13th Biennial Congress Of The Asian Surgical Association

01 Nov 2001

By Mr Lim Hng Kiang

MANAGING HEALTHCARE COSTS

Good evening,

Distinguished Guests,

Ladies and Gentlemen,

It gives me great pleasure to be here this evening, at this 13th Biennial Congress of the Asian Surgical Association. May I first congratulate and commend the Academy of Medicine Singapore, and the Asian Surgical Association for co-organising this important event. I would also like to warmly welcome the overseas delegates who have come to Singapore, to participate in this Congress. The programme of this Congress ranges from lectures and symposiums to clinical workshops. I am confident you would benefit from the intellectual stimulation and bring home fond memories of Singapore.

This evening, at the request of the organisers, I will be addressing the issue of managing healthcare costs. This is a challenge facing all of us around the world, and it is useful for us to share our experiences. Escalating healthcare costs also make it important for medical professionals, administrators and politicians, to work together to control healthcare costs.

HEALTHCARE COSTS

With growing affluence, consumers' expectations have risen and patients expect to have good quality healthcare that is also affordable. Advances in medical information, the greater use of expensive medical technology and drugs, the ageing population, and increasing manpower costs, all add to the rising costs in healthcare. Unless proactive management is in place, the escalation of healthcare cost can easily go beyond the affordability level of the users, and of society. On the other hand, healthcare quality not only has to be maintained, it has to be improved, so as to meet the expectations of the users. The challenge faced by many societies is how to achieve this fine art of balancing the rising expectations and limited resources.

As in the other developing and developed countries, Singapore faces the necessity of this balancing act. Our national healthcare expenditure has risen from 2.5% of GDP in 1980 to 3% today. I would like to share with you the key features of our approach. The 4 broad strategies are:

(i) Reduce the burden of diseases and disabilities

(ii) Avoid over-provision

(iii) Ensure a sensible healthcare financing system

(iv) Manage the process of developing and introducing new capabilities

(i) REDUCE THE BURDEN OF DISEASES AND DISABILITIES

Over the last few decades, the improvements in socioeconomic status, public health and healthcare, coupled with the successful implementation of immunisation programmes in Singapore, have led to a reduction in the incidence of communicable diseases. Today, our leading causes of hospitalisation and death are the non-communicable diseases, like heart disease, cancer, stroke, and diabetes. Whilst we cannot completely eliminate the occurrence of all chronic diseases, our plan is to reduce their incidence and the complications through health promotion, disease prevention, early detection, good treatment and appropriate rehabilitation.

The Health Promotion Board was set up to plan and organise programmes to promote good health and healthy lifestyles. Health promotion activities are conducted throughout the year, in schools, workplaces, at healthcare institutions and in the community. To demonstrate the priority we give to health promotion and prevention, the Health Promotion Board's budget was increased to $108 million this year.

In addition, we have implemented national disease prevention and control programmes, to streamline measures to reduce the incidence and burdens of major conditions. These conditions include diabetes, hypertension, end-stage renal disease, stroke, breast cancer and cervical cancer. The national disease prevention and control programmes use a comprehensive approach, incorporating patient responsibility, integration of care by several providers and identification of responsible parties to ensure successful implementation. For the prevention and management of disabilities, we are developing integrative rehabilitation programmes.

With these measures firmly in place over the next few years, I believe we will reap the dividends, with a reduction of disease and disability burden when the major diseases are controlled. Health costs will be controlled at source, or upstream.

For the continuing control of communicable diseases, we will continue with our immunisation programmes for measles, diptheria, tetanus, whooping cough, poliomyelitis, rubella, mumps and hepatitis B and disease surveillance measures.

(ii) AVOID OVER-PROVISION

(a) Use Of Appropriate Level Of Care

Despite good health promotion and disease prevention programmes, provision still has to be made for the whole spectrum of healthcare services. As you realise, highly specialised care in hospitals and national centres are the most expensive within the healthcare arena. They are often not the most appropriate level of care.

Primary healthcare care can deal with 90% of the medical problems in a country, but the primary care doctors must be appropriately trained. For many patients who require prolonged care but not the high technology of expensive acute hospitals, stepdown care is the more appropriate choice. We have in place a wide spectrum of primary, secondary and tertiary healthcare services, and we are educating our public on the use of the most appropriate level of service.

At the same time, we are working on improving both primary care provision and stepdown care provision in Singapore. This includes training of primary care doctors through a Masters programme, diploma courses and continuing medical education programmes; and raising the standards of stepdown care provision through the production of guidelines, quality assurance programmes and licensing requirements for community hospitals, nursing homes, day rehabilitation facilities and home care services. We have also taken steps to ensure that long term care is seamlessly integrated, which will further encourage its utilisation.

As this is a congress for surgeons, I would like to mention as an example of appropriate care, a surgical aspect which you are all familiar with. I refer to day surgery, which is a cheaper alternative to surgery as an inpatient. In 1991, 28% of all surgical procedures in the public sector in Singapore were done as day surgery procedures. In year 2000, this rose to 46%. In absolute terms, the figures were 40,000 in 1991 and 100,000 in year 2000, a 2 and a half fold increase. This is utilisation of an appropriate level of care, at a lower cost, which helps the individual and the country to control healthcare cost.

(b) Appropriate Use of Drugs

In most healthcare systems, drug cost forms a substantial part of healthcare cost. To ensure the affordability of drug costs in our restructured hospitals and institutions, we have a standard drug list comprising subsidised drugs for the treatment of common ailments for the majority of the population. This list is reviewed half yearly to keep it updated.

There is collaboration between our institutions to purchase drugs in bulk as this achieves cost savings through greater economies of scale, and the savings can be passed to the patients. Similar to what is widely practiced worldwide, we encourage and practise the use of the cheaper generic drugs as an alternative to the more expensive proprietary drugs, as this is a more cost effective measure. Clinical and drug guidelines are also drawn up by institutions, to guide the selection of the best and most cost-effective option in the management of a disease state.

Over time, the cost of prescription drugs can be expected to rise as pharmaceutical companies spend more on research for new drugs and have to recover the cost of developing the drugs. We have set up a Drug Cost Task Force to look into the cost drivers for drugs, make comparision with practices elsewhere and to make recommendations on measures to ensure that drug costs continue to remain affordable for Singaporeans. There are also plans for our statutory board, the Health Service Authority, to conduct pharmacoeconomics evaluation and drug utilisation studies to support our planning for cost effective drug utilisation.

The measures for the appropriate use of the right level of healthcare and drugs serves to prevent the overuse of resources and reduce the related excessive increase in cost. This is the second prong of our strategy in managing healthcare cost.

(iii) HEALTHCARE FINANCING SYSTEM

The third prong is our healthcare financing system. The healthcare financing schemes of a country go hand in hand with healthcare strategies to ensure affordability of healthcare. Some countries finance healthcare through taxation, others through private or national insurance schemes. In Singapore, we use a combination of these schemes. Our financing philosophy of health services emphasises individual responsibility and family support, with Government and the community providing support to those who are unable to afford. Singaporeans are expected to pay part of the cost of medical services which they use, and pay more when they demand a higher level of services. The principle of co-payment applies even to the most heavily subsidised wards to avoid the pitfalls of providing "free" medical services.

Based on the principle of individual responsibility, our government has put in place a health financing system, commonly referred to as the 3M system. The first M refers to the Medisave scheme, which is a compulsory savings scheme to help individuals save and pay for their hospitalisation expenses. The second M, or Medishield, is an affordable insurance scheme which provides protection against catastrophic illnesses. The last M or Medifund is a safety net set aside by the government to help the lower income group who are unable to pay for their medical care despite government subsidies.

This healthcare financing philosophy has been extended to provide additional financial support for the elderly, who need more healthcare, and for some, long term care as well. I refer to our Eldercare Fund, which is an endowment fund built up from budget surpluses, and where the interest income is used to fund step-down care. In this way, the economically active of the future will not need to be further taxed to support the elderly. I have also recently announced ElderShield, which is an insurance scheme that pays out upon severe disability. This payout will help to defray the cost of long term care.

Our financing schemes are designed to ensure universal access to health services but maintain financial discipline on the users as well as on the government. In this way, we achieve both affordability and sustainability, for the individual, society and government.

(iv) DEVELOPMENT OF NEW CAPABILITIES

It is evident that medicine advances at a high speed and we have to keep abreast with medical advances in the rest of the world to continue to have high standards of healthcare. In Singapore, we recognise that the development of new medical capabilities in our healthcare institutions is necessary to maintain and improve the standards of our public healthcare system and to attain medical excellence.

We have therefore provided several streams of funding for new capability development. These include:

(i) First, the National Medical Research Council, which supports clinical research that leads to the acquisition of new medical knowledge. This year, $47 million was committed for the purposes of medical research and development.

(ii) Second, the Health Research Endowment Fund. This fund allows the individual institutions to raise their own funds through donations and the government would provide a matching grant of one dollar for every donation dollar raised up to a maximum of S$40 million. We started this with a S$4M contribution towards this fund in FY 2001. Another $8.65 million had been allocated to the clusters under the Cluster Research Fund.

(iii) Third, the Health Services Development Programme which provides funding to public sector institutions to carry out evaluation of advanced or experimental treatments; major augmentations of existing management capability for key diseases; and to carry out pilot programmes in the use of new cutting-edge medical technology. $20 million is committed to this programme every year. Of these, $12 million so far has been committed to surgical related programmes. The HSDP provides the mechanism for us to bring in selected new technologies and treatment modalities for use in Singapore in a controlled environment. In this way we reduce considerably the risks of introducing expensive treatment modalities into Singapore for general application, which are not yet proven to be cost effective. An important factor in all these programmes is that these new technologies must be cost-effective, as it would allow us to embrace new technologies and yet maintain healthcare costs at an affordable level for patients.

(iv) Fourth, the Health Manpower Development Programme which funds medical professional training. This includes inviting experts from internationally renowned centres to conduct teaching sessions and update professionals in various fields, as well as sending our medical professionals overseas to pick up new skills. The HMDP is around $5 million each year.

The development of new capabilities contributes to greater healthcare expenditure. However, we consciously strive to ensure that this money is well spent. This money is spent on developing new capabilities which have to improve healthcare provision in a cost effective manner, so that we have high and constantly improving standards of healthcare at an affordable level.

CONCLUSION

In conclusion therefore, as resources are limited, and we want to give good healthcare at an affordable cost to our people, we have taken a multipronged approach to manage our healthcare costs, to ensure that healthcare is provided effectively and efficiently, and that measures are put in place to ensure sustainability of healthcare. We will continue to take the necessary measures to ensure that good healthcare remains affordable to Singaporeans

On that note, ladies and gentlemen, it is now my pleasant duty to declare the 13^th Biennial Congress of the Asian Surgical Association open, and to wish all of you a fruitful Congress.

Thank you.