Skip to main content

Advertisement

Advertisement

Rethinking how Singapore can meet the challenge of healthcare financing

Ten years ago, the Government’s allocation for health was a modest S$2.01 billion annually. Today, this has ballooned to S$11 billion. An ageing population is commonly blamed for this, but even among the working population, healthcare costs have gone up sharply. The latest Mercer Marsh Benefits survey of Singapore insurers revealed an increase in medical spending of 9.9 per cent compared with previous years.

Last year, the Academy of Royal Medical Colleges described a ‘miracle cure’ that reduced all-cause mortality by 27 per cent and cardiac mortality by 31 per cent in patients who had a previous heart attack. What was it? Exercise. TODAY file photo

Last year, the Academy of Royal Medical Colleges described a ‘miracle cure’ that reduced all-cause mortality by 27 per cent and cardiac mortality by 31 per cent in patients who had a previous heart attack. What was it? Exercise. TODAY file photo

Follow TODAY on WhatsApp

Ten years ago, the Government’s allocation for health was a modest S$2.01 billion annually. Today, this has ballooned to S$11 billion. An ageing population is commonly blamed for this, but even among the working population, healthcare costs have gone up sharply. The latest Mercer Marsh Benefits survey of Singapore insurers revealed an increase in medical spending of 9.9 per cent compared with previous years.

In rolling out its 2020 Healthcare Manpower Plan in October, the Ministry of Health (MOH) said that Singapore would need an additional 30,000 healthcare workers in the next four years to meet the demands of an ageing population.

The MOH added that its strategies to develop the healthcare workforce of the future include equipping them with new skills, growing a Singapore core in the workforce, and tapping into technology to improve efficiency and patient experience.

All these clearly do not come free. The bottom line is that Singapore faces a tough challenge in healthcare financing. What can be done? Then-Finance Minister Tharman Shanmugaratnam, speaking during the 2014 Budget debates, stressed that even as “healthcare will be the main driver of the higher social spending that we will see over the next 10 to 15 years”, Singapore had to “do it in a cost-effective way and prevent the total healthcare bill from spiraling upwards, because everyone will have to pay for that.”

Has Singapore been smart about managing healthcare spending? And how can we get smarter about it? The year 2016, in its own quiet way, has shown the way forward.

 

BENEFITS AND BEHAVIOUR

 

In 2015, the Academy of Royal Medical Colleges described a “miracle cure” that reduced all-cause mortality by 27 per cent and cardiac mortality by 31 per cent in patients who had a previous heart attack. What was it?

Exercise. We are all familiar with the trite advice of regular exercise and healthy eating, but this sensible advice is now bundled with a buffet of benefits and rewards, aligning the interests of payers (typically insurers and employers) and patients.

The insurer AIA — through its Vitality scheme — tracks physical activity and grocery purchases, and rewards healthy choices with lower premiums, retail vouchers and even cash. A small start, no doubt, but a significant one that recognises that the right incentives and programme support can go a long way towards improving health and reducing healthcare expenses.

 

REDUCING WASTE AND CREATING VALUE

 

Third-party administrators, or TPAs for short, have received much negative publicity this year. The issue is primarily centred on fees imposed on doctors for patients referred, but we should not forget that TPAs do play useful roles in the best programmes globally. Managed care services steer patients towards healthcare providers that create the most value for the payer (typically the insurer or the employer) and the patient.

Take, for example, Walmart. The household name in retail, with 1.5 million employees in the United States alone, announced in October that for employees choosing to go to a Walmart-designated “Centre of Excellence” for spine surgery, the company would fully cover the expenses — medical bills, travel, lodging and an allowance for the patient and a caregiver.

Employees electing to seek care at a non-designated centre would have to pay 50 per cent of the expenses themselves. Why did Walmart do this? To save money, of course, but doing so through proper care and reducing unnecessary surgeries. As many as 30 per cent of spinal surgeries were inappropriate or unnecessary, and Walmart thus sought out centres that practised according to evidence-based guidelines.

The cynic might think employees were being forced into second-rate centres for second-rate care dictated by Walmart, but these “Centres of Excellence” include the world-renowned Mayo Clinic and Geisinger Medical Center.

TPAs that possess a wealth of data about pricing, utilisation and outcomes can identify healthcare providers that offer the best quality for the lowest fees, thus playing a valuable role in curbing soaring healthcare costs and improving outcomes.

 

SEEKING VALUE ... ANYWHERE

 

The weakened ringgit and generally lower cost of living across the Causeway have led Singaporeans to head over in droves to buy groceries, petrol and other essentials of daily living.

Today, Singaporeans can also enjoy Medisave-claimable healthcare just a short drive from Singapore at Gleneagles Medini Hospital, part of the Parkway Pantai group.

Thomson Medical Centre is also building a health campus, including general and community hospitals, as well as a medical school. Chairman Roy Quek says the new set-up is targeting Singaporeans, adding that hospital charges will be “very competitively priced” compared with that of Singapore.

 

The best way to deal with the healthcare financing challenge is to face up to it. Critics of TPAs will bemoan the loss of professional autonomy and challenge the “vested interests” of insurers and employers in reducing healthcare costs. But it is not about TPAs per se or physician independence — it is about data and transparency, and being guided by evidence in making healthcare and healthcare-financing decisions. On cross-border healthcare, detractors will decry the brain drain and loss of revenue to Singapore healthcare providers, but let us focus on the bigger issue.

And the bigger questions are how Singapore can address the growing healthcare fiscal challenge and how we Singaporeans can stretch our limited healthcare dollars fully.

This past year, we have seen encouraging green shoots in containing healthcare spending and securing the greatest value for finite healthcare dollars. These trends are likely to continue to gain momentum in the coming months. Singapore needs to continue to embrace innovative ways to address escalating healthcare costs.

Our imagination must be beyond redesigning care models, and extend to new ways of paying healthcare providers, creating incentives for personal health and well-being, and seeking the greatest value, even outside Singapore.

 

ABOUT THE AUTHOR:

Dr Jeremy Lim is head of the Health and Life Sciences Practice in Asia at Oliver Wyman, the global consultancy.

Read more of the latest in

Advertisement

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.