Kuala lumpur: With the West Asia conflict showing no sign of abating, Malaysians may have to brace for rising healthcare costs and continued inflationary pressures, said IHH Healthcare Bhd Malaysia chief executive officer Dr Kamal Amzan.
According to BERNAMA News Agency, the United Kingdom-based insurance broker Aon Plc stated in its 2026 Global Medical Trend Rates Report that Malaysia's medical inflation rate is projected to rise to 16 per cent in 2026 from 15 per cent in 2025. Similarly, MBSB Research forecast medical inflation in the country to increase by 16 per cent in 2026 due to the brain drain of doctors and nurses, as well as rising drug prices.
On the impact of the West Asia tensions which escalated in late February 2026, Dr Kamal said IHH, which operates an 18-hospital network in Malaysia, has not seen any immediate disruption. He cautioned that electricity tariffs and fuel subsidies could pose additional cost pressures should the conflict persist, as fuel prices would also impact its ambulance operations.
To balance rising costs with value-based healthcare, Dr Kamal said IHH is adopting new care models such as ambulatory care, where patients are treated and discharged on the same day. He added that investments in technology and automation were also necessary to improve efficiency and reduce reliance on manpower. On medicine costs, he said IHH is leveraging volume synergies through collective negotiations across its hospitals while also increasing the use of generic drugs alongside original medications.
Concurring that medical costs would inevitably rise each year, Dr Kamal described the government's move to introduce the base medical and health insurance/takaful (MHIT) plan as a commendable step. He said MHIT aimed to achieve three key objectives, beginning with changing Malaysians' mindset towards healthcare spending through the introduction of co-payments, which remain uncommon in many insurance products. Second, he said, the initiative aims to increase insurance penetration so that more Malaysians can obtain coverage, which could help ease congestion at public hospitals. Third, he noted that MHIT would introduce a Diagnosis-Related Group (DRG) reimbursement system, where hospitals receive fixed payments based on standard diagnosis and treatment codes.
Asked whether the RM150,000 annual limit would be sufficient, Dr Kamal said its effectiveness would depend largely on the success of preventive healthcare efforts in Malaysia. He also stressed the need for a more integrated healthcare data system, noting that many clinics and hospitals still operate in silos, resulting in fragmented patient records and duplicated treatments.
While 2026 marks Malaysia's Year of Medical Tourism, the ringgit has also strengthened, appreciating about 3.2 per cent against the US dollar year-to-date. Despite acknowledging that a stronger ringgit would raise costs for international patients, Dr Kamal shrugged off concerns over its impact on Malaysia's medical tourism competitiveness. He remained optimistic about the sector, noting that Malaysia continued to offer strong value compared with neighbouring countries, while medical tourist arrivals continued to rise.
Moving forward, Dr Kamal expects Malaysia's operations to continue contributing significantly to the group's earnings despite current global headwinds. IHH's 2025 annual report showed its Malaysia earnings before interest, taxes, depreciation and amortisation (EBITDA) at RM1.30 billion for the financial year ended Dec 31, 2025 (FY2025).