Malaysia late to the party? Here's how DRG hospital funding reforms unfolded around the world starting in 1983

KUALA LUMPUR, June 21 — Malaysia is set to adopt the Diagnosis-Related Group (DRG)-based hospital payment system in a bid to make healthcare more efficient, transparent and sustainable.
It joins a growing list of nations that have overhauled hospital funding models to control escalating costs and incentivise better patient care.
Originally developed in the United States in the early 1980s, DRG systems assign hospitals a fixed reimbursement rate based on a patient's diagnosis, rather than the number or type of services provided.
This helps discourage unnecessary procedures and encourages shorter hospital stays.
Here's how countries across the globe have implemented and adapted a DRG approach to suit local needs:
Malaysia — End 2025
Malaysia's dual healthcare system consists of a heavily subsidised public sector and a fee-based private sector. The DRG system will introduce fixed, standardised pricing for treatments regardless of actual costs.
The government plans to roll out its DRG system in phases starting at the end of this year, beginning with minor ailments in public hospitals. Health Minister Datuk Seri Dzulkefly Ahmad said the move is expected to drive innovation and transparency, while reducing overall costs.
'DRG implementation is a long-term process, but we're beginning with minor cases before moving on to more complex treatments. Our goal is to establish a well-designed system that works specifically for Malaysia,' he said on Wednesday.
United States — DRG pioneer (1983)
The United States was the first to introduce DRGs, launching them in its Medicare system in 1983. Hospitals were reimbursed a fixed amount rather than issuing itemised bills, pushing them to become more cost-efficient.
Australia — 1992
Australia implemented its own version, the Australian National DRG (AN-DRG), in 1992 based on a modified US model. In 1998, this was replaced by the Australian Refined DRG (AR-DRG), tailored to local clinical and administrative needs.
Following the 2011 National Health Reform Agreement, Australia adopted activity-based funding nationwide, aiming to increase transparency and improve resource allocation in public hospitals funded jointly by the Commonwealth and state governments.
Sweden, Finland, Norway — Mid-1990s
These three Nordic countries adopted modified DRG systems in the mid-1990s to align with their respective healthcare structures.
Germany — 2000
Germany formally adopted DRG systems under the Social Health Insurance Reform Act of 2000. Based on Australia's AR-DRG model, the German system is overseen by its Institute for the Hospital Remuneration System (InEK).
By 2003, DRG systems were mandatory in all hospitals. InEK continues to manage coding, pricing and classification updates to ensure the system keeps pace with clinical and economic developments.
Estonia — 2001
After the Russian financial crisis of 1999, Estonia faced long wait times and tight hospital budgets. In 2001, it replaced its fee-for-service (FFS) model with DRG-based payments, improving cost predictability and reducing delays in care.
Croatia — 2002
Croatia's Health Insurance Fund began adopting DRGs in 2002 via a system known as Plaćanje po terapijskom postupku (PPTP). The aim was to shorten hospital stays, improve patient turnover, and optimise resource use. Over time, DRGs helped rationalise services and improve access to key procedures.
Thailand — 2003
Thailand incorporated DRGs into its Universal Coverage Scheme (UCS) in 2003, initially covering inpatient care for 49 million people. Previously based on FFS, the scheme saw fewer unnecessary treatments and better budget control post-DRG.
Over time, DRGs expanded to include subacute and psychiatric services. Thailand's other two public healthcare schemes — the Social Security Scheme and the Civil Servant Medical Benefit Scheme — also adopted DRGs by the late 2000s.
China — 2009
China's healthcare system uses DRGs in various forms across provinces. In 2011, Beijing introduced DRGs under its Urban Employee Basic Medical Insurance (BJ-UEBMI). Today, three DRG systems are in use:
C-DRG for pricing and payments
CHS-DRG for insurance reimbursements (launched nationally in 2020)
CN-DRG for hospital performance evaluation
By 2021, DRG reforms were piloted in 30 cities, with a nationwide rollout planned under the National Healthcare Security Administration.
South Korea — 1997 to 2013
South Korea began DRG pilots in 1997, targeting specific diseases. A voluntary phase followed, gaining broad uptake.
By 2012, DRGs were mandatory for small clinics, and by 2013, tertiary hospitals joined. This helped reduce overtreatment under the FFS model and introduced more consistent pricing.
Philippines — 2013
The Philippine Health Insurance Corporation (PhilHealth) began shifting from FFS to case-based payments in 2014 with the All Case Rates (ACR) system.
The 2019 Universal Health Care Law reinforced this approach, mandating PhilHealth to strengthen financial risk protection and further refine DRG-based mechanisms.
Indonesia — 2014
Indonesia launched its national health insurance programme, Jaminan Kesehatan Nasional (JKN), in 2014 alongside its DRG system, INA-CBGs.
Both inpatient and outpatient services are reimbursed using standard tariffs set by the Ministry of Health. This model has helped keep JKN financially sustainable and scalable.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Malay Mail

an hour ago

• Malay Mail

More Malaysians are reaching out — this counselling NGO is making sure someone's there

KUALA LUMPUR, June 23 — In recent years, more Malaysians have been seeking mental health support, and counselling helplines are among the services seeing this rising demand. According to its 2024 annual report, local NGO Life Line Association Malaysia (LLAM) received 3,923 calls through its helplines — nearly double the 2,017 calls it recorded in 2020. Most of those seeking help over the past five years have been in the prime working age group, between 29 and 49 years old. While the growing number of people in distress is concerning, the increasing use of counselling services among working adults also signals better awareness and greater acceptance of mental health care. Who are they? Founded in April 1993, LLAM is a non-profit, non-religious organisation offering various support services, including helplines, face-to-face counselling, and email-based counselling. (Its online service is currently suspended.) The group also provides play therapy and runs public awareness campaigns in schools, communities, and through fundraising events. Its demographic includes people of all ages, from children to the elderly, with many help seekers coming from Chinese-speaking communities across Malaysia. To date, LLAM has supported over 44,000 individuals. In 2024 alone, the NGO provided counselling to 4,655 people — its highest annual figure yet, compared to 2,584 in 2020. Despite extending its helpline hours and introducing a more memorable number, LLAM is still working toward operating 24/7. It is also developing a digital integrated system to improve service quality and expand its reach. Adapting with the times Speaking to Malay Mail, LLAM president Choon Lee Meng said the group currently comprises 146 local volunteers and 46 senior voluntary counsellors who supervise and coordinate support efforts daily. Choon explained that LLAM has steadily expanded its operations — from just three hours a day, five days a week in 1993, to 16 hours a day, six days a week since February this year. Their original goal of operating 24/7 by 2025 was disrupted by the Covid-19 pandemic, which led to a drop in volunteer numbers. Still, the organisation remains committed to reaching that goal, while continuously optimising its services. Life Line Association Malaysia president Choon Lee Meng (right) and deputy president Chua Chee Heng (left) at the organisation's operations centre in Setiawangsa. — Picture by Arif Zikri In August 2022, LLAM opened its Counselling Education Development and Training Centre (CETC) in Puchong to train volunteers and provide outreach and certified courses. As an HRDCorp-certified training provider, LLAM has conducted 14 courses involving 387 participants. In May this year, the NGO launched a new national helpline — 15995 — a number chosen for its memorability and its meaning: 'love me, save me.' This initiative aligns with LLAM's mission to promote the '95 spirit', which encourages both self-help and help-seeking behaviours, with the long-term vision of reducing suicide rates to zero. Choon said LLAM is also implementing a digital system called SmartCounsel, designed to: Decentralise operations to support night shifts and a nationwide helpline network Improve crisis management efficiency and reduce manpower reliance Enable personalised data management for clients Analyse big data for more targeted prevention According to Choon, SmartCounsel has already helped streamline operations, including addressing issues related to frequent callers. Navigating help seekers LLAM deputy president and certified counsellor Chua Chee Heng explained that help seekers typically fall into three categories: regular callers, high-risk callers, and frequent callers. This is where the role of the supervisor becomes vital — advising volunteers on how to handle each type of case. 'For example, people who are currently trying to commit suicide or people who are planning to — those we consider high-risk, and we need someone who is able to tackle and plan the situation carefully,' Chua said. 'Occasionally, we also have frequent callers — some are lonely and don't have friends, others are just bored and want someone to talk to. 'Some of them are cheeky — they know our volunteers change shifts every three hours, so they'll call after the shift exchange.' A Life Line Association Malaysia volunteer at one of the phone-answering booths in the Setiawangsa centre. — Picture by Arif Zikri Chua noted that frequent callers have contributed to the number of dropped calls — those that go unanswered when lines are busy — something the SmartCounsel system helps to manage. Typically, calls last between 45 and 60 minutes, but the duration varies depending on the situation. For high-risk callers, volunteers stay on the line until the person is no longer in immediate danger. 'We once had a caller who phoned us while sitting on top of a building. They stayed on the line with us for over five hours. 'Our objective is to keep talking until the person is exhausted — we switched between three volunteers during that call, which the caller agreed to. 'Eventually, after the third volunteer, the caller calmed down and climbed down from the building,' Chua shared. He added that supervisors always debrief volunteers at the end of their shifts to ensure they, too, receive the support they need, as the work can be emotionally taxing. What's ahead for LLAM? This year, Life Line Association Malaysia will host the 18th Asia Pacific Telephone Counselling Conference (APTCC 2025) from September 5 to 7, alongside its 95 Life Awareness Month campaign. This marks the first time Malaysia will host the international event. APTCC 2025 will bring together experts from the region to discuss innovation and future developments in helpline services. Speakers include: Dr John Draper, president of research, development and government solutions at Behavioral Health Link Thilini Perera, CEO of LifeLine International Elliot Taylor, founder of New Zealand tech startup ThroughLine For more information on LLAM or APTCC 2025, click here * If you are lonely, distressed, or having negative thoughts, Befrienders offers free and confidential support 24 hours a day. A full list of Befrienders contact numbers and state operating hours is available here: There are also free hotlines for young people: Talian Kasih at 15999 (24/7); Talian BuddyBear at 1800-18-2327(BEAR)(daily 12pm-12am); Mental Health Psychosocial Support Service (03-2935 9935 or 014-322 3392); Life Line Association Malaysia helpline at 15995 and Jakim's Family, Social and Community Care Centre (WhatsApp 0111-959 8214).

Malay Mail

14 hours ago

• Malay Mail

‘Leadership isn't about physical strength': PAS backs Hadi to stay as president despite heart surgery, with Tuan Ibrahim dismissing renewal concerns

PARIT, June 22 — PAS deputy president Datuk Seri Tuan Ibrahim Tuan Man has today affirmed the party's continued support for Tan Sri Abdul Hadi Awang to remain as president, amid calls for a leadership change due to health concerns and party rejuvenation. New Straits Times reported Tuan Ibrahim saying Abdul Hadi's leadership and vision remain vital for PAS, especially following the Islamist party's recent electoral gains and strong performance. 'There are no major health issues. Tuan Guru recently received treatment at the National Heart Institute, and he is in good health. We expect him to be discharged within a day or two,' he said, referring to Abdul Hadi. 'Our best achievements were under Tok Guru's leadership including 34 parliamentary seats and victories in numerous state seats. So why stop when we are succeeding? 'Leadership is not about physical strength, but about ideas, vision, and management. That is what truly matters, and we believe Tok Guru is still capable,' he added while officianting the PAS Parit division annual general meeting. His comments come amid speculation of a potential leadership reshuffle ahead of the party's 71st Muktamar — or annual congress — in September, part of wider discussions on internal renewal. In February, it was reported that Tuan Ibrahim had not confirmed whether he would defend his deputy president post, stating that it was up to PAS delegates to nominate him if they wished. Tuan Ibrahim also highlighted Abdul Hadi's influence in global Islamic circles, saying he is regularly consulted on international issues, including the Sunni-Shiah divide and the Israel conflict. Abdul Hadi, who is also Marang MP, had earlier this week undergone heart surgery. Supporters and critics have predicted that Abdul Hadi may take the less strenuous post of spiritual adviser rather than president, with Datuk Ahmad Samsuri Mokhtar widely seen as a possible successor.

Sinar Daily

17 hours ago

• Sinar Daily

Fresh approach needed to reignite interest in medicine

KUALA LUMPUR - There was a time when becoming a doctor was seen as one of the most prestigious career paths, sparking public debate when local universities could no longer cope with the surge in applications for medical studies. Many parents were once willing to spend significant sums to send their children abroad for medical studies after failing to secure places in local universities. Addressing challenges like workload, work-life balance and fostering a supportive environment are crucial to attract and retain the next generation of dedicated medical professionals. - Bernama file photo However, times have changed, and the field is now increasingly being overlooked. Health Minister Datuk Seri Dr Dzulkefly Ahmad recently urged straight-A Sijil Pelajaran Malaysia (SPM) students to consider pursuing medicine at the university level. He also expressed concern over the declining interest in STEM (Science, Technology, Engineering, and Mathematics) fields among students, warning that it could have long-term implications for the country's medical sector. LOSING APPEAL The declining interest in pursuing medicine among younger generations is acknowledged by Associate Professor Dr Norsham Juliana Nordin, a physiology lecturer at the Faculty of Medicine and Health Sciences, Universiti Sains Islam Malaysia (USIM). She noted that today's youth are more informed and career-conscious, having grown up in a vastly different environment from that of previous generations. "They are more critical when evaluating career choices, often prioritising work-life balance. While medicine was once regarded as the pinnacle of academic achievement, it is now seen as a long, demanding, and rigid path-especially when compared to emerging fields like technology, entrepreneurship, data science, or artificial intelligence,' she told Bernama in a recent interview. In addition, social media narratives highlighting the hardships, long working hours, and perceived lack of fair compensation have further discouraged many high-achieving students from pursuing a career in medicine. "This trend also reflects society's growing tendency to prioritise income over impact. Today, students who aspire to become doctors are often discouraged by the perceived academic burden and the significant personal sacrifices involved,' she said. She noted that ongoing issues within the national healthcare system-such as unstable contract positions, excessive workloads, and toxic work cultures including bullying or high-pressure environments with minimal support-have become red flags for young people weighing a future in medicine. At the same time, social media glamorises other careers as being more flexible, expressive, and less stressful, she added. Dr Norsham Juliana also pointed out the declining appeal of medicine is partly due to how the profession is treated as "guilty until proven innocent' when it comes to patient care. Quoting the famous Spider-Man phrase, "With great power comes great responsibility,' she said every medical decision carries inherent risk. "Every action taken to save a patient, no matter how small, invites scrutiny and accountability. But I believe existing doctors remain resilient,' she said, noting this as another reason why youth shy away from the field. RESTORING TRUE PURPOSE To reignite interest in the profession, Dr Norsham Juliana suggested regularly reminding both practitioners and medical students of the profession's true value: the nobility of saving lives. She believes that to bring back the golden age of medicine, a more holistic approach is needed-starting with restoring joy to the learning process. "I believe the younger generation is not afraid of sacrifice-they just want that sacrifice to be valued and supported by a fair system. Now is the time for all stakeholders, especially experts and influential medical figures, to step forward and lead the change. "Let's restore the core strength of this profession-the healing spirit. Today, we must first 'heal the young healers' by restoring their mental health, motivation, and work environment. Change isn't impossible... it begins with awareness, courage, and collaboration,' she said. She believes medical curricula today can be both fun and innovative without compromising the integrity of the field. "Creative learning methods like simulations, virtual reality, gamification, and story or visual-based teaching not only strengthen comprehension but also foster positive emotions-vital for sustaining student interest,' she said. She added that studies show positive emotional experiences improve memory, problem-solving, and empathy-all essential qualities of a great doctor. RESHAPING THE APPROACH Citing an initiative developed through collaboration among several public university medical faculties, Dr Norsham Juliana highlighted the upcoming Physiology Drama & Art Challenge 2025, which is scheduled to take place in October. This programme gives medical and health science students the opportunity to showcase their creativity through comic design, digital posters, videos, or theatre performances. "Using the theme of bodily functions, students can express their creativity while integrating science-showing how the two can coexist. We aim to nurture doctors who excel not only in theory but are also artistic, open-minded, and empathetic,' she said. The programme, involving USIM, Universiti Malaya, Universiti Kebangsaan Malaysia and Universiti Pertahanan Nasional Malaysia, will take place on Oct 11 at USIM's Faculty of Medicine and Health Sciences. "Being a good doctor is not measured by exam scores alone, but by the sincere execution of responsibilities, nurtured through creativity,' she added. She also stressed the importance of nurturing interest in medicine from secondary school, giving students early exposure to the profession. "If they see that being a doctor isn't just a burden, but a meaningful life path, they'll choose it willingly. "However, this effort requires collective readiness to shape a more appealing and competitive career path in medicine so we can present a more convincing narrative to students,' she said. OTHER FIELDS SEEN AS EASIER Meanwhile, President of the Malaysian Society of Neurosciences Dr Ahmad Shahir Mawardi believes that the declining interest in medicine among youth is largely due to the rise of alternative career paths that appear easier and more "glamorous' than becoming a doctor. He noted that fields such as technology, engineering, the gig economy, and even social media influencing offer attractive earnings without the intense challenges faced by medical students-on top of the financial burden of repaying loans from the National Higher Education Fund Corporation (PTPTN). "Medical students must complete five to seven years of challenging studies with high costs. "On top of that, the gruelling housemanship or medical graduate training require high physical and mental endurance. In addition, trainee doctors who have completed their training must compete for permanent medical officer positions,' said Dr Ahmad Shahir, who has served the medical field for the past 21 years. He emphasised that unless contract positions, workloads, and other related issues are thoroughly resolved, the medical profession will continue to lose appeal among younger generations. He also warned that if unresolved issues persist, the national healthcare system may lose more specialists and experienced medical personnel. "Many doctors are leaving the public sector due to better incentives and job security elsewhere. For instance, working in Singapore offers more attractive incentives, better work hours, and lighter workloads,' he said, while noting that workplace bullying in hospitals is likely an isolated issue. To cultivate interest in medicine from a young age, Dr Ahmad Shahir said it must be nurtured with the right intentions and a genuine passion for the field. He proposed introducing early education initiatives that expose students to the medical profession through hospital visits and short-term attachments, which could inspire them to consider a career in medicine. Dr Ahmad Shahir also emphasised the importance of passing the torch to future generations, particularly in light of Malaysia's ageing population and rising life expectancy-currently 73.4 years for men and 78.0 for women. "As more Malaysians become senior citizens, the incidence of disease and demand for healthcare, including medical expertise, will rise. If this isn't addressed early, we may face a serious shortage in healthcare services. "My hope is that the authorities recognise healthcare as the backbone of a nation. Medical issues like staffing and excessive workloads, which have been widely reported in the media, must be brought to Parliament and addressed through both short- and long-term strategies-for the future of our beloved Malaysia,' he said. - BERNAMA