The International Healthcare Facilities Exhibition & Conference (IHFEC) 2005

01 Sep 2005

By Dr Balaji Sadasivan, Senior Minister of State for Information, Communications and the Arts and Health

Venue: Singapore Expo

At the start of the millennium, in the year 2000, a world famous heart surgeon shot himself through the heart as a protest against free market economics in healthcare. The heart surgeon, Dr Favaloro was a good-hearted man. He was part of the Cleveland clinic team that developed the cardiac bypass operation in the 1960s.  After becoming famous, he returned to his native Argentina, founded the Favaloro foundation to help cardiac patients. He believed that the foundation was for everyone and that every patient paying or not would receive the same attention. When he started his foundation, 80% of patients paid for their care and 20% had it free. With time, the percentage of patients who did not pay increased. The foundation piled up over $70 million in debt and the poor doctor committed suicide. The good doctor committed suicide as a protest against the global market driven economic system. But the free market system is neutral and only describes the result of the collective behaviour of humans. The good care that his foundation provided could only have been sustained in the long run if it was aided by the invisible hand of the free market. Perhaps, if his foundation had been run on a market based system, it might today be still viable and providing good healthcare services to patients.

Adam Smith did not invent the free-market system. But Adam Smith had the insight to describe the workings of the market system and the efficiency of the invisible hand of the market. He noted that, to enhance the wealth of a nation, every man, consistent with the law, should be "free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of ... other ... men." Secondly "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Thirdly, the individual is driven by private gain but is "led by an invisible hand" to promote the public good, "which was no part of his intention." Fourth, this last insight is extraordinary in that, for much of human history, acting in one's self-interest was considered wrong. This has especially been so in the area of healthcare. The market system's ability to provide cost efficient healthcare is often not appreciated by doctors.

Despite the clear evidence of the efficiency of the free market in other areas of the economy, many doctors in the late 20th century, like Dr Favaloro, believed that healthcare did not need the free market's invisible hand. Over the last two decades, countries in the region have seen some merit in market based healthcare providers and have started to look at the private sector as partners in healthcare. As a result, in Singapore and the region surrounding us, private healthcare providers have been allowed to operate. When one travels around the region today, one can see the great contribution these healthcare companies make to the provision of healthcare in the region. At this point, I would like to say that when I refer to the region around Singapore, I refer to the countries that can be reached by air within 6 hours, and this includes ASEAN, India and China. There are now well known medical healthcare providers like Raffles and Parkway group in Singapore, Bumrungard in Thailand and the Apollo and Max healthcare group in India. They have made a significant contribution to the range of health services available in the region. I heard a prominent Indian leader say that he used to go to Houston for his heart checks and whenever he went there, he met many of his colleagues there. He now goes to Escorts in New Dehli, and meets the same colleagues there, because his colleagues have stopped going to Houston.  Even West Bengal, a bastion of Marxist ideology now has a modern private hospital- the Gleneagles-Apollo hospital.

The private healthcare sector which now has a strong presence in this region will continue to grow for several reasons. First, as countries become more affluent, a higher percentage of the GDP will be spent on healthcare. I want to illustrate this point with data from the OECD countries. Turkey and Mexico are the less affluent countries in the OECD and their percentage of GDP-spending on healthcare are 6.6% and 6.1% respectively. The United States and Switzerland are more affluent members of OECD and their percentage of GDP-spending on healthcare are 11.2% and 14.6%. As the economies of Asia keep growing, the middle class will keep expanding and the middle class is clamoring for a level of healthcare that the public sector finds difficult to provide. Since, countries with a higher per-capita GDP often tend to spend a higher percentage of the GDP on healthcare; the increase in healthcare spending in this region will be greater than the increase in GDP.

Second, improvements in the healthcare also lead to a higher life expectancy. Older people consume more healthcare services than younger people. Hence the demographic changes caused by an improved health services that leads to an increase in the number of people living to an older age, will also fuel demand for health services. Public sector healthcare providers will again find it difficult to meet this demand for service and hence the private sector will be needed to meet this demand.

Competition ensures that private healthcare moves relentlessly to achieve greater and greater efficiency. The drive for efficiency will promote two major changes in the way private health care is delivered. First, there will be greater use of information technology or IT. Second, there will be a trend towards globalization in the health care industry.

The healthcare sector in Singapore has embraced IT. The use of IT will lead to better management of data and information.  For example, electronic information sharing through electronic medical records or EMR facilitates higher patient safety and quality of care. Quick and easy access to the medical history, and laboratory and other test results of a patient allows more thorough assessment in less time and with greater holistic accuracy. This is especially important in the Accident & Emergency setting where a patient could become unconscious when admitted and immediate, accurate access to vital information such as pre-existing medical conditions, drug allergies and current medications can significantly aid treatment. It will enable doctors to make more accurate diagnoses and prescriptions.

It also enables our hospitals to provide better coordinated care, especially when a patient moves across different hospitals and levels of healthcare delivery. Today, about 240,000 patients are referred between Singapore's public healthcare institutions annually. All these patients can potentially benefit from EMR sharing.  EMR will reduce costs for patients, as ready access to information such as laboratory test and x-ray results will eliminate unnecessary repeat orders for identical tests by doctors in different institutions.

Hence last year, in April 2004, the Ministry of Health Singapore rolled out the EMR Exchange (EMRX) to enable hospitals and polyclinics to electronically share information vital for better patient care. The list of information items to be shared will include laboratory test results and radiology reports, Outpatient Discharge Summaries and Polyclinic Discharge Summaries.

A Health Professionals Portal has also been set up and is going from a Phase I system that links all the professional Boards to a Phase II system that links all the Ministry of Health public and professional applications.  All healthcare professionals and the public can use this portal once it is set up. Registered healthcare professionals can use the authentication and password access in the system to do transactions in restricted sites.  With such systems in place, the electronic medical record can be rolled out to the private sector as well.

Computerization of information means that the management of the digital data can take place any where in the world. By digital data, I mean both medical records as well as digitalized radiological studies. Just like the Airlines have outsourced their IT backroom operations, hospitals can also do so. Much of the transcription services in the US are outsourced to India. It is only a matter of time that before most data management services will be outsourced from high cost countries to those with a lower cost structure. Today most X-rays done are digital and are stored and retrieved from computers. These back room operations can also be outsourced.

Outsourcing is just one consequence of the second major trend in private healthcare - that is - globalization. Globalization in the healthcare sector has many facets but all are driven by the same goal - efficiency and lowered cost for the patient.

There are at least five trends in globalization.

First, there is the cross border management of data. Examples are the outsourcing of Transcription services, data management services and, teleradiology services.

Second, allied health services can be provided across borders. For example blood tests and pathology services can be marketed across borders and hospitals can choose the most efficient provider.

Third, healthcare workers will move across borders. We ourselves have benefited from this globalization. Excellent nurses from China, India and South East Asia work in Singapore as a result of the globalization of the healthcare manpower market. But at the same time we have to pay globally competitive wages to ensure others do not recruit our best nurses.

With the signing of CECA, or the comprehensive economic cooperation agreement, the medical sector in Singapore will be liberalized and we expect more movement of medical doctors across the borders between Singapore and India.

Fourth, Capital for healthcare investments moves across borders. Globalization has led to cross border investments. A significant portion of Singapore's private healthcare sector is in foreign hands. Likewise, local healthcare groups like Parkway have invested outside Singapore.

Fifth, there is movement of patients across borders. Singapore has traditionally been a regional medical hub and a large number of foreign patients come here for treatment. Today there are centers in Malaysia, Thailand and India that also compete for foreign patients. Patients will select where they want their treatment by balancing cost and quality.

With the emergence of many medical centers in the region competing for the medical tourist, what is Singapore-s niche?  Our niche will be quality.

Singapore's niche is to be at the cutting edge of care in high end care e.g. advanced ophthalmology procedures, pet scans, organ transplants, keyhole surgery, the least invasive and yet most effective treatments, high quality ancillary and support services, and all round dependable care.  For Singapore to continue to excel as a medical hub, it must provide high value added services like live donor liver transplants.

Singapore must also have the X factor, the factor that gives it the edge despite our higher costs. Singapore's X factor is the systems which we have that ensure quality. There are excellent surgeons in many countries. The best equipment can be purchased and beautiful hospital buildings can be built. But it takes time to build systems of excellence. There cannot be an excellent blood bank unless there is a good system of blood collection based on altruistic donors. And for patients seeking quality care it is factors like having a good blood bank that give Singapore the edge. I think most of us know who Arthur Ashe is. He was the champion tennis player who had a heart operation. Unfortunately, he needed a blood transfusion. The blood transfused was infected with HIV. As a result he died of AIDS. The high rate of HIV in this region poses a risk to all patients who need a blood transfusion. Compared to countries in the region, Singapore's rate is low and we are implementing measures to ensure that the rate continues to be low. This makes our blood supply a lot safer. It is in areas like this that Singapore excels. This gives us a niche in terms of providing a level of quality that is difficult to match. We aspire to make the service of our healthcare sector similar to the service of our airlines - oriented to the customer, value added, giving least anxiety to patients and delivered without waste of time.

The second X factor is research. In order to be on the cutting edge Singapore has invested in research so that the medical community will have treatment options to offer that are not available elsewhere. I would like to invite foreign participants to visit Biopolis, which is one of our important lifescience research centres. In time, new treatments that are based on stem cell research and genomic science will emerge from research centres like the Biopolis.

The healthcare sector in Singapore and the surrounding region is vibrant and exciting. Private sector healthcare providers will find many opportunities for investments and those who are innovative and are able to provide quality care efficiently will be richly rewarded.