Today Newspaper: Pegging Hospital Prices to Inflation to curb demand

When the Today journalist called me last night, I was taken aback by his sharing about what Sean had said. I don’t know Sean well but in the few times we have interacted, I have found him to be a thoughtful commentator. Hence I was surprised at the suggestion to ‘peg’ prices to inflation.

My response was that an eco-system approach would be helpful here rather than suggestions of a single intervention. This eco-system perspective would be at two levels- the financing and the delivery. For example, hospital charges need to be in the context of ability to pay, alternatives such as community or home care etc. It’s the financial gradient of alternatives to hospitalization that really matters. The other eco-system perspective is that of the entire healthcare resource available nationally, i.e. public sector, private sector, NGO sector and we should strive to optimize whatever we have collectively.

On the quote attributed to me below, the context was one of consistency. My point was that it was economically rational to peg prices to inflation but that would reasonably entail applying the same peg to other services to be consistent and fair. This would include having Medisave and MediShield utilization limits similarly inflation pegged and so on. Definitely not a straightforward proposition…

Anyway, I have been reading the comments left by readers. Harsh but I am glad that people care enough to offer opinions. I am also glad that academics internationally take such a keen interest in our health system. With more eyes casting critical gazes at our model and offering opinions, however controversial, our system can only become more robust.

Let’s tap on this global expertise by putting out more data and more local perspectives on the Singapore health system. My book is almost ready and I hope it will contribute in some small way to a better understanding of our system, and more importantly, stimulate discussion on how to make it better for ourselves and future generations.

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US prof’s solution to hospital bed crunch: Peg prices to inflation (Today 29 July 2013)

By Amir Hussain

SINGAPORE — A visiting American economics professor, who is a strong advocate of the Singapore healthcare system — so much so that he is trying to start a coalition to reform the United States’ system along the lines of what the Republic has in place — believes he has a solution to the hospital bed crunch here: Peg to inflation what patients pay for the beds in public hospitals.

In an interview with this newspaper yesterday, Associate Professor Sean Flynn, who lectures at Scripps College — a liberal arts women’s college — and authored the best-seller Economics for Dummies, said that a way to “get rid” of any bed shortages for a particular class of ward would be to raise the prices of these beds. “But this is difficult for politicians to do and if they had to vote on it every year, politicians don’t like to raise the price of anything,” said Assoc Flynn. “So a simple way to solve this problem is to just have everything indexed to inflation, so the prices of things would just go up automatically every year with the inflation rate … that relieves the politicians of having to make that decision every year.”

Assoc Prof Flynn, who is writing a book called The Singapore Solution as part of his efforts to push for a reform of the US healthcare system, is currently on his second study trip here (his first was in 2011). During his time here, Assoc Prof Flynn visited polyclinics, a community hospital, public and private hospitals, and met with civil servants from the Ministry of Health (MOH).

Healthcare experts TODAY spoke to felt that Assoc Prof Flynn was addressing the issue purely from an economics perspective, which may be too simplistic. Insights Health Associates Principal Consultant Jeremy Lim said that pegging hospital bed prices to inflation would open up a can of worms. For instance, should the Government peg subsidies and public assistance to inflation as well, Dr Lim said.

Associate Professor Phua Kai Hong of the Lee Kuan Yew School of Public Policy pointed out that increasing the prices of hospital beds do not address the root causes and answer the questions of why people go to hospitals and why they remain hospitalised for long periods instead of being discharged.

Assoc Prof Phua noted that the design of the Republic’s 3M system — Medisave, MediShield and Medifund — incentivises Singaporeans to be hospitalised.

In March, former Member of Parliament and Presidential hopeful Tan Cheng Bock had argued on his blog that there is too much emphasis on hospital institution care. “Look at our health budget and you will notice the imbalance in funding primary health compared to hospitals .Currently the MOH subsidises 80 per cent of hospital stay in the public hospitals,” Dr Tan, who used to run his own clinic, wrote. He had urged MOH to “pay equal attention” on community health care.

According to MOH website, last year, the average length of stay in the public acute care hospitals was about 5.8 days while the average occupancy rate was around 85 per cent.

Sembawang GRC Member of Parliament Ellen Lee, who sits on the Government Parliamentary Committee for Health, said that one reason why patients continue their stay in hospitals – instead of switching to step-down care – was because “they know the quality of care (at hospitals) is really good and in the long-term, it’s much cheaper for them”.

“If you were to increase the price (but) so long as it’s more affordable than private hospitals, people will still come. And they know there are many ways for them to appeal even if the bills are not affordable,” she said.

On Singaporeans’ concerns over healthcare costs, Assoc Prof Flynn cited Americans’ frustrations with their country’s system which pales in comparison to Singapore’s system in terms of financing model as well as waiting times.

Assoc Prof Flynn — who tells his students that Singapore “delivers the best medical care in the world while spending 80 per cent less” than the US — suggested that the Singapore Government do more to explain the healthcare system and its benefits to Singaporeans, to assuage fears that it is costly.

He noted that the “two or three” taxi drivers whom he spoke with on his previous trip here were “deathly afraid of the system”. They did not know how heavily the government subsidises healthcare here, he said. He noted that people tend to look at the total cost of medical procedures, instead of the amount that they would co-pay. On the whole, Singapore has “the world’s most efficient and also most effective healthcare system”, he said.

On waiting times, Assoc Prof Flynn felt that while it was reasonable for Singaporeans to feel disgruntled if they have to wait for, say, four hours at a polyclinic, he pointed out that in the US, appointments with general practitioners typically have to be made two weeks in advance and waiting times for emergency rooms are between eight and 24 hours. “So the idea that in Singapore you can just walk into a private GP and they see you within 20 minutes or something is miraculous to an American,” he said.

“I want to help Americans know about the existence of the Singapore system and just how remarkable it is.”

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One comment

  1. […] – Healthcare Perspectives From Singapore and Beyond: Today Newspaper: Pegging Hospital Prices to Inflation to curb demand […]

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