COMMENT “Health is everything. As such, concerted efforts will be implemented to enhance the health levels of the rakyat and quality of the healthcare in the country.” So said Prime Minister Najib Abdul Razak, during the tabling of Budget 2017.

The ability of the government to deliver on this promise may be jeopardised by the serious reductions in ‘services and supplies’ category of public health and medical care operational expenditure (opex), both of which come under the Health Ministry.

This year, medical care services, which cover hospital supplies, blood transfusion medication and pharmaceutical supplies, suffered a RM589 million allocations cut, dropping by 12.9 percent from RM4.576 billion in 2016 to RM3.987 billion in 2017. Meanwhile, public health allocations fared even worse, falling from RM1.483 billion in 2016 to RM1.245 billion in 2017, percentage-wise amounting to a 16.0 percent reduction.

 

As the table above shows, budget cuts have been made to almost all items listed under Public Health and Medical Care. Apart from cardiothoracic treatment, expenditure cuts have been made in significant areas such as ‘Pharmacies and Supplies for Public Health’, where opex fell by 11.9 percent; ‘Family Health Development’ (17.9 percent), and Forensic Science, which saw the biggest decrease (56.7 percent).

The anecdotal evidence which has emerged recently, including cases of laboratory tests being suspended and the shortage of medicines, already points to the funding challenges faced by the Health Ministry.

It would not be surprising if further budget cuts in these key areas would lead to more of such cases occurring in 2017.

One division that has experienced worrying cuts in resources is Disease Control, where allocations were reduced by 22.6 percent. Based on the current budget, the division now will receive RM53.1 million less, compared to the previous year. Such cuts will jeopardise the government’s ability to effectively combat the dengue virus which is already at record levels in the urban areas as well as the lurking threat of Zika.

The Health Ministry is already buckling under the weight of rising medicine costs and anticipated increases in patient load. Imposing cutbacks on services and supplies only cripples its ability to handle these challenges, much less rise to meet new ones.

These concerns aside, there have been some positive measures made to the Health Ministry’s budget.

In certain areas, allocations have actually increased from 2016 to 2017. One example would be the introduction of an additional grade 56 in between grade 54 and JUSA C, which will give timely and well-deserved promotions to medical and dental specialists and encourage them to remain in public service.

According to budget estimates, this will result in an additional RM1.1 billion spent on emoluments (Items 2 and 3 under Dasar Baru), accounting for 83.2% of the total increase for emoluments in 2017.

The estimates further show that the ministry intends to retain a large majority of the current workforce (generally reflected in Bil Jawatan), while maintaining 20.3 percent budget cut on management cost, which suggests a desire for ‘lean management’ practices.

Other increases harder to justify

While increasing allocations for emoluments is a step in the right direction, other increases in operating expenditure are somewhat harder to justify.

For example, in the budget estimates, a whopping RM2.015 billion was specially allocated for a programme (‘program khusus’) covering the ‘privatisation of hospital support services’.

In his parliamentary reply, Health Minister Dr S Subramaniam clarified that this special allocation would be given to five outsourced companies, tasked with providing various hospital support services such as facility maintenance engineering, biomedical services, biochemical waste management, laundry and cleaning services. All in all, 148 public hospitals would be served.

However, awarding such a large sum towards the privatisation of hospital support services seems excessive, especially given the large funding slashes made to public health and medical care sectors, where resource allocations can make a difference to a wider swathe of society.

Moreover, certain background details surrounding the relationship between the companies and the ministry raise more questions than answers. Three out of five had been awarded 15-year concession contracts for similar services from the period 1997 to 2011, and then, in 2015, again received a 10-year contract renewal. Could the cost of these concessions have been lowered if they were subject to greater competition and transparency?

In summary, though the overall Health budget for 2017 has increased, (from RM23.03 billion to RM24.8 billion, representing a 7.7 percent increase), a further breakdown of allocations shows significant cutbacks made to public health and medical care, both areas that directly impact public access to healthcare service and treatment.

In other areas, greater resources have been awarded for the sake of retaining professionals in public service and privatising hospital support services. The justification of spending more in these areas must be weighed against cutting down in other, arguably more critical, areas of healthcare.

Negative impact on delivery services

The 2017 Budget set a new low for development expenditure within the Health Ministry, with a budget reduction of 16.4 percent, from RM 1.6 billion in the previous year to RM1.34 billion in 2017.

Broadly speaking, the ministry’s budget has increased on a year-on-year basis (except for 2016), peaking at RM24.8 billion for 2017 (Figure 1). However, the allocations set aside for development expenditure have gone the opposite way.

In 2010, development expenditure totalled RM3.58 billion or 24.3 percent of total expenditure. This amount has steadily declined over the years, reaching an all-time low of RM 1.34 billion, or a mere 5.4 percent share of the overall health budget for 2017 (Figure 2).

 

Excluding the public health sub-sector, which received surplus allocations for providing urban health services, almost all development line items for 2017 have been slashed (Figure 3), the most significant cutbacks being in staff training (-54.5 percent or RM60 million) and staff facilities upgrade (-54.4 percent or RM19.3 million).

In his budget speech, the prime minister announced that the federal government would allocate resources to upgrade hospital facilities, build and upgrade new hospitals and clinics, and acquire one hundred ambulances.

However, as Figure 3 shows, the 2017 budget allocation for building new hospitals has in fact been reduced, with an RM97.1mil or 35.4 percent percentage cut. Such a significant cut would surely hamper the government’s ability to build more public healthcare infrastructure to meet the growing public demands.

Struggling to cope with rising demand for healthcare

Public use of government hospitals and health facilities in Malaysia has increased from 2010 to 2015 (Figure 4). In 2015, about 75 million people utilised Health Ministry primary and curative care services, with a 16.5 percent and 41.7 percent increase in outpatient attendance at hospitals and public health clinics respectively.

While medical workforce numbers have increased, there is a worrying gap in terms of infrastructural public health facilities such as the number of Health Ministry hospitals, beds and combined number of health and community clinic facilities. For example, from 2010 to 2015, the number of hospital beds in government hospitals increased by 9.5 percent, compared to admission rates, which rose by 18.6 percent in the same period.

A need for greater resource allocation

In a Facebook posting released just before the tabling of Budget 2017, director general of Heath Dr Noor Hisham Abdullah aired his concerns over the struggle faced by the public healthcare sector in coping with the increasing patient load.

Dr Noor Hisham went on to state that Health Ministry had taken necessary steps to re-evaluate, optimise and reallocate its limited resources to “wherever it is needed the most”. According to him, these measures were aimed at increasing efficiency and effectiveness by cutting wastage and job duplications, “so as to provide excellent healthcare services at reasonable costs with high satisfaction to the rakyat”.

While these are praiseworthy objectives, the Health Ministry’s hands are tied by chronic underinvestment in public health infrastructure. The recent RM 262.1 million, or 16.4 percent cut made to the development expenditure budget will only make it harder to bridge the gap between supply and demand.

The result will be overcrowding in public hospitals and community clinics, and overall decreased standards in healthcare service delivery, especially to the lower income groups.

The federal government must therefore re-examine the development needs from the ministry.

Where necessary, it must endeavour to increase budget allocations to ensure the long-term sustainable development of our public health sector.

DR LIM CHEE HAN is a senior researcher with the Penang Institute.