Commentary: What to do about rising medical costs in Singapore

Author: Han Fook Kwang

Originally published on CNA 14 Feb 2024

Slowing down the rapidly rising cost of healthcare in Singapore requires the authorities to be willing to try new ways to solve the problem, says former veteran newspaper editor Han Fook Kwang.

 

After I wrote a piece on ever-rising medical insurance premiums in December last year, a reader responded with his own experience.

His story is interesting and there are lessons for Singapore.

When his son was diagnosed with a life-threatening cardiovascular disease, the future looked grim.

This was how he described the condition: “My healthy 20-year-old son would be out of breath walking 500m slowly. If there is a gentle incline he would struggle even more - climbing just one flight of stairs could result in loss of consciousness.”

While there were various medical options available, he opted for a complex minimally invasive procedure that needed to be done multiple times in stages.

They were done in a private hospital here but after four such procedures, his son’s condition had not improved.

The prognosis remained the same: His son was dying.

 

TREATMENT IN JAPAN

Urgent action was required and he decided then to consult a cardiologist in Japan known for his success in performing these procedures, and to fly there with his son for the treatment.

After the first two procedures, performed back-to-back over two days, this was how the father described the improvement: “The results were immediate and dramatic. Where my son would potentially faint climbing up stairs slowly before, now he could rush up stairs two steps at a time, like a normal young adult.”

Three months later, as planned, they returned to Japan for three more rounds of treatment.

“His condition is completely cured now,” the father reported.

The interesting part of his story is not the success or failure of the treatments in Singapore and Japan.

There will always be more experienced and skilful doctors in other countries in the different medical specialties, and each country will have its own strengths and weaknesses.

That’s not the point. What is of greater concern is the difference in costs. 

In Singapore, each procedure cost on average S$40,000 (US$29,700), excluding scans and other tests. These costs were covered by insurance.

In Japan, he was charged a total of S$17,000 for the first two procedures, and S$22,000 for the remaining three, which included a total of 10 days of hospitalisation as well as the necessary tests. This means around S$7,000 to S$8,000 per procedure or about five times cheaper than in Singapore.

It is a staggering difference, made all the more puzzling by the fact that the Japanese doctor was internationally recognised as a leader in the field, and the outcome bore this out.

None of this cost in Japan was covered by insurance as the coverage here does not extend to overseas treatment.

 

RISING HEALTHCARE COSTS IN SINGAPORE

His experience raises the wider and more important question: Why was the medical treatment so much more expensive here than in Japan?

Since his son was a foreign patient, it is unlikely he benefited from state subsidies and what he paid must have been close to or higher than the cost of performing the operation in Japan. This means the actual cost in Japan could not be more than S$7,000 a procedure.

What was the cost in Singapore for which he was charged around S$40,000 per procedure?

Was the huge difference because cost was different or was it because the mark-up or profit here was much higher than in Japan?

Follow-up question: Did the fact that he was insured in Singapore but not in Japan affect these mark-ups as is commonly believed to be the case?

If you’re insured, doctors tend to be less concerned about charging their patients since someone else is paying.

The rising cost of providing healthcare in Singapore is an issue that requires urgent attention.

Government spending on healthcare costs quadrupled from S$3.7 billion in 2009 to S$15.2 billion in 2020 and is projected to hit S$27 billion in 2030.

The government recognises this and has been highlighting its concern about how rapidly costs have gone up. It launched the Healthier SG initiative last year aimed at strengthening primary care provided by general practitioners (GPs) who are better placed to ensure their patients adopt a healthier lifestyle and tackle medical problems at an earlier stage.

The thinking is that when people live more healthily and their medical problems are detected earlier by a GP, their medical bills in later life should be lower.

That is the hope. But it will take time to see results, perhaps in a generation or so. In the meantime, more direct and urgent measures might be needed to contain rapidly increasing costs.

 

PRIVATE VS PUBLIC HEALTHCARE

What can be done?

For government hospitals, you would expect costs to be lower than in the private sector as it is able to benefit from economies of scale and to negotiate better prices for equipment and drugs.

But is it really the case? There are some surprising results when comparing public and private sector prices.

For example, for some tests, the prices of which are available in catalogues at doctor clinics and online, government prices before subsidy are higher than those from private providers.

For testing of Vitamin D levels in blood, it costs S$106 at the specialist outpatient clinics at government hospitals compared to S$95 at private specialists.

For flu jabs, it is S$33 at polyclinics and S$32 at Raffles Hospital, both prices before the Goods and Services Tax (GST).

A 2D echocardiography (non-invasive imaging test to analyse the heart) is also higher at government compared to private hospitals.

These private sector prices include mark-ups that might be as high as 50 per cent, which means that their actual costs are probably much lower.

Managing costs in the public sector is challenging because there is a major difference in the motivation to do so compared to private hospitals.

The latter is driven by the profit motive which provides a powerful incentive because any reduction you can achieve shows in the bottom line. The mantra in private practice is to cut down waste and improve efficiency. Hence a private practitioner will try to see as many patients as possible, which results in a lower cost per patient.

A public doctor is unlikely to be driven by the same motivation but might prefer to do other things such as research or other medical-related activities, but which will not improve his unit cost per patient.

There is nothing wrong with this behaviour and the point isn’t who is the better doctor. They are driven by different motivations concerning costs that explain why public sector costs may not be lower than that in the private sector.

This being the case, it is critical that the public sector implements effective measures to manage costs because individual players in the system may not.

The government has started, in Healthier SG, with budget allocations for hospitals based on the population being managed rather than the number and type of cases treated.

With a fixed budget, hospitals should hopefully be more cost conscious.

But it should do more to learn from private sector practices, in the way staff are deployed, their job scope and the way work is organised to bring down costs to comparable levels.

It should be noted that the discussion above is about the cost of providing medical services.

What is charged to the patient is a completely different matter, and there is, similarly, a world of a difference between the two sectors.

While private hospitals may be relentless about cutting costs, they will charge whatever the market can bear, regardless of their actual costs. Hence patients may end up paying sky high prices, even as costs are managed, as might have been the case mentioned at the beginning of this article. There may be a need for some form of price control in the private sector, to prevent them from running away uncontrollably.