companies and the healthcare sector

Investing in fintech companies to prepare for any-and-all healthcarecostscanbeanimportantstrategytofighttherising out-of-pocketpaymentsseeninMalaysia.

Author:

DrMohd.NasirbinMohd.Ismail,PhD,IndependentConsultant, ACCESSHealthInternational

The rising out-of-pocket healthcare expenditures in Malaysia; opportunities for collaboration between fintech companies and the healthcare sector

Malaysia provides universal health coverage for its citizens. Despite this, the private healthcare sector is growing rapidly, with 49% of total healthcare expenditure in Malaysia spent in the private sector in 2017 alone.95 Malaysians often utilize private healthcare services to receive curative or diagnostic treatments96 or when there are long wait times97 to receive healthcaretreatmentsfrompublicfacilities.Appointmentslots, especiallythoseforspecialtyservices,arefrequentlybookedsix monthsout,promptingMalaysianstouseprivateclinics,oftenat theirownexpense.Outofthissituation,adual-tieredhealthcare system has emerged in Malaysia, with an astonishing 77% of healthcareexpenditureintheprivatesectorcomingfromout-ofpocketpayments. Out-of-pocket(OOP)paymentsaredefinedaspaymentspaidby patients ortheirfamilymembersthat are not reimbursable by thirdparties.In2017,OOPhealthexpenditureinMalaysiawas RM21.5 billion, or 38% of the total health expenditure. The graph below shows the trend of out-of-pocket payments in Malaysiafrom1997to2017.OOPpaymentshavegrownatthe

rate of 10% every year and if this trend continues, total OOP expenditureisprojectedtoreachRM55billionby2027. Figure 18. OOP Health Payments in Malaysian Ringgit

Source:MinistryofHealthMalaysia.(2019).MalaysiaNational

HealthAccounts:HealthExpenditureReport1997-2017.

Putrajaya:MalaysiaNationalHealthAccountsSection.(p. 87).

Why Should Fintech be Interested in Healthcare?

FintechorganizationscanplayabiggerroleinsolvingtheOOP payment crisis in Malaysia, employing technology to make financial transactions faster, easier, affordable, and efficient. Fintech is a relatively new concept for many in the Malaysian healthcaresystembut asinterest grows,it hasthe potentialto address many healthcare challenges through health savings accounts, point-of-care lending, crowdfunding, and innovative insurance plans. By bringing together fintech companies and healthcare institutions, Fintech for Health aims to define the manyopportunitiesforaddressinghighOOPcostsinMalaysia.

These collaborations are crucial as Malaysia aims to be a cashless society.98 With 70% of Malaysians99 supporting this cashlessinitiative,publichospitalsinMalaysiahaveagoaltobe completely cashlessbythe endof 2021.100 Given this,financial paymenttechnologywouldhaveaccessto145publichospitals, 994 health clinics, 1,800 community clinics, 91 child and maternal clinics, 3,421 Malaysian government clinics, and 240 private hospitals in Malaysia.101 , 102 In other words, fintech companieswouldhaveaccesstoalmostRM128billionworthof healthcaretransactionsby2027.103 Additionally, Malaysia strives to be a key player in medical tourism,aimingtogenerateuptoUSD675millionthroughtheir healthcaresectoraloneanduptoUSD2.5billionintotalrevenue through medical tourism.104 The majority of medical tourists comingintoMalaysiaarefromIndonesia,presentingtheneedto ensure fast and smooth financial transactions between these countries.

Fintechcanalsoplayanimportantroleinaddressingtherising OOP payments incurred by the 80% of Malaysian households whoareintheB40(bottom40th ofhouseholdincome)andM40 (middle 41st to 80th of household income) groups. Together these groups represent almost 6 million households in Malaysia.105 The3millionhouseholdmembersintheB40group earn from below poverty level income to RM4849 per month, whereas the other 3 million household members in the M40 group earn from RM4850 and up to RM11000 in household income per month. Additionally, there are 2.2 million documented migrant workers currently not covered for their outpatient care.106 The B40, M40, and documented migrant workers pay OOP to receive treatment in private hospitals, clinics, pharmacies, dentists, and other alternative healthcare