It seeks to appeal to less-affluent patients with reasonably priced treatments. But figures show it has some ground to make up on Thailand and Singapore in boosting its share of an industry that generates $38 billion-$55 billion annually.
Malaysia is a new player in the market, competing with experienced, branded names. But it is quickly attracting the attention of patients, earning third place for "best and most affordable healthcare" by International Living, a lifestyle magazine.
The number of foreigners seeking care in Malaysia more than doubled over five years to 770,134 in 2013. Most patients are from Indonesia, followed by the Middle East and North Africa, areas with plenty of new money and where healthcare is inadequate or dogged by long waiting lists.
That compares with 850,000 in Singapore in 2012 and nearly 2.5 million last year in Thailand, though that figure includes spa stays and resident expatriates.
Spending by foreign patients totalled $216 million in 2013, dwarfed by Thailand's $4.3 billion, again including spa stays.
Medical institutions have promoted cardiology and orthopaedics, areas with high demand in Indonesia and the Gulf states. And the mainstay, according to Patients Beyond Borders, a medical-tourism publisher, is health screenings, which account for more than two-thirds of business.
The United Arab Emirates spent over $2 billion in 2011 to send patients abroad, according to Medical Tourism Guide 2014.
Also being tapped are middle class patients from countries with poor health systems. Kuala Lumpur's Prince Court Medical Centre received almost 2,000 from Libya and more than 1,000 from Iran in 2012.
Lower costs, a shorter recovery time and high-quality care have helped put Malaysia on the radar.
A heart bypass, at about $20,000, is less than half the cost in Singapore, and 10% cheaper than in Thailand, Patients Beyond Borders says. Hospital rooms and follow-up treatments are also cheaper.
"Malaysia's strength has been at conducting high-end surgeries like the heart bypass and orthopaedic procedures that are done non-invasively, so they don't have to stay too long to recuperate," said Mary Wong, chief executive of the Malaysia Healthcare Travel Council, a government agency.
Not all industry players back the low-price strategy.
"The number of people coming in doesn't necessarily translate into higher revenue," said Suresh Ponnudurai, chief executive of private medical travel company Malaysia Healthcare. "Singapore and Thailand are targeting those who are really wealthy, whereas those who come to Malaysia aren't as wealthy."
Hospitals say most Gulf governments sponsor their citizens to specific countries. But they are more inclined to choose Singapore and Thailand, so persuading patients to switch to Malaysia, regardless of price, has been a challenge.
At least three countries - Kazakhstan, Libya and Oman - already have government-to-government agreements to send patients to Malaysia.
"The way to gain ground is to secure these accounts with government agencies since they are paying for the patients," said Amiruddin Satar, managing director of KPJ Healthcare, one of three big hospital groups.
Still, institutions anticipate an influx of patients.
KPJ Healthcare, along with fellow health giants IHH Healthcare and Ramsay Sime Darby Health Care have sought increased bed allocations for foreigners. KPJ hopes by 2020 to see the share of its revenue from medical tourism jump to 25% from 4% last year.
To the north, business is still flourishing in Thailand, but the military coup in May has posed a problem for patients whose governments have issued travel advisories..
Thailand had a head start, promoting its services after the 1998 Asian financial crisis, when the value of the baht sank. Middle East business rose after the Sept 11, 2001 attacks on US targets, as patients felt unwelcome in the West. But competition is also heating up from elsewhere.
South Korea last year flew actor Song Joong Ki, its medical-tourism ambassador, to Qatar and the UAE to drum up business. Dubai and Istanbul are also marketing themselves as hubs for Middle East patients reluctant to travel long distances.
Malaysia is also pursuing a larger share of the Muslim market through halal treatments, which exclude products forbidden under Islamic law, such as those derived from pork. "For example, insulin, a widely used product in hospitals, we are sure which are bovine or porcine based. Where we can help it, we offer patients halal options," said KPJ's Mr Amiruddin.
Islam allows for the consumption of non-halal ingredients in matters of life and death, but hospital pharmacies inform patients of products that are gelatine and porcine free. That includes offering the drug Dhamotil as a halal option for diarrhoea, instead of the commonly used Imodium.
Hospitals are also using sutures manufactured by a local firm made from lambs slaughtered under Islamic law.
Work is underway to produce the world's first halal vaccines for meningitis and hepatitis by 2017. The target would be Muslim pilgrims going for the Hajj in Saudi Arabia, which requires visitors to be vaccinated for meningitis.
"We realise that if we can come up with halal pharmaceutical products, there's a big market for it," said Jamil Bidin, chief executive of Halal Industry Development Corp. "As far as Muslims are concerned, if you have a halal product, there's no compromise."