a 300- to 400-bed not-for-profit hospital<\/span><\/a> in the eastern part of Singapore. Noting it would be nearly two decades since land was last released for a private hospital, he said the move was intended to \u201cencourage the establishment of lower-cost private hospitals\u201d and the tender would fix the price of land and restrict bill sizes charged.<\/p>\nTaken together, these three milestones signal a deliberate attempt to push private healthcare away from a high-cost, volume-driven model towards one that is more disciplined, efficient and affordable.\u00a0<\/p>\n
Two structural realities underpin this shift.<\/p>\n
First, demand for healthcare will increase inexorably with an ageing population. There is nothing that anyone can do to change this. But while demographics may be destiny, they alone do not dictate costs. How care is delivered and paid for will determine whether healthcare spending remains sustainable. <\/p>\n
Second, private healthcare is very much alive and kicking despite acerbic comments about over-servicing and over-charging. In fact, Mr Ong\u2019s pointed reference to the 1993 White Paper on Affordable Healthcare target of private hospitals providing 30 per cent of beds nationally suggests that policymakers still see a significant role for the sector if it evolves. <\/p>\n
A well-functioning private healthcare sector is integral to Singapore\u2019s economy. We have over 650,000 foreigners working and living here, not including work permit holders and domestic workers, and thousands of high-net-worth individuals regionally that admire Singapore-standard healthcare and are prepared to pay for this.\u00a0<\/p>\n
Choice is also fundamental in the Singapore model whether in healthcare, education or any other sector. Private hospitals allow patients to trade off cost, speed and amenities and also relieve pressure on public hospitals, providing added national healthcare capacity and aiding policymakers with further patient segmentation. <\/p>\n
A third noteworthy point is that healthcare can contribute meaningfully to Singapore\u2019s GDP and create many jobs. Healthcare jobs are good jobs \u2013 skilled, in general well-paying and less susceptible to automation and AI.<\/p>\n
Finally, our investments in biomedical research need platforms locally and regionally for piloting and scaling, and done right, private healthcare groups can play this role. For example, IHH, one of the world\u2019s largest healthcare groups, which operates in Singapore brands including Mount Elizabeth Hospital, Gleneagles and Parkway Shenton, is an investor in ASTAR-spin out companies, Us2.ai and Lucence and can help them grow globally.\u00a0<\/p>\n
However, Singapore private healthcare needs to diversify its offerings and right size its value propositions. There will always be room for hospitals with lavish amenities, with full flexibility to accommodate patient schedules and preferences, and prices to match. But there needs to be more private hospitals, which provide good quality and affordable healthcare, and for which a \u201csocial mission\u201d acts as a \u201ckey driving force\u201d, as Minister Ong shared.<\/p>\n
What should this upcoming not-for-profit private hospital offer so that it is financially viable and also strengthens the ecosystem?<\/p>\n
Three attributes stand out: a strong focus on ambulatory and home-based care, relentless operational efficiency, and doctor compensation that is not tied to volume. Together, they offer a credible alternative to the \u201cconcierge\u201d model that dominates private hospitals today.<\/p>\n
Imagine a future not-for-profit hospital in the east which has satellite health posts in a 4 to 5 km radius around it, making an effective hub and spoke model. Patients are admitted in the morning for procedures like gallbladder removal surgery. They are discharged in the afternoon or the next day depending on the complexity of their case. They may be visited by a home nurse the day of discharge and have their subsequent post-operative care managed in a health post a 3-minute walk from home. And all these come in a fixed fee bundle reducing uncertainty for patients and payees alike.<\/p>\n
Elements of such models already exist elsewhere. I visited a private hospital in India earlier this month and noted that its imaging services operate almost 24 hours a day. I noticed an MRI scan appointment for Sunday 10pm and was told that to manage costs efficiently, high-cost equipment such as CT scanners, MRI machines and operating theatres must be utilised as intensively as possible.\u00a0<\/p>\n
The lesson is not to replicate such models wholesale, but to recognise that efficiency in asset use can significantly lower costs.<\/p>\n\n\nHow care is delivered and paid for will determine whether healthcare spending remains sustainable, says the writer.<\/p>\n
PHOTO: PIXABAY<\/p>\n<\/figcaption><\/figure>\n
This does not mean cold, impersonal service \u2013 the \u2018heart\u2019 of healthcare can very much still be present through thoughtful design, pastoral services which Mount Alvernia Hospital already offers and is well-known for, and little touches like free wi-fi access and refreshments in wards and clinics. <\/p>\n
The point is not to run healthcare services around the clock indiscriminately. Rather, real estate and equipment will make up some of the highest costs and hence must be used optimally in a lower-cost private hospital to enable affordable pricing. <\/p>\n
On staffing, where will the hospital find its doctors? Who in their right minds would want to work hard without any financial upside? <\/p>\n
Interestingly, many of the world\u2019s top not-for-profit hospital systems operate on a fixed pay model. Cleveland Clinic, Mayo Clinic and Kaiser Permanente are all world-class health systems, and they all operate on a primarily fixed pay model.<\/p>\n
A 2020 Mayo Clinic publication explains, \u201cThe compensation model aims to reinforce the organization\u2019s primary value that \u2018the needs of the patient come first\u2019 by removing financial incentives to do more than is necessary or less than desired for the patient\u201d.\u00a0<\/p>\n
The Mayo Clinic philosophy is instructive for the upcoming hospital. The \u2018fee-for-service\u2019 payment model emerged in a time when measuring quality of care was difficult. <\/p>\n
Today, digitally enabled hospital operators can move away from blunt volume-based compensation and towards models that incorporate quality metrics and overall cost efficiently to determine final doctor pay. An adroit electronic medical records system will be key to effective physician management and incentivisation of the right clinical care behaviours.\u00a0<\/p>\n
A busy hospital efficiently run in a country with growing healthcare demand should generate the revenue to pay its staff fairly, and remain financially viable without the need to rely on overservicing or overcharging.<\/p>\n
The last but crucial factor will be the cost of real estate \u2013 a factor the Government can control. Too high a price for land and costs will be passed onto patients. No matter the noble intentions at the time of tender, the selected operator will have no choice but to maximise revenue. <\/p>\n
The converse, too low a land price, may be mitigated if the not-for-profit private hospital is anchored by a social mission and must channel surpluses back into deserving social objectives. Mount Alvernia Hospital, the only not-for-profit hospital in Singapore today, for example, uses its surpluses to fund Assisi Hospice and outreach clinical services in Enabling Village and Agape Village.<\/p>\n
Private healthcare is overdue for a rebalancing. Executed well, the Ministry of Health\u2019s careful orchestrating of the many moving pieces including the eastern-based not-for-profit hospital, will set our healthcare ecosystem on the right path to achieve high-quality, affordable and accessible healthcare for all Singapore residents. <\/p>\n
And if it succeeds, it could show that high-quality care need not come with ever-escalating costs \u2013 and that aligning incentives, rather than simply adding capacity, is key to a more sustainable healthcare system.<\/p>\n
\n
\n\nDr Jeremy Lim is the author of Myth or Magic – The Singapore Healthcare System. He is on the board of Mount Alvernia Hospital. The views expressed are in his personal capacity.<\/p>\n<\/li>\n<\/ul>\n<\/div>\n