Private Hospitals

RECOMMENDATION REPORT

August 2014

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 : [email protected] Website : http://www.mpc.gov.my

Perbadanan Produktiviti Malaysia 2014

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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.

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 iv

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) 58 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

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

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

GLOSSARY

Annual Practising Any fully registered person who desires to practise as a medical Certificate (APC) 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 The "healthcare professional" includes a medical practitioner, professionals 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 Occupational licensing is a process whereby entry into an licensing 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

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 The RIS is a document prepared by the department, agency, Statement (RIS) 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.

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”

xiv 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

xv 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

xvi 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,

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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.

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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

xix 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.

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.

xxi

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));

 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

Modernising Business Regulation

Improve Existing Ensure New Quality Quality Regulation Regulation

Vertical Horizontal Transparency & Approach (SSRR Thematic Adequacy Gate- Approach (MBL) & MSRR) (WBDB) Criteria keeper Accountability

Methodology: Main activities:  Baseline study  Develop Gate-keeper function  Analysis and propose solution  Develop function of Quality Regulation Audit  Monitoring implementation  Develop Adequacy Criteria

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

2 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

Malaysia’s ranking with other countries Indicator 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.

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

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.

Figure1.2: Summary of Study Process.

Conceptualize the industry Value Chain List all Acts and map them onto the Value Chain Scoping & Target Selection

LITERATURE Develop a list of questions REVIEW INPUTS CONSULTATION & EXPERT’S (e.g. Reports; Conduct interviews Articles & ADVICE (From Statistics) AGPC) Analyse Information gathered

Draft report (with proposed options)

Workshops and other feedback

Final Report

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.

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.

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].

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).

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

Supporting Services Pharmaceutical Finance/Insurance Drugs Intermediaries Cosmetics Others TMC

Medical Device Human Resource 4 classes (A,B,C,D) Doctors Nurses Public Dentists Etc. Consumer Patient

Food Facilities Manufacturing Surgical Agriculture Services Cardiovascular Diagnostic imaging Etc. Services Hospitals Homes Laboratories Etc.

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

5 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

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

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.

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: Value Chain  Pre-Market  Business players  Pharmaceutical Analysis  Place-on Market & associations  Medical Device  Post Market  Regulators Services & Life-Cycle  Formation/Establishment  Acts & Facilities Value Chain  Operation & Maintenance Regulations Analysis  Expansion/Change ownership  Standards & Human Resources Life Cycle  Pre Employment Guidelines Value Chain  During Employment  Research & other Analysis  Post/Change Employment Reports Supporting services Relationships  Intermediaries/Tour agencies  Interviews & Network  Financing/Payers/Logistics Statistics Value Chain  Patients (Local/Foreign)  Issues & complaints Analysis  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.

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

Health Expenditure As per cent GDP 14

12 High income: OECD 10

8 World 6

Per cent of GDP of cent Per 4 Malaysia 2

0 2006 2007 2008 2009 2010 2011

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.

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

Health Expenditure Per Capital 6000.0 USD5492.3

5000.0 High income:

4000.0 OECD

World

3000.0 Current USD Current 2000.0 Malaysia

USD949.7 1000.0 USD346.0 0.0 2006 2007 2008 2009 2010 2011

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.

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

90000

80000

70000

60000 Doctors 50000 Dentists 40000 Pharmacists

30000 Nurses

20000

10000

0 2006 2007 2008 2009 2010 2011 2012

Growth rate 2006 2007 2008 2009 2010 2011 2012 (%)

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.

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 10000 9000 8000 7000

6000 Doctors 5000 Dentists 4000 Pharmacists 3000 Nurses 2000 1000 0 2006 2007 2008 2009 2010 2011 2012

Rate of change 2006 2007 2008 2009 2010 2011 2012 (%) 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.

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).

Figure 2.10: Registered and Licensed Private Hospitals

Private Hospitals

225 220 215 210 205 200 195 190 185 180 2006 2007 2008 2009 2010 2011 2012

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.

Figure 2.11: Growth of Private Hospital Beds

15000

14500

14000 13667 13568

13500 13186

13000

12500 12216

12000 11689

11291 11500 11206

11000

10500

10000 2006 2007 2008 2009 2010 2011 2012

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

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

17 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

35000

30000 28879

24725 25000 21118

20000 Doctors

15633 Dentists 14315 15000 13044 12766 Pharmacis 11240 ts 10006 10344 10550 10762 Nurses 9440 10000 8602

3744 5000 3403 3321 3327 3344 2907 3149 1572 1625 1718 1709 1755 1801 1894 0 2006 2007 2008 2009 2010 2011 2012

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

18 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.

Figure 2.14: Health Tourism Revenue

HealthTourism Revenue in RMY millions 600 511 500

378

400

299 288

millions 300 254

204 RMY 200

100

0 2007 2008 2009 2010 2011 2012

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 $15,000 $160,000 $9,000 $10,000 $12,500 $29,500 Replacement 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

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.

Figure 3.1: Multiple Costs of Regulation

Types of costs Who bears the costs

Deadweight loss arising from distortions caused by regulation: •prices Costs to the economy in • access forgone economic activity Uncertainty impacts: (return to capital and to labour

• defensive behaviour Benefits • inertia

• resistance to innovation of regulation need to exceed costs exceed to need regulation of Delay costs: • deferred investment • change in competitive position • underutilisation of Cost to business and Time and other costs to consumers discover and comply with (depends on ability to pass on regulatory requirements: costs to consumers) • internal resources • external resources

Fees and charges levied by government Net cost to government expenditure (cost to taxpayers) Administrative costs to government agencies

Costs should be minimised for any given benefit achieved

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

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

23 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

 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.

 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.

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].

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.

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

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

30 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].

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].

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. 33

Table 4.1: Regulation of Healthcare Professionals

No. Professions Acts & Regulations Regulators Licensing 1 Medical Medical Act 1971 (Act 50) Malaysian Registration & practitioner Medical Council Annual Practicing (Doctors) & Certificate specialists 2 Dentists Dental Act 1971 (Act 51) Malaysian Registration & Dental Council Annual Practicing Certificate 3 Nurses Nurses Act 1950 (Act 14) & Malaysia Registration & Nurses Registration Nursing Board Annual Practicing Regulations 1985 Certificate 4 Midwives Midwifery Act 1966 (Act Malaysia Midwife Registration & 436) Board Annual Practicing Certificate 5 Pharmacists Registration of Malaysia Certification of Pharmacists Act 1951 (Act Pharmacy Board Registration & 371) & Annual Retention Registration of of Registration Pharmacists Regulations 2004 6 Medical Medical Assistants Medical Annual Certificate Assistants (Registration) Act 1977 Assistants of Registration (Act 180) (Registration) Board 7 Opticians & Optical Act 1991 (Act 469) Malaysian Registration and Optometrists Optical Council Annual Practicing Certificate 8 Allied Health Bill has been drafted. Registration Professionals required by 2011. (32 categories) 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.

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) 35

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.

Figure 4.1: Income Distributions in Malaysia

60.00

51.40 51.45 50.00 46.00 46.21

40.00

30.00 2007

21.49 21.64 2009 20.00 13.7 13.72

10.00 8.72 8.65 4.69 4.54

0.00 Top 20% Second 20% Third 20% Forth 20% Lowest 20% GINI Index

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 37 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 : Application for approval to establish or maintain or license to operate or provide private healthcare facilities or services and other applications III : Organization and management of private healthcare facilities and services IV : Policy V : Registers, rosters and returns VI : Grievance mechanism VII : Patient medical record VIII : Consent IX : Infection control X : General provisions for standards of private healthcare facilities or services XI : Standards for Obstetrical or Gynaecological care XII : Standards for newborn nursery facilities XIII : Standards for paediatric patient care XIV : Standards relating to Anesthesia XV : Standards for surgical facilities and services XVI : Special requirements for critical care on intensive care unit 38

XVII : Special requirements for emergency care services XVIII : Special requirements for pharmaceutical services XIX : Special requirements for central sterilizing and medical-surgical supply facilities and services XX : Standards for dietary services XXI : Special requirements for blood bank services, blood transfusion services or blood donation programme XXII : Special requirements for haemodialysis facilities and services (Applicable in some hospitals) XXIII : Standards for rehabilitation facilities and services (Not applicable) XXIV : Standards for specialist outpatient facilities and services XXV : Standards for ambulatory care (Not applicable) XXVI : Special requirements for radiological or diagnostic imaging services and radiotherapy and radioisotope services XXVII : Standards for private nursing homes (Not applicable) XXVIII : Special requirements for hospice and palliative care services (Not applicable) XXIX : 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

 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 Strategies 1. Health sector transformation towards 1. Establish a comprehensive healthcare system and a more efficient and effective health recreational infrastructure system in ensuring universal access 2. Encourage health awareness & healthy lifestyle activities to healthcare 2. Health awareness and healthy 3. Empower the community to plan or implement individual lifestyle wellness programme (responsible for own health) 3. Empowerment of individual and 4. Transform the health sector to increase the efficiency and community to be responsible for their effectiveness of the delivery system to ensure universal health access

Source: Country Health Plan, MOH

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 Acts and Regulations Regulatory bodies Cycle a) Start up Companies Act 1965 Companies Commission Malaysia (SSM) Starting a Registration of Business Act 1956 Ministry of Domestic Trade, Co-operatives, and business Consumerism b) Operation/ Town and Country Planning Act 1976 Local and municipal councils, Ministry of Housing Expansion Uniform Building By-laws 1984 and Local Government Dealing with Note: Kuala Lumpur, Putrajaya and Labuan come construction under a different Act and Ministry. permits Fair trade Competition Act 2010 Malaysia Competition Commission (MyCC), Price Control and Anti Profiteering Act 2011 Ministry of Domestic Trade, Co-operatives, and Consumerism Utilities Fire Services Act 1988 Fire and Rescue Department (BOMBA), Ministry of Water Services Industry Act 2006 Housing and Local Government Electricity Supply Act 1990 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 Inland Revenue Board (LHDN), Ministry of Finance Service Tax Act 1975, Royal Malaysian Customs Department, Ministry of Sales Tax Act 1972 Finance Assessment Tax (Local councils) Local and municipal councils, Ministry of Housing and Local Government Trading across Customs Act 1967, Excise Act 1976, Royal Malaysian Customs Department, Ministry of borders Customs Duties order 1996 Finance Exchange Control Act 1953 Central Bank Malaysia (BNM) Employing Employment (Amendment) Act 2011 Ministry of Human Resource workers Industrial Relation Act 1967 Employees Provident Fund (EPF) Minimum Wages Order 2012 Social Security Organisation, (SOCSO), Ministry of Minimum Retirement Age Bill 2012 Human Resource Employees Provident Fund Act 1991 Human Resource Development Fund (HRDF)

Employees’ Social Security Act 1969 Ministry of Human Resource Pembangunan Sumber Manusia Berhad Act National Institute of Occupational Safety & Health 2001 (NIOSH) , Ministry of Human Resource Occupational Safety and Health Act 1994 Ownership of National Land Code 1965 Ministry of Housing and Local Government property Strata Titles Act 1985 Department of Director General of Lands and Mines EPU Guideline on the Acquisition of (JKPTG), Ministry of Natural Resource & Properties (foreign investment) Environment Economic Planning Unit (EPU), Prime Minister’s Department Getting credit/ Anti-Money Laundering Act 2001 Capital Bank Negara Malaysia raising fund Market & Services Act SC Guidelines on Private Debt Securities Securities Commission (SC) SC Guidelines on Sales Practice of Unlisted Capital Market Products Protecting Malaysian Code on Corporate Governance Bursa Malaysia (Bursa) investors 2012 Bursa Malaysia Listing & Trading Requirements Enforcing Contracts Act 1950 Attorney General’s Chambers (AGC) contracts Stamp Act 1949 Specific Relief Act 1963 Winding-up/ Bankruptcy Act 1967 Malaysia Department of Insolvency (MDI) Receivership 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 website 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

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 Private Healthcare Facilities and Services Act Ministry of Health (various departments)  Healthcare 1998 professionals Private Healthcare Facilities and Services  Specialists (Private Hospitals and Other Private  Medical supplies Healthcare Facilities) Regulations 138/2006 Malaysian Medical Council (MMC)  Facilities Medical Act 1971 National Specialists Registration (NSR)  Medical tourists Malaysian Dental Council (MDC) Malaysia Nursing Board (MNB) Dental Act 1971 Nurses Act 1950 & Nurses Registration Malaysia Midwives Board (MMB) Regulations 1985 Malaysia Medical Assistants Midwifery Act 1966 (Act 436) (Registration) Board (MMAB) Medical Assistants (Registration) Act 1977 Malaysian Pharmacy Board (MPB) (Act 180) Registration of Pharmacists Act 1951 & Registration of Pharmacists Regulation 2004 Operations Private Healthcare Facilities and Services Act Ministry of Health  Services 1998  Healthcare Private Healthcare Facilities and Services professionals (Medical Clinics or Dental Clinics) Regulations  Specialists 2006  Diagnostics Medical Act 1971 Malaysian Medical Council (MMC)  Treatment Medical Regulations 1974  Rehabilitation Dental Act 1971 Malaysian Dental Council (MDC)  Reporting Nurses Act 1950 Malaysia Nursing Board (MNB) (statistics & Registration of Pharmacists Act 1951 & Malaysian Pharmacy Board (MPB) incident reporting) Registration of Pharmacists Regulation 2004 Malaysian Optical Council (MOC) Optical Act 1991 (Act 469) & Optical Regulations 1994 Medical Device Act 2012 Medical Device Board (MDB) Medical Device Regulations 2012 Atomic Energy Licensing Act 1984 (Act 304) Engineering Department of MOH Environmental Quality Act 1974 (Act 1270 Department of Environment (DOE) Factory and Machinery Act 1967 Department of Occupational Health Fire Services Act 1988 and Safety (DOSH) Control of Drugs and Cosmetics Regulations BOMBA 1984 (for manufacturing license) Malaysian Pharmacy Board Statistics Act 1965 (Act 415) Department of Statistics (DOS) Sales & Marketing Medicines (Advertisement and Sale) Act 1956 Medicine Advertisements Board (MAB)  Promotion Medicines Advertisements Board Regulations  Brand development 1976 Malaysia Health Tourism Council  Market development Malaysia Health Tourism Council (MHTC) Requirements Services  Immigration Immigration Act 1959/63 Immigration Department Malaysia  Transportation Insurance Act 1996 Bank Negara Malaysia (BNM)  Accommodation Exchange Control Act 1953  Financial Tourism Industry Act 1992 Ministry of Tourism (MOT) Land Public Transport Act 2010 Land Public Transport Commission & Road Transport Department (JPJ) Source: MITI-PwC Report 2013 [6] Note: Author’s addition in ‘bold italic’ 43

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 Private Healthcare Facilities and Services Act 1998 [Act 586] Division – Private  Section 3: Approval and Licensing of facilities other than clinics; Medical Practice  Section 4: Registration of clinics; Control Section  Part XIV: Managed Care Organisation; and (CKAPS)  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  Section 12 -14 of the Medical Act 1971; Medical Council  Section 20 of the Medical Act 1971; (MMC)  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  Dental Act 1971 (Act 51) Council Malaysia Nursing  Nurses Act 1950 (Act 14) & Board  Nurses Registration Regulations 1985 Malaysia Midwife Midwifery Act 1966 (Act 436) Board Medical Assistant Medical Assistant (Registration) 1977 Act [Act 180] Board  Section 3(1);  Section 6(1), 7(1); and  Section 9(1). Malaysian Optical  Optical Act 1991 (Act 469) Council (MOC)  Optical Regulations 1994 Pharmacy 1. Poisons Act 1952 Enforcement  Section 31: Power of investigation, examination and entry into premise. Division (PED)  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 44

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  Registration of Pharmacist Act 1951; and Malaysia  Registration of Pharmacist Regulations 2004. National Control of Drugs and Cosmetics Regulations 1984… Pharmaceutical Where the Authority (known as the Drug Control Authority, DCA) established under these Control Bureau 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  The Medicines (Advertisement and Sale) Act 1956 [Act 290]; and Advertisement  Medicines Advertisements Board Regulations 1976 Board Food Safety and  Food Regulation 1985 Quality Division  Food Hygiene Regulation 2009  Food Analyst Act 2011 Disease Control  Prevention and Control of Infectious Diseases Act 1988 (Act 342); Division  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.

Table 4.5: Key Non-Governmental Bodies in Healthcare Regulation Bodies Purpose/objective/function Malaysian Health Tourism Mission: Council www.mhtc.org.my  To promote global awareness of Malaysian healthcare facilities and services. [Note: MHTC was  To promote and facilitate the development of the Malaysian healthcare industry established under MOH so as to penetrate the global market. with Cabinet approval in Objective: 2009] 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 Objective: Association  To promote and maintain the honour and interest of the profession of http://www.mma.org.my/ medicine [A National Association for  To serve as a vehicle of the integrated voice of the whole profession Medical Doctors]  To participate in the conduct of medical education, as may be as appropriate National Specialist Register Purpose: http://www.nsr.org.my/ 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 AMM is a professional organisation to assure the maintenance of a high standard of Malaysia professional and ethical practice. AMM was formed in 1966 and was registered on 22nd http://www.acadmed.org.m December, 1966 under the Societies Act (1966). The Academy of Medicine of Malaysia y/ embraces all specialities in medicine. Association of Private The APHM plays an important role in its objective of helping to raise standards of medical Hospitals Malaysia care within the country. http://www.hospitals- Some of the activities geared towards this objective include:- malaysia.org/  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 Among the aims of the Society are: Society  To promote and maintain the honour and interest of the profession of pharmacy http://www.mps.org.my/  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 The Malaysian Society of Anaesthesiologists was founded in 1964. It was initially Anaesthesiologists Registered as Malayan Anaesthetic Society but changed its name to Malaysian Society of http://www.msa.net.my/ Anaesthesiologists in the 1970s. Objectives:  To promote the art and science of Anaesthesiology.  To co-ordinate the activities of Anaesthesiologists. 46

 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 MNA Objectives Association To achieve our mission, the Association aims to:- http://www.mna.org.my/  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 Objectives Of The Association Medical Assistants  To cater for the professional interests of medical assistants and to all those http://www.pppmalaysia.co having connection with and the practice of medical and health sciences towards m/ 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 Objectives: Association  To promote the art and science of dentistry http://www.mda.org.my/  To maintain the honour and interest of the dental profession. Affiliations:  To foster and preserve unity, aim and purpose of the dental profession as a a) Malaysian Endodontic whole. Society  To hold periodical meetings of members of the association for the discussion of b) Malaysian Private scientific subjects professional matters and social purposes.  To encourage study and research in the field of dentistry. Dental Practitioners’  To support and promote a high standard of ethics and professional conduct. Association  To enlighten and direct public opinion on dentistry and problems of dental c) Malaysian Association health. of Aesthetic Dentistry  To publish papers, journals and other materials in furtherance of the above d) Malaysian Oral Implant objects Association 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.

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  Starting a business  Business registration (SSM)  Registration of Business Act 1956  National Land Code 1965  Acquiring property (land  Land acquisition and registration  Strata Titles Act 1985 matters) (State)  EPU Guideline on the Acquisition of  Strata title (State) Properties (foreign investment)  Town and Country Planning Act  Establishment of private Dealing with construction permits 1976 hospital  Development Order (LA)  Federal Territory Planning Act 1982  Construction of building  Planning Approval (LA)  Uniform Building By-laws 1984  Land conversion  Land conversion & registration (State)  Fire Services Act 1988  Utilities requirements  Approval to Establish (MOH)  Water Services Industry Act 2006  Fire safety (BOMBA)  Electricity Supply Act 1990  Water & sewerage (SPAN)  PHFS Act 1998  Approval for electricity (ST/TNB)  PHFS Regulations 138/2006  Certificate of completion & compliance (LA)  Contracts Act 1950  Establishing contracts  Registration of contracts  Stamp Act 1949  Stamp duties  Specific Relief Act 1963

Operation & Maintenance  PHFS Act 1998  Operation & maintenance  Operation licensing (MOH - CKAP)  PHFS Regulations 138/2006 of hospital & healthcare  Licensing of medical devices (MDB)  Medical Device Act 2012 facilities  Licensing of radioactive medical  Medical Device Regulations 2012 equipment (MOH)  Atomic Energy Licensing Act 1984  Licensing of hazardous waste (DOE)  Environmental Quality Act 1974  Passenger lifts safety certificate  Factory and Machinery Act 1967 (DOSH)  Fire Services Act 1988  Autoclaves & other pressure vessels  Control of Drugs and Cosmetics (DOSH) Regulations 1984  Fire safety certificate (BOMBA)  Poisons Act 1952  Drugs and pharmaceuticals  Sale of Drugs Act 1952 manufacturing license (MPB)  Medicines (Advertisement and Sale)  Approvals for advertisement and Act 1956 adverting materials (MAB)  Medical Act 1971  Healthcare professionals  Registrations for all healthcare  Medical Regulations 1974 o Medical doctors professionals (various boards/councils)  Dental Act 1971 o Medical specialists  Annual Practising Certificate for all  Nurses Act 1950 o Dentist & dental healthcare professionals, including  Registration of Pharmacists Act specialists Allied Health Professionals (various 1951 o Nurses boards/councils)  Registration of Pharmacists o Midwives  Specialist Certification (NSR) Regulation 2004 o Medical Assistants  Optical Act 1991 (Act 469) & o Opticians & Optometrists  Optical Regulations 1994 o Pharmacists o Other Allied Health Professionals  Employment (Amendment) Act 2011  Other employment  Registration of workforce (MOHR)  Industrial Relation Act 1967 requirements  Registration of Unions (Industrial  Minimum Wages Order 2012 Relations Department – MOHR)  Minimum Retirement Age Bill 2012  Registration of employees with  Employees Provident Fund Act SOCSO 1991  Registration of employees with PSMB  Income Tax Act 1967  Registration of employees with LHDN  Employees’ Social Security Act  Work Permits (Immigration) 1969  Various types of permits on workforce  Pembangunan Sumber Manusia (see Appendix 4.3) Berhad Act 2001  Occupational Safety and Health Act 1994  Immigration Act 1959/63

 Local Government Act 1976  Other business licensing  Premise License (LA)  Land Public Transport Act 2010  Advertising License (LA)  Vehicle Parking License (LA)  Food Premise License (LA)  Vehicle Type Approval (JPJ) Continuing operation  Similar to operation and  Private Hospital License is  Except for those one-off registrations, maintenance renewable every 2 years. all other renewable licenses and  Other types of licensing are certifications are the same of usually on an annual basis Operation and Maintenance.

Expansion/Growth (include improvement)  Similar regulations are applicable  Renovation on building  Similar planning as in dealing with as for establishing a new hospital  Up-grading of facilities construction permits (LA)  Extension of building  Establishment approval (MOH)  Acquiring adjacent land for  Re-licensing on completion by MOH to extension include the new facility. Winding up business  PHFS Act 1998  Closing down  Surrender of operating license (MOH)  PHFS Regulations 138/2006  Sales or ownership transfer  Notification on retrenchment (MOHR)  Companies Act 1965  Bankruptcy  Receivership processing (MDI)  Income Tax Act 1967  Registration of company (SSM)  Bankruptcy Act 1967  Employment (Amendment) Act 2011  Industrial Relation Act 1967

Source: Author

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

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)

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

52 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 53 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:

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

55 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. 56

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.

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

58 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 59 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

60 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.

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,

62 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.

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 64 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

65 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. 66

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.

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.

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 69

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.

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.

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

72 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.

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!

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

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

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.

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.

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.

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

80 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.

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

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

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 24230p pharmacological properties in the manufacture of medicaments 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 24230p products n.e.c

2660 Manufacture of irradiation, electro medical and electrotherapeutic equipment 26600 Manufacture of irradiation, electro medical and electrotherapeutic 33110p equipment

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 52310p orthopaedic goods 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 74950 an automated process

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 84

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 85329p disabled 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

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 Process 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 Prescribed Documents/Information Policy assessment/ Instrument/type Requirements & Regulatory Process Burdens Section 8: Approval in 1. Formal application 1. Prescribed application forms MOH Perspectives: Approval to writing by DG: 2. Application fee 2. Comprehensive plans:  Patients’ rights to establish or  Location 3. Submission of a. Site plan quality, safety, comprehensive b. Building layout plan maintain  Services & accessibility and facilities plans: c. Architectural & engineering plans equitability of d. Specifications of facilities  Acute beds health care e. Manpower arrangements  Social/public and f. Personal & company details national interest (statuary declaration) g. Other information as determined by Assessment criteria DG. for private hospital Section 9: As in Section 8 1. Nature of facility or Market feasibility study report Matters to be service establishment: considered 2. Facilities or services  30 Km radius before approval available  Multi-discipline: 2 to establish or 3. Need for facility or beds/1000 maintain is service  Types of granted. 4. Future need for the facilities/services facility or service  Future projection 5. Any other matters 3 years deemed relevant. Section 14. Time limit on Written application to Application with justifications. Health Plan 2011- Application for a approval granted DG 2015: licence to operate in Section 8  Towards a more or provide to be efficient & made within three effective health years. system Section 15. License to 1. Formal application 1. Prescribed forms & manner  Equity of access – Application for operate (2 years 2. Prescribed form 2. Prescribed fee physical ease of licence to operate limit) and manner 3. Information, particulars & documents access or provide. 3. Prescribed fee 4. Additional information as required by 4. Specified DG  High quality & information and safe care documents  Equity of access – 5. Any additional financial information within  Cost containment prescribed time  Compliance to 6. Subject to quality & standard inspection  Responsive to (Section 16) population needs Section 16. Licence to 1. On-site inspection 1. Building layout plans, design, Inspection of operate of premises construction and specifications and premises. 2. Inspection information submitted in planning facilities. approvals. 3. inspection of 2. Inventory of equipment, apparatus, operations and instrument, material, article, sample maintenance or substance or any other thing 4. Within three years found in the premises of planning 3. Registers, rosters, records, policies, approval or standard operating procedures, extension clinical practice guidelines or the management Section 22.  Licence to 1. Formal application 1. Prescribed forms & manner Duration and operate; 2. Prescribed form & 2. Prescribed fee renewal of renewal manner 3. Specified information, particulars & 3. Prescribed fee documents licence to operate every 2 years 4. Specified 4. Additional information as required by or provide  DG may information & DG vary the documents 86

terms or 5. Subject to conditions 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 Prescribed Documents/Information Policy assessment Instrument Requirements Section 31. Operation: 1. Registered by law Person in charge:  Competent Responsibilities person in charge person with valid Section 32.  Person in 2. Qualified and with  Prescribed qualification, training and practicing license Person in charge. charge experience experience  Ensure  Personal 3. Periodic  Registered person accountability Section 33. care aide inspection of  Prescribed duties and  To ensure quality Change of person facility by owner responsibilities health care and in charge 4. Notify DG within  Notification of change safety of patients 14 days on  Protection of Section 34. change of person patients’ rights Personal care in charge aide.

Section 35. Policy Prescribed Make available to Documented policy statements statement. policy statement patients Section 36. Plan of Established plan and Documented plans and procedures Patient grievance grievance procedure mechanism. mechanism Section 37. Reporting to DG Incident reporting Incident reports Incident reporting. Section 38. Availability of Emergency measures,  Defined nature and scope. Emergency emergency procedures and  Established measures, procedures treatment and services services and services. services Section 53. 1. Notify in 1. Notify DG not less 1. Written notice of intention to DG Conditions for writing to than 30 days. 2. Indicate compliance to DG closure,… DG 2. Compliance to DG directives healthcare facility 2. Directives directives 3. Surrender of certificate or service of DG 3. Immediately upon 3. Surrender discontinuance. of license PART X - BLOOD BANK Section 57. Application of Application to DG with Application form.  Quality assurance Import and export import & export prescribed form..  Control of dangerous natural human certificate. blood-related diseases blood and blood Payment of prescribed product. Prescribed fee fee. PART XI - BLOOD TRANSFUSION SERVICES Section 59. Operation & 1. maintain proper Established and documented  Quality assurance Storage facilities. maintenance of blood storage procedures. Control of dangerous blood bank facilities blood-related diseases 2. adequate control Control records and supervision 3. stored in refrigerators 4. alarm system & regularly inspected Section 60. Operation & 1. Minimum blood Stock control records. Minimum blood maintenance of supply Contract for alternative supply. supply blood bank 2. Alternative source of supply Section 61. Maintain Recording receipt and Records of use and disposition. Maintain records records use of blood. of receipt & indicating the disposition of receipt and blood disposition

Section 62. Investigate all Investigation Records of investigation and Transfusion transfusion procedures & reporting to MAC. reactions. reactions. reporting. Section 63. Records of improvement. Recommendations Reporting to to the Medical MAC Improvement made. Advisory Committee Section 67. Reporting Notify assessable Notice to DG. 87

Reporting of assessable death to DG within 72 assessable deaths death to DG hours. within 72 hours. Section 68. Reporting by Reports on Medical reports by practitioner. Medical or dental medical or procedures relating to Clinical and medical records. practitioners to dental death and clinical & provide practitioner. medical records. information Section 72. MAC Establishing & May establish and Reporting of assessable death. at private maintaining of maintain a functioning MAC assessment and healthcare facility MAC. MAC. recommendations or service level. PART XIII - QUALITY OF HEALTHCARE FACILITIES AND SERVICES Section 74. Establishing Provide information on Quality system documentation and  Quality assurance Quality of health quality quality system and records.  Patient safety and healthcare system. Standards to the DG. rights facilities and services Section 76. Incorporation of Continual DG directives on quality assurance Power of DG to DG directives in improvement to quality (orders & guidelines) issue directives, quality system. system processes and orders or procedures. guidelines relating to quality assurance PART XIV - BOARD OF MANAGEMENT AND ADVISORY COMMITTEE Section 77. Board Board of Establishing BOM & Documents of committee’s function.  Accountability for of Management Management its function Records of committee’s work. continual improvement and composition

Section 78. Medical or Establishing Documents of committee’s function. Medical or Dental Dental Advisory MAC/MDC & its Records of committee’s work. Advisory Committee. function Committee. Section 79. Midwifery Care Establishing MCAD & Documents of committee’s function. Midwifery Care Advisory its function Records of committee’s work. Advisory Committee Committee Section 80. Nursing Establishing NAC & its Documents of committee’s function. Nursing Advisory Advisory function Records of committee’s work. Committee Committee References: 1. Private Health Care Facilities and Services Act 1998 (Act 586) 2. MOH, Country Health Plan, 10th Malaysia Plan, 2011- 2015 3. MOH, Dr. Afidah Ali (Presentation), Location of Private Hospital From MOH Perspective, 31st October 2012

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

Part Title Reg. Prescribed requirements No. II Application for approval to 3 to 10 The method and requirements for application on planning approval for establish or maintain or establishment (including extension and alternation) and for application of licence to license to operate or provide operate. private healthcare facilities or services and other applications III Organization and 11 to 20 Mandates the planning of the organization and management of the private management of private hospitals, a plan of organization outlining the staff and practitioners and the chain healthcare facilities and of command. Specify Person-In-Charge accountability, role and responsibility. services 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 50 to These requirements are organized into 14 chapters prescribing the minimum standards of private 132 standards for healthcare facilities covering the spatial requirements, environmental healthcare facilities or ventilations requirements, utilities requirements, housekeeping management, services 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 133 to The minimum requirements for maternity services and facilities are prescribed in Gynaecological care 148 these regulations for hospital providing maternity services. XII Standards for newborn 149 to The minimum requirements for newborn nursery facilities in conjunction with the nursery facilities 169 maternity services and facilities are prescribed in these regulations. XIII Standards for paediatric 170 to The minimum requirements for the facilities, organization and management of the patient care 175 service (nursing care & special care) are defined here for hospitals providing these. XIV Standards relating to 176 to The minimum requirements for facilities and equipment (anesthetic apparatus, Anesthesia 185 machines, equipment, etc), room facilities, qualified persons, processes, monitoring of patient and patient recovery, privacy are defined. XV Standards for surgical 186 to Define the minimum requirements for the facilities (equipment, supplies, suitable facilities and services 217 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 218 to Define the minimum requirements for the facilities (location, room size, design critical care on intensive care 227 features, acoustics, clean & soiled & storage rooms,), equipment, support services unit and facilities and staff for the ICU. XVII Special requirements for 228 to Organized into three chapters on requirements as follows: emergency care services 237 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 238 To This part defines the requirements of pharmaceutical staff according to hospital pharmaceutical services 249 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 250 to Define the minimum requirements for the facilities (location and design) and the central sterilizing and medical- 262 processes (receiving, disassembling, cleaning, assembling, packaging and surgical supply facilities and equipment), facilities for sterilizing and storage, organization, management and services control of the operations. XX Standards for dietary services 263 to Define the minimum requirements for the facilities kitchen, storage, refrigeration, 276 wash rooms) and the organization, staffing, diet, food preparation and serving and management (policies) of the services. XXI Special requirements for 277 to The special requirements are organized into General Requirements and three blood bank services, blood 300 chapters comprising: transfusion services or blood General requirements which prescribed who the person-in-charge, person allowed donation programme 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 89

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 301 to If the hospital has such services, these special requirements define the minimum haemodialysis facilities and 322 requirements for such facilities and the standards for managing the facilities and services 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 323 to Usually not applicable to private hospital. facilities and services 332 XXIV Standards for specialist 333 to Note: Private hospitals are not allowed to maintain a outpatient facility or services outpatient facilities and 338 except specialist outpatient facility and services. services Define the minimum requirements for the facility and the management of the specialist outpatient facility and services. XXV Standards for ambulatory care 339 to A separate healthcare facility and service. services 344 XXVI Special requirements for 345 to Define the minimum requirements for the facilities and the services and the radiological or diagnostic 352 purpose, staffing and managing the records (and registers) on the operations. imaging services and Need to comply with requirements of Atomic Energy Licensing Act 1984 [Act 304] radiotherapy and radioisotope services XXVII Standards for private nursing 353 to A separate healthcare facility and service. homes 387 XXVIII Special requirements for 388 to A separate healthcare facility and service hospice and palliative care 416 services XXIX Miscellaneous (other facilities 417 to These requirements are prescribed for all other necessary facilities and services and ancillary services) 434 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.

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 2 Lesen Iklan (Advertising License) dan Kesejahteraan Bandar 3 Lesen Tempat Letak Kereta (Vehicle Parking License) (Ministry of Federal Territory and 4 Lesen Premis Makanan (Food premise License) Urban Wellbeing) Dewan Bandaraya Kuala Lumpur (City Hall KL) 5 Kelulusan Vehicle Type Approval (VTA) Jabatan Pengangkutan Jalan (Road Transport Department) 6 Perakuan Pendaftaran untuk Kementerian Kesihatan Menubuhkan/Menyenggarakan/Mengendalikan/Menyediakan Klinik Perubatan (Ministry of Health - MOH) Swasta Cawangan Kawalan Amalan 7 Perakuan Pendaftaran untuk Menubuhkan/Menyenggarakan/ Perubahatan Swasta (CKAP) 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 18 Perakuan Pendaftaran Sementara (Perubatan) Majlis Perubatan Malaysia 19 Perakuan Amalan Sementara Warga Asing (Perubatan) (Malaysian Medical Council - MMC) 20 Perakuan Amalan Tahunan (Perubatan) 21 Perakuan Peperiksaan Kelayakan Perubatan 22 Letter of Good Standing (Perubatan) 23 Perakuan Pendaftaran Pembantu Perubatan MOH 24 Perakuan Pembaharuan Pendaftaran Tahunan (Pembantu Perubatan) Lembaga Pembantu Perubatan 25 Perakuan Pendaftaran Pembantu Hospital Estet Percubaan (Medical Assistants Registration 26 Sijil Peperiksaan Pembantu Hospital Estet Board) 27 Perakuan Pendaftaran Penuh Juruoptik MOH 28 Perakuan Pendaftaran Penuh Optometris Majlis Optik Malaysia (Malaysian 29 Perakuan Pendaftaran Sementara Juruoptik Optical Council - MOC) 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 36 Permit Psikotropik Seksyen Penguatkuasaan Farmasi 37 Kebenaran Import Dadah Berbahaya (Pharmaceutical Control Section) 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 MOH Swasta, Klinik, Klinik Radiologi dan Makmal Perubatan Lembaga Iklan Ubat (Medicine

Advertising Board) 50 Lesen Pengilang (Farmaseutikal) MOH 51 Lesen Pemborong (Farmaseutikal) Biro Pengawalan Farmaseutikal 52 Lesen Mengimport (Farmaseutikal) Kebangsaan (BPFK) (National 53 Sijil Pendaftaran Keluaran Entiti Kimia Baru/Bioteknologi Pharmaceutical Control Bureau) Preskripsi dan Bukan Preskripsi Suplemen Kesihatan Produk Semulajadi Kosmetik 54 1. Sijil Kesihatan Berdasarkan Jenis Makanan MOH, 2. Sijil Kesihatan Makanan Am Bahagian Keselamatan Dan Kualiti 3. Sijil Kesihatan Udang Sejuk Beku yang telah dimasak Makanan 4. Sijil Kesihatan Daging Diproses Haba (Food Quality & Safety Division) 5. Sijil Kesihatan Minyak Makan Kelapa Sawit, Palm Olein dan Palm Stearin 6. Sijil Kesihatan Air Minuman Berbungkus 7. Sijil Kesihatan Air Mineral Semulajadi 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 MOH bahagiannya Bahagian Kawalan Penyakit 78 Permit Mengimport dan Mengeksport Mayat atau mana-mana bahagiannya Diseases Control Division) 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 MOH A&C (Bahan Radioaktif & Radas Penyinaran) dibawah Akta Perlesenan Bahagian Perkhidmatan Kejuruteraan Tenaga Atom 1984 (Akta 304) bagi maksud perubatan (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/ MOH Jururawat Masyarakat/ Penolong Jururawat (APC) Lembaga Jururawat Malaysia 87 Sijil Pengamalan Sementara (TPC) (Malaysian Nursing Board) 88 Pendaftaran Jururawat 89 Letter of Good Standing 90 Pendaftaran Pengamal Pergigian MOH 91 Sijil Pengamalan Pergigian Tahunan Majlis Pergigian Malaysia (Malaysian 92 Sijil Pengamalan Sementara (Pergigian) Dental Council) 93 Letter of Good Standing (Pergigian) 94 Sijil Perakuan Bomba Jabatan Bomba & Penyelamat 95 Melesenkan penggunaan atom bagi aktiviti bukan perubatan (mengikut kelas) Ministry of Science, Technology and Kelas A – Bahan Radioaktif Innovation (MOSTI) Kelas B – Bahan Nuklear Lembaga Perlesenan Tenaga Atom Kelas C – Radas Penyinaran (Atomic Engergy Licensing Board) Kelas D – Pengangkutan Kelas E – Import/Eksport 92

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 111 Pas Residen (Immigration Department) 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

Appendix 5.1: Summary of Survey Output No. Regulatory Issue Consequence or Burden Requirement

1 Licence renewal (every 1. Long waiting time for renewal, 1. Long wait, sometimes until 2 years) sometimes exceeding 6 months. licence lapsed 2. A lot of documents required in 2. High overheads to prepare application (2 sets), certified copies documents for submission required. Every piece of paper needed Reference: to be signed. Too much paperwork required. Additionally, now have to key- 1. Private Health Care Facilities and in data online.

Services Act 1998 3. Many different units involved in the (Act 586) process, difficult to deal with and to

 Part III: Approval for access to them. establishment and 4. Different auditors assessing and maintenance, 3. Too many interactions with interpreting the requirements License-to-Operate different units on requirements and Inspections differently, some stricter than others. (Premise, Services & Variation in competency and 4. Variability in assessments Facilities) experience of auditors. causes confusion. . Section 15. 5. The older hospitals (those approved Application for before Act 586) have problems with

licence to operate meeting some of the new dimensional or provide. . Section 16. requirements. 5. Expensive on structural Inspection of 6. Need to write officially to resolve changes and causes serious premises. issues, oftentimes do not receive interruption to services. . Section 22. replies to queries. Frequently need to Duration and travel to Putrajaya to resolve issues, a 6. Time consuming and causes renewal of licence costly burden for those from other to operate or delays. states, e.g. East Malaysia. provide  Part VI: 7. Parts of PHFS Regulations 2006 are Responsibilities of a not specific causing different Licensee, Holder of interpretations of requirements Certificate of 8. New requirements are not published 7. Delays in getting requirements Registration and and made known to hospitals until the rectified in submission & cost. Person In Charge audit.  Part VIII: Quality of 9. Delay in the issuance on professional Healthcare Facilities 8. Costly delays to meet and Services. license contributes to overall delays. requirements. and Also results in delay for quality accreditation. 9. Licensing delays result in other 2. Private Health Care 10. Two levels of audit in some states, consequences, e.g. MSQH Facilities and state office and Putrajaya. Sometimes, accreditation. Services (Private state gave comments which could be Hospitals or Other over-ruled by Putrajaya auditors. Healthcare 10. Give rise to costly changes and Facilities) 11. Have to deal with different regulators delays. Regulations (State MOH, BOMBA, Local Authority, 138/2006 Immigration, DOSH) before applying. 12. East Malaysian states have a 11. Fragmented and uncoordinated additional requirements on process (merry go-round) and immigrations which results in delays. delays. 13. Need costly statutory declaration by 12. Cause delays and added board members and licence/certificate administrative burdens. holders for every renewal. 13. Unnecessary costs and administrative burden. 2 Planning Approval for 1. All types and level changes on physical 1. Delays resulting in heavy expansion, renovation, building has to go through the same long overheads, many interactions, upgrading and difficult approval processes. inconveniences to services. 2. Difficulty in meeting requirements 2. Many interactions and burdens of because of absence of guidelines or resulting delays. 94

specification standards. 3. Different officers specifying the 3. Difficult approval process with Reference: requirements differently (depending of consequential delays. competency of officers). 1. Private Health Care 4. Long and difficult process for land 4. Delays in introduction of new Facilities and conversion for expansion. services (State/Land issue) Services Act 1998 5. Difficulty in contacting right officers to 5. Inconvenience, costly and (Act 586) resolve issues through the phone. process delay.  Part III: Approval for Oftentimes, need to travel down to Putrajaya to resolve issues or to speed establishment and up approval. Need to have good maintenance, License-to-Operate networking to get things done.

and Inspections 6. Submission for approval of new clinic (Premise, Services & has to be complete. Any missing 6. Costly payment, administrative Facilities) requirements require a re-submission. burden and delays.  Part VI: Responsibilities of a Licensee, Holder of Note: Certificate of Registration and This approval is treated the same as Person In Charge establishing a new facility (hospital),  Part VIII: Quality of therefore undergoes the burdensome Healthcare Facilities building approval processes. and Services. and

2. Private Health Care Facilities and Services (Private Hospitals or Other Healthcare Facilities) Regulations 138/2006 3 Approval for 1. All applications have to be sent to 1. Burdensome in terms of cost, advertisements and Putrajaya. This is inconvenient for convenience and delays. advertising materials hospitals located in other states. 2. Additional burdens and also 2. Medicine Advertisements Board (MAB) delays implementation of hospital has recently introduced this control on educational programs for staff and printed materials for internal distributions patients. (information for medical staffs and 3. High overhead costs and total Reference: patients). compliance costs. Delays to 3. Lots of paperwork on number of hard hospitals efficiency programs. 1. Medicine copies needed in application, and also as 4. Increased interactions, delays and (Advertisements hospitals produced many such materials cost burden. and Sales) Act 1956 throughout the year. (Revise 1983) Act 4. Too many changes required to 5. Confusion and burdensome to 290 submissions because there is no achieve compliance.  Section 4A. established guidelines by regulators. Prohibition of 5. Different requirements from different 6. Confusion and burdensome to advertisements regulators as local authorities also relating to skill or achieve compliance. regulate advertisements. service. 6. No communication or information on 7. Delays and additional burden on  Section 4B. revisions on requirements. Only knew compliance. Advertisements of upon application.

medicines to be 7. Problem with getting approvals for approved. materials in other languages (Japanese, and Russian, Chinese, etc.).

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.

4. Workforce regulation 1. The quality of nurses graduating from 1. Difficult and costly to retrained and quality and some private colleges is not up to these graduate; they are not availability of employable requirements resulting in passionate in the profession. professionals. many unemployed graduates. 2. Burden on hospitals to employ 2. Shortage of experienced and specialist poor quality graduate nurses by skilled nurses. Restriction on Nursing Board. recruitment of foreign nurses to mop up 3. Rising cost of employment for the unemployed graduates. hospitals. Reference: 3. Public hospitals are pinching private hospitals’ experienced nurses (better 4. A hospital tries to re-open 1. Medical Act 1971 benefits and security). school but unsuccessful. Act 50 4. Poor enrolment by hospital nursing 5. Difficulty to expand healthcare 2. Medical (Amend.) school due to unemployed nurses. services for country to be a Act 2012 5. Shortage of specific medical specialists medical hub. 3. Nurses Act 1950 is preventing the expansion of Act 14 (Revised healthcare services as foreign 6. Experience poorer type of 1969) professionals are not allowed to medical graduates. 4. Registration of practice here. Pharmacists Act 6. Suspect poorer quality of medical 7. Burden on hospital to supply 1951 Act 371 graduates as a result of places for houseman internship. (Revised 1989) commercialisation of medical

5. Registration of education. Pharmacists 7. Unbalance expansion of medical 8. Burdensome application for Regulations 2004 education to the resources (hospitals claims and cost burden on 6. Registration of and supervisory) for houseman hospitals. Medical Specialist internship. 8. Incentive for continuous professional development has been discontinued. Also difficult to make HRDF claims for courses not registered, even though 9. Delays, costly, and the provider is MOH. administrative burdens. 9. Burdensome procedures for engaging foreign specialists when applying to MMC. Lots of forms to fill, 11 copies 10. Delays in getting license for new required and take months. specialist clinics. 10. Long wait to get registered with NSR by specialists. 11. Approval delays add to administrative burden. 11. Sabah & Sarawak have restrictions on employment of professionals from other states. Immigration restrictions on 12. High staff cost. “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 13. Hospital has to bear the burden with SL1M initiative. of training these nurses. 5 Other Issues: 1. Health tourism requires good air services 1. Limited inbound flights are to host country. Penang hospitals receive curbing health tourist arrivals in 1. Export of Healthcare more health tourists with addition flights state. Services (Health to Indonesia. Tourism) 2. Health tourists to hospital in Melaka need 2. Additional burden of having to There is no specific to come through KLIA, which has poor arrange transportation to and from regulation for health transportation to Melaka. KLIA. tourism but hospitals are 3. Control on advertisements, inefficiency in 3. Burdensome regulatory licensing and other approvals are stifling expected to register with processes stifling growth. health tourism. Malaysia Health Tourism 4. Health tourism is not the main focus of 4. Only a small per cent of health Council and to obtain hospital in Klang Valley. Travel tourist trade in Klang Valley. MSQH accreditation. inconvenience and higher costs. 5. Added administrative burdens. 5. Sarawak has added issue with land travel issues. There is a restriction of crossing border (180 times/year) for Indonesian agents. 2. Personal Data 1. Some hospitals are concern with the 1. Some hospitals are feeling the implementation of the new Act. There are administrative burdens of the no guidelines and hospitals are regulation. Personal Data experiencing different requirements from 96

Protection Act 2010 regulators. Too many restrictions from (Act 709) interpretation of the requirements.

3. MSQH Accreditation 1. Auditors for MSQH are from medical 1. Perceived threat and unfairness in MSQH is a voluntary professionals from competing hospitals, assessments. accreditation scheme. not independent. MOH has made it a 2. Auditors are not trained or did follow 2. Perceived inconsistencies and standard auditing protocols. requirement for health variations in assessments. tourism.

4. Medical fee 1. The capped on procedure fee stifle 1. Stifle innovativeness in private Private Healthcare innovativeness as specialists are hospitals. Facilities and services reluctant to try new procedures because (Private Hospitals and the risk (of litigation) outweighs the returns. Other Private 2. Stifling to growth of new services. 2. Hospitals find it difficult to introduce new Healthcare Facilities) services which are not listed in the Regulations schedule. Thirteenth Schedule (Regulations No. 433) 5. Information & 1. Needed to keep summary of 1. Additional administrative burden reporting prescriptions in a book (register). A to maintaining a physical book. physical book is required. IT register is not accepted (yearly inspection of books). 2. Administrative burden for hospital. 2. Need to submit statistics online on monthly basis, e.g. Nursing Board. Poor online system is a hassle. DOS also requires quarterly input.

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  Long wait, sometimes until 5. Estimate cost, very judicious in the insisting on licence lapsed. Sometimes the i. Processing and licence fees structural changes on older facilities hospitals get their license after : >RM10,000 where it has direct impact on patient or very near the expiry date. 6. Duration to obtain approval – safety. Older operation theatres, ICU, We hope that MOH can review approx. 9 months CCU and Labour the application submitted and 7. Estimated amount of paper Rooms may require renovations to conduct site inspection as soon required for submission – 25 meet with current patient safety reams of A4 paper. as they received the application/ requirements. 8. All documents are to be No. 7: The respondents must be more documents so that any missing submitted in 3 sets and all the specific here. document or follow-up action certificates are required to be No. 9: The hospitals can be more can be addressed accordingly certified. This includes the proactive by applying for renewals of within adequate timeframe. certificates for staff who are Professional Licenses at least 6 Hence, no delay in issuance of from the non-allied health months before expiry. new license. professionals and non- No. 10-11: Agree, duplication of work, executive positions. time lost, cost overruns. This has to be  Despite the online application, looked into e.g. set up one stop centre hospitals are required to submit paper application and in 2 sets. where all regulatory authorities sit together. This involved a lot of paperwork. No. 12: This is tied up with conditions Also almost every document agreed to when Sabah and Sarawak requires to be certified true became one with Malaysia. copies. We feel that there is a No13: This is part of the requirements duplication of work and also and can be taken up with the MOH. 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

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 Applicant should be made to For renovation work: requirements, patient-flow, access to submit the missing service areas may change with the requirement/document only 1. Estimate of cost – processing proposed expansion, renovations, etc. instead of having to re-submit the fee of RM1000 No. 2: The PHFS Regulations are 2. Duration to get approval: 6 - 9 whole application again. specific in what is required in terms of months spatial requirements etc. All that the 3. Number of interactions MOH wants is the final layout and “as (meetings) with regulators – via built plans for it to vet. 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 27th 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  To produce quality nurses, the Ministry of Higher Education in its Nurse Educators and Clinical approval of far too many private Instructors (CI) themselves nursing colleges. should be qualified to teach and No. 5: Foreign Medical Specialists can mentor the student nurses. be brought in subject to them meeting Some of the CIs are graduates requirements of the Malaysian Medical with only 1 or 2 years nursing Council (MMC). This is to ensure they experience which renders them possess recognized post-graduate unfit and unqualified to mentor qualification, come from recognized the student nurses. medical schools and have sufficient  The MOH should not take short post graduate experience as cut by employing experienced determined by the MMC. The intention nurses working and trained in is NOT to have a closed-shop policy the private sector to work for but more on ensuring only qualified and them, leaving the private experienced foreign specialists get to hospitals with only fresh practice in our country. This not unique graduates to run the wards. to Malaysia  The MOH should relax the No. 7: Private hospitals WANTING to requirement of hiring qualified take in housemen will first have to meet and skilled foreign specialists to requirements as set by the MOH. I work in Malaysia. The same have been involved in meetings with should be extended to local the MOH on this issue and to date, I do Malaysians working overseas not know of any private hospital which who wish to come back to serve provides houseman training. the country. More incentives No. 9: Same as No.5 in above. should be given to them to 99

Hospitals should look at the return to Malaysia. requirements of the MMC (as in its Reduce the number of website) or speak to the Secretary of documents required and speed the MMC AND put in the applications up the registration process. early.  Should allow qualified and No. 12: Yes it is a requirement and trained Asst. Pharmacist to be hospitals should willingly spend some on standby/on-call. 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.

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.

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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 : 19 November 2013 (Tuesday) Time : 3.00p.m – 12.30p.m Venue : 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) Attendance 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 101

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  Less detailed that the application of a new hospital approval for establishment, thus there is no need to change the expansion license to incorporate the change (expansion)

3. Advertising  The approval process is currently handled by Lembaga approval 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  Required under the Act, MOH collects the reports but so Reporting far no analysis has been done.

5. Dealing with  Business finds it difficult to meet or reach MOH officers licensing 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  MOH is considering using performance indicators in indicators future for private hospital regulation and would also be interested in study on impact of regulation on private hospital performance.

7. Continuing  This is normally done on a one-off basis. There is no education on planned allocation for this and lack of expertise business (resource) to conduct it on a programmed basis.

8. Six-month  The intention is to reduce the probability of license application lead lapse. time

2. MPC shall maintain continuous engagement with MOH upon decision on the implementation of the recommendations (focusing on reviews on regulatory framework), if any.

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Appendix A: Study Methodology (Presentation by Sue Holmes)

APPENDIX A: STUDY METHODOLOGY BY SUE HOLMES Tips for gathering useful information on unnecessary regulatory burdens

Sue Holmes 2 April 2013

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

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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?

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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, ctd Conduct 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?

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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 businesses Need 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 form Benefits: • 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

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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).

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Checklist for assessing the quality of administration and enforcement 1. Maximises the potential for voluntary compliance 2. Maintains an ongoing dialogue between government and the business community 3. 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

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Checklist for assessing the quality of written regulation

Source: Sue Holmes

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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, inpatients)? 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? 111

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

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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 Persiaran A Fiat, Taman www.colombiaasia.c T : +607 2339999 82 Hospital Kesihatan A Fiat, 79250 om/nusajaya Nusajaya, F : +607 2339900

Hospital Penawar 17 & 18 (A-D), Pusat www.hospitalpenaw T : +607 2521800 50 Perniagaan Pasir ar.com Gudang, 81700, Pasir F : +607 2518199 Gudang

Kempas Medical Lot PTD 7522, Jalan www.kempasmedical T : +607 2368999 47 Centre Kempas Baru, .com F : +607 2368222 81200, Johor Bharu

Klinik Rakyat dan 5-2, Jalan Zabedah, - T : +607 4317579 18 Hospital Bersalin 83000, Batu Pahat, F : +607 4323022

KPJ Johor 39-B, Jalan Abdul Samad www.jsh.kpjhealth.co T: +607-223 7811 263 Specialist Centre 80100 Johor Bahru m.my F: +607-224 8213

Medical Specialist Wisma Maria Jalan Ngee - T: +607-2243888 70 Centre Heng F: +607-2236785 80100 Johor Bharu

Pantai Hospital 95, Jalan Bintang Satu www.pantai.com.my T: +607 4338811 106 Batu Pahat Taman Koperasi Bahagia /pantai-hospital- F: +607 4331881 83000 Batu Pahat batu-pahat

Pelangi Medical 68A Jalan Kuning Taman - T: +607-3331263 12 Centre Pelangi F: +607-3345823 80400 Johor Bahru

Pusat Pakar 1 Susur 1, Jalan Besar - T: +607-7718999 30 Kluang Utama 86000 Kluang F: +607-7728999

Pusat Pakar 133-1 Jalan Salleh - T: +606-9522224 11 Perbidanan & 84000 Muar Sakitpuan Raja

Puteri Specialist 33, Jalan Tun Abdul www.psh.kpjhealth.c T: +607-225 3222 158 Hospital Razak (Susur 5) om.my F: +607-223 8833 81100 Johor Bahru

Regency Specialist No. 1 Jalan Suria, Bandar www.regencyspeciali T: +607-3817700 58 Seri Alam

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Hospital 81750 Masai, Johor st.com F: +607-3887666 Bahru

T.K Tan O&G No.2, Jln Sri Perkasa 1/5 - T: +607-2411100 10 Specialist Clinic Taman Tampoi Utama, 81200 Johor Bahru

Tey Maternity 21 Jalan Sulaiman - T: +606-932 9187 19 Specialist & Gynae 84000 Muar Centre

(KEDAH)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kedah Medical 175, Jalan Pumpong, www.kedahmedical.c T: +604-7308878 84 Centre Mukim Alor Merah om.my F: +604-7332869 05250 Alor Setar

Metro Specialist 1, Lorong Metro www.hospitalmetro.c T: +604-4238888 106 Hospital 08000 Sungai Petani om F: +604-4234848

Pantai Hospital 1 Persiaran Cempaka, www.pantai.com.my T: +604-442 80 Sungai Petani Bandar Amanjaya /pantai-hospital- 8888/9999 08000 Sungai Petani sungai-petani F: +604-442 6805

Putra Medical 888, Jalan Sekerat, Off www.putramedicentr T: +604-7342888 124 Centre Jalan Putra e.com.my F: +604-7348882 05100 Alor Setar

(KELANTAN)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kota Bharu Pt 179-184, Jalan Sultan www.kbmc.com.my T: +609-7433399 44 Medical Centre Yahya Petra, Lundang, F: +609-7478271v 15200 Kota Bharu

KPJ Perdana Lot PT 37 & 600, www.perdana.kpjhea T: +609-7458000 110 Specialist Hospital Seksyen 14, Jalan lth.com.my F: +609-7472877 Bayam, 15200 Kota Bharu

Pusat Rawatan JKR 284, Jalan Sultan www.annisa.com.my T: +609-741 4444 17 Islam An-Nisa Ibrahim F: +609-747 8197 15050 Kota Bharu

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(MELAKA)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Mahkota Medical 3 Mahkota Melaka Jalan www.mahkotamedic T: +606-2848222 356 Centre Merdeka al.com F: +606-281 0560 75000 Melaka

Pantai Hospital No.2418-1 KM 8 Lebuh www.pantai.com.my T: +606-231 9999 120 Ayer Keroh Ayer Keroh /pantai-hospital- F: +606-231 3299 75450 Melaka ayer-keroh

Putra Specialist 169 Jalan Bendahara www.psh-group.com T: +606-283 5888 225 Hospital 75100 Melaka F: +606-281 0518

(NEGERI SEMBILAN)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Columbia Asia No. 292, Jalan Haruan 2, www.columbiaasia.c T: +606-6011988 65 Hospital Oakland Commercial om/seremban F: +606-6011848 Center, 70300 Seremban

KPJ Seremban Lot 6219 & 6220 Jalan www.ssh.kpjhealth.c T: +606-7677800 137 Specialist Hospital Toman 1 Kemayan om.my F: +606-7675900 Square, 70200 Seremban

Mawar Renal No. 71, Jalan Rasah www.mawar.com.my T: +606-7647048 55 Medical Centre 70300 Seremban F: +606-7647092

N.S Chinese Lot 3900 Jalan Tun Dr - T: +606-7622104 74 Maternity Ismail F: +606-7630105 Hospital 70200 Seremban

NCI Cancer PT 137/7, Jalan BBN 2/1 www.nci.com.my T: +606-8500 999 25 Hospital 71800 Nilai F: +606-8500 733

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(PAHANG)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Darul Makmur Jalan Kempadang www.dmmc.com.my T: +609-5349988 91 Medical Centre Makmur, Taman F: +609- Kempadang Makmur, 5349966/9987 26060 Kuantan

Kuantan Medical No.1 Jalan Tun Ismail 9 www.kmcsb.com.my T: +609-5142828 79 Centre 25000 Kuantan F: +609-5147688

Kuantan Specialist 51 Jalan Alor Akar, www.ksh.kpjhealth.c T: +609-5678588 81 Centre Sdn Bhd Taman Kuantan om.my F: +609-5678098 25250 Kuantan

(PERAK)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Apollo Medical 271 Jalan Taming Sari - T: +605-8056000 30 Centre 34000 Taiping F: +605-8076000

Colombia Asia No.5, Jalan Perwira www.colombiaasia.c T: +605-8208888 82 Hospital, Taiping 34000 Taiping om/taiping F: +605-8208999

Hospital Fatimah 1 Lebuh Chew Peng www.fatimah.com.m T: +605-545 5777 226 Loon, Off Jalan Dato' Lau y F: +605-547 7050 Pak Khuan, Ipoh Garden, 31400 Ipoh

Kinta Medical 20 Jalan Chung Thye www.kmc.com.my T: +605-2542125 48 Centre Phin F: +605-2543264 30250 Ipoh

KPJ Ipoh Specialist 26 Jalan Raja Dihilir www.ish.kpjhealth.co T: +605-2408777 260 Hospital 30350 Ipoh m.my F: +605-2541388

Pantai Hospital Lot No. 126, Jalan www.pantai.com.my T: +605-540 5555 121 Ipoh (Paloh Tambun /pantai-hospital-ipoh F: +605-545 1163 Medical Centre 31400 Ipoh Sdn Bhd)

Perak Community 277, Jalan Raja www.pcsh.com.my T: +605-2545594 75 Specialist Hospital Permaisuri Bainun (Jln F: +605-2554288 Kampar), 30250 Ipoh

Taiping Medical 45 - 49, Jalan Medan www.tmc.kpjhealth.c T: +605-8071049 48 Centre Taiping 2, Medan om.my F: +605-8063713 Taiping, 34000 Taiping

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(PULAU PINANG)

NAME ADDRESS WEBSITES CONTACT NO.OF NUMBER BEDS

Gleneagles 1 Jalan Pangkor www.gleneagles-penang.com T: +604-220 227 Medical Centre 10050 Pulau Pinang, 2151 Malaysia F: +604-226 2994

Hope Children 25 B-D, Jalan Gottlieb - T: +604- 29 Hospital 10350 Pulau Pinang, 2286557 Malaysia F: +604- 2286559

Island Hospital 308 MacAlister Road www.islandhospital.com T: +604-228 192 10450 Pulau Pinang, 8222 Malaysia F: +604-226 7989

KPJ Penang No 570 Jalan Perda www.kpjpenang.kpjhealth.com.my T: +604-548 130 Specialist Hospital Utama, Bandar Perda, 66 88 14000 Bukit Mertajam F: +604-548 6700

Lam Wah Ee Jalan Tan Sri Teh Ewe www.hlwe.com.my T: +604-657 442 Hospital Lim 1888 11600 Georgetown F: +604-657 0940

LohGuanLye 238, Macalister Road / www.lohguanlye.com T: +604-238 265 Specialists Centre 19 & 21 Logan Road, 8888 10400 Pulau Pinang, F: +604-229 Malaysia 0287

Mount Miriam 23, Jalan Bulan Fettes www.mountmiriam.com T: +604-890 40 Cancer Hospital Park, Tanjong Bunga, 7044 11200 Pulau Pinang, F: +604-890 Malaysia 1583

Pantai Hospital 82 Jalan Tengah, Bayan www.pantai.com.my/pantai- T: +604-643 180 Penang Baru, hospital-penang 3888 11900 Bayan Lepas F: +604-643 2888

Peace Medical 81 Lorong Selamat - T: +604- 24 Centre 10400 Pulau Pinang, 2266032 Malaysia F: +604-228 2472

Penang Adventist 465, Jalan Burma, www.tanjungmedical.com.my T: +604- 94 Hospital 10350 Georgetown 2262323 F: +604- 2299008

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Tanjung Medical 473 Jalan Burma www.tanjungmedical.com.my T: +604- 94 Centre 10350 Pulau Pinang, 2262323 Malaysia F: +604- 2299008

Tropical Medical 12-A, Jalan Masjid www.tmcpenang.com T: +604- 24 Centre (Penang) Negeri 8299188 11600 Pulau Pinang, F: +604- Malaysia 8286118

(SABAH)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Kota Kinabalu Lorong Pokok Tepus 1, www.dsc.kpjhealth.com T: +6088-222922 53 Specialist Hospital Off Jalan Damai F: +6088-255692 88300 Kota Kinabalu

Rafflesia Medical Lots 5-8 Millennium www.rafflesiamedicalce T: +6088-272620 / 630 14 Centre Commercial Centre Jalan ntre.com F: +6088-272640 Lintas Kepayan Penampang 88200 Kota Kinabalu

SMC HealthCare Lorong Bersatu, Off www.sabahmedicalcent T: +6088-211333 175 Sdn Bhd (aka. Jalan Damai, Luyang re.com F: +6088-272622 Sabah Medical 88838 Kota Kinabalu Centre)

(SARAWAK)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Columbia Asia Lot 3582, Block 26, www.columbiaasia.com T: +6086-251888 19 Hospital Bintulu Kemena Land District, /bintulu F: +6086-252888 Jalan Tan Sri Ikhwan, Tanjung Kidurong 97000 Bintulu

Columbia Asia Lot 498 Jalan Jee Poh www.columbiaasia.com T: +6085-437755 45 Hospital Miri (fka. 2,Off Jalan Bulatan Pujut, /miri F: +6085-425677 Selesa Medical 58000 Miri Centre)

KPJ Sibu Specialist 52A-F Brooke Drive www.ssmc.kpjhealth.co T: +6084-329900 26 Medical Centre 96000 Sibu m.my F: +6084-327700

Kuching Specialist Lot 10420 Block 11, www.kcsh.kpjhealth.co T: +6082-365777 59 Hospital Muara Tebas Land m.my F: +6082-364666 District, Tabuan Stutong Commercial Centre, 119

Jalan Setia Raja , 93350 Kuching

Miri City Medical Lot 916-920 Jalan www.mcmcmiri.com T: +6085-426622 30 Centre Hokkien, C.D.T. 100 F: +6085-438096 98009 Miri

Normah Medical P.O.Box 3298 www.normah.com T: +6082-440055 130 Specialist Centre 93764 Kuching F: +6082-442600

Timberland Lot 5164-5165 Block 16 www.timberlandmedica T: +6082-234 466 72 Medical Centre KCLD 2 1/2 Mile Rock l.com F: +6082-232 259 Road Taman Timberland 93250 Kuching

(SELANGOR)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

Arunamari 168 Jalan Batu Unjur 1, - T: +603-33243288 67 Specialist Medical Bayu Perdana, 41200 F: +603-33243288 Centre Klang

Assunta Hospital Lot 68 Jalan Templer www.assunta.com.my T: +603-7780 7000 344 46990 Petaling Jaya F: +603-7781 4933

Bandar Baru No 102, Persiaran www.kpjklang.com T: +603-33777888 67 Klang Specialist Rajawali / Ku 1, Bandar F: +603-33777800 Hospital Sdn Bhd Baru Klang, 41150 Klang

Colombia Asia No. 1, Lebuh Puteri, www.colombiaasia.com T: +603-80648688 78 Hospital Puchong Bandar Puteri Puchong, /puchong F: +603-80648788 47100 Puchong

Columbia Asia Lot No 2, Jalan Baung www.columbiaasia.com T: +603-55417833 46 Extended Care 17/22, Seksyen 17, /shah alam F: +603-55411366 Hospital 40200 Shah Alam

Columbia Asia 3 Persiaran Anggerik www.columbiaasia.com T: +603-51259999 84 Hospital Bukit Eria, Bukit Rimau, /bukit-rimau F: +603-51259998 Rimau Seksyen 32, 40460 Shah Alam

DEMC Specialist No 4, Jalan Ikhtisas, www.demc.com.my T: 03-55151888 130 Hospital Seksyen 14 F: 03-55151815 40000 Shah Alam

Hospital Pakar No. 14 & 16, Medan www.annur.com.my T: +603-89266036 31 An-Nur Hasanah Pusat Bandar 1, Seksyen F: +603-89266067 9, 43650 Bandar Baru Bangi

Hospital Pusrawi No. 62,63 & 64, Jalan - T: +603-87347570 7 Raja Haroun 120

SMC Sdn. Bhd. 43000 Kajang F: +603-87347571

Kelana Jaya No. 1, Fas Business www.kjmc.com.my T: 03-7805 2111 23 Medical Centre Avenue, Jalan F: 03-7806 3505 Perbandaran SS 7, Kelana Jaya, 47301 Petaling Jaya

Klinik Damo & Lot 26326/26327 - T: +603-33710757 20 Pusat Bersalin Persiaran Raja Muda F: +603-3332360 Musa, Jalan Telok Gadang 41200 Klang

Klinik Pakar 36,38 & 40, Jalan Batai - T: +603-3341 4500 / 21 Wanita Sheela dan Laut 3, Kaw.16, Taman 3341 2834 Rumah Bersalin Intan, Off Jalan Batu 3 F: +603-3343 6926 Lama, 41300 Klang

KPJ Ampang No. 1, Jalan Mamanda 9, www.apsh.kpjhealth.co T: +603-4270 2500 230 Puteri Specialist Taman Dato Ahmad m.my F: +603-4270 2443 Hospital Razali, 68000 Ampang

KPJ Damansara 119 Jalan SS20/10 www.kpjdamansara.co T: +603-7122598 209 Specialist Hospital Damansara Utama, m F: +603-7122617 47400 Petaling Jaya

KPJ Kajang Jalan Cheras - T: +603-87692999 145 Specialist Hospital 43000 Kajang F: +603-87692831

KPJ Selangor Lot 1, Jalan Singa 20/1, www.kpjselangor.kpjhe T: +603-5543 1111 173 Specialist Hospital Seksyen 20 alth.com.my F: +603-5543 1722 40300 Shah Alam

Metro Maternity 34, Jalan Pasar www.metromaternity.co T: +603-3341 2277 33 Sdn Bhd 41400 Klang m F: +603-3342 4479

Pantai Hospital 42 Persiaran Raja Muda www.pantai.com.my/pa T: +603-3374 2020 87 Klang Musa ntai-hospital-klang F: +603-331 4979 41100 Klang

Pusat Rawatan 34, Medan Pusat Bandar www.azzahrah.my T: +603-8921 2525 23 Islam Az-Zahrah 1, Section 9 F: +603-8921 2677 43650 Bandar Baru Bangi

QHC Medical 11A, Jalan USJ 10/1A, - T: +603-80245760 11 Centre UEP F: +603-7316342 47620 Subang Jaya

Salam Medical 4-12 Jalan Nelayan 19/B www.salam.com.my T: +603-5548 5161 26 Centre Section 19 F: +603-5541 0503 40300 Shah Alam

Sime Darby No 2, Jalan Lapangan www.simedarbyhealthc T: 03-56391212 75 Medical Centre Terbang, Seksyen U2, are.com/company- F: 03-78420923 info/facilities/sdmc-ara- 121

Ara Damansara 40150 Shah Alam damansara

Sime Darby 1 Jalan SS12/1A www.simedarbyhealthc T: +603-7341212 393 Medical Centre 47500 Subang Jaya are.com/company- F: +603-7335910 Subang Jaya info/facilities/sdmc- subang-jaya

Sri Kota Specialist Lot No.167-172, Jalan www.srikotamedical.co T: +603-33733636 173 Medical Centre Mohet m F: +603-33736888 41000 Klang

Sunway Medical No.5, Jalan Lagoon www.sunway.com.my/s T: +603-7491 9191 185 Centre Selatan, Bandar Sunway, unmed F: +603-56324688 46150 Petaling Jaya

Tropicana Medical No. 11 Jalan Teknologi, www.tropicanamedicalc T: +603 6287 1111 70 Centre Taman Sains Selangor 1, entre.com F: +603 6287 1212 PJU 5, Kota Damansara 47810 Petaling Jaya

Tun Hussein Onn Lot 2, Lorong Utara B www.thoneh.com T: +603-77181488 extn 44 National Eye Jalan Utara 1565 Hospital 46200 Petaling Jaya F: +603-7957 5128 (THONEH)

(WILAYAH PERSEKUTUAN KUALA LUMPUR)

NAME ADDRESS WEBSITES CONTACT NUMBER NO.OF BEDS

CMC Coop Medical 17-19, Jalan Medan Tuanku - T: +603-26924594 14 Centre (formerly 50300 Kuala Lumpur F: +603-26929245 Sambhi Clinic and Malaysia Nursing Home)

Damai Service 115-119, Jalan Ipoh, First www.dsh.com.my T: +603-4043 4900 53 Hospital (HQ) Mile F: +603-4043 5399 51200 Kuala Lumpur

Damai Service Lot 9132, 9133 & 9134 www.dshm.com.my T: +603-4108 9900 50 Hospital Wisma Damai, Jalan Bandar F: +603-4108 9388 (Melawati) 4 Taman Melawati 53100 Kuala Lumpur

Dato’ Harnam 3rd Floor, UMNO Selangor - T: +603-40410092 9 E.N.T Specialist Building, 142, Jalan Ipoh, F: +603-40416336 Clinic Sdn Bhd 51200 Kuala Lumpur

Gleneagles 282-286 Jalan Ampang www.gleneagleskl.co T: +603-4141 3000 311 Hospital Kuala 50450 Kuala Lumpur m.my F: +603-4257 9233 Lumpur

Hospital Pusrawi Lot 149, Jalan Tun Razak www.pusrawi.com.m T: +603-26875000 111

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Sdn Bhd 50400 Kuala Lumpur y F: +603-26875001

HSC Medical Lot 3A-1, Menara HSC, 187 www.hsc.com.my T: +603-27120866 7I Centre Jalan Ampang, 50450 Kuala F: +603-27120766 Lumpur

Imran ENT 62, Jln Ang Seng - T: +603-2274 0599 7 Specialist Hospital 50470 Brickfields F: +603-2274 0577

Institut Jantung 145 Jalan Tun Razak www.ijn.com.my T: +603-2981333 424 Negara (IJN) 50400 Kuala Lumpur F: +603-2982824

KPJ Tawakkal No 1 Jalan Pahang www.tawakal.kpjheal T: +6034026 7777 188 Specialist Hospital 53000 Kuala Lumpur th.com.my F: +6034228063

Lourdes Medical 244 Jalan Ipoh www.lourdes.com.m T: +603-40425335 33 Centre 51200 Kuala Lumpur y F: +603-40420479

Pantai Hospital Jalan Perubatan 1 Pandan www.pantai.com.my T: +603-4289 2828 114 Ampang Indah /pantai-hospital- F: +603-4289 2829 55100 Kuala Lumpur ampang

Pantai Hospital NO. 1, Jalan 1/96A, Taman www.pantai.com.my T: 603-9132 2022 143 Cheras Cheras Makmur, 56100 /pantai-hospital- F: 603-9132 0687 Kuala Lumpur cheras

Pantai Hospital 8 Jalan Bukit Pantai www.pantai.com.my T: +603-2296 0888 264 Kuala Lumpur 59100 Kuala Lumpur /pantai-hospital- F: +603-2282 1557 kuala-lumpur

Poliklinik 9154 Jalan Bandar 4 Taman - T: +603-41084621 10 Kotaraya Melawati Hulu Kelang, F: +603-41058786 53100 Kuala Lumpur

Prince Court 39, Jalan Kia Peng www.princecourt.co T: +603 2160 0000 212 Medical Centre 50450 Kuala Lumpur m F: +603 2160 0010

Roopi Medical 86, Jalan Dato Haji Eusoff, - T: +603-4042 3766 24 Centre Damai Complex, 50400 F: +603-4042 5644 Kuala Lumpur

Samuel & 313 Jalan Tun Razak - T: +603-9618736 14 Specialist 50400 Kuala Lumpur F: +603-9810395 Maternity Centre & Specialist Clinic for Women

Sentosa Medical 36 Jalan Chemur Damai www.sentosa.kpjheal T: +603-4043 7166 201 Centre Complex th.com.my F: +603-4043 7761 50400 Kuala Lumpur

Sentul Hospital 631 Jalan Sentul www.sentulmedical.c T: +603-40416962 15 51000 Kuala Lumpur om.my F: +603-40422231

Taman Desa 45 Jalan Desa (Off old Klang - T: +603-7982 6500 128 Medical Centre Road), F: 03-7820705

123

58100 Kuala Lumpur

Tung Shin 102 Jalan Pudu www.tungshin.com. T: +603-2037 2288 238 Hospital 55100 Kuala Lumpur my F: +603-2070 0345

UKM Specialist 7th Floor, Clinical Block, www.ukmsc.com.my T: 603 - 9172 6064 45 Centre UKM Medical Centre, Jalan F: 603 - 9171 2837 Yaacob Latif, Bandar Tun Razak, 56000 Kuala Lumpur

UM Specialist No 28, Lorong Universiti, www.umsc.my T: +603- 70 Centre Lembah Pantai 78414188/4000 50603 Kuala Lumpur F: +603-79543233

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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 Issue & Problem Consequence & Burden Requirement

1 License renewal (every 1. Long waiting time for renewal, 1. Long wait, sometimes 2 years) sometimes exceeding 6 months. until licence lapsed 2. A lot of documents required in 2. High overheads to application, certified copies required. prepare documents for Too much paperwork required. submission Reference: 3. Many different units involved in the 3. Too many interactions process, difficult to deal with and to with different units on 1. Private Health Care access to them. requirements Facilities and Services Act 1998 (Act 586) 4. Different auditors assessing and 4. Variability in  Part III: Approval for interpreting the requirements assessments causes establishment and differently, some stricter than others. confusion. maintenance, License- Variation in competency and 5. Expensive on structural to-Operate and experience of auditors. changes and causes Inspections (Premise, 5. The older hospitals (those approved serious interruption to Services & Facilities) before Act 586) have problems with services. . Section 15. Application for licence meeting some of the new dimensional 6. Time consuming and to operate or provide. requirements. causes delays. . Section 16. Inspection 6. Need to write officially to resolve 7. Delays in getting of premises. issues, oftentimes do not receive requirements rectified in . Section 22. Duration replies to queries. submission. and renewal of licence 7. PHFS Regulations 2006 are not specific 8. Costly delays to meet to operate or provide causing different interpretations of requirements.  Part VI: Responsibilities requirements 9. Licensing delays result in of a Licensee, Holder of Certificate of 8. New requirements are not published other consequences, e.g. Registration and Person and made known to hospitals until the MSQH accreditation. In Charge audit.  Part VIII: Quality of 9. Delay in the issuance on professional Healthcare Facilities license contributes to overall delays. and Services. Also results in delay for quality and accreditation.

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2. Private Health Care Facilities and Services (Private Medical Clinics or Private Dental Clinics) Regulations 2006

2 Approval for 1. All types and level changes on physical 1. Delays resulting in heavy expansion, renovation, building has to go through the same overheads, many upgrading long and difficult approval processes. interactions, 2. Difficulty in meeting requirements inconveniences to because of absence of guidelines or services. specification standards. 2. Many interactions and Reference: 3. Different officers specifying the burdens of resulting requirements differently (depending delays. 1. Private Health Care of competency of officers). 3. Difficult approval process Facilities and Services 4. Long and difficult process for land with consequential Act 1998 (Act 586) conversion for expansion. delays..  Part III: Approval for 4. Delays in introduction of establishment and new services (State/Land maintenance, License- Note: issue) to-Operate and Inspections (Premise, This approval is treated the same as Services & Facilities)  Part VI: Responsibilities establishing a new facility (hospital), of a Licensee, Holder of therefore undergoes the burdensome Certificate of building approval processes. 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

3 Approval for 1. All applications have to be sent to 1. Burdensome in terms of advertisements and Putrajaya. This is inconvenient for cost, convenience and advertising materials hospitals located in other states. delays. 2. Medicine Advertisements Board 2. Additional burdens and (MAB) has recently introduced this also delays control on printed materials for implementation of Reference: internal distributions (information for hospital educational medical staffs and patients). programs for staff and 1. Medicine 3. Lots of paperwork on number of hard patients. (Advertisements and copies needed in application, and also 3. High overhead costs and Sales) Act 1956 (Revise as hospitals produced many such total compliance costs. 1983) Act 290 materials throughout the year. Delays to hospitals  Section 4A. Prohibition 4. Too many changes required to efficiency programs. of advertisements submissions because there is no 4. Increased interactions, relating to skill or established guidelines by regulators. delays and cost burden. 126

service. 5. Different requirements from different 5. Confusion and  Section 4B. regulators as local authorities also burdensome to achieve Advertisements of regulate advertisements. compliance. medicines to be 6. No communication or information on 6. Confusion and approved. revisions on requirements. Only knew burdensome to achieve and upon application. compliance. 2. Medicine 7. Problem with getting approvals for 7. Delays and additional Advertisements Board materials in other languages burden on compliance. Regulations 1976 (Japanese, Russian, Chinese, etc.). P.U.(A) 283/76  Regulation 5. Issue approvals.  Regulation 7. Numbering of approvals  Regulation 8. Application and fees.

4. Workforce regulation 1. The quality of nurses graduating from 1. Difficult and costly to and quality and some private colleges is not up to retrained these graduate; availability of employable requirements resulting in they are not passionate many unemployed graduates. in the profession. professionals. 2. Shortage of experienced and specialist 2. Burden on hospitals to skilled nurses. Restriction on employ poor quality

recruitment of foreign nurses to mop graduate nurses by up the unemployed graduates.. Nursing Board. Reference: 3. Public hospitals are pinching private 3. Rising cost of 1. Medical Act 1971 hospitals’ experienced nurses (better employment for Act 50 benefits and security). hospitals. 2. Medical (Amend.) 4. Poor enrolment by hospital nursing 4. A hospital tries to re- Act 2012 school due to unemployed nurses. open school but 3. Nurses Act 1950 Act 5. Shortage of specific medical specialists unsuccessful. 14 (Revised 1969) is preventing the expansion of 5. Difficulty to expand 4. Registration of healthcare services as foreign healthcare services for Pharmacists Act professionals are not allowed to country to be a medical 1951 Act 371 (Revised 1989) practice here. hub. 5. Registration of 6. Suspect poorer quality of medical 6. Experience poorer type of Pharmacists graduates as a result of medical graduates. Regulations 2004 commercialisation of medical 7. Burden on hospital to 6. Registration of education. supply places for Medical Specialist 7. Unbalance expansion of medical houseman internship. education to the resources (hospitals 8. Burdensome application and supervisory) for houseman for claims and cost internship. burden on hospitals. 8. Incentive for continuous professional development has been discontinued. Also difficult to make HRDF claims for 9. Delays in getting license courses not registered, even though for new specialist clinics. the provider is MOH. 9. Long wait to get registered with NSR by specialists.

5 Other Issues: 1. Health tourism requires good air 1. Limited inbound flights services to host country. Penang are curbing health tourists 1. Health Tourism hospitals receive more health tourists arrivals in state. There is no specific with addition flights to Indonesia. 2. Additional burden of regulation for health 2. Health tourists to hospital in Melaka having to arrange tourism but hospitals are need to come through KLIA, which has transportation to and poor transportation to Melaka. from KLIA. expected to register with 3. Control on advertisements, inefficiency 3. Burdensome regulatory Malaysia Health Tourism in licensing and other approvals are processes stifling growth. Council and to obtain stifling health tourism. 4. Only a small per cent of 127

MSQH accreditation. 4. Health tourism is not the main focus of health tourist trade in hospital in Klang Valley. Travel Klang Valley. inconvenience and higher costs.

2. Personal Data 1. All hospital are concern with the 2. Some hospitals are Personal Data Protection implementation of the new Act. There feeling the administrative Act 2010 (Act 709) are no guidelines and hospitals are burdens of the regulation. experiencing different requirements from regulators. Too many restrictions from interpretation of the requirements.

3. MSQH Accreditation 1. Auditors for MSQH are from medical 1. Perceived threat and MSQH is a voluntary professionals from competing unfairness in accreditation scheme. hospitals, not independent. assessments. MOH has made it a 2. Auditors are not trained or did follow 2. Perceived inconsistencies standard auditing protocols. and variations in requirement for health assessments. tourism.

4. Medical fee 1. The capped on procedure fee stifle 1. Stifle innovativeness in Private Healthcare innovativeness as specialists are private hospitals. Facilities and services reluctant to try new procedures (Private Hospitals and because the risk (of litigation) 2. Stifling to growth of new Other Private Healthcare outweighs the returns. services. Facilities) Regulations 2. Hospitals find it difficult to introduce Thirteenth Schedule new services which are not listed in (Regulations 433) the schedule.

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