Malaysia provides universal health coverage for its citizens. Despite this, the private healthcare sector is growing rapidly, with 49% of total healthcare expenditure in Malaysia spent in the private sector in 2017 alone.[1] Malaysians often utilize private healthcare services to receive curative or diagnostic treatments or when there are long wait times to receive healthcare treatments from public facilities. Appointment slots, especially those for specialty services, are frequently booked six months out, prompting Malaysians to use private clinics, often at their own expense. Out of this situation, a dual-tiered healthcare system has emerged in Malaysia, with an astonishing 77% of healthcare expenditure in the private sector coming from out-of-pocket payments.1

Out-of-pocket (OOP) payments are defined as payments paid by patients or their family members that are not reimbursable by third parties. In 2017, OOP health expenditure in Malaysia was RM21.5 billion or 38% of the total health expenditure.1 The graph below shows the trend of out-of-pocket payments in Malaysia from 1997 to 2017. OOP payments have grown at the rate of 10% every year and if this trend continues, total OOP expenditure is projected to reach RM55 billion by 2027. 1

source: Malaysia National Health Accounts: Health Expenditure Report from 1997 to 2017

Why Should Fintech be Interested in Healthcare?

Fintech organizations can play a bigger role in solving the OOP payment crisis in Malaysia, employing technology to make financial transactions faster, easier, affordable, and efficient. Fintech is a relatively new concept for many in the Malaysian healthcare system but as interest grows, it has the potential to address many healthcare challenges through health savings accounts, point-of-care lending, crowdfunding, and innovative insurance plans. By bringing together fintech companies and healthcare institutions, Fintech for Health aims to define the many opportunities for addressing high OOP costs in Malaysia.

These collaborations are crucial as Malaysia aims to be a cashless society. With 70% of Malaysians supporting this cashless initiative, public hospitals in Malaysia have a goal to be completely cashless by the end of 2021. Given this, financial payment technology would have access to 145 public hospitals, 994 health clinics, 1800 community clinics, 91 child and maternal clinics, 342 1Malaysia (government) clinics and 240 private hospitals in Malaysia. In other words, fintech companies would have access to almost RM128 billion worth of healthcare transactions by 2027.

Additionally, Malaysia strives to be a key player in medical tourism, aiming to generate up to US$675 million through their healthcare sector alone and up to US$2.5 billion total revenue through medical tourism. The majority of medical tourists coming into Malaysia are from Indonesia, presenting the need to assure fast and smooth financial transactions between these countries.

Fintech can also play an important role in addressing the rising OOP payments incurred by the 80% of Malaysian households who are in the B40 (bottom 40th of household income) and M40 (middle 41st to 80th of household income) groups. Together these groups represent almost 6 million households in Malaysia.[2] The 3 million household members in the B40 group earn from below poverty level income to RM4849 per month, whereas the other 3 million household members in the M40 group earn from RM4850 and up to RM11000 in household income per month.2 Additionally, there are 2.2 million documented migrant workers currently not covered for their outpatient care. The B40, M40 and documented migrant workers pay OOP to receive treatment in private hospitals, clinics, pharmacies, dentistry, and other alternative healthcare facilities. The “bottom of the pyramid” carries much of the burden of OOP payments, with the B40 group paying RM1 to RM5 to see a doctor at public hospitals, despite the coverage from social insurance plans.

The Opportunities

As Malaysia embarks on their mission to create a completely cashless society, there are many opportunities for fintech and healthcare organizations to team up. 60% of Malaysians now own smartphones, providing an excellent foundation for creating a digital payments ecosystem in the country. In this ecosystem, there are many opportunities for innovative financing solutions – such as lending, crowdfunding, investments, and insurance models – that aim to address high OOP payments in Malaysia.


Malaysians in the B40 and M40 groups experience barriers in seeking healthcare treatment in private centers because they lack the immediate financial resources needed to pay for the fees. Point-of-care lending solutions can provide immediate, affordable, and targeted loans to those struggling to pay up-front costs at private facilities. These loans would improve this population’s access to the private healthcare sector and outpatient clinics, avoiding the long wait times and discontinuity in care experienced at public facilities. Opening up the private healthcare system to the wider population also lessens the burden on the public system. One opportunity for fintech companies includes the chance to build customer lending profiles using historical financial transactions to determine their creditworthiness. This could then be used by patients or their family members to acquire funds to pay for other OOP payments or necessities.


Crowdfunding is another innovative financing model that can address high OOP payments. Typically, the P2P model is used as the crowdfunding source in Malaysia. This platform could be used to help Malaysians pay healthcare expenses quickly as the funds come from multiple individuals at the same time. Raising the funds can be done rapidly or slowly, allowing users the flexibility to use the funding according to the treatment they need.

Health Savings    

Up to now, many Malaysians have not had much incentive to save for their OOP or catastrophic healthcare costs. In the B40 and M40 groups, saving is even more rare and often not financially feasible. Simple digital health savings accounts (HSA), whether linked to one’s bank account or in the form of a digital wallet for the under or non-banked, provide Malaysians with a way to set aside money each month for their healthcare payments. These accounts allow Malaysians to put in small or varying sums of money each month to save for healthcare costs. Future opportunities for fintech companies lie in the area of incentivizing this savings behavior through products and services that bolster the HSAs and through programs that make it easier for Malaysians to pull from these accounts for healthcare services as soon as it is needed. In the future, Fintech for Health projects in Malaysia will delve more into conversations about what can be done to make these HSAs more attractive and saving for healthcare services easier for B40 and M40 populations.


Fintech companies could also play a role in creating curated insurance products that are affordable for large segments of the population. Affordability has been cited by 43% of Malaysians as the reason why they did not have healthcare insurance. Currently, only 22% Malaysians are covered by personal health insurance. Through designing and offering innovative insurance models, fintech companies could customized insurance products and packages for young married couples, women, recent graduates, retired elderly, or students in higher learning institutions, among others.

Currently, fintech companies are designing these insurance products from healthcare insurance companies without specifically targeting populations that might benefit from these products the most. For example, one fifth of all birth deliveries in Malaysia or about 100,000 deliveries take place in private healthcare facilities every year; however, there are no curated insurance products that target the newly married couples or pregnant couples leading to Malaysians spending from RM300 millions to RM600 millions in OOP payments for birth deliveries. Additionally, the lack of affordable, customized healthcare insurance products for recent graduates mean young graduates are dependent on poor-quality public health facilities or are forced to pay OOP in private healthcare facilities. These curated insurance products might help to further reduce the OPP payments, improve access to care for Malaysians and reduce the burden on public health facilities.

The opportunities for fintech and healthcare to come together to create solutions to the high OOP payments in Malaysia are vast. With the market open and eager to find innovative solutions, now is the right time to hold these conversations. The key is identifying the best, most effective solutions for the B40 and M40 populations in Malaysia who experience the worst outcomes due to high OOP payments. For the next two years, through Fintech for Health projects, we hope to be an advocate for this population and bring these innovative solutions to the market.

Written by Dr. Mohd. Nasir bin Mohd. Ismail. Dr. Ismail received his PhD in social and behavioral sciences from Johns Hopkins University, a master’s degree in energy and mineral engineering, and a bachelor’s degree in Physics from Pennsylvania State University. He has worked in the healthcare system in the United States, Malaysia, and the United Arab Emirates. To contact him or to inquire about Fintech for Health programs, please write to [email protected]