SINGAPORE'S HEALTHCARE SYSTEM: ADDRESSING COSTS AND CARE

UNCLAS SECTION 01 OF 03 SINGAPORE 000965 SENSITIVE SIPDIS STATE FOR OES/IHB DHHS FOR OGHA EAP/MTS - MCOPPOLA BANGKOK FOR REO HOWARD E.O. 12958: N/A TAGS: TBIO SOCI ECON SN SUBJECT: SINGAPORE'S HEALTHCARE SYSTEM: ADDRESSING COSTS AND CARE REF: A) 09 SINGAPORE 018 B) 07 SINGAPORE 1844 C) 07 SINGAPORE 371 ¶1. (SBU) SUMMARY: Singapore's first graduate medical school, a partnership between Duke University and the National University of Singapore (NUS),opened September 29. The physicians it graduates will increase Singapore's pool of new doctors and help the island address increased healthcare demands from an ageing population. Singapore, like the United States, is concerned about managing the rising costs of health care, but Singapore's health expenditure as a proportion of gross domestic product (GDP) remains a fraction of U.S. healthcare costs, and data show that Singaporeans enjoy longer life expectancy and lower infant mortality than Americans. Healthcare contacts credit lifestyle, competition between public and private health providers, and lower legal fees as key contributors to Singapore's lower healthcare burden. Singapore is positioning itself as a medical travel destination while local healthcare entities are expanding globally. End Summary. Medical School Opens; Doctors Wanted -------------- ¶2. (SBU) Singapore's first dedicated graduate medical school, a partnership between Duke University and the National University of Singapore (NUS),opened September 29. At the opening ceremony, Prime Minister Lee Hsien Loong noted that the school, which will train researchers and medical practitioners, will be an important step in Singapore's efforts to advance its healthcare system. Singapore, with a birth rate of only 1.28 and a relatively high median age of 39 years, must address rising healthcare costs and an ageing population. Duke-NUS anticipates graduating 50 doctors a year, increasing the annual pool of new doctors to 350, which will help Singapore address future healthcare needs. PM Lee indicated that the GOS will also consider other options to further add to the number of local doctors. ¶3. (SBU) Strict rules govern who can practice medicine in Singapore. New graduates must work in public hospitals when they begin their careers and new graduates may be subject to a five or eight-year bond, depending on whether they studied on scholarship, Dr. Jason CH Yap, Director of Marketing at Raffles Hospital, told Econoff. Foreign doctors with work experience abroad must complete a three-year term at a local public hospital before they can go into private practice, Yap continued. This limits the private sector's ability to recruit foreign physicians and limits options for medical professionals living in Singapore temporarily (e.g., qualified spouses of executives assigned to Singapore for two years cannot work here). ¶4. (SBU) Physicians are groomed in the public health system but usually move to the private sector later in their careers. Doctors at public hospitals advance quickly and heads of departments can be in their late 30's. They are allowed to stay in such positions six to nine years and then must rotate out, Dr. Goh Jin Hian, Group Senior Vice President for Growth, Innovation and Strategy at private hospital operator Parkway Health, told Econoff. At that point, most physicians choose to go into private practice, Goh said. As a result, there is room for younger physicians to rise through the ranks, while the private sector often has the most experienced physicians, he added. However, this rigid system keeps the overall pool of practicing physicians relatively low. No Universal Coverage, but Forced Savings -------------- ¶5. (U) Singapore does not offer universal health coverage per se, rather it makes saving for expenses like retirement and health care compulsory for individuals. The government administers three programs to help cover the health costs of its population: Medisave, Medishield, and Medifund. Medisave was established in 1984 as a mandatory savings program for individuals to meet costs associated with hospitalization, outpatient surgery and certain other outpatient expenses. The savings requirement is between 6.5 and 9 percent, depending on age; people 35 or younger must save 6.5 percent of their income, 35 to 45 year-olds 7.5 percent, 45 to 50 year-olds must save 8.5 percent, while those 60 and above must save 9 percent. Employers must also contribute to their employees' Medisave accounts. Medisave was recently expanded to allow patients to draw on accounts to cover outpatient services for diabetes, hypertension, hyperlipidemia, and stroke. For those chronic conditions, the maximum amount that can be drawn from a Medisave account is S$300 (US$214) per year but patients can augment that SINGAPORE 00000965 002 OF 003 with funds from family member accounts. Patients still pay deductibles of about S$30 (US$21) and then 15 percent of the balance of outpatient bills. ¶6. (U) Medishield is a low-cost insurance plan that the GOS introduced in 1990 to cover "catastrophic" illness or accidents that outstrip the balances in individuals' Medisave accounts. Private insurance options are also available to Singaporeans. Medifund, akin to U.S. Medicaid, is an endowment fund established by the GOS to help Singaporeans who cannot pay their medical expenses, even with Medisave and Medishield. Reports indicate that Medifund serves approximately ten percent of the Singaporean population. Quality Care is Not Always Equal Care -------------- ¶7. (SBU) Traditionally, private healthcare providers handle about 80 percent of primary and preventive healthcare services while subsidized government hospitals provide 80 percent of the more costly acute care. There are seven public hospitals in Singapore and care is tiered based on patients' ability to pay what is not subsidized. The lowest level "C" is 80 to 85 percent subsidized and patients are treated in multiple bed wards with communal bathrooms that often do not have air conditioning, Dr. Yap said. While in the highest level "A", which is not subsidized, patients might be in single or double rooms with bathrooms. Dr. Yap said that patients, regardless of subsidy level, will have access to the same medical tests, equipment and general care, so the GOS asserts that all patients receive quality health care. However, Dr. Yap acknowledged that there are inequalities because C-level patients do not receive the same individual attention and may be at greater risk of hospital infection in a multiple-bed setting. Hospitals conduct some means testing to ensure patients that can pay more are not taking up beds in the lower-level wards. Singapore to be Medical Travel Hub -------------- ¶8. (SBU) Private hospitals like Raffles and those run by Parkway Health are competing for business from Singaporeans that could pay to receive A-level care in public hospitals, expatriates resident in Singapore, and overseas patients. Dr. Yap and Dr. Goh estimated that approximately 30 to 40 percent of the patients in their hospitals were from countries like Malaysia, Indonesia and India. Dr. Goh noted optimistically that a recent amendment to Singapore's Human Organ Transplant Act (Ref A) that will allow compensation for unrelated living donors could increase the numbers of transplants performed at Singapore's private hospitals. Dr. Goh said Singapore is not a medical "tourism" destination where people go for cosmetic surgery and recuperate in a vacation setting, like Thailand. Instead, Singapore is positioning itself as a medical travel destination that offers high-quality care for serious health issues at a more affordable price. The Ministry of Health (MOH) Web site lists average costs for common medical procedures and online sources comparing medical expenses estimate that procedures like coronary artery bypass and coronary angioplasty can cost 75 percent less in Singapore than in the United States. Dr. Goh said that U.S. health insurers were in discussions with Parkway Health regarding covering U.S. patients who seek care in Singapore. Factors Contributing to Lower Costs -------------- ¶9. (SBU) Singapore spends approximately 3.4 percent of its GDP on healthcare, compared to more than 15 percent in the United States. Yet, Singaporeans have lower infant mortality and higher life expectancy than Americans, according to World Health Organization statistics. Dr. Yap and Dr. Goh attributed the lower healthcare costs in Singapore to a number of factors, including lifestyle, government controls, competition, and a less litigious society. Breast and colorectal cancers, heart disease and stroke are still major killers in Singapore and chronic diseases like diabetes are on the rise, but widespread obesity is not yet a problem. Compulsory National Service and the associated military fitness tests may encourage young men to adopt a healthier lifestyle, Dr. Goh surmised. Singaporeans are good consumers of preventive care, spending approximately S$300 to S$400 (US$214-285) annually on health screening, he estimated. Companies will also pay to have mobile clinics brought to their locations to screen employees. Private physicians and facilities are forced to compete for business with heavily subsidized polyclinics and public hospitals, which distorts the market but keeps costs low for consumers, Dr. Yap stated. The average consultation fee at a local polyclinic can be SINGAPORE 00000965 003 OF 003 as little as S$8.00 (US$5.70),according to MOH. ¶10. (SBU) Raising polyclinic fees would be a major policy issue, so the prospect of increasing fees in the public sector is limited, Dr. Yap stated. To help augment the low consultation fees, MOH allows physicians to prescribe and dispense medicine, Dr. Goh and Dr. Yap noted. The pharmaceutical industry would like to see prescribing and dispensing rights separated (Ref B),but such a change would take time and careful planning as Singapore would suddenly need 500 more pharmacists, Dr. Yap estimated. The government also controls which pharmaceuticals are allowed onto the Standard Drug List (SDL), which restricts the drugs public-sector healthcare providers can prescribe. (Note: According to contacts at a major U.S. pharmaceutical company operating in Singapore, the opaque SDL process described in ref C remains a concern. End Note.) ¶11. (SBU) Dr. Yap also noted that compared to the United States, healthcare providers in Singapore do not have the same administrative and legal costs. He said that there are few malpractice lawsuits in Singapore and most hospitals try to deal with a patient issue internally. Dr. Yap indicated that malpractice awards usually only cover medical expenses and lost income. He said the highest payout he was aware of was S$2 million (US$1.4 million). Private Healthcare Providers Going Global -------------- ¶12. (SBU) Both Raffles Medical Group, the parent company of Raffles Hospital, and Parkway Health are expanding overseas. Raffles is going global conservatively and currently has three clinics in Hong Kong, Dr. Yap said. Parkway Health has projects in the Middle East and India, but Dr. Goh noted that Parkway had been burned in a few deals, so their overseas operations tend to be consulting or operations contracts and not capital-intensive projects. Parkway Health won a bid last year to manage a women and children's hospital in Abu Dhabi. Neither Parkway nor Raffles have expansion plans for the United States. SHIELDS