Healthcare

One of the new laws recently signed by President Duterte increases the penalty imposed on hospital staff and owners who demand a deposit before treating an emergency patient. The fact that we have to pass such a law shows how dysfunctional our national healthcare system is.

As expected, the association of private hospital owners is reported to be considering a suit that seeks to nullify the new law on constitutional grounds. I guess they will say they are being deprived of their property rights because the cost of treatment may never be paid or only paid in part by PhilHealth.

Data from the World Health Organization show the Philippines has 12 doctors per 10,000 persons, six dentists, and 61 nurses and midwives. But most of them are in Metro Manila and key cities. A sizeable percentage of the population rarely, or never, sees a healthcare practitioner.

Arangkada Philippines reports that hospital beds are also scarce with only five per 10,000 persons in 2009, compared to six in Indonesia, 18 in Malaysia, 22 in Thailand, 28 in Vietnam, and 32 in Singapore. We can be sure that the number of hospitals in the country has barely increased all these years.

Our poor are badly served by our healthcare system. Facilities in government hospitals, which can be obtained for free from PhilHealth, are not always the best outside of those in Metro Manila. The middle income groups in the Philippines only look like they get better health services, but many struggle in the face of catastrophic diseases.

But even if a few of our top hospitals are among the best in Southeast Asia, many of the really rich still go to Singapore or the United States to manage their health needs. I know of a few of our taipans and top corporate executives who go to Singapore for their regular check-ups. 

As in many other sectors of the economy, we may have been superior to Singapore in the ‘60s and ‘70s in terms of quality doctors, but those were the days. Today, many of our young medical graduates go to Singapore for specialization training. The Indians have long ago replaced Filipino doctors in US hospitals.

Indeed, statistics show Singapore is now competitive with developed nations in healthcare. Singapore spends 4.6 percent of its GDP on healthcare compared to 12.6 percent of high income OECD countries.

Public expenditure on healthcare is 30.8 percent for Singapore compared to 61.4 for OECD. Life expectancy at birth is 82.3 years for Singapore compared to 80.7 years for OECD. Mortality rate under five per thousand is 2.8 for Singapore and 5.1 for OECD.

The Economist Intelligence Unit ranks Singapore’s health system the second best (after Japan) out of 166 in the world. Similarly, the Bloomberg Health-Care Efficiency Index 2017 ranks it second best among 55 countries.

How is Singapore doing it? Singapore may be the bastion of a free enterprise economy but for healthcare, according to a paper I found in the website of the LKY School of Public Policy, the Singaporean government intervenes heavily and comprehensively.

Singaporean government policy was changed in response to “the unsatisfactory experience with corporatization, deregulation and marketization of the sector in the mid-1980s which saw massive rise in costs and public disquiet.”

A 1993 white paper bluntly noted: “Market forces alone will not suffice to hold down medical costs to the minimum…. In healthcare, supply tends to create its own demand, thus raising healthcare expenditure. The government, therefore, needs to intervene…”

The policy tools currently used to manage the healthcare sector in Singapore serve as “a counterweighing system of incentives and disincentives that encourage the key stakeholders to pursue cost-effectiveness, make prudent economic decisions without compromising the overall policy goals of providing necessary healthcare to all at affordable costs.”

Singapore provides subsidies at public hospitals as well as a scheme that offers additional grants to low-income households for outpatient treatment. This is a program that subsidizes insurance premiums as well as reduces co-payments for elderly Singaporeans.

Then, there is Medisave, a financing scheme based on compulsory savings. The government wants to encourage individual responsibility for healthcare, while reducing the government’s fiscal responsibility.

There is also Medishield, introduced in 1990 and replaced by Medishield Life in 2015, a low-cost and basic health insurance scheme for catastrophic hospital costs. It was introduced after they realized Medisave was insufficient to pay large hospital bills.

It is a voluntary scheme (with an opt-out provision) intended to cover those up to the age of 92 years, but new enrollment is not allowed after the age of 75 years. The premiums vary by age and are subsidized based on income.

The annual premium for Medishield, ranges from $50 for those under the age of 20 years to $1,190 for those between the age of 84 and 85. For patients seeking more generous cover or treatment in upper class hospital wards, additional cover may be purchased from authorized private insurance schemes. The premium for Medishield can be paid from Medisave accounts.

There is also Medifund, established to fill the gaps left by Medisave and Medishield. Medifund caters to those who do not have the means to pay for their health bills from out of pocket (OOP) or Medisave or Medishield.

By deliberate policy design, out-of-pocket or OOP payments are large in Singapore. There is almost no entirely free healthcare. Everyone is expected to pay all or part of the costs, including hospital care, the LKY policy paper explained.

There is a Singapore Medical Council, a statutory board under the MOH that regulates and licenses healthcare providers. The LKY paper notes that “the council ensures costs are ‘competitively priced’…

“There have been instances where the council has censured providers for ‘over-charging’ patients.” In other words it controls provider behavior to reduce their monopoly power in the health sector, and reduce room to engage in maleficent behavior.”

Singapore uses IT to ensure a patient gets the best treatment at the least cost. The DOH disseminates information on hospital charges and clinical outcomes.

According to the paper, public hospitals are required to publish their average bill sizes (which include charges for room, treatment, surgery, laboratory test, etc.) for different common conditions and procedures. The collated data is subsequently published on the MOH’s webpage.

Information on the occupancy rates of hospital beds is updated on a weekly basis. The Ministry of Health also publishes the distribution of bills across public hospitals for major illnesses.

The MOH maintains online calculators. Patients may visit the website and estimate the cost of treatment of particular illness and calculate the share of the bill that may be financed by Medisave and Medishield.

Here in the Philippines, healthcare is a problem even for higher middle class folks specially after retirement and they have lost hospitalization benefits. There is really no effective health insurance system that could be depended on specially in cases of catastrophic illnesses.

The tradition in the private sector is for doctor-owned and managed hospitals. But these are largely badly managed because very few doctors are like Dr. Alran Bengzon who is both a good doctor and a good manager. Even the top-tier Makati Medical Center, which used to be managed by doctors, avoided outright bankruptcy only by being bought by Metro Pacific.

Indeed, a number of the smaller doctor-led hospitals have sold out to Metro Pacific and are getting a new lease on life. Ayala is also getting into hospitals. But I doubt if the healthcare system will get any better for most patients under big business without intelligent government intervention as in Singapore.

Healthcare is neglected by our policy makers. I am not sure if there is even an industry study by PIDS, the government economic think tank. Our healthcare system is a big challenge for our government to fix, but they are not even thinking of it.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco