How the various stakeholders can contribute

(From left) ST Invest Editor Ms Lorna Tan; Dr Jeremy Lim, Partner & Head of Health and Life Sciences Practice, Asia Pacific at Oliver Wyman; Ms Pauline Lim, Executive Director at Life Insurance Association; Mr Mack Eng, Head of Medical at Prudential;
(From left) ST Invest Editor Ms Lorna Tan; Dr Jeremy Lim, Partner & Head of Health and Life Sciences Practice, Asia Pacific at Oliver Wyman; Ms Pauline Lim, Executive Director at Life Insurance Association; Mr Mack Eng, Head of Medical at Prudential; Dr Carol Tan Yean Eng, Medical Specialist for the elderly, Chairman of The Good Life Cooperative; and Mr Chye Pang Hsiang, Principal Consulting Actuary, Milliman. ST PHOTO: LIM YAOHUI

Highlights of the ST Roundtable on Sustainable Healthcare.

Q What can consumers do to ensure sustainable healthcare?

DR CAROL TAN When you talk about healthcare insurance, there are actually three words in it - health, care, and insurance. It's not illness care. But the way we structure and talk about healthcare, it's about what you do when you're already sick.

But many other countries adopt the healthcare approach, where you go from cradle to grave, and you actually start to work with your patients, citizens, policyholders on how to keep them out of hospitals.

It's very distressing to me. I was happy and sad when the MOH (Ministry of Health) declared war on diabetes. I was happy that at least there was some attention on diabetes but also very sad that Singapore, out of all countries, needs to declare war on diabetes.

We are such a small country, it takes only an hour to drive from one end to another, and yet we can have stories like diabetes - one-third not even screened. And diabetes doesn't make you ill, you can be healthy but you end up with kidney failure and amputations and so on, and that's when you need to go to the hospital.

 

So how can it be that in Singapore, we don't have a strong healthcare system in the community accepting the fact that the onset of diabetes is not preventable? However, we can prevent the complications arising from diabetes (kidney failure, strokes, and so on) with good community care. The very fact is how we can have a healthcare system when we're so small and doctors are so accessible and still end up with people going to the hospitals and all the claims that are going up because diabetes goes on to heart failure, heart disease and kidney failure. What we can do together is make sure that healthcare is healthcare, and not illness care and then scramble when people are ill and find a way to pay for it. Prevention is much cheaper than trying to cure and care for illness now.

HELP FOR DOCTORS

To a lot of doctors, in the absence of a fee guideline, it is very hard to make the argument that one is under- or over-pricing... We should consider, as a society, whether or not we should bring back a guideline on fees. This will help to establish boundaries on what is appropriate and inappropriate practice. Beyond that, there is so much wastage in the healthcare system. ''

DR JEREMY LIM


HELP FOR PATIENTS

We can all come together and take a good hard look at what is happening to our customers and predict where are the ambers, greens and the reds, and see what we can do to keep customers healthy and avoid spending what they don't need to spend.

'' DR CAROL TAN

Q What can insurers do to ensure sustainable healthcare?

MR MACK ENG We advise our customers to review their medical plans and needs. What is it that they really want out of their medical treatments? Do they prefer private or public hospitals?

With that as a background and based on the budgets they have, then they can decide what they should be going for. As we mentioned, healthcare costs are increasing year on year. As a consumer, I want to think about what it means to me, my annual premiums, what it is that I can afford and what it is that I really need.

MR CHYE PANG HSIANG The reintroduction of cost sharing is certainly very important because there's a dilution of the policyholder taking financial responsibility in Hong Kong, and I think if you go back 10 years, you go back to the time when the Integrated Shield premium rates were still relatively cheap.

But today, it's a different scenario. What we ended up with over the years is a situation where we are selling blank cheque policies, no out-of-pocket costs. All the insurers were competing to provide better and higher broader coverage. Basically they were issuing blank cheques and we're paying for that now.

If you think about Shield plans, one of the founding principles was financial responsibility. But that has been diluted. And we see this not only in Singapore but also in neighbouring countries... There's always that pressure to provide a product with less cost-sharing rather than more. But I think we have to come back to the fundamental principle that policyholders need to take some financial responsibility for their own healthcare, and insurance is there to protect consumers against the big hospital bills.

MR MACK ENG For Prudential, we believe in providing consumers with choices based on their medical needs and budgets. We have different healthcare insurance options catering to different requirements. It is so important that consumers review their healthcare needs and plans regularly, given rising medical costs.

For instance, our full-cover private hospitals rider allows customers to play a part in determining their future premiums based on the choice of medical treatments and claims amount. If customers choose to use public hospitals and stay healthy, they pay lower premiums over time. If customers make no claims during the review period, they get a saving of 10 per cent on their renewal premiums.

For customers who do not prefer such a pricing approach, there are options. We have a private hospital co-pay option that allows customers to pay lower premiums with a cap on annual out-of-pocket expenses. For those who do not have preference for public or private hospital services, they can opt for a public hospital plan and enjoy significant savings on premiums. At the end of the day, it's about providing our customers access to public and private healthcare at a budget they can afford now and in the future.

DR CAROL TAN I would love, in addition to innovative packages for pricing, a system that will support your policyholders to keep healthy and actually tell them and guide them, via talks and so on, to tell them how to stay out of hospitals. Not because you don't want to pay but because you want them to stay healthy.

If you are in the business of providing healthcare insurance... it is certainly in your business soundness to have healthy policyholders... who are your policyholders? Do you know them?

For all your policyholders, for example, if you just take those who get admitted, say, twice in a year, have you actually called them up and got to know them and understood why they are going in and out? For all your policyholders above the age of 60, how many are diabetic? What is happening to them? How do you prevent them, at 65, from claiming?

We can all come together and take a good hard look at what is happening to our customers and predict where are the ambers, greens and the reds, and see what we can do to keep customers healthy and avoid spending what they don't need to spend.

I agree with Jeremy. I have way too many people who are happy to spend way too much money on one-off events to do health screening and there's no follow-up. We all know that the data from the screening for diabetes, yes, you come and we suck your blood and we tell you you're diabetic but do you see a doctor and do your check-ups? Nobody knows.

The follow-up is very important and in the end, you will have to pay when they become blind. How do you want to incentivise the right behaviour? If you asked me, I would choose an insurance provider that is innovative, that not only rewards me for no claims but also helps me to keep healthy for the right reasons. DR

JEREMY LIM I think it's interesting to see how these trends are evolving and how the insurance products are evolving. And like you said, Mack, this is just the first of many steps insurers plan to take because when we look at US data, health plans that spend more on outpatient care have lower in-patient costs.

And overall, the healthcare spending is lower, which to me suggests that their members are healthier if they are spending less overall. You're not denying them care but you are emphasising more outpatient care to avoid uncomfortable and unwanted complicated in-patient care.

But at the moment, there's this disconnect, and in Singapore, because most of our insurance is in-patient-based, we are taking steps where we're embracing the outpatient and lifestyle side of things. I suppose as our policyholders age and when outpatient becomes more and more important in terms of maintaining the overall healthiness, then we're probably going to step in that direction to get involved in the financing of outpatient care as well.

Q What can medical providers do to ensure sustainable healthcare?

DR JEREMY LIM This is not a zero- sum game. It's very critical when we think about the number of claims. We look at the quantum. That is where I think stakeholders need to be more interventionist.

To a lot of doctors, in the absence of a fee guideline, it is very hard to make the argument that one is under- or over-pricing. I think that we should consider, as a society, whether or not we should bring back a guideline on fees. This will help to establish boundaries on what is appropriate and inappropriate practice. Beyond that, there is so much wastage in the healthcare system.

We have perverse behaviours like policyholders having to be admitted to hospitals to claim the maximum amount to cover tests that will not be covered on an outpatient basis. So in terms of product design, what is covered on an in-patient basis vis a vis an outpatient one needs to be relooked so that we can squeeze the waste or inefficiencies out of the healthcare system. If not, it becomes a zero-sum game where insurers compete with the doctors, hospitals for essentially what is a limited patient wallet.

I think it's important to set benchmarks as to what is appropriate practice, and in fairness to a lot of doctors, they're not businessmen, they don't know how to price. And oftentimes the cost structures at the individual clinics/hospitals can be very different, so the ability to look at what everyone else is supposed to charge allows sanity and it allows a yardstick to go back and look at their own costs and say: "Am I appropriate or am I not? If not, then what can I do about it?"

I mean, some of us have been in the industry long enough to remember that a decade ago, the ministry released the hospital bill sizes and this was adjusted for similar Diagnostic Related Groupings (DRGs). Essentially, it was an eye-opener because it demonstrated that among public hospitals, there was incredible variation in cost for treating the same disease.

Perhaps because this was the public sector, this led to a very healthy cross-comparison and sharing, and I remember hospitals, clinicians, operation managers visiting other hospitals to understand what they were doing differently and how they could learn. That's the sort of self-improvement attitude that I think needs to permeate.

DR CAROL TAN I never understood at that time when I was in the ministry when they said we can't have fee guidelines because we need to have competition...

I was in the ministry when we did the fee (guidelines), and looking at the different hospitals, it was amazing to watch the behaviour change just as we put up the numbers. Other countries have also said that they want to have healthy competition.

Australia, for example, got all the stakeholders together and then they discussed DRG - how much does it cost in 2017 to care for stroke and so on, how many will need MRI and CT, and so on. It always goes back to the patient and looking at the diseases, and they took into account all these and calculated in 2017 and so on, how much it will cost. And then it goes into the guidelines. This is across public and private hospitals.

Germany does this too. It allows for variation - it's never just one number, they give you a range because the services may be different.

DR JEREMY LIM We can't afford to be simplistic when we compare private and public cost because the cost structures are very different. Public sector enjoys government subsidies for equipment, land, and so on, and public-sector doctors enjoy a salary and, on top of that, fees for number of patients seen.

But private-sector doctors by and large are individual business owners - there are costs to cover, rental, nurses, and so on. Mapping apple for apple outside of the total bill will be quite challenging.

Even at the total bill level, the public sector enjoys a tremendous advantage over the private sector when it comes to capital and state-of-the-art equipment.

Q What can the Government do to ensure sustainable healthcare?

MR CHYE PANG HSIANG I think there are two parts to this (data transparency). The foundation is of transparency and it's a brave step to be transparent. That includes the Government being transparent with costs.

The second part is how prices are actually set. This may be controversial but if you look at the Dutch system for the kinds of procedures and services where market competition actually works, they leave it to the market to set the prices. But where they see market forces failing, the government steps in and sets prices. So it's not a one-size-fits-all kind of approach but they look at where markets are working and where they aren't but underpinning all this is transparency.

DR CAROL TAN The whole point is that the stakeholders need to come together. In many countries, the government is not just the funder or provider of hospitals but they actually have guidelines on how to stay out of hospital - vaccinations, and so on. These measures are there and people know about it and say: "Oh, okay, that's important too."

Immunisation is very low in this country. Immunisation is the very thing which keeps people out of hospital but our immunisation rates for diseases such as pneumonia is less than 10 per cent and it is the No. 1 or 2 cause of admissions.

Looking ahead

MS PAULINE LIM We're all on a learning curve because the insurers were somehow admitted into the scheme according to the Government's thinking of the day. So as Jeremy rightly said, the minister said it's about health.

So I think we all have to move, the products need to evolve as well. Already, I think, people believe that I have to be admitted (to a hospital) or else insurance won't pay. So I think in small steps, for certain procedures, insurance has already modified to say if it's in the doctor's clinic, we'll (insurers) pay as well but I think more has to be done in this direction.

So really, all the stakeholders are moving along and it's critical, and the Government has said it's about health. And that sets the tone for insurers and doctors to say "actually we should be concerned with people staying healthy".

DR JEREMY LIM Can I make the point that we should expect these changes to be non-linear, it will be discontinuous because fundamentally underpinning a lot of the different ways to pay for health as well as healthcare would be data. And really, data will allow us to do phenomenally different things... We will be able to pivot very quickly.

I am very optimistic that we are moving in the right direction. I'm also pretty bullish that the change will come slower than what we hope for on a year-to-year basis but much faster than what we anticipate if we look at a 10-year horizon. All in, we are on the right trajectory, and Singapore desperately needs this to happen.

More discussions and dialogues between insurers, healthcare providers are definitely steps in the right direction. I think, as a dyed-in-the-wool capitalist, fundamentally we need the right business models for all these to work.

Currently, a lot of health screening, a lot of preventive health measures, are seen as government activities, things that NGOs do and so on. It has to be a very legitimate business that insurers are happy to pay for, professional providers are happy to provide and once the ecosystem kicks in, the whole situation will be very different.

Lorna Tan

•For reports and video clip on the ST Roundtable, visit http://www.straitstimes.com/tags/sustainable-healthcare

A version of this article appeared in the print edition of The Sunday Times on April 16, 2017, with the headline 'How the various stakeholders can contribute'. Print Edition | Subscribe