What the capitation model is about and how it works

The way Singapore's healthcare system currently works can be boiled down to this: You get a service - such as a blood test, surgery or doctor's consultation - and are subsequently billed for it.

Similarly, healthcare institutions are funded based on their workload, such as the number of medical procedures they perform.

But last week, Health Minister Ong Ye Kung said that Singapore will move away from this fee-for-service model, towards capitation funding instead.

Simply put, this means each of Singapore's three healthcare clusters will get a fixed fee for every person in the geographical region under their care, regardless of whether they are healthy or not. Each is expected to look after up to 1.5 million people.

This creates an incentive for clusters to make sure their residents stay healthy through preventive care, as they will be able to keep the money that might otherwise be used on costly treatments.

Details, like how often funding will be given out, are being worked out.

Capitation funding is used by several other countries - notably, the National Health Service in Britain, which uses this model to determine core funding for general practitioners.

In Singapore, the Ministry of Health (MOH) will probably look at a variety of indicators to determine how successful each healthcare group is, including the prevalence of chronic diseases and the cost-effectiveness of treatments.

General practitioners, as the "boots on the ground", will play a central role in this shift - working with healthcare clusters to identify their patients' needs and ensure they get appropriate care.

MOH aims to get all Singapore residents enrolled with a GP or polyclinic doctor of their choice starting next year.

Doing so empowers GPs to look after people who have enrolled with them, said Professor Teo Yik Ying, dean of the National University of Singapore's Saw Swee Hock School of Public Health.

GPs will also work with healthcare clusters to provide seamless care, he added. "This means that when a person's healthcare needs escalate, the GP is able to identify this early, and to facilitate access and movement within the health cluster."

This new system could result in cost savings at the national level, given that financing of various medical procedures will be subject to an upper limit rather than being open-ended, noted health economist Phua Kai Hong, an adjunct senior research fellow at the Institute of Policy Studies.

He added that while administrative costs could rise because proper audits will be needed to measure outcomes, the country would ideally see the pay-off in the long term.

If done well, the changes could eventually mean that Singapore's healthcare clusters would be assessed by the value they bring to the people living around them, rather than a narrow focus on their financials, observed Associate Professor Jeremy Lim, who is also with the Saw Swee Hock School.

"We can have a 'balanced score card' - much like how corporates are now increasingly assessed not just on their financial performance, but also on environmental, social and governance factors," he said.