China-Singapore Joint Healthcare Forum

08 Sep 2006

By Mr Khaw Boon Wan, Minister for Health

Venue: Xiamen, China

"The Magic of Saving Lives"

Your Excellency Dr Huang Jie Fu

Distinguished delegates

Ladies and Gentlemen

Let me first thank the Chinese MOFCOM and MOH for inviting us to the Joint Healthcare Forum. Your hospitality is deeply appreciated.  We are honoured to be your partner for this Forum. It reflects the excellent bilateral relations that our countries share. 

Purpose of Forum

This afternoon, we are gathered to learn from one another in managing healthcare systems at the national level.  While we are different, the problems we face are largely similar. 

Over the years, I have watched with admiration at the huge achievements you have made in the social, economic and healthcare sectors.   You have increased life expectancy, reduced infant mortality, reduced poverty and brought vast improvements in living conditions to millions of people.  A few years ago, I visited my father's hometown in Anxi, 1.5 hours' drive away.  My relatives there spoke glowingly of the progress they have made in housing conditions, education and healthcare in recent years.  They were particularly pleased with the rising market price for tie-guan-yin, their key agriculture product.  This has raised their income which in turn is a reflection of the rising middle class in China.

As a result, in your key cities like Shanghai and Beijing, you have many modern tertiary hospitals which are as well equipped as the best in the world.  Yet I understand your huge challenges of uneven distribution of wealth and resources, pollution and simply many people needing care.  These problems are not unlike what I face as a Health Minister, but because of Singapore's small size, my job is a lot easier.

Last week, I met Health Minister Gao Qiang in Beijing.  We chit-chatted and shared our experiences.  We both knew that it is tough being a Health Minister.  This is because patients expect us to do magic.  They expect us to deliver a very high standard of medical services but at a very low cost, preferably free.  These objectives are almost contradictory.  How can we deliver first world healthcare at third world costs?

Early this week, I read a newspaper article (ST, Aug 4) in which India was reported as promoting its hospitals to international patients.  It quoted the Indian Tourism Minister Ambika Soni as saying that India offers "the best treatment for one-fifth of the cost (in the west)".  For example, bone marrow transplants cost US$30,000 in India, as compared with US$250,000 in the US.  Likewise, cardiac surgery in India costs a quarter of that in the US.

But hospitals offering US standards of care are rare exceptions in India.  The bulk of healthcare in India remains at third world level.  Hence, it is possible for a few hospitals to offer US standards of care while leveraging on the large number of healthcare workers who remain on third world wages.

The challenge is to keep wages and costs at third world level when the rest

of the healthcare system has moved up to first world standard.  It is almost impossible.

With globalization, both wages of healthcare workers and prices of medical

products are converging.  Cross border migration of healthcare workers, whether doctors, nurses or pharmacists, is now common.  For a small country like Singapore, we import most of our medical products, like drugs and X-ray equipment.  We have to pay international prices for these imports.

What we have experienced in Singapore will soon be your experience too, if not already so in the key cities.  It is a matter of time before your national wages and prices converge with international wages and prices.  That will push up your healthcare cost even more.

We worry a lot about such trend because with people living longer and mothers producing fewer babies, uncontrollable healthcare costs can potentially wreck our finances, not to mention create major political problems.  We have therefore been thinking through and preparing for these anticipated problems. 

Singapore is fortunate that our founding fathers were successful in developing the economy, creating jobs and improving our living conditions.  With clean water, clean air and good sanitation, the health of our people has improved over the years.  We now enjoy high life expectancy and very low infant mortality rates.  Credit should go to our Ministries in charge of economy, housing, environment and education for these achievements. 

But the Health Ministry under my predecessors has also done its part.  Over the years, we have set up proper manpower planning, rebuilt our hospitals and created a viable and affordable healthcare system.  Our medical school, nursing and other healthcare training institutions are modeled after the best around the world.  Almost all of our specialists have the opportunity to be trained in some of the best centres overseas.  We anticipate even greater needs for well-trained healthcare professionals in the coming years, and we are opening a new medical school, and starting a new university degree programme in nursing. 

Our system today is not perfect but it is not bad.  WHO has rated our system as among the top 10 most cost-effective in the world.  Today, we spend only 4% of our GDP on health.  The average public hospital bill size for the Class A ward where there is no government subsidy is about one month  of the average salary.  In Class C where it is heavily subsidized, the average bill  is less than a week of salary.  For the high standard of medical care that the hospitals provide, we think this is very good value for money.  We do not pretend that our healthcare system is applicable elsewhere but it has worked reasonably well for us.  A full presentation of our system will follow later.

Meanwhile, let me share some insights on 5 aspects of managing healthcare systems.

(a) Many Helping Hands

First, we work on the basis that healthcare cost will continue to rise.  While we do our best to manage medical inflation, we know that the trend is rising.  The reason is simple.  Doctors and nurses will continue to command high salaries and advances in medical science will continue to churn out new drugs and new equipment which are more expensive than their old replacements. 

The first key to managing healthcare cost is therefore to ensure that there is a constant and expanding flow of money going into the healthcare sector, to pay for new services.  There is no short cut to this problem.  Without money, we cannot address this problem. 

We are more likely to succeed if we share the financial burden widely.  If we load the burden on one payer, whether the Government as in the British system, or the employers like the American system, we will cause very severe strains on the payers.  In Singapore, we involve both the Government and the employers and additionally we rope in the patients and their families as well.  Our healthcare system is supported by all the major stakeholders: Government, employers, patients, family members, insurers and charities.  Many hands make light work.

b) Let The Market Work

Second, we believe that the healthcare market can work better under competition.  Market competition is the best way to allocate resources efficiently, with less wastage.  Compared to other economic sectors, the healthcare sector is notoriously unproductive.  Economists like to describe healthcare as a case of imperfect market or market failure.  But there is no fundamental reason why the healthcare market must fail.  It fails only because we allow it to fail.  For markets to function, there must be timely appropriate information so that consumers and producers can make rational decisions on allocation of resources.  When we want to buy a mobile phone, we shop around, for the best prices for the functions that we desire.  But how many patients truly shop around before they go for their cataract eye operation or knee cap replacement?  And how can they shop around when information on how much patients pay for such operations and the surgical outcomes of the doctors is not easily available?

In Singapore, we are trying to do this. We push out timely and relevant information. We gather the data from our hospitals and publish them regularly.  We have now done so for the 70 most common illnesses and the data are updated every month in the MOH website.

We intend to do more, particularly in collecting clinical outcomes data.  Patients need to be better informed, so that they can make informed choices.  If we reward the productive providers, we will more likely help raise medical standards while keeping cost in check. 

(c) Empower the Patient

Third, we must empower the patients and get them to take greater responsibility for their own health. This is particular so in the management of chronic diseases, like diabetes and hypertension.  Chronic diseases contribute to the bulk of morbidity and mortality in the hospitals and the clinics.  If we manage chronic diseases well, we are more likely to avoid or at least delay or minimize the onset of future medical complications, requiring costly treatment. 

The best approach is when patients take serious responsibility for their own health and work with their doctors and change their life style.  Eat healthily, exercise regularly, avoid obesity and smoking, take regular medication as prescribed by their doctors while regularly monitoring their own health and look out for signs for complications.  Many pilot studies of such structured disease management programmes have shown the benefits to the health of patients, while saving them money.

In Singapore, we have started to push this chronic disease management programme nationwide.  Aligning the financial incentive to encourage such patients and their GPs to do the right thing is an important part of the strategy.

(d) Right-siting the Treatment

Fourth, we must revive the important role played by the primary healthcare sector.  In many countries, primary healthcare has been marginalized as patients and doctors flock to the more glamorous tertiary sector.  While a comprehensive healthcare system requires resources and expertise in the full range of healthcare services, an over swing to the tertiary sector has been a major contributor to the escalating healthcare cost in many countries, without any corresponding improvement in health outcomes. 

As a rule, to manage healthcare cost, we need to keep patients away from unnecessary care at expensive hospitals and specialists.  We should right-site the treatment at wherever the medical expertise is available at the lowest possible cost.  When a patient who can be adequately treated by a GP is instead managed by a specialist in a tertiary hospital, it means a waste and abuse of expertise, at the expense of the seriously ill who require the expertise of the specialist. 

The theory behind right-siting is simple but making it happen is not easy.  Often, financial incentives and remunerations for the doctors work against right-siting.  When insurers reward high-intensity, high-cost surgical treatment but do not reimburse GPs who provide low-intensity, low cost health education and dietary advice to their chronic sick patients, we should not be surprised that the outcome is disappointing.  We need to change this.  In Singapore, we have just started thinking about this very difficult problem.  Practical solutions do not come easily.

(e) Exploit Globalization

Fifth, we should exploit globalization to help lower cost.  While globalization is itself pushing up wages of health workers, we should leverage on it to average down our cost.  This is the way the manufacturing sector brings about greater productivity and lower production cost. 

One clear example is the greater use of teleradiology.  In Singapore, we are now sending out our routine X-rays to India for reporting, relieving our radiologists of mundane work while at the same time reducing our cost of X-ray reporting.  There must be more scope for such innovations in the healthcare sector.

Cross Border Cooperation

Our experiences in healthcare are that of a small city state.  They are minor compared to your scale of operation.  Last month, when I discussed our Medisave Scheme (a compulsory national saving scheme for healthcare) with Minister Gao Qiang, he told me that farmers alone make up 60% of your workforce.  Being self-employed, imposing a compulsory saving scheme on them will be a great challenge.  I then could better appreciate the enormous challenge faced by him.

Last week, the British Medical Journal devoted several key articles on the healthcare challenges in China.  One article was headlined: "China's health challenges cannot be solved in a day".

Singapore will be happy to do what it can to help, if it is of value to you.  Let me mention 4 possible areas.

First, training of health manpower, especially nurses.  We have many years of cooperation on this front.  Every year, we take in many nurse trainees.  So far, more than one thousand nurses have been trained under this cooperation programme.  While some stay back in Singapore, many return to China to work in your hospitals as higher-skilled nurses.  We will be happy to do more. 

Second, responding to your interest, our companies have invested in your hospitals and clinics.  As your middle class expands, their demand for sophisticated hospital services will likely grow.  If business conditions are conducive, I am sure our hospital investors will be keen to consider more such prospects.  I have brought along a large business delegation.  They believe, as I do, that there is much scope for such partnership with China.  After Xiamen, they will be going to Shanghai to discuss opportunities with their Shanghai partners there.  Whether Shanghai or Xiamen, wherever we are welcome, I am sure our businessmen will be happy to explore such opportunities.

Third, our public hospitals are in some way not unlike yours, in that we have to serve very large number of outpatients and our inpatients tend to have many hospital visitors.  Hence in hospital planning, we cannot simply copy what they do in the West.  Fortunately, we rebuilt our hospitals one after another over the years.  We were able to learn from each project and improve along the way.  We are just about to start construction of another major hospital.  We are applying our past lessons on this new project.  The design is almost complete.  We are proud of it.  It will be very energy efficient and the layout pays particular attention to the needs of patients and their visitors.  I understand that you have plans to build and rebuild many hospitals in China.  You may be interested in our experiences.  In fact, our hospitals receive thousands of visitors from your hospitals every year.  We welcome them and are happy to share both our successes and our mistakes with you.

Fourth, we should jointly explore innovative approaches to meet new demands from sophisticated patients.  In the same newspaper article on Indian healthcare which I mentioned just now, it noted that "patients from both India and Thailand opt to go to Singapore for treatment as we (Singapore) offer both Western medicine, at one-fifth the cost in Europe, and TCM".  By combining east and west, we offer a service that distinguishes ourselves from the competition, while satisfying a need.  So according to the article, "India is trying to emulate (Singapore), by combining Ayurveda medicine with western medicine".  I suspect there is growth prospect for both approaches.  But we will never know, until we test it in the market.

Conclusion

Finally, let me say that an important value of any such Forum is the opportunity to make new friends.  I am sure the participants from both sides will make the effort to get to know one another and if that brings about business deals, it would be a bonus.  On this note, let me wish all a successful Forum.