Malaysia's Healthcare: A Public Service Legacy under Strain


While Malaysia has a public healthcare system to boast about, it is at the same time plagued by brain drain, budget cuts and a bad rep when it comes to waiting time.

Public health services in Malaysia are financed through general tax revenue – not dissimilar to Britain’s National Health Service. This healthcare financing model, the Beveridge model, is a legacy that persists until today, and is still practised in many other countries in the world.

Malaysians have received heavily subsidised healthcare services from the government since independence; only a nominal fee or a co-payment of RM1 for outpatient treatment and RM5 for specialist outpatient treatment is required at government hospitals and health clinics.

The charges have remained constant since 1982, in accordance with the Fees (Medical) Order 1982 covering services such as registration, consultation, medication and investigations.

For many Malaysians, affordability to healthcare is therefore not the major issue. Neither is accessibility – 86.2% of households live within a 5km radius of the nearest public health centre.1 In a national survey done by the Ministry of Health (MOH), 75.5% of respondents prefer government health facilities when it comes to seeking medical attention for major health problems.2

However, present trends are worrying. In the face of rising healthcare demand, local medical care departments are increasingly underfunded, while medical practitioners are overstretched from the outflow of public sector specialists to the private sector. This inevitably affects the quality of medical care and services in government facilities.

How did Malaysia’s public healthcare get into this quandary?

More Health Facilities, Doctors, Needed, Pronto!

Overcrowded Hospitals

From 2006 to 2016, visits to public hospitals and MOH facilities went up tremendously, with a 73.9% increase (nearly 10 million) in outpatient visits; 43.4% (or 830,000) in inpatient admissions; and 88.6% (about 19 million) in public health facilities.

This increase far outpaced population growth – by a magnitude of 44% for outpatient visits and 20% for admissions.

It can be seen as the principal cause of overcrowded conditions and long waiting queues at public health facilities.

Delving deeper, the rising demand for health services in public hospitals may be due to a number of other factors, such as deteriorating health in the general population. For example, non-communicable diseases, which are often associated with lifestyle diseases, accounted for 43.3% of all admissions in 2016, up from 26.6% in 2006.

Such a reality should have been anticipated by the government, which should have put strategies and plans in place to cope with the situation. But instead, the proliferation rate of health facilities lags far behind the demand: only 9.3% and 18.3% new public hospitals and beds were added to the total capacity from 2006 to 2016 (see Table 2), despite the nationwide increase of 73.9% in outpatient visits and 43.4% in admissions. The additional volume has had to be absorbed by the current number of health facilities – especially major specialist centres and state hospitals, which are normally the busiest. The ratio of public hospitals to 100,000 population has dropped from 0.53 in 2006 to 0.48 in 2016, as has the bed-to-100,000 population ratio – from 145.5 in 2006 to 144.4 in 2016.

The bed occupancy rate (BOR) is normally used as a proxy to gauge the activity level of hospital wards. All but one state hospital was above the national average BOR at 70.1% in 2016. Scrutinised further, seven out of 14 hospitals were above 80%, while two hospitals were higher than 90%!

The high levels of BOR do not indicate high efficiency in bed utilisation, but rather a lack of public beds. One of the steps taken by the MOH to address this was to expand the bed capacity for Hospital Sultanah Aminah in Johor Bahru and Hospital Tengku Ampuan Rahimah in Klang, temporarily relieving the bed shortage issue in these two hospitals which had more than 90% BOR in 2015.

On the other hand, Hospital Seberang Jaya, a major specialist hospital in Penang, suffered from chronic bed shortage (BOR>100%) for seven consecutive years. It was only in 2016 that 71 additional beds were added (Figure 3).

Brain Drain

In the Eleventh Malaysia Plan (2016-2020), the government aims to improve the doctor-to-population ratio to 1:400 by 2020. With Malaysia’s total population estimated to reach 33.8 million by 2020,3 if the government is serious about achieving the target ratio, Malaysia will need to have 84,456 doctors by 2020.4

In 2016 the count was only at 50,087 doctors. The country is thus still short of 34,369 doctors. This means 8,592 new doctors are needed each year. Given the current yearly number of newly registered doctors, which is about 5,000, there are serious issues surrounding the housemanship programme in Malaysia: its 44 housemanship training hospitals simply cannot accommodate more medical graduates.

It is not all doom and gloom though: the numbers of the healthcare workforce have improved over the years. The gap between doctors, nurses and pharmacists to population has narrowed from 2008 to 2016, indicating the policy is moving in the right direction. The latest 2016 data shows that the doctor-to-population ratio stands at 1:632, nurse-to-population at 1:309 and pharmacist-to-population at 1:3,013 – akin to an average medical team comprising one doctor and two nurses, whereas five doctors share a pharmacist.

The gap between doctors, nurses and pharmacists to population has narrowed from 2008 to 2016.

If we calculate by health demand (total of public health facilities and public hospital outpatient attendance as well as admissions) in 2016, a MOH doctor faces an average of 1,819 patients per year. While this average does not look too bad, in reality, doctors in urban hospitals tend to have a heavier workload.

But with more and more medical specialists from public hospitals crossing over to the private sector (as many as 170 in 2017 – most of whom are highly experienced and hold a doctors’ grade of UD54 and above),5 their departure inevitably affects medical care quality in public hospitals. In an unpublished work looking at specialists distribution in Penang, it was found that the private sector had twice the number of specialists, who had on average seven years more experience than their counterparts in public hospitals.

If the government does not manage to slow down the demand for public healthcare services, i.e. reduce the incidents of communicable and non-communicable diseases, then it has no choice but to allocate appropriate resources – money and manpower – to cater to growing needs.

Budgetary Concerns

In Malaysia the government is not just the major healthcare provider; it also acts as public health planner, regulator and enforcer. To deal with rising medical costs, the government has plans to introduce a voluntary health insurance scheme in 20186 so that people can utilise the extra capacity offered by private healthcare providers. (The liberalisation and rapid development of the private healthcare sector since the 1990s has established and shaped the current two-tier healthcare system in Malaysia; in 2016 the private sector contributed nearly half – 48.5% – of total health expenditure in Malaysia.)

In other words, the government considers using a risk-pooling mechanism to provide healthcare to those who can afford a little more and at the same time to divert some demand for public healthcare services.

As health is a form of welfare provided by the government, budget planning and the size of allocation for health reflect the government’s policy intent and commitment.

Malaysia spent equivalent to 4% GDP on health in 2015, which is lower than the world average at 6.8%, but higher than Indonesia (3.3%) and Thailand (3.8%). This indicates that our health expenditure is either efficiently utilised, or just insufficient.

In terms of government expenditure on health as percentage share of total government expenditure, the federal government contributed 8.3% in 2015 – more than Indonesia (7.4%), the Philippines (7.4%), Brazil (7.7%) and Vietnam (7.9%). However, our government spent less on health than the world average (9.9%), compared to countries such as China (10.1%), South Africa (14.1%) and Thailand (16.6%); while these countries may be lagging behind in terms of GDP per capita, their governments spent more on health.

In 2016 the government spent RM26.6bil on healthcare, or 51.5% of the total health expenditure (Figure 5). A large bulk came from the MOH (83.6%); the proportion of MOH allocation over the total federal budget stands at 9.5%, which is the highest since 2008.

Most of the budget allocation goes to operation expenditures, from 75.7% in 2010 to 93.1% in 2018. As a direct outcome, the amount and percentage share allocated for development has shrunk over the years, hitting the nadir in 2017 at merely 5.4%. This might explain why there were few additions and expansions of hospitals and health facilities.

A huge chunk of MOH’s 2018 operating budget goes to emoluments (61%), while 37% goes to services and supplies (Figure 6). Its operating expenditure has grown 121.3% since 2010; at the same time, the portion for emoluments has grown 144.6%, and this increase is the likely cause of the ballooning of the operating expenditure.

It is necessary to adjust the salary levels to retain health practitioners and experts in the public service. However, the fact that only 30.2% more MOH positions were created during this period is a cause for concern.

While the allocation for services and supplies has grown by 94.8%, it is still considered a slowdown compared to the growth rate of the total operating expenditure. The worrying trend in recent years is that the government has decided to cut the allocation for services and supplies – especially for the Medical Care department, which is at the front line of public healthcare services – from RM5.17bil in 2015 to RM3.92bil in 2018, a difference of RM1.25bil (Figure 7)!

In 2018 the Pharmacy and Supplies division of the Medical Care department received RM65.1mil less funding compared to the previous year. From the negative press surrounding shortages of basic test materials and medical supplies,7 which has been increasing in frequency in recent years, how the MOH will manage public expectations, given that they now have less funding to purchase medical supplies to meet greater healthcare demand, is in question. On top of that, the budget allocation for the public health department’s supplies and services has also shrunk for the Disease Control division (by RM22.4mil) and the Public Health Pharmacy and Supplies division (by RM35.6mil). The consequences for this can be far-reaching and deadly to public health protection.


While public health expenditure borne by the government grew over 68.2% compared to 2008, the public-private share of expenditure dropped from 56.9% in 2008 to 51.5% in 2016 – the lowest in two decades.

On the other hand, the out-of-pocket (OOP) expenditure of private households dominated the total private healthcare expenditure (78%)8: the proportion of OOP expenditure in the total health expenditure has risen from 33% in 2008 to 38% in 2016 – an increase of RM10.5bil.

What has driven people to spend more on private healthcare?

The MOH periodically publishes the key performance indicators, output and outcomes of Malaysia’s health status, breaking information down to the state level. As healthcare is basically a service, user satisfaction is key.

It is fair to use private hospitals as the benchmark for comparison. From the National Health and Morbidity Survey (NHMS) 2015, the overall impression is rather mixed: Malaysians are happy with public hospitals (81% rated public hospitals as “Good” or “Excellent”), while the major dissatisfaction with private hospitals is the treatment charges.

On the other hand, general dissatisfaction with public hospitals concern9 the long wait to see the doctor (21% of respondents rated this as “Poor”/“Very poor”), and the availability of private or fewer-bedded rooms (15%).

The long waiting time is a major gripe among most urban public healthcare service users. It is a key performance indicator in the MOH’s Client’s Charter to ensure that 80% of their patients are served by a medical officer within 90 minutes. They surpassed this rate in 2017, at 88.88%, according to data collected from health clinics and several hospitals equipped with Teleprimary Care (TPC) facility.10

However, in reality, that is probably not what some people are experiencing: in a media report, about half of the respondents admitted that they waited over two hours to see a doctor.11 This might be happening especially in urban specialist hospitals, where the data might not be captured by the TPC system. As many as 26.3% of respondents cited waiting time as the reason they stopped seeking medical treatment at public clinics or hospitals; according to the same media report, an average doctor’s visit at a university (public) hospital ranges from two to five hours.

Dissatisfaction with the MOH’s public healthcare services has led to the ministry receiving an average of 7,000 public complaints per year12 for issues such as poor service or communication skills among the doctors and the nurses; long waiting time before receiving treatment; and insufficient equipment. In addition, the MOH also admitted to having to spend about RM20mil a year as compensation due to the negligence of their medical staff.

For all the various issues and shortcomings, steps can be taken by the federal government to improve the public healthcare sector. First of all, it can consider reprioritising the budget allocation among ministries. The currently under-resourced MOH should get more funding, especially for development and for supplies and services under the Medical Care and Public Health departments. The proportion of budget allocation for health should be at least on par with the world average (or better, OECD average) of percentage of general government health expenditure to GDP.

The federal government can increase the level of public spending according to needs, based on evidence-and-demand projection. A proactive health system research would give the right input to formulate better strategies and planning. The government can also invest more in development to build, expand or upgrade more government hospitals; increase the number of beds; and purchase the necessary equipment.

Partnership with the private sector should be seriously considered, especially when it comes to utilising or sharing resources, e.g. housemanship and specialist training, and facilities and equipment sharing.

Finally, it should allow open access to more disaggregated (and de-identified) health data categories and details, e.g. those in the Malaysian Health Data Warehouse (MyHDW) database, to encourage more health systems research, and thus contribute towards better solutions.

Lim Chee Han received his PhD in Infection Biology from Hannover Medical School, Germany. He is currently a senior analyst in the economics section at Penang Institute.

1Household Income and Basic Amenities Survey 2016, Department of Statistics Malaysia.

2National Health and Morbidity Survey (NHMS) 2015, Ministry of Health Malaysia.

3Department of Statistics Malaysia

4Lim Chee Han. “Housemanship programme in Malaysia: Availability of positions and quality of training”, Penang Institute, 21 July 2017

5“Health Ministry says losing more medical specialists each year”, The Malay Mail Online, 10 Jan 2018

6“Voluntary health insurance scheme will be introduced next year”, Bernama, 3 May 2017

7“Less money for reagents, vaccines despite 2016 shortcomings”, Free Malaysia Today, 22 Oct 2016.


9The second highest disapproval issue in the study was actually "Allowed to choose the doctor" (16%), but it just suggests how the public healthcare system usually works.

10 view/1922.

11Boo Su-Lyn, “Hours-long hospital waits drivingsome to abandon treatment”, The Malay Mail Online, 22 Aug 2017.

12Ili Shazwani, “Health Ministry gets 7,000 complaints, spends RM20mil on compensation annually”, New Straits Times, 4 Nov 2017.

Related Articles

Aug 2017

The Story of Malaysia through its Constitution

The Constitution today is no longer what it was. To fix Malaysia, we need to fix its laws.

Dec 2011

Budget 2012 Reveals Malaysia’s Structural Problems

For Malaysia to become an industrialised nation, major problems with its income distribution and employment structure must be solved.

Dec 2010

The State of The Economy

If Malaysia is get out of the middle-income trap, economic decentralisation must happen first.

Oct 2011

Entering New Territory With Open Tenders

It's been more than three years since the open tender system was introduced in Penang. How is it supposed to work, and has it fulfilled its objectives?