Both the public and private sectors are important players in Malaysia's healthcare delivery system. About 80 per cent of healthcare services are provided by the public sector, which is still considered one of the best in the region. The public sector is heavily subsidized and focuses on healthcare promotion as well as rehabilitative and curative care at the primary, secondary, and tertiary levels.

The rapidly-growing private sector, on the other hand, offers mainly curative and rehabilitative services, and is financed strictly on a non-subsidized, fee-for-service basis.

There are three types of public hospitals: 1) general hospitals; 2) district hospitals; and 3) special medical institu-tions (SMIs). Each of Malaysia's sixteen state capitals has a general hospital, which average between 600 to 700 beds each and provide a full range of healthcare services. Because of their size and comprehensive range of care, general hospitals are the most preferred public hospitals in Malaysia. District hospitals, which are much smaller, average between 250 to 400 beds each and provide more basic diagnostic and curative services.

While private hospitals, on the other hand, only account for 20 per cent of the country's hospital beds, they employ 54 per cent of the nation's doctors. A rapidly growing private healthcare system, fueled over the past ten years by the rise of employer-paid private insurance benefits and rising per-capita income, is expected in the next 15 years alone to raise Malaysia's health expenditure from 3per cent of GDP to 6 per cent of GDP.

However, there is increasing concern over whether the government can continue to sustain the country's rising healthcare costs. In 1990, healthcare expenditures were close to RM1.8 billion (US$426 million), and almost doubled by 1997 to RM$3.4 billion (US$805 million). Rapid investment in the private healthcare sector lightened some of this burden, but suffered a blow after the economic crisis struck in mid-1997 - causing business in private hospitals to fall 18-20 per cent and imposing a 3 - 4 year delay in the development of new private hospitals.