee

Application to DG with prescribed form..

Payment of prescribed fee.

Application form. Quality assurance

Control of dangerous blood-related diseases

PART XI - BLOOD TRANSFUSION SERVICES

Section 59. Storage facilities.

Operation & maintenance of blood bank

1. maintain proper blood storage facilities

2. adequate control and supervision

3. stored in refrigerators

4. alarm system & regularly inspected

Established and documented procedures.

Control records

Quality assurance Control of dangerous blood-related diseases

Section 60. Minimum blood supply

Operation & maintenance of blood bank

1. Minimum blood supply

2. Alternative source of supply

Stock control records. Contract for alternative supply.

Section 61. Maintain records of receipt & disposition of blood

Maintain records indicating the receipt and disposition

Recording receipt and use of blood.

Records of use and disposition.

Section 62. Transfusion reactions. Section 63. Recommendations to the Medical Advisory Committee

Investigate all transfusion reactions. Reporting to MAC

Investigation procedures & reporting. Improvement made.

Records of investigation and reporting to MAC. Records of improvement.

Section 67. Reporting Notify assessable Notice to DG.

88

Reporting of assessable deaths Section 68. Medical or dental practitioners to provide information

assessable death to DG within 72 hours. Reporting by medical or dental practitioner.

death to DG within 72 hours. Reports on procedures relating to death and clinical & medical records.

Medical reports by practitioner. Clinical and medical records.

Section 72. MAC at private healthcare facility or service level.

Establishing & maintaining of MAC.

May establish and maintain a functioning MAC.

Reporting of assessable death. MAC assessment and recommendations

PART XIII - QUALITY OF HEALTHCARE FACILITIES AND SERVICES

Section 74.

Quality of

healthcare

facilities and

services

Establishing

health quality

system.

Provide information on

quality system and

Standards to the DG.

Quality system documentation and

records.

Quality assurance

Patient safety and rights

Section 76. Power of DG to issue directives, orders or guidelines relating to quality assurance

Incorporation of DG directives in quality system.

Continual improvement to quality system processes and procedures.

DG directives on quality assurance (orders & guidelines)

PART XIV - BOARD OF MANAGEMENT AND ADVISORY COMMITTEE

Section 77. Board of Management

Board of Management and composition

Establishing BOM & its function

Documents of committee’s function. Records of committee’s work.

Accountability for continual improvement

Section 78.

Medical or Dental

Advisory

Committee.

Medical or

Dental Advisory

Committee.

Establishing

MAC/MDC & its

function

Documents of committee’s function.

Records of committee’s work.

Section 79. Midwifery Care Advisory Committee

Midwifery Care Advisory Committee

Establishing MCAD & its function

Documents of committee’s function. Records of committee’s work.

Section 80. Nursing Advisory Committee

Nursing Advisory Committee

Establishing NAC & its function

Documents of committee’s function. Records of committee’s work.

References:

1. Private Health Care Facilities and Services Act 1998 (Act 586) 2. MOH, Country Health Plan, 10

th Malaysia Plan, 2011- 2015

3. MOH, Dr. Afidah Ali (Presentation), Location of Private Hospital From MOH Perspective, 31st October 2012

89

Appendix 4.2: PHFS Regulations 138/2006: Requirements for Private Hospitals

Part Title Reg. No.

Prescribed requirements

II Application for approval to establish or maintain or license to operate or provide private healthcare facilities or services and other applications

3 to 10 The method and requirements for application on planning approval for establishment (including extension and alternation) and for application of licence to operate.

III Organization and management of private healthcare facilities and services

11 to 20 Mandates the planning of the organization and management of the private hospitals, a plan of organization outlining the staff and practitioners and the chain of command. Specify Person-In-Charge accountability, role and responsibility.

IV Policy 21 to 27 Establish management intentions through documented policies, procedures and guidelines with specific focus on patient’s rights.

V Registers, rosters and returns 28 to 37 The management of information and records, and that of data and statistics relating to the patients and staffs (including volunteers).

VI Grievance mechanism 38 to 41 Define the establishment and maintenance of a patient grievance mechanism

VII Patient medical record 42 to 46 Maintain a patient record management system

VIII Consent 47-48 Define how patient consent is to be managed

IX Infection control 49 Establish a Infection Control Committee to manage a infection control programme

X General provisions for standards of private healthcare facilities or services

50 to 132

These requirements are organized into 14 chapters prescribing the minimum standards for healthcare facilities covering the spatial requirements, environmental ventilations requirements, utilities requirements, housekeeping management, laundry management, waste management, patient room facilities, management of nursing services, medical assistant services, transport arrangement and communications requirements and maintenance management. The requirements aim to achieve a standard level of patient safety, patient care and comfort, patient service and the control of infection.

XI Standards for Obstetrical or Gynaecological care

133 to 148

The minimum requirements for maternity services and facilities are prescribed in these regulations for hospital providing maternity services.

XII Standards for newborn nursery facilities

149 to 169

The minimum requirements for newborn nursery facilities in conjunction with the maternity services and facilities are prescribed in these regulations.

XIII Standards for paediatric patient care

170 to 175

The minimum requirements for the facilities, organization and management of the service (nursing care & special care) are defined here for hospitals providing these.

XIV Standards relating to Anesthesia

176 to 185

The minimum requirements for facilities and equipment (anesthetic apparatus, machines, equipment, etc), room facilities, qualified persons, processes, monitoring of patient and patient recovery, privacy are defined.

XV Standards for surgical facilities and services

186 to 217

Define the minimum requirements for the facilities (equipment, supplies, suitable environment, ventilation, supporting facilities, staff and administrative facilities, maintenance and housekeeping) and the requirements to establish (policy), document (including records management) and maintain the management system (including patient rights) for surgical services.

XVI Special requirements for critical care on intensive care unit

218 to 227

Define the minimum requirements for the facilities (location, room size, design features, acoustics, clean & soiled & storage rooms,), equipment, support services and facilities and staff for the ICU.

XVII Special requirements for emergency care services

228 to 237

Organized into three chapters on requirements as follows: Chapter one: Disaster preparedness – to establish and maintain such a plan for all personnel Chapter two: Emergency care and facilities – toe establish and maintain an emergency care services Chapter three: Pre-hospital care services, ambulances and transportation of patient services – defined the requirements for managing and maintaining such services if provided by the hospital on a regular basis.

XVIII Special requirements for pharmaceutical services

238 To 249

This part defines the requirements of pharmaceutical staff according to hospital size, and specifies the management of pharmaceutical facilities within the hospital and the management and preparation of medicines usage. If manufacturing is involved, the facility also requires a manufacturing license issued under the Control of Drugs and Cosmetics Regulations 1984 [P.U. (A) 223/1984].

XIX Special requirements for central sterilizing and medical-surgical supply facilities and services

250 to 262

Define the minimum requirements for the facilities (location and design) and the processes (receiving, disassembling, cleaning, assembling, packaging and equipment), facilities for sterilizing and storage, organization, management and control of the operations.

XX Standards for dietary services 263 to 276

Define the minimum requirements for the facilities kitchen, storage, refrigeration, wash rooms) and the organization, staffing, diet, food preparation and serving and management (policies) of the services.

XXI Special requirements for blood bank services, blood transfusion services or blood donation programme

277 to 300

The special requirements are organized into General Requirements and three chapters comprising: General requirements which prescribed who the person-in-charge, person allowed to collect blood and the person to screen and process blood and blood products; Chapter one on Standards for private blood bank: prescribes the facilities, staffing, spatial requirements, utilities requirements, ventilation and toilet/shower/washing facilities; Chapter two on Special provision on healthcare facilities: prescribes the

90

requirements management of blood bank services (including quality assurance and safety of personnel and environment). Disposal of waste need to comply with the provisions under the Environmental Quality Act 1974 [Act 127]; Chapter three on the Selection and retention of donors and code of ethics: specifies the requirements for managing blood donors.

XXII Special requirements for haemodialysis facilities and services

301 to 322

If the hospital has such services, these special requirements define the minimum requirements for such facilities and the standards for managing the facilities and services (including location, staffing, facilities and equipment, processing, monitoring, waste disposal, safety of personnel, control of infection) and incident and statistical reporting to the regulator.

XXIII Standards for rehabilitation facilities and services

323 to 332

Usually not applicable to private hospital.

XXIV Standards for specialist outpatient facilities and services

333 to 338

Note: Private hospitals are not allowed to maintain a outpatient facility or services except specialist outpatient facility and services. Define the minimum requirements for the facility and the management of the specialist outpatient facility and services.

XXV Standards for ambulatory care services

339 to 344

A separate healthcare facility and service.

XXVI Special requirements for radiological or diagnostic imaging services and radiotherapy and radioisotope services

345 to 352

Define the minimum requirements for the facilities and the services and the purpose, staffing and managing the records (and registers) on the operations. Need to comply with requirements of Atomic Energy Licensing Act 1984 [Act 304]

XXVII Standards for private nursing homes

353 to 387

A separate healthcare facility and service.

XXVIII Special requirements for hospice and palliative care services

388 to 416

A separate healthcare facility and service

XXIX Miscellaneous (other facilities and ancillary services)

417 to 434

These requirements are prescribed for all other necessary facilities and services that need to be provided in private hospitals. They include the mortuary, public amenities (toilets and nappy change, public telephone, cafeteria, breastfeeding room, prayer room), staff facilities (rest room, toilets, prayer room, and library), social and welfare, prescribed fee schedule, and defined offence (for non compliance) and penalty.

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Appendix 4.3: Regulatory Regimes for Healthcare and Health-related industries

No. License/Permit/Approval Ministry/Agency

1 Lesen Premis (Premise license) Kementerian Wilayah Persekutuan

dan Kesejahteraan Bandar

(Ministry of Federal Territory and

Urban Wellbeing)

Dewan Bandaraya Kuala Lumpur (City

Hall KL)

2 Lesen Iklan (Advertising License)

3 Lesen Tempat Letak Kereta (Vehicle Parking License)

4 Lesen Premis Makanan (Food premise License)

5 Kelulusan Vehicle Type Approval (VTA) Jabatan Pengangkutan Jalan (Road

Transport Department)

6 Perakuan Pendaftaran untuk

Menubuhkan/Menyenggarakan/Mengendalikan/Menyediakan Klinik Perubatan

Swasta

Kementerian Kesihatan

(Ministry of Health - MOH)

Cawangan Kawalan Amalan

Perubahatan Swasta (CKAP) 7 Perakuan Pendaftaran untuk Menubuhkan/Menyenggarakan/

Mengendalikan/Menyediakan Klinik Pergigian Swasta

8 Kelulusan bagi Pemindahan Hakmilik/ Penyerahakan Perakuan Pendaftaran

9 Kelulusan Bagi Pemindahan Hakmilik/ Penyerahhakan Kelulusan/Lesen

Kemudahan/ Perkhidmatan Jagaan Kesihatan Swasta

10 Kelulusan bagi Pindaan Perakuan Pendaftaran bagi Klinik Perubatan Swasta

dan Klinik Pergigian Swasta

11 Kelulusan Pindaan Perakuan Kelulusan atau Lesen bagi Kemudahan/

Perkhidmatan Jagaan Kesihatan Swasta lain

12 Perakuan Kelulusan untuk Menubuh/Menyenggara Kemudahan/Perkhidmatan

Jagaan Kesihatan Swasta lain

13 Lesen Untuk Mengendalikan/Menyediakan Kemudahan/Perkhidmatan Jagaan

Kesihatan Swasta lain

14 Kelulusan bagi Melupuskan Perakuan Pendaftaran

15 Kelulusan Bagi Melupuskan Perakuan Kelulusan/ Lesen Kemudahan/

Perkhidmatan Jagaan Kesihatan Swasta lain

16 Kelulusan Bagi Peluasan/Pengubahan kpd Kemudahan/Perkhidmatan Jagaan

Kesihatan Swasta lain (Berlesen)

17 Perakuan Pendaftaran Penuh (Perubatan) MOH

Majlis Perubatan Malaysia

(Malaysian Medical Council - MMC)

18 Perakuan Pendaftaran Sementara (Perubatan)

19 Perakuan Amalan Sementara Warga Asing (Perubatan)

20 Perakuan Amalan Tahunan (Perubatan)

21 Perakuan Peperiksaan Kelayakan Perubatan

22 Letter of Good Standing (Perubatan)

23 Perakuan Pendaftaran Pembantu Perubatan MOH

Lembaga Pembantu Perubatan

(Medical Assistants Registration

Board)

24 Perakuan Pembaharuan Pendaftaran Tahunan (Pembantu Perubatan)

25 Perakuan Pendaftaran Pembantu Hospital Estet Percubaan

26 Sijil Peperiksaan Pembantu Hospital Estet

27 Perakuan Pendaftaran Penuh Juruoptik MOH Majlis Optik Malaysia (Malaysian Optical Council - MOC)

28 Perakuan Pendaftaran Penuh Optometris

29 Perakuan Pendaftaran Sementara Juruoptik

30 Perakuan Amalan Tahunan Juruoptik

31 Perakuan Amalan Tahunan Optometris

32 Sijil Kebenaran Mempreskripsi dan Mendispens Kanta Lekap

33 Photo Name Certificate (Optik)

34 Letter of Good Standing (Juruoptik / Optometris)

35 Lesen Racun Jenis A, B, D, E / Permit NaOH (Natrium Hidroksida) MOH Seksyen Penguatkuasaan Farmasi (Pharmaceutical Control Section)

36 Permit Psikotropik

37 Kebenaran Import Dadah Berbahaya

38 Kebenaran Eksport Dadah Berbahaya

39 Kebenaran Import Bahan Psikotropik

40 Kebenaran Eksport Bahan Psikotropik

41 Kebenaran Pengeksportan Prekusor/ Bahan Kimia Terkawal (Acetic Anhydride, Ephidrine, Pot.Permanganate, Sulphuric Acid, Hydrochloric Acid, Toluence, dll)

42 Kebenaran Import Bahan Kimia Terkawal

43 Sijil Pendaftaran Penuh Ahli Farmasi

44 Sijil Pendaftaran Pertubuhan Perbadanan

45 Sijil Tahunan Ahli Farmasi

46 Sijil Tahunan Pertubuhan Perbadanan

47 Sijil Pendaftaran Sementara Ahli Farmasi (Warga Asing)

48 Letter of Good Standing (Ahli Farmasi)

49 Kelulusan Iklan Ubat/Keluaran Penjagaan Kesihatan/Perkhidmatan Hospital Swasta, Klinik, Klinik Radiologi dan Makmal Perubatan

MOH Lembaga Iklan Ubat (Medicine

92

Advertising Board)

50 Lesen Pengilang (Farmaseutikal) MOH Biro Pengawalan Farmaseutikal Kebangsaan (BPFK) (National Pharmaceutical Control Bureau)

51 Lesen Pemborong (Farmaseutikal)

52 Lesen Mengimport (Farmaseutikal)

53 Sijil Pendaftaran Keluaran Entiti Kimia Baru/Bioteknologi Preskripsi dan Bukan Preskripsi Suplemen Kesihatan Produk Semulajadi Kosmetik

54 1. Sijil Kesihatan Berdasarkan Jenis Makanan 2. Sijil Kesihatan Makanan Am 3. Sijil Kesihatan Udang Sejuk Beku yang telah dimasak 4. Sijil Kesihatan Daging Diproses Haba 5. Sijil Kesihatan Minyak Makan Kelapa Sawit, Palm Olein dan Palm

Stearin 6. Sijil Kesihatan Air Minuman Berbungkus 7. Sijil Kesihatan Air Mineral Semulajadi

MOH, Bahagian Keselamatan Dan Kualiti Makanan (Food Quality & Safety Division)

55 Sijil Penjualan Bebas

56 Sijil Non-Genetically Modified Food (Non-GMF)

57 Sijil Akuan Kandungan Melamine

58 Sijil Hazard Analysis and Critical Control Point (HACCP)

59 Sijil Kesihatan bagi pengeksportan Hasilan Ikan ke Kesatuan Eropah

60 Skim Pensijilan Good Manufacturing Practice (GMP)

61 Kelulusan Punca Air Mineral Semulajadi dan Air Minuman Berbungkus

62 Lesen Bahan Pemanis Tanpa Zat

63 Kelulusan Pengimportan Bahan Perisa

64 Pensijilan GMP 1 Malaysia

65 Pengikitirafan Sekolah Latihan Pengendali Makanan (SLPM)

66 Ujian Saringan Tenaga Pengajar Sekolah Latihan Pengendali Makanan (SLPM)

67 Pengikitirafan Tenaga Pengajar Sekolah Latihan Pengendali Makanan (SLPM)

68 Kelulusan Penyenaraian Premis Eksport Untuk Pengeksportan Hasilan Ikan Ke Kesatuan Eropah (EU)

69 Kelulusan Penyenaraian Pengeluar Ais Yang Digunakan Sepanjang Rantaian Pengeluaran Hasilan Ikan Ke Kesatuan Eropah (EU)

70 Kelulusan Penyenaraian Premis Bahan Mentah Separa Proses Yang Membekalkan Bahan Mentah Ke Premis Eksport

71 Kelulusan Kenderaan Pengangkutan Yang Digunakan Sepanjang Rantaian Pengeluaran Hasilan Ikan Ke Kesatuan Eropah (EU)

72 Kelulusan Puinca Bahan Mentah Yang Diimport Yang Membekalkan Bahan Mentah Ke Premis Eksport

73 Lesen penyediaan ais bagi maksud perdagangan dan perniagaan

74 Kelulusan Pendaftaran Syarikat Melalui Sistem FoSIM Import (Online) Untuk Agen dan Importer

75 Kelulusan pengiktirafan pengeksport Minimally Processed Foods Untuk Eksport ke Singapura

76 Perakuan Pendaftaran Premis Makanan

77 Permit Mengimport dan Mengeksport Tisu Manusia atau mana-mana bahagiannya

MOH Bahagian Kawalan Penyakit Diseases Control Division) 78 Permit Mengimport dan Mengeksport Mayat atau mana-mana bahagiannya

79 Permit Mengimport dan Mengeksport Organisma atau Bahan Patogenik atau mana-mana bahagiannya

80 Pemeriksaan Kapal dan Pengeluaran Ship Sanitation Control Certificate (SSCC) / Ship Sanitation Control Exemption (SSCEC) Certificate

81 Sijil Demam Kuning

82 Yellow Fever Vaccination Centre

83 Permohonan Lesen Pewasapan

84 Lesen Kelas A (Bahan Radioaktif), Kelas C (Radas Penyinaran) dan Kelas A&C (Bahan Radioaktif & Radas Penyinaran) dibawah Akta Perlesenan Tenaga Atom 1984 (Akta 304) bagi maksud perubatan

MOH Bahagian Perkhidmatan Kejuruteraan (Engineering Services Division )

85 Lesen Kelas H (Juru Perunding Fizik Perubatan) dibawah Akta Perlesenan Tenaga Atom 1984 (Akta 304) bagi maksud perubatan

86 Sijil Perakuan Pengalaman Jururawat Tahunan (Jururawat Berdaftar/ Jururawat Masyarakat/ Penolong Jururawat (APC)

MOH Lembaga Jururawat Malaysia (Malaysian Nursing Board) 87 Sijil Pengamalan Sementara (TPC)

88 Pendaftaran Jururawat

89 Letter of Good Standing

90 Pendaftaran Pengamal Pergigian MOH Majlis Pergigian Malaysia (Malaysian Dental Council)

91 Sijil Pengamalan Pergigian Tahunan

92 Sijil Pengamalan Sementara (Pergigian)

93 Letter of Good Standing (Pergigian)

94 Sijil Perakuan Bomba Jabatan Bomba & Penyelamat

95 Melesenkan penggunaan atom bagi aktiviti bukan perubatan (mengikut kelas) Kelas A – Bahan Radioaktif Kelas B – Bahan Nuklear Kelas C – Radas Penyinaran Kelas D – Pengangkutan Kelas E – Import/Eksport

Ministry of Science, Technology and Innovation (MOSTI) Lembaga Perlesenan Tenaga Atom (Atomic Engergy Licensing Board)

93

Kelas F – Pepasangan Nuklear Kelas G – Pelupusan/Penstoran Sebelum Pelupusan Kelas H – Lain-lain Aktiviti Selain Kelas A hingga Kelas H

96 Pendaftaran di bawah Akta Perlesenan Tenaga Atom 1984 (Akta 304)

97 Pengiktirafan Akta Perlesenan Tenaga Atom 1984 (Akta 304)

98 Kebenaran Akta Perlesenan Tenaga Atom 1984 (Akta 304)

99 Permit Membayar Gaji Lewat Jabatan Tenaga Kerja (JTK)

100 Permit Potongan Gaji

101 Permit Mengumpul Rehat Mingguan

102 Permit Kelonggaran Waktu Kerja Biasa

103 Permit Pendahuluan Gaji

104 Permit Kebenaran Waktu Kerja Syif

105 Permit Bekerja Melebihi Sekatan Waktu Lebih Masa

106 Permit Kelulusan Skim Bayaran Insentif

107 Permit Simpan Daftar Pekerja

108 Permit Sekatan Wanita Kerja Malam

Kebenaran Pendaftaran Jentera Jabatan Keselamatan dan Kesihatan Pekerjaan (Department of Occupational Safety & Health - DOSH)

109 Permit Penerbitan Kementerian Dalam Negeri

110 Pas Lawatan Ikhtisas Jabatan Imigresen Malaysia (Immigration Department) 111 Pas Residen

112 Pas Pengajian

Note: Other local authorities, municipal councils , city and town councils will have their own regulatory regimes which may be similar to that of DBKL

Source: MPC Regulatory Review Directorate Database

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Appendix 5.1: Summary of Survey Output No. Regulatory

Requirement

Issue Consequence or Burden

1 Licence renewal (every

2 years)

Reference:

1. Private Health Care Facilities and Services Act 1998 (Act 586)

Part III: Approval for establishment and maintenance, License-to-Operate and Inspections (Premise, Services & Facilities) Section 15.

Application for licence to operate or provide.

Section 16. Inspection of premises.

Section 22. Duration and renewal of licence to operate or provide

Part VI: Responsibilities of a Licensee, Holder of Certificate of Registration and Person In Charge

Part VIII: Quality of Healthcare Facilities and Services.

and

2. Private Health Care Facilities and Services (Private Hospitals or Other Healthcare Facilities) Regulations 138/2006

1. Long waiting time for renewal,

sometimes exceeding 6 months.

2. A lot of documents required in

application (2 sets), certified copies

required. Every piece of paper needed

to be signed. Too much paperwork

required. Additionally, now have to key-

in data online.

3. Many different units involved in the

process, difficult to deal with and to

access to them.

4. Different auditors assessing and

interpreting the requirements

differently, some stricter than others.

Variation in competency and

experience of auditors.

5. The older hospitals (those approved

before Act 586) have problems with

meeting some of the new dimensional

requirements.

6. Need to write officially to resolve

issues, oftentimes do not receive

replies to queries. Frequently need to

travel to Putrajaya to resolve issues, a

costly burden for those from other

states, e.g. East Malaysia.

7. Parts of PHFS Regulations 2006 are

not specific causing different

interpretations of requirements

8. New requirements are not published

and made known to hospitals until the

audit.

9. Delay in the issuance on professional

license contributes to overall delays.

Also results in delay for quality

accreditation.

10. Two levels of audit in some states,

state office and Putrajaya. Sometimes,

state gave comments which could be

over-ruled by Putrajaya auditors.

11. Have to deal with different regulators

(State MOH, BOMBA, Local Authority,

Immigration, DOSH) before applying.

12. East Malaysian states have a

additional requirements on

immigrations which results in delays.

13. Need costly statutory declaration by

board members and licence/certificate

holders for every renewal.

1. Long wait, sometimes until

licence lapsed

2. High overheads to prepare

documents for submission

3. Too many interactions with

different units on requirements

4. Variability in assessments

causes confusion.

5. Expensive on structural

changes and causes serious

interruption to services.

6. Time consuming and causes

delays.

7. Delays in getting requirements

rectified in submission & cost.

8. Costly delays to meet

requirements.

9. Licensing delays result in other

consequences, e.g. MSQH

accreditation.

10. Give rise to costly changes and

delays.

11. Fragmented and uncoordinated

process (merry go-round) and

delays.

12. Cause delays and added

administrative burdens.

13. Unnecessary costs and

administrative burden.

2 Planning Approval for

expansion, renovation,

upgrading

1. All types and level changes on physical building has to go through the same long and difficult approval processes.

2. Difficulty in meeting requirements because of absence of guidelines or

1. Delays resulting in heavy overheads, many interactions, inconveniences to services.

2. Many interactions and burdens of resulting delays.

95

Reference:

1. Private Health Care Facilities and Services Act 1998 (Act 586)

Part III: Approval for establishment and maintenance, License-to-Operate and Inspections (Premise, Services & Facilities)

Part VI: Responsibilities of a Licensee, Holder of Certificate of Registration and Person In Charge

Part VIII: Quality of Healthcare Facilities and Services.

and

2. Private Health Care Facilities and Services (Private Hospitals or Other Healthcare Facilities) Regulations 138/2006

specification standards. 3. Different officers specifying the

requirements differently (depending of competency of officers).

4. Long and difficult process for land conversion for expansion.

5. Difficulty in contacting right officers to resolve issues through the phone. Oftentimes, need to travel down to Putrajaya to resolve issues or to speed up approval. Need to have good networking to get things done.

6. Submission for approval of new clinic has to be complete. Any missing requirements require a re-submission.

Note:

This approval is treated the same as

establishing a new facility (hospital),

therefore undergoes the burdensome

building approval processes.

3. Difficult approval process with consequential delays.

4. Delays in introduction of new services (State/Land issue)

5. Inconvenience, costly and process delay.

6. Costly payment, administrative burden and delays.

3 Approval for

advertisements and

advertising materials

Reference:

1. Medicine (Advertisements and Sales) Act 1956 (Revise 1983) Act 290

Section 4A. Prohibition of advertisements relating to skill or service.

Section 4B. Advertisements of medicines to be approved.

and

2. Medicine Advertisements Board Regulations 1976 P.U.(A) 283/76

Regulation 5. Issue approvals.

Regulation 7. Numbering of approvals

Regulation 8. Application and fees.

1. All applications have to be sent to Putrajaya. This is inconvenient for hospitals located in other states.

2. Medicine Advertisements Board (MAB) has recently introduced this control on printed materials for internal distributions (information for medical staffs and patients).

3. Lots of paperwork on number of hard copies needed in application, and also as hospitals produced many such materials throughout the year.

4. Too many changes required to submissions because there is no established guidelines by regulators.

5. Different requirements from different regulators as local authorities also regulate advertisements.

6. No communication or information on revisions on requirements. Only knew upon application.

7. Problem with getting approvals for materials in other languages (Japanese, Russian, Chinese, etc.).

1. Burdensome in terms of cost, convenience and delays.

2. Additional burdens and also delays implementation of hospital educational programs for staff and patients.

3. High overhead costs and total compliance costs. Delays to hospitals efficiency programs.

4. Increased interactions, delays and cost burden.

5. Confusion and burdensome to achieve compliance.

6. Confusion and burdensome to achieve compliance.

7. Delays and additional burden on compliance.

96

4. Workforce regulation

and quality and

availability of

professionals.

Reference:

1. Medical Act 1971 Act 50

2. Medical (Amend.) Act 2012

3. Nurses Act 1950 Act 14 (Revised 1969)

4. Registration of Pharmacists Act 1951 Act 371 (Revised 1989)

5. Registration of Pharmacists Regulations 2004

6. Registration of Medical Specialist

1. The quality of nurses graduating from some private colleges is not up to employable requirements resulting in many unemployed graduates.

2. Shortage of experienced and specialist skilled nurses. Restriction on recruitment of foreign nurses to mop up the unemployed graduates.

3. Public hospitals are pinching private hospitals’ experienced nurses (better benefits and security).

4. Poor enrolment by hospital nursing school due to unemployed nurses.

5. Shortage of specific medical specialists is preventing the expansion of healthcare services as foreign professionals are not allowed to practice here.

6. Suspect poorer quality of medical graduates as a result of commercialisation of medical education.

7. Unbalance expansion of medical education to the resources (hospitals and supervisory) for houseman internship.

8. Incentive for continuous professional development has been discontinued. Also difficult to make HRDF claims for courses not registered, even though the provider is MOH.

9. Burdensome procedures for engaging foreign specialists when applying to MMC. Lots of forms to fill, 11 copies required and take months.

10. Long wait to get registered with NSR by specialists.

11. Sabah & Sarawak have restrictions on employment of professionals from other states. Immigration restrictions on “foreign” staff are burdensome.

12. Requires a 24-hour pharmacist on standby for issuance of drugs. Assistant Pharmacist is not accepted.

13. Government imposition of program to mob-up unemployed graduate nurses with SL1M initiative.

1. Difficult and costly to retrained these graduate; they are not passionate in the profession.

2. Burden on hospitals to employ poor quality graduate nurses by Nursing Board.

3. Rising cost of employment for hospitals.

4. A hospital tries to re-open school but unsuccessful.

5. Difficulty to expand healthcare services for country to be a medical hub.

6. Experience poorer type of medical graduates.

7. Burden on hospital to supply places for houseman internship.

8. Burdensome application for claims and cost burden on hospitals.

9. Delays, costly, and administrative burdens.

10. Delays in getting license for new specialist clinics.

11. Approval delays add to administrative burden.

12. High staff cost.

13. Hospital has to bear the burden of training these nurses.

5 Other Issues:

1. Export of Healthcare Services (Health Tourism)

There is no specific

regulation for health

tourism but hospitals are

expected to register with

Malaysia Health Tourism

Council and to obtain

MSQH accreditation.

1. Health tourism requires good air services to host country. Penang hospitals receive more health tourists with addition flights to Indonesia.

2. Health tourists to hospital in Melaka need to come through KLIA, which has poor transportation to Melaka.

3. Control on advertisements, inefficiency in licensing and other approvals are stifling health tourism.

4. Health tourism is not the main focus of hospital in Klang Valley. Travel inconvenience and higher costs.

5. Sarawak has added issue with land travel issues. There is a restriction of crossing border (180 times/year) for Indonesian agents.

1. Limited inbound flights are curbing health tourist arrivals in state.

2. Additional burden of having to arrange transportation to and from KLIA.

3. Burdensome regulatory processes stifling growth.

4. Only a small per cent of health tourist trade in Klang Valley.

5. Added administrative burdens.

2. Personal Data

Personal Data

1. Some hospitals are concern with the implementation of the new Act. There are no guidelines and hospitals are experiencing different requirements from

1. Some hospitals are feeling the administrative burdens of the regulation.

97

Protection Act 2010

(Act 709)

regulators. Too many restrictions from interpretation of the requirements.

3. MSQH Accreditation MSQH is a voluntary

accreditation scheme.

MOH has made it a

requirement for health

tourism.

1. Auditors for MSQH are from medical professionals from competing hospitals, not independent.

2. Auditors are not trained or did follow standard auditing protocols.

1. Perceived threat and unfairness in assessments.

2. Perceived inconsistencies and variations in assessments.

4. Medical fee

Private Healthcare

Facilities and services

(Private Hospitals and

Other Private

Healthcare Facilities)

Regulations

Thirteenth Schedule

(Regulations No. 433)

1. The capped on procedure fee stifle innovativeness as specialists are reluctant to try new procedures because the risk (of litigation) outweighs the returns.

2. Hospitals find it difficult to introduce new services which are not listed in the schedule.

1. Stifle innovativeness in private hospitals.

2. Stifling to growth of new services.

5. Information & reporting

1. Needed to keep summary of prescriptions in a book (register). A physical book is required. IT register is not accepted (yearly inspection of books).

2. Need to submit statistics online on monthly basis, e.g. Nursing Board. Poor online system is a hassle. DOS also requires quarterly input.

1. Additional administrative burden to maintaining a physical book.

2. Administrative burden for hospital.

98

Appendix 5.2: Validation Response on Survey Output

Validation Response No. 1 Validation Response No. 2 Validation Response No. 3

Issue No. 1: Licence Renewal

No. 5: To be fair, the MOH has been very judicious in the insisting on structural changes on older facilities where it has direct impact on patient safety. Older operation theatres, ICU, CCU and Labour Rooms may require renovations to meet with current patient safety requirements. No. 7: The respondents must be more specific here. No. 9: The hospitals can be more proactive by applying for renewals of Professional Licenses at least 6 months before expiry. No. 10-11: Agree, duplication of work, time lost, cost overruns. This has to be looked into e.g. set up one stop centre where all regulatory authorities sit together. No. 12: This is tied up with conditions agreed to when Sabah and Sarawak became one with Malaysia. No13: This is part of the requirements and can be taken up with the MOH.

Long wait, sometimes until licence lapsed. Sometimes the hospitals get their license after or very near the expiry date. We hope that MOH can review

the application submitted and

conduct site inspection as soon

as they received the application/

documents so that any missing

document or follow-up action

can be addressed accordingly

within adequate timeframe.

Hence, no delay in issuance of

new license.

Despite the online application, hospitals are required to submit paper application and in 2 sets. This involved a lot of paperwork. Also almost every document requires to be certified true copies. We feel that there is a duplication of work and also waste of time having to do the same thing twice but differently. Perhaps MOH should consider

looking at asking hospitals to

only submit any new document

such the latest/valid APC or

certification of the doctors, staff,

etc. instead of getting the

hospital to re-submit everything.

There also seem to be frequent changes in the personnel dealing with licensing, hence, no consistency and sometime when the person is new to the job she doesn’t know very much when asked about certain things. Frustrating because unable to

get clarification or information

needed promptly. Sometimes

the people giving the

information seemed unsure or

lack of knowledge when asked

to clarify certain things. So

when information is not clear it

is difficult to proceed to the next

level.

There should not be too much

changes/ movement of

personnel involved in the

process so that there is proper

follow-up and easy to access.

Not only board members and licence holder but also other

5. Estimate cost, i. Processing and licence fees

: >RM10,000 6. Duration to obtain approval –

approx. 9 months 7. Estimated amount of paper

required for submission – 25 reams of A4 paper.

8. All documents are to be submitted in 3 sets and all the certificates are required to be certified. This includes the certificates for staff who are from the non-allied health professionals and non-executive positions.

99

employees (almost everyone) – require statutory declaration to be submitted.

Issue No. 2: Planning Approval for expansion, renovation, upgrading

No. 1: It has to be so as spatial requirements, patient-flow, access to service areas may change with the proposed expansion, renovations, etc. No. 2: The PHFS Regulations are specific in what is required in terms of spatial requirements etc. All that the MOH wants is the final layout and “as built plans for it to vet.

Applicant should be made to

submit the missing

requirement/document only

instead of having to re-submit the

whole application again.

For renovation work:

1. Estimate of cost – processing fee of RM1000

2. Duration to get approval: 6 - 9 months

3. Number of interactions (meetings) with regulators – via tele-conversation only;

4. Application requires hospital to provide precise drawing scale to the renovation. This is costly and time consuming especially if the renovations are not major.

Issue No. 3: Approval for advertisements and advertising materials

No. 1: The Medicine Advertisement Board (MAB) is chaired by the DG and therefore the applications need to go to Putrajaya. No. 2: As a past member of the MAB, I can affirm that printed materials meant for use WITHIN the hospital do NOT require approval. No: 4. The hospitals should refer to “Advertising Guidelines for Healthcare Facilities and Services (Private Hospitals, Clinics, Radiological Clinics and Medical Laboratories” which came into effect on the 27

th of July 2010. This

is also available in the Pharmacy Division MOH Website.

Issue no. 4: Workforce regulation and quality and availability of professionals.

No. 1-4: Problem brought about by the Ministry of Higher Education in its approval of far too many private nursing colleges. No. 5: Foreign Medical Specialists can be brought in subject to them meeting requirements of the Malaysian Medical Council (MMC). This is to ensure they possess recognized post-graduate qualification, come from recognized medical schools and have sufficient post graduate experience as determined by the MMC. The intention is NOT to have a closed-shop policy but more on ensuring only qualified and experienced foreign specialists get to practice in our country. This not unique to Malaysia No. 7: Private hospitals WANTING to take in housemen will first have to meet requirements as set by the MOH. I have been involved in meetings with the MOH on this issue and to date, I do not know of any private hospital which provides houseman training. No. 9: Same as No.5 in above.

To produce quality nurses, the Nurse Educators and Clinical Instructors (CI) themselves should be qualified to teach and mentor the student nurses. Some of the CIs are graduates with only 1 or 2 years nursing experience which renders them unfit and unqualified to mentor the student nurses.

The MOH should not take short cut by employing experienced nurses working and trained in the private sector to work for them, leaving the private hospitals with only fresh graduates to run the wards.

The MOH should relax the requirement of hiring qualified and skilled foreign specialists to work in Malaysia. The same should be extended to local Malaysians working overseas who wish to come back to serve the country. More incentives should be given to them to

100

Hospitals should look at the requirements of the MMC (as in its website) or speak to the Secretary of the MMC AND put in the applications early. No. 12: Yes it is a requirement and hospitals should willingly spend some money to engage the required number of Pharmacists - patient safety being the issue here. No. 13: SLIM is not an imposition by the MOH as yet.

return to Malaysia. Reduce the number of

documents required and speed

up the registration process.

Should allow qualified and trained Asst. Pharmacist to be on standby/on-call.

Issue no. 5: Export of Healthcare (Health Tourism)

No response

Issue No. 6: Personal Data Protection

Act 709: It relates to Patient

Confidentiality and has to be addressed

by the hospitals.

Issue No. 7: MSQH Accreditation

True to some extent.

Issue no. 8: Regulated Medical Fees

Singapore had the Professional Fee Schedule for Medical specialists as in our country but later did away with it. Yes the MOH can consider doing the same too.

Issue No. 9: Information & reporting

Information and Reporting. Yes it could

be reviewed and streamlined by the

MOH.

101

Appendix 7.1: Reports of Meeting with the MOH

DISCUSSION ON REDUCING UNNECESSARY REGULATORY BURDENS (RURB) –

SETTING UP AND OPERATING A PRIVATE HOSPITAL

Industry Concerns & Recommendations

Date

Time

Venue

Attendance

: 19 November 2013 (Tuesday)

: 3.00p.m – 12.30p.m

: Bilik Mesyuarat CKAPS, Tingkat 3 Blok E1, KKM, Putrajaya

1. Dr. Ahmad Razid Salleh, Pengarah, Pentadbiran (MOH) 2. Dr. Afidah Ali, Timbalan Pengarah, CKAPS (MOH) 3. Dr. Alicia Liew Hsiao Hui, KPP, CKAPS (MOH) 4. Mr. Goh Swee Seang, MPC Associate 5. En. Alamin Rehan, MPC 6. Ms. Musfirah, MPC 7. Pn. Jamaliah Daud, MPC (WGILF Secretariat)

Main Discussion Points:-

1. MPC shared the slide presentation on RURB on setting up and operating a Private Hospital (please

refer to the attachment). Some of the discussion points are as follows:-

Item / Concern Discussion Points

1. Certified APC

Online System:

CKAPS is moving towards information-based input. No more APC two copies of the renewal documents required.

In-house system has been developed for online input of application (renewal of APC) information. The system shall allow medical professionals to update and check on their professional information with declaration of compliance or “Aku Janji” at the end of the form, to certify that the information provided by them was correct. The system is an online “manual check” and not yet integrated with other systems e.g. MMC, BLESS.

Enforcement (implementation) is targeted by January 2014.

MOH system has been initiated in RMK9, however various system issues faced e.g. no link to clinics’ database, network data communication issues and no unique ID assigned for personnel’s (medical practitioner’s) identification.

APC application and renewal period / frequency:

Yearly renewal is seen as burdensome for both regulators and business – as it happened at the end of the year, in December.

However, change in the renewal period or frequency requires amendment to the regulation. This is up to the council board to deliberate and act.

Annual renewal is required for MOH to ensure that the medical practitioners are still practising at the stated place of practice (private hospitals or clinics), i.e. as per their registration record;

APC determines the place of practice; thus

102

Item / Concern Discussion Points

necessary for licensing renewal;

It is in the planning that MMC will also monitor the practitioner’s performance for credentials, privileges and continuation of medical education.

APC application vs. notification:

APC application is a requirement by the act; hence self-notification (similar to renewal of driving license, at any particular time) may not be possible under current regulation.

APC on-site audit:

Two years after renewal, inspection is conducted by MOH with state agency;

On-site audit is to check on evidences and confirm submission of the documents as defined in the requirement (stated place of practice, expiry, staffing, OT records, etc.);

2. Planning approval for expansion

Less detailed that the application of a new hospital establishment, thus there is no need to change the license to incorporate the change (expansion)

3. Advertising approval

The approval process is currently handled by Lembaga Iklan Ubat (Medicines Advertising Board)

There is a proposal to move the approval process to CKAPS but this requires change in both acts

4. Incident Reporting

Required under the Act, MOH collects the reports but so far no analysis has been done.

5. Dealing with licensing officers

Business finds it difficult to meet or reach MOH officers regarding their applications;

Common scenario exists where business representatives prefer to meet with the head and senior officers only.

To handle this issue, MOH has allocated a special client day on every Friday of the week to consult with business.

6. Performance indicators

MOH is considering using performance indicators in future for private hospital regulation and would also be interested in study on impact of regulation on private hospital performance.

7. Continuing education on business

This is normally done on a one-off basis. There is no planned allocation for this and lack of expertise (resource) to conduct it on a programmed basis.

8. Six-month application lead time

The intention is to reduce the probability of license lapse.

2. MPC shall maintain continuous engagement with MOH upon decision on the implementation of the

recommendations (focusing on reviews on regulatory framework), if any.

103

Appendix A: Study Methodology (Presentation by Sue Holmes)

Tips for gathering useful information on unnecessary regulatory burdens

Sue Holmes

2 April 2013

APPENDIX A: STUDY METHODOLOGY BY SUE HOLMES

1 Sources of information

1. existing data and analysis

2. interviews with one stakeholder

3. surveys

4. synthetic analysis

5. focus groups

6. consultants

7. submissions

104

existing data and analysis

Very important because:

• less effort than creating your own

• avoids unnecessary repetition

• reduces ‘review fatigue’

• may foreworn you of what will not work

Action:

• list existing information sources

• ensure each is checked for content by at least one team member who then shares what he/she has read

interviews with one stakeholder at a time

Important because:

• stakeholder more likely to share if not worrying about what is revealing to others

• able to explore in detail issues of concern to the particular stakeholder

• able to gather different views on the one issue – where you get conflicting views this is an indication that this may be an important issue

Approach:

• need to guarantee confidentiality and will only make public information gained after clearing with the stakeholder

• need to create a sense of trust and that undertaking of confidentiality is never breached – does this create any issues over freedom of information laws, etc?

105

interviews with one stakeholder, ctd

Preparation:• have one team member prepare background notes, usually from

information available on the internet, about the activities, interests, mission statement, etc of the stakeholder

Conduct of the interview:• provide background to the review, that are interested in reducing

burdens on business while still achieving social, economic and environmental objectives, and part of a broad reform programme

• explain comments are confidential and will only make public information gained after clearing with the stakeholder

• explain what you consider to be under scope both in terms of industries and regulation – broadly defined - and that you are interested in both the written regulation and how it is administered

• move to asking questions which should start general and become gradually more specific, if necessary

interviews with one stakeholder, ctdConduct of the interview, ctd:• sorts of questions include:

• Which regulations concern you the most? Why?• Which regulations are the hardest to comply with?• Which regulations do you think are too onerous given what they are trying to

achieve?• Do you think any regulations are not justified at all?• Are some regulatory requirements inconsistent?• Do you consider inspectors and other regulatory administrators do a good or a poor

job? In what ways?• Do you find inspectors and administrators are consistent in their decisions?• Do you find they are helpful or unhelpful in advising you how to comply? Are there

any publicly available guidelines?• How long do regulators take to respond to applications, etc? [Other questions based

on the sources of unnecessary burdens and the types of adverse impacts on business contained in slides on core concepts.]

• Do you have any suggestions for reducing the burden of compliance of regulations?• Ask any specific questions that you have due to research you have already done or

because of issues raised by other stakeholders – do not share who has raised the issue with you previously unless is already public.

• Are there any other issues you want to suggest we should cover in our review?

106

surveys

Useful because:• can ensure statistical soundness of observations and so can make

statements about the whole sector or industry including significance of reg’y costs

• ensure ask all those surveyed the same questions and can compare responses

• as with interviews are also able to gather different views on the one issue

Disadvantages:• take a long time to develop and then to get responses and to

process and analyse• risk of low response rate, especially from businessesNeed to tailor length and types of questions to the target population.

synthetic analysis

Involves:• a desk based analysis of how long it takes to fulfil regulatory

requirements, such as filling in an application formBenefits:• produces data which can be compared across jurisdictions or

regulators

Disadvantages:• may not be representative of actual business experience• cannot capture all the substantive elements that businesses have

to undertake for example, the time taken to attend interviews or lodging forms

107

focus groups

Disadvantages:

• limits what people may want to say to you

• PC’s experience was that businesses had limited knowledge of the cost of compliance so focus groups were not cost effective

• also suffered from low attendance by businesses

Advantages:

• most useful after the Green Report has been released because can see how widely held are assessments of the report and may lead to collective agreement on solutions

Checklist for assessing the quality of written regulation

1. Minimum necessary to achieve objectives

2. Only prescriptive where fully justified

3. Accessible, transparent and accountable

4. Integrated and consistent with other laws

5. Communicated effectively

6. Mindful of the compliance burden imposed

7. The regulation was prepared using Regulation Impact Analysis

Source: Productivity Commission 2006, page 54, based on: Argy and Johnson (2003); OECD (1995); Office of Regulation Reform (Vic) (1996); COAG (2004) — as amended; ORR (1998); and Cabinet Office (UK) (2000).

108

Checklist for assessing the quality of administration and

enforcement1. Maximises the potential for voluntary compliance2. Maintains an ongoing dialogue between government and the

business community3. Use risk analysis to identify areas of intrinsically potential high

adverse impacts and/or possible low compliance 4. Develop a range of enforcement instruments so regulators can

respond to different types of non-compliance – responsive regulation

5. Adequately resource regulatory agencies and improve their governance – transparency and accountability – to reduce compliance burdens on business

6. Monitor compliance trends in order to gauge the effectiveness and efficiency of enforcement activities

Source: Based on Parker (in OECD 2000).

References

• Information on information sources can be found at:

• Appendix B ‘Approach to gathering information’ of Performance Benchmarking of Australian Business Regulation: Occupational Health and Safety, 2010. This includes an explanation of how existing information, surveys – including survey questions for regulators and businesses -and synthetic sources were used.

• Appendix B ‘Approach to gathering information’ of Performance Benchmarking of Australian and New Zealand Business Regulation: Food Safety, 2009. This includes an explanation of how existing information, surveys – including survey questions for regulators and for one retailer - and a consultancy on regulatory differences were used.

• Appendix B ‘Approach to gathering information’ of Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessment, 2011. This includes an explanation of how surveys – including survey questions for state regulators, local government, the community and developers - were used.

• Appendix B ‘Approach to gathering information’ of Performance Benchmarking of Australian Business Regulation: Local Government as Regulator, 2012. This includes an explanation of how surveys – including survey questions for state regulators, local government and businesses - were used.

• Performance Benchmarking of Australian Business Regulation: Cost of Business Registrations, 2008 made extensive use of synthetic estimates.

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Sources of unnecessary burdens on business

• excessive regulatory coverage - regulations that encompass more activities than required to achieve their objective

• prescriptive regulation that excessively limits the ways in which businesses may meet the underlying objectives of regulation

• overly complex regulation• inconsistent regulatory frameworks across jurisdictions affect businesses

operating across state or regional borders• regulations which do not allow businesses to use the best technology, meet

consumer demand and/or generally be flexible to changing circumstances • similarly, rules or enforcement approaches can create perverse incentives to

operate in less efficient ways, such as distorting choice of inputs• multiple regulations or regulators which overlap or conflict • unwieldy licence application and approval processes • excessive time delays in obtaining responses and decisions from regulators • unnecessarily invasive regulator behaviour, such as overly frequent inspections or

information requests • inconsistent application or interpretation of regulation by regulators

Types of adverse impact on business

• administrative and operational costs

• reporting, record keeping, publications and documentation

• education and consulting costs required to interpret legislation and guidelines)

• changing the way products are produced or services are provided

• changing the characteristics of what is produced

• lost production and marketing opportunities

110

Checklist for assessing the quality of written regulation

1. Minimum necessary to achieve objectives

2. Only prescriptive where fully justified

3. Accessible, transparent and accountable

4. Integrated and consistent with other laws

5. Communicated effectively

6. Mindful of the compliance burden imposed

7. The regulation was prepared using Regulation Impact Analysis

Source: Productivity Commission 2006, page 54, based on: Argy and Johnson (2003); OECD (1995); Office of Regulation Reform (Vic) (1996); COAG (2004) — as amended; ORR (1998); and Cabinet Office (UK) (2000).

Source: Sue Holmes

111

Appendix B: Study Questionnaires and Conceptual Framework

Interview Questionnaires

Primary Questions:

A. General Questions for hospital operations 1. Which regulations concern you the most? Why? 2. Which regulations are the hardest to comply with? 3. Which regulations do you think are too onerous given what they are trying to achieve?

a. What do you think of the current costs involved in getting your application to setup a

business?

b. How about the application’s processing time? Which exact processing stage is the most

burdensome to your setting up the business?

4. Do you think any regulations are not justified at all? 5. Are some regulatory requirements inconsistent? 6. Do you consider inspectors and other regulatory administrators do a good or a poor job? In what

ways? 7. Do you find inspectors and administrators are consistent in their decisions? 8. Do you find they are helpful or unhelpful in advising you how to comply? Are there any publicly

available guidelines? 9. How long do regulators take to respond to applications, etc? 10. Do you have any suggestions for reducing the burden of compliance of regulations? 11. Are there any other issues you want to suggest we should cover in our review?

Supplementary Questions

B. Specific Questions for Health/Medical Tourism: 1. What types of services/treatments offered? (Diagnostic, treatment, others) 2. Why and how do foreign patients come to you? (Referral? Excellence? Price? Overall costs? Ease of

entry (medical visa)? Supporting services (travel, transport, accommodation, others)? Funding arrangement?)

3. Who are your customers (market)? (Which countries? Percentage? What types you want? Medical tourists? Foreign students? Others?)

4. What are your overall capacity and utilization, in terms of facility, human resources? Can you handle more? If not what changes what increase your capacity to handle more?

5. What per cent of business for health/medical tourism? (Number patients, admissions (out-patients, in-patients)? capacity used? revenue? What are other potential markets you are looking at?)

6. What are your constraints/challenges for more medical tourists? (Regulations? Marketing? Human resource? Capacity? Supporting services? Culture & language?)

7. What information challenges faced by you? (On your market? By foreign patients? Marketing and promotion?) Knowing legal regulatory requirements and what will meet them?

8. What regulatory issues faced by your foreign patients? (Entry? Length of stay? Travel and accommodation? To accompanying helper/relatives?)

9. What current regulatory burdens you faced in medical tourism? (What institutional, regulatory and other arrangements which impede efficiency? Regulation effectiveness? Administrative efficiency? Information availability and accessibility? Facilitating/ambivalence of regulators?)

10. What sources of waste and inefficiency in the delivery of you services and possible options for change?

11. What kinds of institutional, regulatory and other arrangements that can assist the medical tourism industry? (Marketing & advertising? Information? International referral network? Improving efficiency/quality/capacity? Medical visa? Supporting services?)

C. Specific questions on health workforce: 1. What are the classifications of health care workforce? (Professional and non-professional? Doctors,

Nurses, Dentists, Pharmacists, Allied health professionals, others.) 2. What are the current workforce issues? (Shortages: types, skills and competencies, specialists…

types, quality and quantity, others?) 3. What are the institutional, regulatory and other factors that affect supply, entry, mobility and

retention of health care workforce? Doctors, specialists, nurses, allied health professionals, etc.? What are your views on these factors:

a. National (policy) health service planning and health workforce planning? b. Differences and common goals across organisations and sectors?

112

c. Supply… VET, undergraduate and postgraduate education and curriculum, clinical training? d. Workforce participation? e. Workforce satisfaction and productivity?

4. Are current policies and regulatory regimes impeding future workforce requirements on new professions, skills, competencies? (From perspectives of technology changes, information technology, higher income, and aging population?)

5. Are current regulations and practices impeding workforce change? a. Professional registration, b. Clinical training, c. Continuous Professional Development, d. entrenched customs and practice (codes), e. fragmented roles (different registration bodies), f. inflexible regulatory practices g. Payments

6. Is the current regulatory administration on medical workforce burdensome to your operation/business? (Cost, time, interactions, others?) In what way can you suggest for the regulator to improve the administration of regulation?

7. What do you think current restrictions on foreign health care professionals? Is it impeding growth, competition, knowledge transfer, others? How would you suggest that foreign health professionals be regulated in the future?

8. Do you have any suggestion how and which area the government should do to further improve the health workforce? (Skills, competencies, job redesign, retention and deployment, job satisfaction and productivity, meeting changing technological and business requirements?)

9. Should the government be reviewing the existing health care workforce legislation? (Medical Act, Nurses Act, etc.?) Which areas or aspects (regulatory bodies and their roles, associations) and why?

10. Do you have any other suggestions: a. to improve current process of employing local and foreign medical workforce? b. to develop, expand or optimize future workforce in healthcare industry

11. Are there are any other issues you would like raise with us? Are there any particular people or organizations who you think we should talk to?

Concepts of Regulatory Burdens and Regulatory Burdens Dimensions

A. Measures quantifying burdens: 1. Costs (direct… fees, charges; indirect… revenue loss, overheads) 2. Time (days of contact with regulators) 3. Interactions (with regulators for each process) 4. Frequency (times per period) 5. Number of types (license, inspection, registration, etc.) 6. Number of regulators/agencies 7. Human resources (internal allocation) 8. Professional services (external bought-in) 9. Capital expenditure (ICT, other facilities)

B. Types of control actions and burdens: 1. Approvals (for plans, proposals) 2. License to operate/use 3. Certificate of practice (application and renewal) 4. Permits to do 5. Inspections (periodic, random) 6. Registration (application, CPD and renewal) 7. Notification 8. Reporting (periodic, incident-base, as-requested) 9. Standards, agreements and third-party certification (quality, safety, environment, out-sourcing

contracts) C. Regulatory process & regulators (Principles and Practices)

1. Transparent – clear rules and processes

2. Accountable – explain the performance

3. Consistent – the same approach is applied within and across sectors

4. Proportionate – actions are governed by the risk

5. Targeted – focus on the most important health/safety outcomes

113

6. Codes of practice/Practice guidelines – published and make known, eg. UK Regulator’s Compliance Code

7. Competency – knowledge, skills and experience

8. Professionalism & ethical conduct (Facilitating or ambivalence)

9. Information (Availability and Accessibility, Comprehensiveness and Clarity)

D. Unnecessary burdens might arise from:

11. excessive coverage of the regulations, including ‘regulatory creep’ — that is, regulations that

encompass more activity than was intended or required to achieve their objective

12. subject-specific regulations that cover much the same ground as other generic regulation

13. unduly prescriptive regulation which does not allow businesses to use the best technology, choose

the best inputs, meet the best inputs, meet customer demand and/or limits the ways in which

businesses may meet the underlying objectives of regulation

E. Conceptual Framework

Source: Author

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Appendix C: APHM Members List Member Hospitals Of APHM By States

(JOHOR)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Colombia Asia

Hospital

Persiaran A Fiat, Taman

Kesihatan A Fiat, 79250

Nusajaya,

www.colombiaasia.c

om/nusajaya

T : +607 2339999

F : +607 2339900

82

Hospital Penawar 17 & 18 (A-D), Pusat

Perniagaan Pasir

Gudang, 81700, Pasir

Gudang

www.hospitalpenaw

ar.com

T : +607 2521800

F : +607 2518199

50

Kempas Medical

Centre

Lot PTD 7522, Jalan

Kempas Baru,

81200, Johor Bharu

www.kempasmedical

.com

T : +607 2368999

F : +607 2368222

47

Klinik Rakyat dan

Hospital Bersalin

5-2, Jalan Zabedah,

83000, Batu Pahat,

- T : +607 4317579

F : +607 4323022

18

KPJ Johor

Specialist Centre

39-B, Jalan Abdul Samad

80100 Johor Bahru

www.jsh.kpjhealth.co

m.my

T: +607-223 7811

F: +607-224 8213

263

Medical Specialist

Centre

Wisma Maria Jalan Ngee

Heng

80100 Johor Bharu

- T: +607-2243888

F: +607-2236785

70

Pantai Hospital

Batu Pahat

95, Jalan Bintang Satu

Taman Koperasi Bahagia

83000 Batu Pahat

www.pantai.com.my

/pantai-hospital-

batu-pahat

T: +607 4338811

F: +607 4331881

106

Pelangi Medical

Centre

68A Jalan Kuning Taman

Pelangi

80400 Johor Bahru

- T: +607-3331263

F: +607-3345823

12

Pusat Pakar

Kluang Utama

1 Susur 1, Jalan Besar

86000 Kluang

- T: +607-7718999

F: +607-7728999

30

Pusat Pakar

Perbidanan &

Sakitpuan Raja

133-1 Jalan Salleh

84000 Muar

- T: +606-9522224 11

Puteri Specialist

Hospital

33, Jalan Tun Abdul

Razak (Susur 5)

81100 Johor Bahru

www.psh.kpjhealth.c

om.my

T: +607-225 3222

F: +607-223 8833

158

Regency Specialist No. 1 Jalan Suria, Bandar

Seri Alam

www.regencyspeciali T: +607-3817700 58

115

Hospital 81750 Masai, Johor

Bahru

st.com F: +607-3887666

T.K Tan O&G

Specialist Clinic

No.2, Jln Sri Perkasa 1/5

Taman Tampoi Utama,

81200 Johor Bahru

- T: +607-2411100 10

Tey Maternity

Specialist & Gynae

Centre

21 Jalan Sulaiman

84000 Muar

- T: +606-932 9187 19

(KEDAH)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kedah Medical

Centre

175, Jalan Pumpong,

Mukim Alor Merah

05250 Alor Setar

www.kedahmedical.c

om.my

T: +604-7308878

F: +604-7332869

84

Metro Specialist

Hospital

1, Lorong Metro

08000 Sungai Petani

www.hospitalmetro.c

om

T: +604-4238888

F: +604-4234848

106

Pantai Hospital

Sungai Petani

1 Persiaran Cempaka,

Bandar Amanjaya

08000 Sungai Petani

www.pantai.com.my

/pantai-hospital-

sungai-petani

T: +604-442

8888/9999

F: +604-442 6805

80

Putra Medical

Centre

888, Jalan Sekerat, Off

Jalan Putra

05100 Alor Setar

www.putramedicentr

e.com.my

T: +604-7342888

F: +604-7348882

124

(KELANTAN)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kota Bharu

Medical Centre

Pt 179-184, Jalan Sultan

Yahya Petra, Lundang,

15200 Kota Bharu

www.kbmc.com.my T: +609-7433399

F: +609-7478271v

44

KPJ Perdana

Specialist Hospital

Lot PT 37 & 600,

Seksyen 14, Jalan

Bayam, 15200 Kota

Bharu

www.perdana.kpjhea

lth.com.my

T: +609-7458000

F: +609-7472877

110

Pusat Rawatan

Islam An-Nisa

JKR 284, Jalan Sultan

Ibrahim

15050 Kota Bharu

www.annisa.com.my T: +609-741 4444

F: +609-747 8197

17

116

(MELAKA)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Mahkota Medical

Centre

3 Mahkota Melaka Jalan

Merdeka

75000 Melaka

www.mahkotamedic

al.com

T: +606-2848222

F: +606-281 0560

356

Pantai Hospital

Ayer Keroh

No.2418-1 KM 8 Lebuh

Ayer Keroh

75450 Melaka

www.pantai.com.my

/pantai-hospital-

ayer-keroh

T: +606-231 9999

F: +606-231 3299

120

Putra Specialist

Hospital

169 Jalan Bendahara

75100 Melaka

www.psh-group.com T: +606-283 5888

F: +606-281 0518

225

(NEGERI SEMBILAN)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Columbia Asia

Hospital

No. 292, Jalan Haruan 2,

Oakland Commercial

Center,

70300 Seremban

www.columbiaasia.c

om/seremban

T: +606-6011988

F: +606-6011848

65

KPJ Seremban

Specialist Hospital

Lot 6219 & 6220 Jalan

Toman 1 Kemayan

Square, 70200

Seremban

www.ssh.kpjhealth.c

om.my

T: +606-7677800

F: +606-7675900

137

Mawar Renal

Medical Centre

No. 71, Jalan Rasah

70300 Seremban

www.mawar.com.my T: +606-7647048

F: +606-7647092

55

N.S Chinese

Maternity

Hospital

Lot 3900 Jalan Tun Dr

Ismail

70200 Seremban

- T: +606-7622104

F: +606-7630105

74

NCI Cancer

Hospital

PT 137/7, Jalan BBN 2/1

71800 Nilai

www.nci.com.my T: +606-8500 999

F: +606-8500 733

25

117

(PAHANG)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Darul Makmur

Medical Centre

Jalan Kempadang

Makmur, Taman

Kempadang Makmur,

26060 Kuantan

www.dmmc.com.my T: +609-5349988

F: +609-

5349966/9987

91

Kuantan Medical

Centre

No.1 Jalan Tun Ismail 9

25000 Kuantan

www.kmcsb.com.my T: +609-5142828

F: +609-5147688

79

Kuantan Specialist

Centre Sdn Bhd

51 Jalan Alor Akar,

Taman Kuantan

25250 Kuantan

www.ksh.kpjhealth.c

om.my

T: +609-5678588

F: +609-5678098

81

(PERAK)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Apollo Medical

Centre

271 Jalan Taming Sari

34000 Taiping

- T: +605-8056000

F: +605-8076000

30

Colombia Asia

Hospital, Taiping

No.5, Jalan Perwira

34000 Taiping

www.colombiaasia.c

om/taiping

T: +605-8208888

F: +605-8208999

82

Hospital Fatimah 1 Lebuh Chew Peng

Loon, Off Jalan Dato' Lau

Pak Khuan, Ipoh Garden,

31400 Ipoh

www.fatimah.com.m

y

T: +605-545 5777

F: +605-547 7050

226

Kinta Medical

Centre

20 Jalan Chung Thye

Phin

30250 Ipoh

www.kmc.com.my T: +605-2542125

F: +605-2543264

48

KPJ Ipoh Specialist

Hospital

26 Jalan Raja Dihilir

30350 Ipoh

www.ish.kpjhealth.co

m.my

T: +605-2408777

F: +605-2541388

260

Pantai Hospital

Ipoh (Paloh

Medical Centre

Sdn Bhd)

Lot No. 126, Jalan

Tambun

31400 Ipoh

www.pantai.com.my

/pantai-hospital-ipoh

T: +605-540 5555

F: +605-545 1163

121

Perak Community

Specialist Hospital

277, Jalan Raja

Permaisuri Bainun (Jln

Kampar), 30250 Ipoh

www.pcsh.com.my T: +605-2545594

F: +605-2554288

75

Taiping Medical

Centre

45 - 49, Jalan Medan

Taiping 2, Medan

Taiping, 34000 Taiping

www.tmc.kpjhealth.c

om.my

T: +605-8071049

F: +605-8063713

48

118

(PULAU PINANG)

NAME ADDRESS WEBSITES CONTACT

NUMBER

NO.OF

BEDS

Gleneagles

Medical Centre

1 Jalan Pangkor

10050 Pulau Pinang,

Malaysia

www.gleneagles-penang.com T: +604-220

2151

F: +604-226

2994

227

Hope Children

Hospital

25 B-D, Jalan Gottlieb

10350 Pulau Pinang,

Malaysia

- T: +604-

2286557

F: +604-

2286559

29

Island Hospital 308 MacAlister Road

10450 Pulau Pinang,

Malaysia

www.islandhospital.com T: +604-228

8222

F: +604-226

7989

192

KPJ Penang

Specialist Hospital

No 570 Jalan Perda

Utama, Bandar Perda,

14000 Bukit Mertajam

www.kpjpenang.kpjhealth.com.my T: +604-548

66 88

F: +604-548

6700

130

Lam Wah Ee

Hospital

Jalan Tan Sri Teh Ewe

Lim

11600 Georgetown

www.hlwe.com.my T: +604-657

1888

F: +604-657

0940

442

LohGuanLye

Specialists Centre

238, Macalister Road /

19 & 21 Logan Road,

10400 Pulau Pinang,

Malaysia

www.lohguanlye.com T: +604-238

8888

F: +604-229

0287

265

Mount Miriam

Cancer Hospital

23, Jalan Bulan Fettes

Park, Tanjong Bunga,

11200 Pulau Pinang,

Malaysia

www.mountmiriam.com T: +604-890

7044

F: +604-890

1583

40

Pantai Hospital

Penang

82 Jalan Tengah, Bayan

Baru,

11900 Bayan Lepas

www.pantai.com.my/pantai-

hospital-penang

T: +604-643

3888

F: +604-643

2888

180

Peace Medical

Centre

81 Lorong Selamat

10400 Pulau Pinang,

Malaysia

- T: +604-

2266032

F: +604-228

2472

24

Penang Adventist

Hospital

465, Jalan Burma,

10350 Georgetown

www.tanjungmedical.com.my T: +604-

2262323

F: +604-

2299008

94

119

Tanjung Medical

Centre

473 Jalan Burma

10350 Pulau Pinang,

Malaysia

www.tanjungmedical.com.my

T: +604-

2262323

F: +604-

2299008

94

Tropical Medical

Centre (Penang)

12-A, Jalan Masjid

Negeri

11600 Pulau Pinang,

Malaysia

www.tmcpenang.com T: +604-

8299188

F: +604-

8286118

24

(SABAH)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kota Kinabalu

Specialist Hospital

Lorong Pokok Tepus 1,

Off Jalan Damai

88300 Kota Kinabalu

www.dsc.kpjhealth.com T: +6088-222922

F: +6088-255692

53

Rafflesia Medical

Centre

Lots 5-8 Millennium

Commercial Centre Jalan

Lintas Kepayan

Penampang

88200 Kota Kinabalu

www.rafflesiamedicalce

ntre.com

T: +6088-272620 / 630

F: +6088-272640

14

SMC HealthCare

Sdn Bhd (aka.

Sabah Medical

Centre)

Lorong Bersatu, Off

Jalan Damai, Luyang

88838 Kota Kinabalu

www.sabahmedicalcent

re.com

T: +6088-211333

F: +6088-272622

175

(SARAWAK)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Columbia Asia

Hospital Bintulu

Lot 3582, Block 26,

Kemena Land District,

Jalan Tan Sri Ikhwan,

Tanjung Kidurong

97000 Bintulu

www.columbiaasia.com

/bintulu

T: +6086-251888

F: +6086-252888

19

Columbia Asia

Hospital Miri (fka.

Selesa Medical

Centre)

Lot 498 Jalan Jee Poh

2,Off Jalan Bulatan Pujut,

58000 Miri

www.columbiaasia.com

/miri

T: +6085-437755

F: +6085-425677

45

KPJ Sibu Specialist

Medical Centre

52A-F Brooke Drive

96000 Sibu

www.ssmc.kpjhealth.co

m.my

T: +6084-329900

F: +6084-327700

26

Kuching Specialist

Hospital

Lot 10420 Block 11,

Muara Tebas Land

District, Tabuan Stutong

Commercial Centre,

www.kcsh.kpjhealth.co

m.my

T: +6082-365777

F: +6082-364666

59

120

Jalan Setia Raja , 93350

Kuching

Miri City Medical

Centre

Lot 916-920 Jalan

Hokkien, C.D.T. 100

98009 Miri

www.mcmcmiri.com T: +6085-426622

F: +6085-438096

30

Normah Medical

Specialist Centre

P.O.Box 3298

93764 Kuching

www.normah.com T: +6082-440055

F: +6082-442600

130

Timberland

Medical Centre

Lot 5164-5165 Block 16

KCLD 2 1/2 Mile Rock

Road Taman Timberland

93250 Kuching

www.timberlandmedica

l.com

T: +6082-234 466

F: +6082-232 259

72

(SELANGOR)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Arunamari

Specialist Medical

Centre

168 Jalan Batu Unjur 1,

Bayu Perdana, 41200

Klang

- T: +603-33243288

F: +603-33243288

67

Assunta Hospital Lot 68 Jalan Templer

46990 Petaling Jaya

www.assunta.com.my T: +603-7780 7000

F: +603-7781 4933

344

Bandar Baru

Klang Specialist

Hospital Sdn Bhd

No 102, Persiaran

Rajawali / Ku 1, Bandar

Baru Klang, 41150 Klang

www.kpjklang.com T: +603-33777888

F: +603-33777800

67

Colombia Asia

Hospital Puchong

No. 1, Lebuh Puteri,

Bandar Puteri Puchong,

47100 Puchong

www.colombiaasia.com

/puchong

T: +603-80648688

F: +603-80648788

78

Columbia Asia

Extended Care

Hospital

Lot No 2, Jalan Baung

17/22, Seksyen 17,

40200 Shah Alam

www.columbiaasia.com

/shah alam

T: +603-55417833

F: +603-55411366

46

Columbia Asia

Hospital Bukit

Rimau

3 Persiaran Anggerik

Eria, Bukit Rimau,

Seksyen 32, 40460 Shah

Alam

www.columbiaasia.com

/bukit-rimau

T: +603-51259999

F: +603-51259998

84

DEMC Specialist

Hospital

No 4, Jalan Ikhtisas,

Seksyen 14

40000 Shah Alam

www.demc.com.my T: 03-55151888

F: 03-55151815

130

Hospital Pakar

An-Nur Hasanah

No. 14 & 16, Medan

Pusat Bandar 1, Seksyen

9, 43650 Bandar Baru

Bangi

www.annur.com.my T: +603-89266036

F: +603-89266067

31

Hospital Pusrawi No. 62,63 & 64, Jalan

Raja Haroun

- T: +603-87347570 7

121

SMC Sdn. Bhd. 43000 Kajang F: +603-87347571

Kelana Jaya

Medical Centre

No. 1, Fas Business

Avenue, Jalan

Perbandaran SS 7,

Kelana Jaya,

47301 Petaling Jaya

www.kjmc.com.my T: 03-7805 2111

F: 03-7806 3505

23

Klinik Damo &

Pusat Bersalin

Lot 26326/26327

Persiaran Raja Muda

Musa, Jalan Telok

Gadang

41200 Klang

- T: +603-33710757

F: +603-3332360

20

Klinik Pakar

Wanita Sheela dan

Rumah Bersalin

36,38 & 40, Jalan Batai

Laut 3, Kaw.16, Taman

Intan, Off Jalan Batu 3

Lama, 41300 Klang

- T: +603-3341 4500 /

3341 2834

F: +603-3343 6926

21

KPJ Ampang

Puteri Specialist

Hospital

No. 1, Jalan Mamanda 9,

Taman Dato Ahmad

Razali, 68000 Ampang

www.apsh.kpjhealth.co

m.my

T: +603-4270 2500

F: +603-4270 2443

230

KPJ Damansara

Specialist Hospital

119 Jalan SS20/10

Damansara Utama,

47400 Petaling Jaya

www.kpjdamansara.co

m

T: +603-7122598

F: +603-7122617

209

KPJ Kajang

Specialist Hospital

Jalan Cheras

43000 Kajang

- T: +603-87692999

F: +603-87692831

145

KPJ Selangor

Specialist Hospital

Lot 1, Jalan Singa 20/1,

Seksyen 20

40300 Shah Alam

www.kpjselangor.kpjhe

alth.com.my

T: +603-5543 1111

F: +603-5543 1722

173

Metro Maternity

Sdn Bhd

34, Jalan Pasar

41400 Klang

www.metromaternity.co

m

T: +603-3341 2277

F: +603-3342 4479

33

Pantai Hospital

Klang

42 Persiaran Raja Muda

Musa

41100 Klang

www.pantai.com.my/pa

ntai-hospital-klang

T: +603-3374 2020

F: +603-331 4979

87

Pusat Rawatan

Islam Az-Zahrah

34, Medan Pusat Bandar

1, Section 9

43650 Bandar Baru

Bangi

www.azzahrah.my T: +603-8921 2525

F: +603-8921 2677

23

QHC Medical

Centre

11A, Jalan USJ 10/1A,

UEP

47620 Subang Jaya

- T: +603-80245760

F: +603-7316342

11

Salam Medical

Centre

4-12 Jalan Nelayan 19/B

Section 19

40300 Shah Alam

www.salam.com.my T: +603-5548 5161

F: +603-5541 0503

26

Sime Darby

Medical Centre

No 2, Jalan Lapangan

Terbang, Seksyen U2,

www.simedarbyhealthc

are.com/company-

info/facilities/sdmc-ara-

T: 03-56391212

F: 03-78420923

75

122

Ara Damansara 40150 Shah Alam damansara

Sime Darby

Medical Centre

Subang Jaya

1 Jalan SS12/1A

47500 Subang Jaya

www.simedarbyhealthc

are.com/company-

info/facilities/sdmc-

subang-jaya

T: +603-7341212

F: +603-7335910

393

Sri Kota Specialist

Medical Centre

Lot No.167-172, Jalan

Mohet

41000 Klang

www.srikotamedical.co

m

T: +603-33733636

F: +603-33736888

173

Sunway Medical

Centre

No.5, Jalan Lagoon

Selatan, Bandar Sunway,

46150 Petaling Jaya

www.sunway.com.my/s

unmed

T: +603-7491 9191

F: +603-56324688

185

Tropicana Medical

Centre

No. 11 Jalan Teknologi,

Taman Sains Selangor 1,

PJU 5, Kota Damansara

47810 Petaling Jaya

www.tropicanamedicalc

entre.com

T: +603 6287 1111

F: +603 6287 1212

70

Tun Hussein Onn

National Eye

Hospital

(THONEH)

Lot 2, Lorong Utara B

Jalan Utara

46200 Petaling Jaya

www.thoneh.com T: +603-77181488 extn

1565

F: +603-7957 5128

44

(WILAYAH PERSEKUTUAN KUALA LUMPUR)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

CMC Coop Medical

Centre (formerly

Sambhi Clinic and

Nursing Home)

17-19, Jalan Medan Tuanku

50300 Kuala Lumpur

Malaysia

- T: +603-26924594

F: +603-26929245

14

Damai Service

Hospital (HQ)

115-119, Jalan Ipoh, First

Mile

51200 Kuala Lumpur

www.dsh.com.my T: +603-4043 4900

F: +603-4043 5399

53

Damai Service

Hospital

(Melawati)

Lot 9132, 9133 & 9134

Wisma Damai, Jalan Bandar

4 Taman Melawati

53100 Kuala Lumpur

www.dshm.com.my T: +603-4108 9900

F: +603-4108 9388

50

Dato’ Harnam

E.N.T Specialist

Clinic Sdn Bhd

3rd Floor, UMNO Selangor

Building, 142, Jalan Ipoh,

51200 Kuala Lumpur

- T: +603-40410092

F: +603-40416336

9

Gleneagles

Hospital Kuala

Lumpur

282-286 Jalan Ampang

50450 Kuala Lumpur

www.gleneagleskl.co

m.my

T: +603-4141 3000

F: +603-4257 9233

311

Hospital Pusrawi Lot 149, Jalan Tun Razak www.pusrawi.com.m T: +603-26875000 111

123

Sdn Bhd 50400 Kuala Lumpur y F: +603-26875001

HSC Medical

Centre

Lot 3A-1, Menara HSC, 187

Jalan Ampang, 50450 Kuala

Lumpur

www.hsc.com.my T: +603-27120866

F: +603-27120766

7I

Imran ENT

Specialist Hospital

62, Jln Ang Seng

50470 Brickfields

- T: +603-2274 0599

F: +603-2274 0577

7

Institut Jantung

Negara (IJN)

145 Jalan Tun Razak

50400 Kuala Lumpur

www.ijn.com.my T: +603-2981333

F: +603-2982824

424

KPJ Tawakkal

Specialist Hospital

No 1 Jalan Pahang

53000 Kuala Lumpur

www.tawakal.kpjheal

th.com.my

T: +6034026 7777

F: +6034228063

188

Lourdes Medical

Centre

244 Jalan Ipoh

51200 Kuala Lumpur

www.lourdes.com.m

y

T: +603-40425335

F: +603-40420479

33

Pantai Hospital

Ampang

Jalan Perubatan 1 Pandan

Indah

55100 Kuala Lumpur

www.pantai.com.my

/pantai-hospital-

ampang

T: +603-4289 2828

F: +603-4289 2829

114

Pantai Hospital

Cheras

NO. 1, Jalan 1/96A, Taman

Cheras Makmur, 56100

Kuala Lumpur

www.pantai.com.my

/pantai-hospital-

cheras

T: 603-9132 2022

F: 603-9132 0687

143

Pantai Hospital

Kuala Lumpur

8 Jalan Bukit Pantai

59100 Kuala Lumpur

www.pantai.com.my

/pantai-hospital-

kuala-lumpur

T: +603-2296 0888

F: +603-2282 1557

264

Poliklinik

Kotaraya

9154 Jalan Bandar 4 Taman

Melawati Hulu Kelang,

53100 Kuala Lumpur

- T: +603-41084621

F: +603-41058786

10

Prince Court

Medical Centre

39, Jalan Kia Peng

50450 Kuala Lumpur

www.princecourt.co

m

T: +603 2160 0000

F: +603 2160 0010

212

Roopi Medical

Centre

86, Jalan Dato Haji Eusoff,

Damai Complex, 50400

Kuala Lumpur

- T: +603-4042 3766

F: +603-4042 5644

24

Samuel &

Specialist

Maternity Centre

& Specialist Clinic

for Women

313 Jalan Tun Razak

50400 Kuala Lumpur

- T: +603-9618736

F: +603-9810395

14

Sentosa Medical

Centre

36 Jalan Chemur Damai

Complex

50400 Kuala Lumpur

www.sentosa.kpjheal

th.com.my

T: +603-4043 7166

F: +603-4043 7761

201

Sentul Hospital 631 Jalan Sentul

51000 Kuala Lumpur

www.sentulmedical.c

om.my

T: +603-40416962

F: +603-40422231

15

Taman Desa

Medical Centre

45 Jalan Desa (Off old Klang

Road),

- T: +603-7982 6500

F: 03-7820705

128

124

58100 Kuala Lumpur

Tung Shin

Hospital

102 Jalan Pudu

55100 Kuala Lumpur

www.tungshin.com.

my

T: +603-2037 2288

F: +603-2070 0345

238

UKM Specialist

Centre

7th Floor, Clinical Block,

UKM Medical Centre, Jalan

Yaacob Latif, Bandar Tun

Razak, 56000 Kuala Lumpur

www.ukmsc.com.my T: 603 - 9172 6064

F: 603 - 9171 2837

45

UM Specialist

Centre

No 28, Lorong Universiti,

Lembah Pantai

50603 Kuala Lumpur

www.umsc.my T: +603-

78414188/4000

F: +603-79543233

70

125

Appendix D: Summary of Interviews Output The Study on Reducing Unnecessary Regulatory Burdens in Private Hospital Sector – Focusing on

Hospital Operation, Workforce and Health Tourism.

Introduction:

The Survey was carried out through interviews with senior representatives on selected private hospitals over

the country. The first interview was carried out on 14th May 2013 and the survey will continue until end of

August 2013. The private hospitals were selected from the members list of the Association of Private

Hospitals Malaysia (APHM), as listed in the website www.hospitals-malaysia.org .

At the point of reporting, a total of 27 respondents from 12 organizations (private hospitals and/or their

parent corporations and APHM) had been interviewed. The organizations are from Penang (2 hospitals),

Selangor (2), Kuala Lumpur (2), Melaka (2), Kuching (2) and Kota Kinabalu (1).

With this preliminary analysis from the first round of survey, the team will then verify the findings with the

respondents. Then the findings will be used to draft the study report, which will propose options to the key

issues raised by the respondents. The feedbacks from the interviews will be verified with the regulators to

get a better understanding of the issues raised by the private hospitals.

Along the journey of drafting the study report, the drafted chapters with be reviewed by Ms. Sue Holmes, the

APC advisor to the project. The final draft report will then be submitted to MPC for further actions.

Summary of Interviews Outputs

No. Regulatory

Requirement

Issue & Problem Consequence & Burden

1 License renewal (every 2 years)

Reference:

1. Private Health Care Facilities and Services Act 1998 (Act 586)

Part III: Approval for establishment and maintenance, License-to-Operate and Inspections (Premise, Services & Facilities) Section 15.

Application for licence to operate or provide.

Section 16. Inspection of premises.

Section 22. Duration and renewal of licence to operate or provide

Part VI: Responsibilities of a Licensee, Holder of Certificate of Registration and Person In Charge

Part VIII: Quality of Healthcare Facilities and Services.

and

1. Long waiting time for renewal, sometimes exceeding 6 months.

2. A lot of documents required in application, certified copies required. Too much paperwork required.

3. Many different units involved in the process, difficult to deal with and to access to them.

4. Different auditors assessing and interpreting the requirements differently, some stricter than others. Variation in competency and experience of auditors.

5. The older hospitals (those approved before Act 586) have problems with meeting some of the new dimensional requirements.

6. Need to write officially to resolve issues, oftentimes do not receive replies to queries.

7. PHFS Regulations 2006 are not specific causing different interpretations of requirements

8. New requirements are not published and made known to hospitals until the audit.

9. Delay in the issuance on professional license contributes to overall delays. Also results in delay for quality accreditation.

1. Long wait, sometimes until licence lapsed

2. High overheads to prepare documents for submission

3. Too many interactions with different units on requirements

4. Variability in assessments causes confusion.

5. Expensive on structural changes and causes serious interruption to services.

6. Time consuming and causes delays.

7. Delays in getting requirements rectified in submission.

8. Costly delays to meet requirements.

9. Licensing delays result in other consequences, e.g. MSQH accreditation.

126

2. Private Health Care Facilities and Services (Private Medical Clinics or Private Dental Clinics) Regulations 2006

2 Approval for

expansion, renovation,

upgrading

Reference:

1. Private Health Care Facilities and Services Act 1998 (Act 586) Part III: Approval for

establishment and maintenance, License-to-Operate and Inspections (Premise, Services & Facilities)

Part VI: Responsibilities of a Licensee, Holder of Certificate of Registration and Person In Charge

Part VIII: Quality of Healthcare Facilities and Services.

and

2. Private Health Care Facilities and Services (Private Medical Clinics or Private Dental Clinics) Regulations 2006

1. All types and level changes on physical building has to go through the same long and difficult approval processes.

2. Difficulty in meeting requirements because of absence of guidelines or specification standards.

3. Different officers specifying the requirements differently (depending of competency of officers).

4. Long and difficult process for land conversion for expansion.

Note:

This approval is treated the same as

establishing a new facility (hospital),

therefore undergoes the burdensome

building approval processes.

1. Delays resulting in heavy overheads, many interactions, inconveniences to services.

2. Many interactions and burdens of resulting delays.

3. Difficult approval process with consequential delays..

4. Delays in introduction of new services (State/Land issue)

3 Approval for

advertisements and

advertising materials

Reference:

1. Medicine (Advertisements and Sales) Act 1956 (Revise 1983) Act 290

Section 4A. Prohibition of advertisements relating to skill or

1. All applications have to be sent to Putrajaya. This is inconvenient for hospitals located in other states.

2. Medicine Advertisements Board (MAB) has recently introduced this control on printed materials for internal distributions (information for medical staffs and patients).

3. Lots of paperwork on number of hard copies needed in application, and also as hospitals produced many such materials throughout the year.

4. Too many changes required to submissions because there is no established guidelines by regulators.

1. Burdensome in terms of cost, convenience and delays.

2. Additional burdens and also delays implementation of hospital educational programs for staff and patients.

3. High overhead costs and total compliance costs. Delays to hospitals efficiency programs.

4. Increased interactions, delays and cost burden.

127

service. Section 4B.

Advertisements of medicines to be approved.

and

2. Medicine Advertisements Board Regulations 1976 P.U.(A) 283/76

Regulation 5. Issue approvals.

Regulation 7. Numbering of approvals

Regulation 8. Application and fees.

5. Different requirements from different regulators as local authorities also regulate advertisements.

6. No communication or information on revisions on requirements. Only knew upon application.

7. Problem with getting approvals for materials in other languages (Japanese, Russian, Chinese, etc.).

5. Confusion and burdensome to achieve compliance.

6. Confusion and burdensome to achieve compliance.

7. Delays and additional burden on compliance.

4. Workforce regulation

and quality and

availability of

professionals.

Reference:

1. Medical Act 1971 Act 50

2. Medical (Amend.) Act 2012

3. Nurses Act 1950 Act 14 (Revised 1969)

4. Registration of Pharmacists Act 1951 Act 371 (Revised 1989)

5. Registration of Pharmacists Regulations 2004

6. Registration of Medical Specialist

1. The quality of nurses graduating from some private colleges is not up to employable requirements resulting in many unemployed graduates.

2. Shortage of experienced and specialist skilled nurses. Restriction on recruitment of foreign nurses to mop up the unemployed graduates..

3. Public hospitals are pinching private hospitals’ experienced nurses (better benefits and security).

4. Poor enrolment by hospital nursing school due to unemployed nurses.

5. Shortage of specific medical specialists is preventing the expansion of healthcare services as foreign professionals are not allowed to practice here.

6. Suspect poorer quality of medical graduates as a result of commercialisation of medical education.

7. Unbalance expansion of medical education to the resources (hospitals and supervisory) for houseman internship.

8. Incentive for continuous professional development has been discontinued. Also difficult to make HRDF claims for courses not registered, even though the provider is MOH.

9. Long wait to get registered with NSR by specialists.

1. Difficult and costly to retrained these graduate; they are not passionate in the profession.

2. Burden on hospitals to employ poor quality graduate nurses by Nursing Board.

3. Rising cost of employment for hospitals.

4. A hospital tries to re-open school but unsuccessful.

5. Difficulty to expand healthcare services for country to be a medical hub.

6. Experience poorer type of medical graduates.

7. Burden on hospital to supply places for houseman internship.

8. Burdensome application for claims and cost burden on hospitals.

9. Delays in getting license for new specialist clinics.

5 Other Issues:

1. Health Tourism There is no specific

regulation for health

tourism but hospitals are

expected to register with

Malaysia Health Tourism

Council and to obtain

1. Health tourism requires good air services to host country. Penang hospitals receive more health tourists with addition flights to Indonesia.

2. Health tourists to hospital in Melaka need to come through KLIA, which has poor transportation to Melaka.

3. Control on advertisements, inefficiency in licensing and other approvals are stifling health tourism.

1. Limited inbound flights are curbing health tourists arrivals in state.

2. Additional burden of having to arrange transportation to and from KLIA.

3. Burdensome regulatory processes stifling growth.

4. Only a small per cent of

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MSQH accreditation. 4. Health tourism is not the main focus of hospital in Klang Valley. Travel inconvenience and higher costs.

health tourist trade in Klang Valley.

2. Personal Data Personal Data Protection

Act 2010 (Act 709)

1. All hospital are concern with the implementation of the new Act. There are no guidelines and hospitals are experiencing different requirements from regulators. Too many restrictions from interpretation of the requirements.

2. Some hospitals are feeling the administrative burdens of the regulation.

3. MSQH Accreditation MSQH is a voluntary

accreditation scheme.

MOH has made it a

requirement for health

tourism.

1. Auditors for MSQH are from medical professionals from competing hospitals, not independent.

2. Auditors are not trained or did follow standard auditing protocols.

1. Perceived threat and unfairness in assessments.

2. Perceived inconsistencies and variations in assessments.

4. Medical fee Private Healthcare

Facilities and services

(Private Hospitals and

Other Private Healthcare

Facilities) Regulations

Thirteenth Schedule

(Regulations 433)

1. The capped on procedure fee stifle innovativeness as specialists are reluctant to try new procedures because the risk (of litigation) outweighs the returns.

2. Hospitals find it difficult to introduce new services which are not listed in the schedule.

1. Stifle innovativeness in private hospitals.

2. Stifling to growth of new services.