Enhanced Subsidy Framework for Community Hospitals

29 Mar 2009

1. Currently, the Ministry of Health (MOH) provides an operating subvention to the 5 community hospitals (CHs) run by VWOs, so that they can in turn subsidise their lower income Singaporean patients.Government subsidy is significant, at $26 mil last year, and extends to middle income Singaporeans with a family income of up to $5,200 per month (for a family of 4).  The highest level of subsidy is available to those with a family income of $1,320 per month (for a family of 4). 

2. Patients are grouped in accordance with the income level and the subsidy rendered varies by 25%-points from one income group to the next.  This has some times caused financial difficulty to those at the margins.  For example, a patient from a family of 4, with a family income of $ 1,200 enjoys a 75% subsidy, whereas a patient from a similar family size with a family income of $1,400 gets a reduced subsidy of 50%.  The difference of 25%-points can mean a difference in hospital bill of $700 (for a hospitalisation stay of 30 days).

3. MOH has decided to introduce more income tiers so as to smoothen out the incremental subsidy level.  This will benefit the patients.

4. In acute hospitals, the incremental subsidy level is 1%-point.  For CHs, such a fine level of incremental change is not necessary, as the cost of running CHs is much less than that of running an acute hospital.

5. MOH has decided to reduce the incremental subsidy level from 25%-points (0%, 25%, 50% and 75%) to 10%-points (e.g. 0%, 10%, 20%…60%, 70% and 75%).  Effectively, this means increasing the number of subsidy levels from 4 to 9.   MOH is discussing with CHs on the implementation details.  We will implement this enhancement as soon as possible, before July 1, so that patients can benefit early. 

6. The enhancement and other adjustments will cost MOH more, tentatively estimated at about $4 million a year at the CHs. 

7. Together with the liberalization, MOH will also differentiate the subsidy level granted to Singapore permanent residents (PRs).  Citizens should enjoy better privileges than PRs.  Currently, all foreigners are not subsidized, while PRs are heavily subsidized.  In acute hospitals, the subsidy enjoyed by PRs is 10%-points less than that enjoyed by citizens of similar income group.  The differentiation was implemented last year.

8. MOH is now ready to implement the differentiation in CHs.  The difference will also be set at 10%-points.  This change will be introduced together with the enhanced subsidy framework described above.