Competition rules must not apply to healthcare

One of the reasons for the sharp increase in healthcare costs is generous insurance policies that pay according to how much doctors and hospitals charge (New riders for IP plans will include co-pay feature; March 8).

Such insurance plans encourage doctors to order useless tests, overprescribe medications and propose unnecessary treatments to patients.

It is clear that the withdrawal of Singapore Medical Association (SMA) fee guidelines in 2007 has resulted in the phenomenal rise in charges, with private healthcare costs rising at a rate of 18 per cent a year.

Critics claim that a reintroduction of fee guidelines would destroy the free economy as we know it. However, when benchmarks were in place, the majority of doctors charged near the cap, and once this limit was abolished, most exceeded it without a care.

While it is impossible for a single private hospital to corner the market, undercut all competitors and then raise prices when patients are left with no alternatives, companies like Parkway Pantai, which owns four premier private hospitals in Singapore, have sufficient market share to enjoy an oligopoly.

In the presence of imperfect competition, medical care must not be dependent on market forces. Section 34 of the Competition Act - which prohibits practices which prevent or distort competition - should not apply to healthcare.

The sick are at the mercy of their doctors, as they may not be in the right frame of mind nor possess the time and knowledge to compare prices.

In the absence of some industry regulation in the form of fee guidelines, patients rely on the Health Ministry, healthcare experts, the media, patient feedback and insurers to gauge the reputation of doctors and private hospitals.

No heed was paid to the SMA's warning about removing fee benchmarks 10 years ago, paving the way for some of the worst abuses of the free market system.

Change is critical if Singapore is serious about achieving the quality healthcare that our country so badly needs. Requiring the insured to pay at least part of the bill is a move on the right trajectory.

Edmund Khoo Kim Hock

A version of this article appeared in the print edition of The Straits Times on March 12, 2018, with the headline 'Competition rules must not apply to healthcare'. Print Edition | Subscribe