(Delivered in Parliament on 6 January 2020)
Mr Deputy Speaker sir, the Healthcare Services Bill seeks to accomplish a number of things: to introduce a services-based licensing regime for providers of healthcare services, replacing the old premises-based licensing regime; to strengthen the safeguards for the safety and welfare of patients; to improve the governance requirements for providers of healthcare services; and to enhance the regulatory powers in relation to providers of healthcare services, including allowing intervention in failing providers in order to stabilise operations and ensure continued patient care. These are all steps in the right direction.
MP Ms Sylvia Lim, my Party Chair, has made a number of points about the Bill with which I agree and which I shall not repeat here. My speech will focus on what else can be done to contain healthcare inflation.
Part 57 (2) R. of the Bill empowers the Minister to regulate the sector so as to require price transparency towards patients and customers.
Mr Speaker sir, according to Mercer Marsh Benefits’ 2019 Medical Trends Around the World report based on surveys of insurers regarding types, costs and frequency of medical conditions that were claimed for by company employees in 2018, Singapore’s medical trend rate – which measures medical cost inflation – was 10 per cent in 2018, 10 times the Singapore economy’s estimated 2018 inflation rate of 1 per cent. In a Parliamentary reply from 2018, the government figure for healthcare inflation, measuring the growth rate of prices for healthcare related goods and services paid by patients, after Government subsidies, was about 1.2% between 2013 and 2016.
A media report from late 2018 quoted the Life Insurance Association of Singapore (LIA) having found that average private hospital bills were increasing by 8 per cent a year compared to less than 3 per cent for public hospital bills – though I note that the 3 per cent figure is still far higher than general inflation.
Medical or healthcare inflation is a challenge faced by many countries around the world. It is partly driven by the increasing availability of advanced, cutting edge drugs, treatments and diagnostic which are expensive. How do we control medical inflation and curb any tendency towards over-treatment and over-prescription without shutting the door to R&D and innovation in the medical sphere?
The rest of my speech will focus on ideas to answer this question. I will speak on several themes related to this question.
Firstly I would like to speak on price transparency, which is one thrust being explored around the world. The movement towards price transparency aims to make market mechanisms work to curb healthcare inflation through market competition.
In November 2018, MOH started publishing fee benchmarks for private sector professional fees which are not mandatory caps but which place some onus on healthcare providers to justify their fees, and prior to this MOH has been providing similar guidance to public hospitals in 2017.
MOH now publishes information on 222 common surgical procedures like hip replacement and colonoscopy, comprising about 85% of all procedures. Details include, depending on the type of data set, the Public or Private setting, Hospital, Ward Type, Bill size, Operation Fee, Surgeon Fee, Anaesthetist Fee, Facility, average length of stay and Implant breakdown. Data is, in some cases, published according to the 25th, 50th and 75th percentile.
However it is not clear what causal effect these measures have had to date. I would like to ask: since MOH started the publication of this data, does MOH have any evidence or indications as to what the effect has been, to assess the return on that investment?
At the level of theory, a few observations can be made. Not all patients would have the skills, time and inclination to study prices and make informed choices on that basis. This problem gets compounded when that patient is faced with a medical emergency or pressing problem where familiarity with one healthcare provider or physical proximity may weigh on the decision more than any prior study of pricing.
Moreover, many patients may be confused as to the link between pricing and quality and may not only be willing to pay more for better quality but may misunderstand higher pricing to mean higher quality. Many patients and more broadly consumers may use price as a surrogate for quality in the absence of other information.
Would the MOH consider the following further measures?
Firstly, publishing data by hospital but also with data on the outcomes for those procedures at those hospitals where relevant and where there are sufficient data points – by outcome measures I mean, for example but not necessarily, readmission rates, safety of care, mortality, patient experience, waiting times and so on. This would help patients make the link between price and quality.
I am aware that this needs an investment the data systems and expertise to capture data well and risk-adjust to take into account the differential complexity of patients. This will take time. Doctors need to be reassured the system is fair or everyone will start to turn away or decline to treat complex or poor pre-morbid patients. But it could well be worth the investment and at the very least should be studied, since what we want is value and this means price or fees as a function of outcomes.
Secondly, can MOH consider creating a simple app or website for patients to key in the counselled projected charges broken down by facility, doctor and so on, so that patients can see in simple charts the variation from norms? And can such price comparisons be made a mandatory part of the financial counselling?
Under pressure of time or stress, a patient may not shop around when initially choosing a healthcare service provider, but this idea may give them some food for thought for considering their healthcare service provider the next time they have the same complaint.
Nudges against overtreatment
Secondly, I turn to mechanisms to curb over-treatment and over-testing.
There may be a natural tendency to over-prescribe, over-treat or over-test, in lieu of strong controls and pressures from customers and regulators. Earlier, I touched on how patients, as customers, may not always be in the best position, be well-incentivised or sufficiently resourced to exert pressure on healthcare providers to keep prices in check in a skilful way. Insurance coverage may also distort choices by both providers and patients.
What can regulators do? MOH’s Agency of Care Effectiveness has been issuing care and drug guidance since 2017.
However defining over-treatment is notoriously complex, as some cases require more extensive – and expensive – testing and treatment than others.
Having said that, can we do more to monitor and publish trends relevant to curbing unnecessary treatment by focusing on specific kinds of procedure?
For example, according to the “Health at a Glance: Europe 2018” report by the OECD and European Commission, Portugal created a national commission to monitor C-section rates and indexed funding to hospitals partly to C-section rates. Italy has similar financial incentives to hospitals with lower C-section rates and publishes information on C-section rates at different hospitals.
The same report details how Denmark, Sweden, the UK and Finland have high day surgery rates for a number of common procedures. Studies have shown that day surgery can reduce the cost of surgical procedures substantially compared to in-patient surgery.
The report states: “In Sweden, one of the main factors that has contributed to the expansion of day surgery over the past few decades has been clinical leadership in the adoption of evidence-based guidelines to streamline pre- and post-operative surgical procedures, and promote safe and effective use of day surgery. Nationwide collaboration and support from national authorities have helped to set up and disseminate new standards, while leaving sufficient autonomy to enable adaptation to local circumstances. The expansion of day surgery has helped achieved substantial savings….A 2016 review by the National Board of Health and Welfare showed that the costs of the 11 most common types of procedures would have been 14% higher if the share of day surgery had not increased between 2005 and 2013…”
I would like to ask if the government could consider publishing data on lower cost procedures at major healthcare service providers and perhaps even making tweaks to funding models to incentivise these lower cost approaches where relevant. This can be done initially by focusing on procedures where there is the most volume vis-à-vis potential to impact on cost.
The issue of day-surgery or outpatient surgery is a good case in point. It would seem that only medical care is covered by insurance and patients then have to pay out of pocket for transport, home nurse visits, perhaps some tele monitoring and even meals. Can insurance funding models be changed such that cash is paid to cover these costs pegged to but not equal to what it would have cost to do this on an inpatient basis, so as to incentivise outpatient surgery? Also, ambulatory or outpatient surgery centers need a formal arrangement with a hospital for transfer in case of adverse events. In terms of the regulatory regime, is there a sufficient nudge for hospitals to embrace ambulatory care for surgery?
I would also like to ask if the MOH’s Agency of Care Effectiveness looks into flagging out cases of what, for want of a better term, can be termed unnecessary innovation? For example, an NPR article from 2017 in the US recounts how one pharma producer marketed a single pill that combined two OTC drugs as an innovation because it was easier to take one pill than two. A month’s supply of the two inexpensive drugs costs about $40. The company billed insurance $3,252 for the new pill.
Generics and Biosimilars
Thirdly, I’ll turn to the promotion of generics and biosimilars.
In the Mercer-Marsh study quoted earlier, it was noted that Singapore’s medical inflation is partially driven up by supplier-led factors such as high-cost pharmaceuticals and biologics.
I asked a Parliamentary Question on the use of generics in the public healthcare system last year. The reply stated that “In 2017, to better guide institutions and doctors in use of generic drugs, we introduced a basket of clinically and cost-effective generic drugs which can replace the more expensive branded equivalents. MOH and the Health Sciences Authority monitor new generic drugs that enter the local market and add them to the basket on a regular basis.”
I have two suggestions.
Can healthcare providers be required to include in bills information about the cost of treatment had a generic been used? Alternatively, a simple app or website could provide information on HSA-approved generics in respect of differential pricing.
Secondly, can the proportion of use of ACE-endorsed bioequivalent lower cost alternative drugs for key conditions and procedures, be these generics or biosimilars, also be made public, broken down by healthcare provider?
Fourthly, on waste reduction.
One expert, at an event in Singapore on healthcare costs, said waste in OECD countries amounts to as much as one-fifth of healthcare expenditure.
I would like to discuss one example: the US FDA has long known that many drugs remain safe and potent for years longer than their published expiration dates. The FDA and Defense Department created the Shelf Life Extension Program to test the stability of drugs in the federal government’s stockpiles and then extend their expiration dates, when possible. A 2006 study of 122 drugs tested by the program showed that two-thirds of them were stable every time a lot was tested. Each of them had their expiration dates extended, on average, by more than four years. But the same type of drugs in hospitals or pharmacies get thrown away when they “expire.”
Does our healthcare system destroy significant quantities of drugs due to expiry? If so, could we consider something like the US shelf life extension program to use clinical data to extend the life of drugs?