Fears over medical IPOs' impact on costs are real

Fears have surfaced with regard to the possible conflict of interest and accountability to shareholders, and whether medical initial public offerings (IPOs) would result in higher charges and monopolistic practices ("Concern over health-cost implications of medical IPOs" by Mr Lawrence Law Cher Khiam; Nov 1, and "Fullerton Health calls off IPO plans"; Nov 21).

Unfortunately, these have already come to pass.

The private hospital market in Singapore is an oligopoly, with four premier private facilities owned by the same publicly listed company.

As healthcare is a business, operators of private hospitals are responsible to their shareholders in terms of profits and dividends.

Is it any wonder that the escalating cost of healthcare has become an issue?

Private hospital charges have doubled over the past 10 years or so. Some of these facilities creatively embed all manner of hidden charges into inpatient bills.

A major cause of large bills is the enormous mark-up for basic medication and supplies.

These charges do not include the service element - daily treatment, ward, nursing and miscellaneous fees, on top of charges for room and board.

The mark-up on inpatient laboratory and radiology charges can even be double that of outpatient prices for the same service code and description.

Private hospital charges are largely unknown to the patient before admission, when only an estimate of the final bill is given.

It is difficult to decipher or verify complex hospital bills because of the arbitrary manner in which services and consumables are levied at times.

Another reason for the increase in healthcare costs is the easing of advertising rules for the profession.

Now that private hospitals are allowed to advertise their services, the impact of patients' feedback on overcharging and unnecessary treatments has diminished.

The mechanism of checks and balances (namely, patients' word of mouth) that deterred private hospitals from overcharging in the past can now be countered by aggressive advertising. The cost of advertisements is, of course, passed on to patients.

The ultimate losers from spiralling prices are not only patients, but also stakeholders such as private and public hospitals, as well as doctors, who may lose more patients to medical tourism destinations in the region.

Singapore's reputation as a regional medical hub may also be tarnished as a result.

The rising concern over cost implications of medical IPOs cannot be overstated.

Edmund Khoo Kim Hock

A version of this article appeared in the print edition of The Straits Times on November 22, 2016, with the headline 'Fears over medical IPOs' impact on costs are real'. Print Edition | Subscribe