Friday 26 April 2013

A better way to spend on healthcare

By Eric Finkelstein, Published TODAY, 24 Apr 2013

Singapore is in the midst of a major demographic transition that is forcing every ministry to rethink the way in which government programmes are to be delivered.

The Ministry of Health (MOH) is no exception. It is now challenged with the task of determining how best to provide affordable healthcare to a growing population of older adults who, thanks to increasingly sedentary lifestyles and poor diets, are developing chronic diseases at rates not seen in generations past.

Moreover, due to advances in medical technology, these conditions are often treatable. As a result, even with rising rates of chronic disease, it is increasingly likely that older adults will die at an advanced age following a period of prolonged illness.

To compound this challenge, one of the many changes Singapore has seen over the past few decades are increased opportunities for women in the labour force: Today, 75 per cent of women aged 25 to 39 are working, which makes it increasingly difficult for children to take care of their aging and increasingly ailing parents, and they are looking to Government for help.

The MOH has recognised the current challenges and pledged to make significant changes, including doubling health spending in the coming years, with much of it targeting older adults.

This increase in spending is largely inevitable, but two important questions remain: First, how high should the Government be prepared to increase health spending, and second, how should that money be spent?


These are not easy questions to answer. In fact, to their detriment, many countries have not been willing or able to commit to a level of health spending. As a result, they have seen their share of healthcare expenditures outstrip GDP growth nearly every year.

The United States is the worst example, where health spending now accounts for 17 per cent of GDP, but the US is not alone. Healthcare spending routinely outstrips the general inflation rate in most developed countries.

To avoid this upward spiral on health spending, Singapore should commit a fixed amount of government resources to go toward health expenditures. This will force a level of discipline not seen in other countries.

What the appropriate level of health spending should be set at is not for me to say, but I would expect this figure to be no greater than 9 per cent, which is the average for OECD countries.

However, as nearly all of the OECD countries have some form of national health insurance coverage or provision, and Singapore relies on private funding to finance more than half of health expenditures, I would expect this percentage to be much lower here, assuming the Government does not abandon the 3M (Medisave, MediShield, Medifund) model.


As to this point, I am a proponent of the 3M model. However, medical technology has changed since Medisave was enacted in 1984. Financing and reimbursement in Singapore was built around a model where the highest cost and greatest need for care (and coverage) revolved around inpatient admissions. That is increasingly no longer the case.

The Government has recognised this reality and slowly liberalised use of Medisave and MediShield for select non-inpatient services. That trend should continue, although the Government is right to be cautious in this transition as this liberalisation will ultimately drive up MediShield premiums and leave some older adults with too little Medisave savings to finance their expenses.

As a result, it may be necessary to further top up Medisave accounts for older low-income adults to ensure that they have access to high value services when needed.


In addition to these changes, the Government should adopt payment schemes to providers that create incentives to avoid unnecessary hospitalisations.

Provider reimbursement based on quality benchmarks, combined with global capitation for some services, including end-of-life services, are strategies that should be considered.

The creation of Accountable Care Organisations (ACOs) which are responsible for care both within and outside the hospital is also a viable option. This is possible in Singapore as each of the health clusters could readily be ramped up to become an ACO capable of overseeing care both within and beyond the inpatient setting.

A global payment structure to these organisations, which would then be responsible for delivering all services within and outside the hospital for participating members, would force integration across inpatient and outpatient settings as well as the right-siting of patients.

This would go a significant way toward improving the quality and continuity of care and containing unnecessary costs.


Even with the above improvements in place, one of the great challenges that Singapore faces concerns the provision and financing of end-of-life services, which in addition to acute medical treatment includes home care, nursing home and hospice services.

To meet demand for these services without breaking the bank, some rationing will need to occur.

One area where increased rationing may be appropriate concerns end-of-life treatments that extend life by only a few months or less on average, such as occurs with many late-stage cancer treatments.

Based on results of a national survey led by the Lien Centre for Palliative Care, respondents’ willingness to pay to extend life by one year or less is well below established thresholds that other governments use to make coverage decisions.

Moreover, these results were not driven by lower-income individuals. If even wealthy individuals have a low willingness to pay for moderately life extending treatments, then it is reasonable for the Government to limit funding for these treatments in efforts to reallocate resources towards those services that society deems to be more important.

This is not to say that the Government does not have a significant role in helping finance end of life services.

Our analyses show that other factors commonly associated with a good end-of-life experience — including pain management, dying at home, and having high quality care that is well-coordinated and where patients are treated with dignity and respect — were more highly valued than treatments that extend life by only a few months on average.

As such, it may be appropriate to reduce the emphasis on coverage for costly but marginally effective life-extending care, and to place a greater focus on other aspects that are important to patients at the end of life, as this is likely to be a more appropriate use of scarce healthcare resources.

These changes will help ensure that the Government maximises the value of its investments in health while ensuring that citizens receive care that is consistent with their preferences.

Professor Eric Finkelstein is Director of Lien Centre for Palliative Care, Duke-NUS Graduate Medical School Singapore

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