Every private entity has the risk of poor performance and difficulty in sustaining. Most business can be diversified with many avenues to gain traction and modalities of profits. Unfortunately in private hospital business there is only a single pathway of earning: from the payment received while providing treatment to the patient.
In a country like Malaysia, there are dual health care systems and the challenge is the opportunity for the consumer to make cost comparisons. Its impossible to compare as public health care is almost solely subsidised by the government with the budgeted amount of RM31 billion for the year 2020 which was approved by parliament. This is reflective to the amount healthcare will cost and private healthcare will be in similar quantum based on the size of the healthcare facility.
Hospitals bills are self regulated in order to be competitive. In addition to that, profiteering formulas are observed so that its within the stipulated ranges. This is because the sole income is derived from mark ups of consignments and pharmaceuticals. Besides that there are additional professional service charges for doctors, nurses and other allied health care.
Expenditure of private hospitals includes capital expenditure, real estate cost, operating expenses, depreciation cost and future expansion. The other hidden cost would be indemnities and insurance coverage plus other emergency contingency funds that are important as healthcare is an essential service. A careful balance is always taken in account to have the bill affordable to the patient without going into a negative balance and working out some surplus for the share-holders.
An article written in the Star Online https://www.thestar.com.my/opinion/letters/2020/05/20/business-is-not-a-bed-of-roses-for-private-hospitals explains this is detail.
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