TMC Admits ‘Hard’ Balancing Act Between Health Care Providers, Payers

PETALING JAYA, Oct 27 — TMC Life Sciences Berhad says private hospitals are navigating a “hard” balancing act between clinical needs and payer cost controls, as rising medical inflation and recent policy shifts reshape hospital-insurer negotiations.

Speaking at TMC Life Sciences’ annual general meeting (AGM) press conference today, Group CEO Dr Ahmad Adzuan Abdul Rahman said pressures to contain health care costs have intensified, particularly after the government moved to cap medical insurance premiums last December.

“At the end of the day, there is a need to contain costs. We are no strangers to high inflation in health care – it’s not sustainable in the long term. All payers in the health care space are trying to find that equilibrium,” Dr Adzuan told reporters today.

“So when we go into uncharted territory, when the government suddenly announces a cap on insurance, it becomes a highly combustible topic.”

He said the premium cap disrupted insurers’ risk and cash management models, prompting system-wide recalibration. “When that equation is suddenly put into upheaval, it’s very difficult for them to recalibrate,” Dr Adzuan said.

As insurers tighten cost controls, hospitals are seeing changes that sometimes prioritise financial considerations over clinical judgement.

“Sometimes the intent isn’t bad. But due to a lack of detailed understanding of the patient journey or clinical needs, some decisions become more financial-centric,” he said. “At the moment, the whole industry is working through this. It’s not about right or wrong – we’re trying to find equilibrium, and there will be mistakes along the way.”

CodeBlue recently published findings from a nationwide survey of 855 specialists in private hospitals, where 99 per cent reported insurer or third-party administrator (TPA) interference in clinical decision-making.

Specialists described interventions that follow a “Deny, Delay, Revoke” pattern — including reclassifying inpatient cases to outpatient or daycare, delays in guarantee letter (GL) approvals, and revocation of GLs after treatment had started.

Respondents also reported denials of general anaesthesia and refusals to cover standard cancer drugs, often pushing insured patients into the public system when cashless coverage was not approved.

TMC Life Sciences’ remarks today come as other private hospitals, including IHH Healthcare and Beacon Hospital, have publicly raised concerns about insurer and TPA interference in clinical decisions and access to treatment.

Weighing Value Against Treatment Costs

On drug decisions, Dr Adzuan said clinicians frequently weigh clinical value against affordability, noting differences between standard generics, branded generics, and originator drugs.

He referenced the United Kingdom’s National Health Service (NHS), where he previously worked, which uses structured health economic evaluations to determine value-based prescribing.

“Most jurisdictions reference the NHS. There is a whole ecosystem that looks at the health economics of care, but that’s under a nationalised system,” Dr Adzuan said. He added that the marginal benefit of newer, higher-cost drugs can be limited in real-world use.

“Sometimes the incremental benefit of newer drugs is very small. You spend, say, RM100 more, but you only see one in 10,000 people benefiting from it,” he said. “So it’s about finding that balance, but it is tough. We don’t have the infrastructure to do this health economic valuation, and on the clinician side, we will always want the best for the patient.”

Thomson Medical Group Executive Director and Group CEO Dr Melvin Heng echoed the challenges of balancing competing priorities between providers and payers.

TMC Life Sciences group chairman Mohd Mokhtar Mohd Shariff (centre) and board members at the AGM press conference at M World Hotel Petaling Jaya on October 27, 2025. Photo credit: TMC Life Sciences Bhd.

“Providers might want to give a drug that has strong value to one patient out of 100, and give it to all 100 – which is costly. In a place where a payer is strong, they might ask for the one drug that can support 100 patients, and you might lose out on benefiting the one patient,” Dr Heng said. “That’s the balance we are trying to find.”

For FY2025, TMC Life Sciences reported revenue of RM345.5 million, slightly lower than RM346.4 million the previous year. Profit after tax fell to RM3.6 million from RM40.6 million in FY2024.

The group attributed the decline to pricing pressure from private insurers and corporate payers, constrained growth in medical insurance premiums, and delisting from certain insurance panels, resulting in steeper discounting and margin compression.

TMC Life Sciences group chairman Mohd Mokhtar Mohd Shariff said the company focused on stabilisation and consolidation during the year. “FY2025 was a year of steady progress and strategic consolidation, culminating in a strong rebound and sustained positive momentum,” he said.

“Our continued focus on community-centric service approach, clinical excellence, and medical tourism positions the group to capture opportunities in emerging health care markets and deliver long-term value to our stakeholders.”

The board proposed a single-tier final dividend of 0.1863 sen per share.