Diversity in Acute Hospital Models in Singapore’s Healthcare Landscape

1 Dr Tan Wu Meng asked the Minister for Health (a) what is the Ministry’s comparative assessment on the existing not-for-profit private acute hospital model in Singapore and those in other advanced economies in terms of (i) patient care (ii) talent development and (iii) alignment of institutional culture with the not-for-profit mission; (b) whether additional diversity in acute hospital models will complement Singapore’s existing care landscape; and (c) what factors might constrain the viability of entrants to this new industry locally and how can these be mitigated.

The Minister for Health (Mr Ong Ye Kung): Mr Speaker, Sir, let me first give some background on not-for-profit hospitals.

Not-for-profit hospitals are common around the world, such as in the United States (US), Netherlands, Japan, Korea. It does not mean that they operate at a loss. In fact, all hospitals need to be financially viable, or they will have to close at some point. A well-run not-for-profit hospital is sustainable in its operations, but do not distribute dividends to its shareholders. Instead, it ploughs back its profit to improve hospital services and facilities, and other activities such as charity.

There are various reasons why hospitals would run as not-for-profit organisations. The key ones are that it is more in line with the public health mission of hospitals and it helps them access philanthropic funds. Apart from that, there are no major inherent differences in the way good for-profit and not-for-profit hospitals are run, in terms of quality of care, attention to value-based care, talent recruitment, development and so on. We see those qualities in Mount Alvernia Hospital, the only private, not-for-profit hospital in Singapore.

The Ministry of Health (MOH) is consulting the industry to establish a next private hospital. Much attention has been given to the proposed not-for-profit feature, but actually, that is not the key feature. Instead, we think the more important features are:

First, the hospital is required to serve primarily Singaporeans.

Second, there will be stronger governance – it will be singularly licensed, that is, it will only have one healthcare licence, which means that the hospital operator needs to have strong oversight and control of its doctors’ clinical practices. The various professionals – specialists, surgeons, general physicians, pharmacists, rehabilitation professionals – will have to work closer as a team to serve the patients.

Third, cost-effective care – we intend to impose bill size restrictions on the private hospital as we do not want a high-cost care model.

We intend to specify these as conditions that potential hospital operators will have to meet and will be evaluated on. This means that land price will not be the sole criterion in determining the hospital operator.

Why do we want to establish a new private hospital model with these key features? The main reason is that it provides a better range of options in our healthcare landscape. Today, we have public healthcare which is heavily subsidised by the Government and which we try to make as affordable to Singaporeans as possible. But the nature of subsidised care is there is a wait time, which can be quite lengthy for non-urgent electives.

The public healthcare system is complemented by private healthcare services, where we have a range of hospitals. Most are quite high in cost and you need to be able to afford or be well-insured to access them, with little or no wait time. There are a few private hospitals that are lower in cost, such as Mount Alvernia, some say maybe Raffles Hospital. MOH’s view is that we can increase options for lower-cost private hospitals so that private healthcare better complements public healthcare and we have a more adequate range of options for Singaporeans.

About 10 years ago, the share between public and private hospital workload was 85:15. Today, it has shifted to 90:10 and the ratio continues to move towards the public hospitals. This is good in the sense that it is a demonstration of the public’s confidence in public hospitals, but it is not so positive because it adds considerable load to the public healthcare system. We are better off with a variegated system, where residents who are well-insured with private policies, have less need for subsidies, can opt for a lower-cost private hospital care if they wish to. Private hospitals will also bring new insights and ideas to the management and delivery of healthcare. The additional diversity will enrich and improve the quality of our healthcare system.

MOH has received good responses from various professionals and the industry after our invitation for consultation. I prefer not to make any pre-judgements on the constraints or success factors on this new private hospital model. I am sure we will receive many useful inputs and suggestions on how to help us improve and refine our model, and make it a success.

Mr Speaker: Dr Tan.

Dr Tan Wu Meng (Jurong): Mr Speaker, I thank the Minister for his answer. I should start by declaring that I work at a public hospital, although I have also worked in the past at a private hospital. I have two supplementary questions to the Minister.

Firstly, many in this Chamber would have experience of large organisations and their behaviour, and would have observed how incentives, culture and leadership all play a role in shaping the organisation, as well as the day-to-day reality on the ground. Has the Ministry given consideration to what incentives will be needed, what approach will be needed to the culture of these hospitals and whether it will have any say in the leadership approach in these hospitals to ensure that the outcomes that the Ministry seeks will be achieved?

Secondly, a question that some of my residents have asked is, if these models of care were already very much viable and having an existing market niche, why has there not been a second Mount Alvernia or similar model in Singapore so far? And may I suggest to the Ministry that although we do not want to prejudge the analysis, it is important to look at the drivers which shape whether certain models of care are viable, whether it is in terms of how the land cost is approached, how the tender is structured, including what backup measures there are to ensure that the institution does not drift from the intended purpose?

Mr Ong Ye Kung: The first question on leadership and culture, I fully agree. Ultimately, that is the soul of the organisation. Without the right leadership, right culture, it will not serve our purpose. As to what incentives there can be, I personally think it is difficult to have incentives or schemes that will ensure you have the right culture. That is fundamentally inherent in the soul of the organisation, but having said that, I think rules, regulations do matter. Which is why I mentioned just now that we want to be singularly licensed. We put in other quality factors such as: primarily for Singaporeans; affordability, which will be measured in terms of bill sizes; as well as value-based care, how you intend to do value-based care. All these will be taken into account as we had put put in the tender and as we evaluate interested bidders.

As to why we did not think about the model earlier, I think there are practical considerations. We have been expanding our public healthcare and hospitals, and there is a need for manpower, for doctors. As the Member knows, doctors and surgeons take time to develop and to mature and to be good in their skills. The resource, in terms of manpower and talent, is limited. If we over push this, we can end up having a bidding war of our healthcare professionals and talent, which is why we are always careful as we develop our healthcare capacity.

Having said that, between now and end of the decade, we are developing and building more public hospitals. In addition, we think we can, we should be able to accommodate one more more affordable private hospital.