Ministry of Health Offer fixed price packages for common surgical procedures
Under the current practice, public and private hospitals impose a separate charge for each item of service, such as surgeon fees, stay in hospital wards, laboratory tests, use of equipment, etc.

This is good for maximizing the revenue to the hospital, but is bad for patients. They are billed billed for every item, some of which are subject of dispute and complaint.

It is time to consider providing a fixed price or package price for each type of surgical procedures. Initially, this can be applied to the common operations, such as appendectomy, breast biopsy, cataract surgery, coronary heart bypass, etc. It can be extended to the less common procedures at a later date.

The fixed price should cover all of the items of services and consumables related to the procedure. It should cover some minor variations within that procedure, e.g. need for additional tests or extended period of stay.

The hospital has the data to determine the average cost for each type of procedure, including its variations. By offering a fixed price, they are actually providing some internal insurance to cover the variation.

If there are complications, e.g. in the course of the surgery, other medical conditions are discovered, which are not related to the initial procedure, the treatment of these other conditions should be handled separately. In any case, it does require a different set of specialists and careful consideration of the problem. 

The hospitals would prefer the current system of billing for each item of service. They can get revenue under this billing system. It does cause disputes with patients, but they are able to handle them. The only consequence to the hospital is the unhappiness of the patient, but it does not seem to be important to the hospital.

In the public interest, we should move to a fixed price for most medical procedures. Let the hospital, and not the patient, handle the variations. 

How can this change be implemented?

As a first step, the govt must decided that the fixed price system is a better and fairer system for all parties, i.e. the medical providers and the patients. 

They should take the lead by requiring the public hospitals (i.e. restructured hospitals) to offer the fixed price packages for the common procedures.  The price may vary according to the type of wards.

The fixed prices can be set at a level that allows the hospitals to cover the average cost and a fair profit margin. Anyway, different hospitals will have different price structures. The comparison of the fixed prices will give them the push to improve their operational efficiency.

If fixed prices are set by the public hospitals, the private hospitals will also be pushed by market forces to offer fixed prices. They are likely to be higher than the prices charged by the public hospitals (even without govt subsidy). Some patients may be willing to pay the higher prices at private hospitals due to the shorter waiting time and the reputation of the surgeons.

At a later stage, the govt should set the maximum price for access to Medishield and Medisave.  Most hospitals wil set their fixed prices based on these "maximum prices" but some may offer a discount for competitive reasons. the hospitals should not be allowed to ask the patient to pay additional charges on top of the fixed prices.

I am not suggesting that the fixed prices should be made compulsory. Public and private hospitals are free to continue to offer their services on a "fee for service basis". But the public hospitals should take the lead to offer fixed price packages for the common surgical procedures. Over the long term, we should encourage a trend for more charges to be based on fixed prices.

We need to control the escalating health care costs. The fixed prices system is a necessary step to implement this control. I hope that the health ministry will consider and implement this approach.

Tan Kin Lian
 

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