The challenge of going beyond healthcare to health

‘Business model innovation’ is all the craze in the commercial healthcare world, what with increasing consumerization, ‘digitalization’ and payer pricing pressures. It’s also become clear that there are fundamental differences between the ecosystems for health as opposed to healthcare. In reviewing the recent Singapore budget debates on the health sector, I felt going ‘Beyond Healthcare to Health’ would require new business models and all stakeholders including politicians and policy makers would have critical industry developing roles. Only then can we at-scale move ‘Beyond Healthcare to Health’.
Below are my thoughts penned for a commentary for TODAY:

“Beyond Healthcare to Health”- New business models needed

Health minister Gan Kim Yong and his team deserve full credit for presenting last week probably the most comprehensive health promotion and disease prevention national strategy ever to be articulated in the hallowed halls of Parliament.

The tour de force covers Singaporeans across the span of health and healthcare, offering a blueprint to prevent disease onset, avoid disease progression and mitigate disease complications. Young Singaporeans’ eating habits would be addressed through NurtureSG while workers would increasingly see their employers roll out health promotion initiatives in the workplace. For seniors, health screening would become even more attractive, with no need for any payments.

In Mr Gan’s speech, he said that in preparing to meet its long-term healthcare needs in a sustainable way, Singapore must do what’s encapsulated in the “three beyonds” – move beyond hospital to the community; move beyond quality to value and move beyond healthcare to health.

Moving beyond healthcare to health will be a game-changer, as it entails the need to create an entirely new industry within healthcare- a ‘health industry’.

Contrary to common belief, Singapore does not have a ‘health industry’, at least not within the traditional medical construct Yoga, fitness clubs and so on promote health but don’t fall into this category.

What we have is a healthcare industry. Preventing disease is wonderful for public health but bad business for healthcare providers. We doctors unfortunately don’t get paid for diseases that don’t occur; we get paid for treating the ones that do. Perversely, managing well a patient’s diabetes is professionally rewarding and can be economically reasonable, but treating kidney failure, blindness and heart failure, all resulting from a lifetime of poor disease control, far more substantially brings in the revenue.

Let’s indulge in a little thought experiment. If the Economic Development Board, Singapore’s traditional champion of new industries, led the charge to bring to fruition ‘Beyond Healthcare to Health’, what would it do?

Based on its track record, it would adopt an ecosystem approach, considering demand and supply factors, as well as the underlying industry enablers such as skilled manpower, access to capital, favorable regulations and so on. On the demand side, the EDB would look at the unmet needs and customer ‘willingness to pay’ or ‘market opportunity’ in business-speak. On the supply side, it would ask whether there are sufficient providers of appropriate expertise and experience. And marrying the two, it would examine whether there are business models which align interests of customers and providers so that the industry could grow and flourish.

Here’s where troubles may erupt. How do doctors earn a living? Sadly it’s from ‘sick care’, not ‘health care’. Most doctors in primary healthcare are small business owners, that is, they own and run their own clinics. Patients and insurers pay for consults and consumables like medicines and devices. Exercise is one of the best interventions any doctor can prescribe, but there are no mark-ups to benefit from commercially compared to say, doling out expensive branded medicine. What about spending more time to counsel patients on eating and living better? GP consultation fees can be as low as S$6 today- why would any doctor bother to go beyond the immediate presenting symptoms? The Primary Care Networks announced last week are steps in the right direction and hopefully will herald a new paradigm.

What about hospitals? In most hospitals, the operating theatres and diagnostic imaging suites are major revenue generators, not the geriatric clinic or the nutritionist office. As with the doctors, hospital operators benefit from ‘sick care’, and the poorer the health of the population, the better the financials of the hospitals.

Surely insurance companies have an incentive to keep their policy holders healthy? Actually not quite. While insurers do want to actively manage claims, insurers are also at liberty to raise premiums. In fact, it was reported last year that the MediShield Life Integrated Plan insurers would increase premiums by between 9 per cent and 15 per cent this year. In group health insurance, employers tend to put the policies up for renewal every 12 months with the key consideration being pricing. The incentives are hence to manage for the short term which is the anti-thesis of what health promotion is about. Furthermore, health promotion programs like what the Health Promotion Board is rolling are costly to set up and operate with no clear ‘return on investment’ to employers. As researchers from Maastricht University dryly note, “Prevention praised, cure preferred”.

To sum up, we don’t have a viable business model for health as opposed to healthcare. What would the EDB do in such instances? Its mandate is overall societal and national benefit. If the business case for a company to set up in Singapore didn’t quite pass muster, but Singapore wanted the jobs created or expertise to be based here, it would offer tax incentives, co-investment or other supporting measures. EDB would also actively work to change the business dynamics so that companies and the industry would be profitable and want to continue in Singapore.

What’s the equivalent as we develop the ‘health industry’? What do we need to do to ensure a thriving ‘health industry’ that is not artificially propped up by endless government subsidies? Initial support would be vital no doubt, to kick start and complete the ecosystem. But in perpetuity at ever-increasing amounts? I think not.

No country in the world has developed a successful health industry model that Singapore can follow or learn from. The socialised European countries do preventive health very well in general and the classic case is the transformation of North Karelia in Finland in the 1970s which is taught in public health schools the world over. But this is not a business model as most of it was state funded and provided. Unfortunately, Singapore and other countries that don’t have a single-payer, government-dominant system have struggled with this.

Steven E. Landsburg, author of ‘The Armchair Economist’ famously opens the book saying, “People respond to incentives.” The rest is commentary.” We need the right incentives for providers of health services such as doctors and hospitals, and the right incentives for payers such as insurers and employers to go beyond healthcare to health.

Singapore needs Singaporeans to be healthy, for ourselves and for the nation. The clinical and societal cases are indisputable, the business case for providers and payers who form the other side of the demand-supply equation, less clear. We need to change this.

The link can be found here:

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