“Transform the way Healthcare is delivered” ST 2 Mar 2013

ST Interview 2 Mar 2013I hope the key messages in the interview with the Straits Times came out clearly enough. To me, these are:

1. Our health system has served us pretty well these last 4 decades, but it is no longer sufficient, and it is timely a total system review is undertaken.

2. Budget 2013 was great from a financing perspective for healthcare, but I hope Minister Gan will take the opportunity of the Committee of Supply debates to elaborate on how the government will, similar to the construction, F and B sectors etc, use financing as a key lever to transform the sector. Otherwise, we may just be pouring money into a flawed and failing model.

3. The MOH mission is to enable Singaporeans to live long, live well, and with peace of mind. Every policy should be measured against this mission statement.

The Straits Times journalist and I met up for a face-to-face interview and we also exchanged some views via email. I’ve appended below the email questions (and my responses).


INTERVIEW WITH STRAITS TIMES (Published on 2 Mar 2013)

What ails Singapore’s healthcare financing framework?

Singapore’s financing framework has actually the subject of much policy and academic interest for many years. Despite the criticism at home from certain quarters, Singapore’s model attracts very keen attention as total healthcare spending which is  less than 4%, is very modest compared to most other developed countries and the outcomes as indicated by metrics such as life expectancy, infant mortality rate etc. are pretty impressive.

That said, the underpinning philosophy of individual responsibility and family as the basic social support unit which may have been very appropriate previously is increasingly challenging for three reasons:

  1. Change in epidemiology from acute illnesses to chronic diseases with consequently much higher lifetime spending. This spending is largely on an outpatient basis punctuated by short inpatient admissions for acute complications. The typical example would be a diabetic who has daily medicines to take and is generally well-controlled. There may over the years be one or two episodes of poor control requiring hospitalization and over time, the disease may progress, leading to heart disease, stroke, kidney failure, blindness etc. all of which may be expensive, and just as importantly impact on the patient’s ability to remain a wage earner.
  2. Healthcare inflation has far outstripped wages, especially for the lower income groups, and it is no longer realistic to expect citizens to have sufficient savings.
  3. Families are smaller today and the ‘risk pooling’ within families that used to happen is in the main no longer possible.

Hence, it is very timely that the government has called for a total review of the healthcare system. Our system today was built for a different era, and the emphasis on hospitals and government interventions to keep hospitalizations affordable with citizens bearing up for outpatient costs, needs to evolve.

Bottom-line, what got us here won’t get us ‘there’, and ‘there’ is where we need to be.


What do you think about the broad strokes that Mr Tharman Shanmugaratnam sketched in his Budget speech for the review of the framework?

DPM Shanmugaratnam is the finance minister and understandably focused on the financials. He has described very encouraging policy directions on the financing side of the healthcare equation but I was hoping he would also highlight how government funds flowing through the healthcare system would be more strategically managed to enable a fundamental transformation of the way we deliver healthcare and promote health. Einstein had said insanity is doing the same thing over and over again and expecting different results. We cannot expect to improve our health system if we just throw more input resources like people, money and infrastructure into a model that is left unchanged and outdated.

The key questions here then are: What are the challenges in our healthcare delivery system? And how can the Finance Minister help the Health Minister?

We have an outstanding hospital system here in Singapore, both in the public and private sectors, but it is time more attention and funds be focused in preventive health, primary care, and extended care, meaning rehabilitation, nursing homes and the like. It’s not just a question of more money, but money which needs to be directed towards industry development, or in this case, sub-sector development taking an eco-system approach. How can we, using influence over the budget and how professionals and providers in the various components of the healthcare system are motivated, design a better model which will stimulate growth and quality in primary care, and the intermediate and long term care sectors? To me, the key concepts are “re-balancing” to emphasize we need to de-emphasize hospitals and re-emphasize the other parts of the health system, and “financial gradient” to connote that it has to make financial sense for the government, providers and patients to do the right thing, seek the right treatments in the right care setting. As long as hospitals are more heavily subsidized than primary care or long term care, and it makes perfect economic sense to patients and their families even if the total societal costs are much higher, patients and their families will make societally sub-optimal decisions like remaining hospitalized in a Restructured Hospital longer than needed, spurning home care for nursing homes etc.

I do hope Minister Gan as health minister will elaborate on how healthcare delivery will be transformed to prepare Singapore for the future and be specific on how finance and delivery will be aligned and congruent. Too often, we discuss these two key pillars of any healthcare system in isolation, and fail to achieve our objectives of system reform.

How do you think Singaporeans’ out-of-pocket share of medical costs can be reduced effectively? How can the needs of the middle-income group be met while helping those who need help most? How much bigger should the share of healthcare spending be borne by the Government?

There are two dimensions to this. The first is to re-distribute both the costs of healthcare and the financial risks arising from a major illness. The second is to lower the unit cost of healthcare, or ‘bend the cost curve’ as what the Americans term efforts to reduce total healthcare spending through more efficient use of resources and minimizing unnecessary healthcare.

On the first, it is clear we have taken the notion of ‘individual responsibility’ to extremes without providing a sufficient safety net for catastrophic healthcare costs. Co-payments are the correct policy tool to use to mitigate over-consumption, but co-payments without caps on individual spending means that in the event of ballooning bills, patients have to worry about how to pay the bills even as they strive to recover. Medifund can help but it is approved post hoc and does not reassure. All in, our current schemes are regressive and place excessive risks of individuals and families. And this risk should rightly be borne by the state.

On the latter, as we discussed earlier, we have a hospital-centric, doctor-heavy healthcare model. To ‘bend the cost curve’, we need to be ready to explore seemingly radical options such as greater use of technology including tele-health to support self-care and home-based care, physician substitutions for routine and less complex care, and other initiatives in those directions. Two examples- for simple “cough and cold” type symptoms in otherwise healthy individuals, do we really need doctors and do we really require employees to present medical certification to be absent from work? In many other countries, individuals self-medicate independently or do so with the help of a national telephone/ internet help-line. For well-controlled chronic diseases such as high cholesterol and high blood pressure, must the consults be with a doctor? Must the consults be in person?

I don’t agree with the critics who argue government share should be much larger simply on the basis of comparisons with other developed countries. The more nuanced approach is to ask what should the out-of-pocket individual component be and then design the system around it. In Singapore, the challenge is that a significant amount of healthcare spending is from employer benefits, which hurts the elderly and unemployed most. It would not be surprising if for these vulnerable groups, the individual share can be more than half since they have no employer benefits, Medisave dollars may be meagre and they may be struggling with other living expenses.

How do the plans to increase government spending and risk-pooling dovetail with the long-held principle of “individual responsibility”?

There is a tension which society needs to balance carefully. Too much ‘government’ and we run the risk of entitlement syndrome and reckless, dangerous spending; too little ‘government’ and we cannot realistically offer citizens peace of mind, and the reassurance that catastrophic illness will not bankrupt the individual and jeopardize the well-being of the entire family. My personal preference is to maintain the co-payment model but temper it with a cap on the co-payments individuals have to bear. Means testing should also be at the individual/ household level without considering one’s housing status.

How do you think Medisave’s role can be increased to meet more healthcare needs while ensuring sustainability of savings?

The major Medisave issues to me are:

  • How much money should be locked up in Medisave? There are opportunity costs for individuals in over-saving and we should respect the very real challenges some Singaporeans face with cash flow.
  • What services should Medisave be allowed use for, and how much?

We need to adopt a whole system perspective and maybe the appropriate way to frame it is “What should the ‘out of pocket’ or cash component of a total healthcare bill be?” From there, we can figure out which financing ‘buckets’ (Medisave, MediShield, employer benefits, private insurance, out-of-pocket) should be used and in what proportions to make up the rest. What patients pay at the point of care in cash is what will shape the perception of healthcare affordability and also determine whether patients seek appropriately healthcare services, with minimal or at least manageable over- and under-consumption.

The mission of the MOH is to enable Singaporeans to ‘live long, live well, and with peace of mind’. How can healthcare financing be designed to support this? I teach strategy to graduate students and constantly urge them to relate specific initiatives and programs back to the organizational mission. If a sensible, coherent linkage cannot be found, then question whether it is the right thing to do. In the same way, every financing policy adjustment should be mapped back to ‘living long’, ‘living well’ and ‘peace of mind’, and a critical test of congruence applied.

One view is that the focus of efforts in healthcare financing should actually be on health promotion and preventive care. What’s your view? How is Singapore doing on this front?

If investing upfront helps Singaporeans to remain healthier for longer periods and minimize spending in later years due to late diagnosis of diseases or poorly-controlled diseases with complications, then a cost-benefit analysis could be carried out. We can then know from a dollar viewpoint, what health planners should focus on.

From both humanitarian and economic points of view, the emphasis should be on ‘compression of morbidity’, or bringing to a minimum the number of years citizens spend in poor health prior to death. Death, like taxes are inevitable, but we can intervene and enable the years of life to be healthy ones as far as possible. These healthy years are economically productive and meaningful years and governments can help citizens achieve this. In this light, health promotion and preventive health then become absolutely essential and in many ways, create very strong positive externalities both through the increase in economically active years as well as reducing the costs of downstream healthcare. In Singapore especially where specialist healthcare and hospitalizations are heavily subsidized, it makes financial sense for the government to fund more generously health promotion and preventive health.

Bloomberg 2012 World Healthiest CountriesSingapore is actually doing very well on the ‘healthy’ front. In fact, Bloomberg judged Singapore to be the world’s healthiest country last year. The factors that were important in scoring were:

Total health-score factors, e.g. Life expectancy at birth and infant mortality, Causes of death: Communicative and non-communicative diseases, excluding war-related injuries, Death rates, Survival to 65 and life expectancy at 65,

Risk-score factors, e.g. % of population age 15+ who smoke, Total per-capita consumption of alcohol, % population ages 20+ overweight ,%  of population physically inactive.

Where I feel we don’t do so well is in the area of preventive health and this would include Singaporeans who undergo regular health screening, Singaporeans with chronic conditions like diabetes or high blood pressure who have the diseases well-controlled and so on. This is probably at least in part related to the financing model which places heavy emphasis on individual out-of-pocket payment for many of these community-based and primary care services. It’s very hard to get patients to be adherent to screening schedules or chronic medicines when they feel perfectly well! More strategic use of subsidies with lower co-payments or even doing away with co-payments may not be a total solution, but it would definitely be very helpful. As we discuss above, it may even in the long run, be a less expensive option.


One comment

  1. […] letter received by the Straits Times following the interview that was published last Saturday. I must say I am encouraged that these are important issues […]

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