Rethinking health care commercialization: evidence from Malaysia

Vitalis Chukwudi Nwagbara, Rajah Rasiah

Against the backdrop of systemic inefficiency in the public health care system and the theoretical claims that markets result in performance and efficiency improvement, developing countries' governments have been rapidly commercializing health care delivery. This paper seeks to determine whether commercialization through an expansion in private hospitals has led to performance improvements in public hospitals. Inpatient utilization records of all public hospitals in Peninsular Malaysia over the period 2006-2010 were used in this study. These records were obtained from the Ministry of Health. The study relied on utilization ratios, bed occupancy rates (BOR), bed turnover rates (BTR) and average length of stay (ALOS). The data were analyzed using SPSS 22 Statistical Software and the Pabon Lasso technique. Over 60 % of public hospitals in Malaysia are inefficient and perform sub-optimally. Average BOR among the public hospitals was 56 % in 2006 and 61 % in 2010. There was excessive BTR of 65 and 73 times within the period. Overall, the ALOS was low, falling from 3.4 days in 2006 to 3.1 days in 2010. This study demonstrates that commercialization has not led to performance improvements in the public health care sector in Malaysia. The evidence suggests that efforts to improve performance will require a focus directly on public hospitals.