What fuels health-care costs? A view from the coalface

By Tan Chi Chiu, Published The Straits Times, 5 Sep 2013

TWO recent events provide food for thought. First, Dr Susan Lim lost her appeal against conviction by the Singapore Medical Council (SMC) for grossly overcharging her patient.

Then, Minister for the Environment and Water Resources Vivian Balakrishnan said in a convocation speech that the "key cost drivers in any health-care system actually are the doctors".

While these events were unrelated, put together, one might think that doctors are totally to blame for health-care cost escalation and some by overcharging. Indeed, doctors do help patients decide on treatment, but are their decisions made in isolation?

Singapore tops the charts for both medical outcomes and efficiency. In 2009, the United States spent 17.6 per cent of its gross domestic product on health care, while Singapore spent 3.9 per cent. This is a happy state of affairs.

But there are many pressures. The country's population demographic has changed. Its people are ageing and the elderly are utilising more, and more complex, health-care services. New technology in medicine is not particularly designed for cost efficiency but more for therapeutic efficacy so they tend to be more expensive.

Doctors must no doubt be judicious, but the increase in demand for these treatments is very real.

Next, Singaporeans are more highly educated, have greater expectations and are more demanding. More sophisticated patients also mean more complaints and litigation, thus increasing the cost of malpractice insurance. This "risk premium" finds its way into fees and defensive medicine - which further increases costs.

The Government actually determines the benchmarks for pricing of services as well as doctors' remuneration in the public sector, which is not at all shabby. In addition, the profit motive is alive and well in the public institutions' full-paying services.

This "Robin Hood principle" has served Singapore well, but it certainly is a driver of health-care costs. Bill sizes of public hospitals are exhibited on the Ministry of Health's website. Such transparency helps to moderate health-care costs. However, it was found that certain treatments in the public sector were much more expensive than in private, a revelation that led to prompt action to bring those charges into line.

Singapore is increasingly expensive to live and do business in, largely due to property and transport costs and salaries. Public health services must factor in the value of real estate into their cost structure. Most medical general practitioners in 2006 paid about $12-$15 per sq ft in rent. Last year, a record of sorts was set by a GP firm that bid $59 psf.

Fourteen years ago, I paid rent of $4 psf for a specialist clinic. Today, it is more than $20 psf at premier clinics. This is a rise of 29 per cent per annum. Twenty years ago, clinic space to buy was perhaps $800 psf. Today, it is easily $7,000 psf in premier locations - a 39 per cent increase per annum.

Real estate being one of the biggest cost drivers of medical services, the fact that fees across the board have not gone up in proportion is evidence of burgeoning subvention by the Government in the public sector and enormous restraint in the private sector.

There is also a "generational inequity" in the private sector. Doctors who started practising 20 years ago continue to charge fees based on their low cost base. Younger doctors face competitive pressures to not charge much more than their seniors.

One must consider how equitable this is considering the vastly different costs of doing business between generations.

Senior doctors in public and private sectors made a comfortable living and secured good homes for their families at a time when homes were relatively cheaper. Young doctors are expected to moderate their expectations and not only earn less, even in inflation-adjusted terms, but also aim lower in terms of quality of life for their families.

It is unsurprising, then, that a good number of doctors, both GPs and specialists, are turning to aesthetic practices and plastic surgery to boost their incomes.

Such services no doubt feed a genuine and growing need in modern society. But because beauty is essentially "priceless", the sky is the limit for aesthetic charges and it is harder to imagine an "ethical limit" for services that are entirely elective and unrelated to illness and physical suffering. This growing sector also drives health-care costs.

So how can doctors help to contain health-care costs in Singapore, in the face of all this?

The best way is to practise ethically and always act in the patients' best interests. I believe health-care costs will keep rising, with many of the reasons beyond the ability of doctors to do anything about. But it must never be because doctors are unethically up-selling their services, over- servicing their patients and taking advantage of patients' ignorance and vulnerability so as to treat more and charge more.

We doctors are entitled to fair remuneration for our work, but we need to remember that we are professionals and therefore we should have, as our first consideration, society's interests.

This is adapted from an article first published in the August 2013 issue of the Singapore Medical Association's SMA News.

The writer is a gastroenterologist and chairman of medical ethics of the Singapore Medical Council.