The Implications of Legislative Controls on Private Hospitals in Malaysia

by Lee, Kwee-Heng, Raja Noriza Raja Ariffin, Prof. Dr.Nik Rosnah Wan Abdullah

Journal of Institutions and Economies, Vol. 10, No. 2, April 2018,Pages 62-94


The emergence of proprietary private hospitals in the 1980s has led to a rise in cost of health care services, variation in care and increase in adverse events. These have contributed to societal concerns prompting the authorities to enforce Private Healthcare Facilities and Services Act 1998 (Act 586) that regulates all private hospitals nationwide in 2006.

Employing a case study approach, this paper discusses some salient themes on the impact of Act 586 on 15 purposively selected private hospitals in the Klang Valley in terms of achieving the national objectives of accessibility, equity and quality care. This study reveals several interrelated themes such as of policy, power, governance, compliance, and quality of care in achieving the national objective.

Findings point to high investment of the state in private hospitals. Although a private hospital is stipulated to be a physician-led institution, in reality the majority of these hospitals are owned by government-linked corporations. Many private hospitals face major challenges in terms of compliance with the new regulations meant to improve patient safety and quality of care. However, full compliance to the regulations remains an insurmountable challenge as the private providers are influential. Faced with political constraints, asymmetric information and inadequate human resources, the regulatory authority seems hampered in its enforcement capacity.

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