Curb medical inflation via price transparency

Advances in medical technology means we are generally living longer and incurring more healthcare costs over a longer period.

Coupled with increases in doctors’ fees, property costs of clinics, medical indemnity costs and investments in medical facilities and equipment, the net result is spiralling medical inflation. And unlike a normal functioning market, there is information asymmetry between patients, who want the best treatment, and medical practitioners, who have a greater influence on the price. This further fuels the rise in healthcare costs.

Medical inflation can be moderated if we level the playing field and give patients more information on the services rendered to them.

To safeguard patients’ interests through transparency of medical fees, the Ministry of Health (MOH) publishes on its website a comparison of the total costs of treatment for 80 common conditions at public and private hospitals.

This includes the bill sizes at the 50th and 90th percentiles. Soon, the MOH will add a new section: Total operation fees — the cost of the surgeon, anaesthetist and facilities — to help patients make informed choices.

While I applaud its latest move to enhance cost transparency, more can be done to improve the quality of and access to such information. The MOH can consider including indicators of clinical quality, such as the hospital re-admission rate for each disease.

This reflects on each institution’s level of clinical efficacy. Patients can then assess the quality of care, given the total cost of treatments. To avoid cherry-picking symptoms, the information should include the patient loads.

Next, the MOH can consider mandating that such information be made available to patients and their next-of-kin during financial counselling at public hospitals. Specifically, hospital staff should advise on the five cheapest institutions for treating an illness. This may compel the specific institution to be cost-conscious in its medical pricing and, more importantly, exert downward price pressure in the market.

Such price comparisons may not be too meaningful for patients who suffer from more than one illness and require a multidisciplinary medical team.

It is nevertheless a right step forward to help keep medical inflation in check and give patients more autonomy, through more precise information, to pick the correct healthcare provider.