Malaysia Reviews Private Healthcare Licensing Process to Address Costs and Delays
Malaysia’s Ministry of Health (MoH) is reviewing licensing and regulatory procedures under the Private Healthcare Facilities and Services Act 1998 (Act 586), following concerns from the private healthcare sector about lengthy approvals and rising operational costs. Health Minister Datuk Seri Dr Dzulkefly Ahmad said the review aims to streamline processes that may be contributing to higher healthcare charges for patients. The development was reported by Bernama after discussions between government agencies, financial authorities and private hospital leaders.
Review of Act 586 Licensing Procedures
The review was discussed during a meeting of the Joint Ministerial Committee on Private Healthcare Costs (JBMKKS), attended by Finance Minister II Amir Hamzah Azizan, representatives from Bank Negara Malaysia, and chief executive officers of private hospitals. The committee is examining structural factors contributing to rising healthcare costs in the private sector.
“We are reviewing Act 586 licensing and regulatory processes as we have heard industry concerns that it takes too long and adds to costs which are passed on to patients,” — Dr Dzulkefly Ahmad, Health Minister, Malaysia
Pilot Programme for Insurance and Hospital Collaboration
In parallel with the regulatory review, the ministry has invited private hospitals to participate as Tier 1 providers in a Medical and Health Insurance or Takaful (MHIT) base plan pilot. The programme will begin in stages in the Greater Klang Valley from July and is intended to improve coordination between insurers and healthcare providers.
Participating hospitals are expected to submit operational and clinical data to support the phased introduction of Diagnosis-Related Groups (DRGs) as a payment mechanism. The government plans to begin implementing DRG-based payments for Tier 1 providers in January 2027.
“DRGs improve the transparency and predictability of pricing and facilitates a shift away from fee-for-service models towards value-based healthcare and a focus on health outcomes,” — Dr Dzulkefly Ahmad, Health Minister, Malaysia
Digital Health Integration Across Public and Private Systems
The initiative also highlights the role of digital health infrastructure in enabling system-wide reform. The ministry has invited private hospitals to join the Malaysia Digital Health Certification Network (MDHCN), which will facilitate secure sharing of medical data, including radiology imaging.
Improved data sharing is intended to reduce duplicate testing, lower treatment costs and strengthen continuity of care. This approach aligns with broader efforts to modernise the healthcare ecosystem through technology, similar to initiatives highlighted in Malaysia’s digital innovation in healthcare delivery.
Officials say stronger digital integration will also support the transition towards outcome-based healthcare financing while maintaining patient control over personal health information through a structured data governance framework. The wider digital transformation agenda reflects Malaysia’s broader push to strengthen its technology capabilities across sectors, including initiatives aimed at advancing smart and digital innovation nationwide and expanding regional collaboration in medical technology as seen in efforts to strengthen MedTech capacity.
According to Dr Dzulkefly, closer collaboration between public and private healthcare providers is essential as Malaysia pursues broader health financing reforms. He described the approach as a “whole-of-nation” effort to improve access, affordability and system efficiency across the country’s healthcare ecosystem.
