Malaysia Health Information Technology
Malaysia’s planned shift to a Diagnosis-Related Group (DRG) payment system represents a structural reform of its healthcare financing model, creating near- and medium-term commercial opportunities for U.S. firms with proven capabilities Health Information Technology solutions such as electronic medical records, clinical billing platforms, DRG grouper software, analytics tools, and data integration systems, and play a key role in supporting Malaysia’s move toward value-based care.
Malaysia’s healthcare system is under mounting pressure from rising medical inflation, which local media report reached 15 percent in 2024—well above the Asia-Pacific average of 10 percent. Inflation is caused by the introduction of new medical technologies, increasing chronic diseases, and aging populations, resulting in a higher demand for healthcare services. At the same time, insurance and takaful operators are experiencing claims that exceed collected premiums, resulting in persistent underwriting losses.
To fight rising costs, Malaysia plans to introduce the DRG system, a payment model that replaces itemized billing with case-based reimbursement. The Malaysian Government and the healthcare industry will jointly provide $14 million to support the implementation of the DRG system under the Malaysia’s Budget 2026.
The implementation of DRG aims to shift hospitals toward value-based care by incentivizing quality outcomes over service volume, reducing unnecessary tests and procedures, and enhancing transparency in treatment costs. The DRG aligns Malaysia with international standards of developed countries such as the United States, South Korea, and Japan, while helping to control medical inflation.
Starting in late 2025, DRG will be tested on simple treatments at selected public hospitals. This stage will help test DRG classifications, cost structures, and hospital workflows. Broader adoption across public hospitals and private hospitals is expected by 2027. The Association of Private Hospitals Malaysia (APHM) notes that accurate clinical data and a strong national electronic health record system will be essential for the success of DRG.
U.S. companies interested in exploring opportunities related to Malaysia’s DRG implementation can contact Commercial Specialist Bethany Tien at office.kualalumpur@trade.gov.