MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE - FINANCIAL YEAR 1ST APRIL, 1989 TO 31ST MARCH, 1990
Sir, first, I would like to thank the many Members who have spoken yesterday and today on the first cut of my Ministry's budget. For the benefit of new Members, let me first briefly re-state my Ministry's main policy objectives. The aim of my Ministry is to build a healthy nation and to achieve a high standard of health care for all Singaporeans. We will continue to emphasize the prevention of disease and the education of the public on all aspects of health, healthy habits and lifestyles and this is the only way to reduce the cost of health care for Singaporeans, ie, by their remaining healthy. Unfortunately, in spite of all health education and preventive medicine, people will still fall ill and require hospitalization. We must therefore ensure that our hospitals and their professional staff are competent and efficient in restoring back the sick to good health. We must also ensure that the physical condition of all our acute hospitals meet the higher expectations of Singaporeans. Today, because they are our most modern hospitals, the NUH and the Singapore General Hospital are viewed by the general public as being more desirable than the older hospitals such as Toa Payoh Hospital and Tan Tock Seng Hospital. This situation will be corrected when the other three major acute hospitals, namely, Tan Tock Seng, Toa Payoh and Kandang Kerbau Hospitals, are redeveloped by 1994. Planning for the three hospitals is in progress and we hope to commence building works by the middle of next year. Sir, my Ministry will also be setting up several speciality centres. This will allow specialists from both the private and public sectors to pool and upgrade their expertise and to develop them into centres of medical excellence. An Oncology or Cancer Treatment Centre is scheduled to be opened in SGH in July this year. A National Eye Centre will also be set up within the SGH complex and renovation works for this will commence within the next few months. The new Kandang Kerbau Hospital, as I have informed the House this morning, will specialize also in paediatrics. This way, we can then develop the new KK Hospital into a centre of medical excellence for both women and children. Sir, let me now deal with the subject of restructuring which is the concern of many Members who have spoken. Restructuring has been supported, I think, by all, except one, and that is the NCMP. Let me first reiterate the objective of restructuring. This is to enable the Government hospitals to be more responsive to the needs of the general public and to be able to provide a better level of service to all Singaporeans. Restructuring will provide all our hospitals with the necessary management authority, autonomy and, more importantly, the responsibility to achieve this objective. By subjecting the restructured hospitals to commercial accounting practices and strict financial controls, there will be greater cost consciousness and better cost controls. The end result of restructuring will then be Government hospitals which are more cost effective, efficient and highly responsive to public needs. Singaporeans will therefore be the ultimate beneficiaries of this whole programme. While all the Members have supported the objective, they, as well as many Singaporeans, are understandably fearful as to how this will impact on the availability of subsidized beds and as to whether they will remain affordable. This is especially important for the lower income group. Let me reassure Members that the Government's policy of providing subsidized hospital care for the lower income group will not be affected in any way by the restructuring programme. Heavily subsidized C class beds will still be available in sufficient numbers. I will first deal with the question of subsidized beds before going on to discuss the subsidy level. Dr Aline Wong had anticipated that my answer to her would be that we are cutting down on the number of C class beds because people preferred the B2 or higher class wards. Indeed she is correct. That is my answer. But that is the fact facing us. Increased affluence, particularly over the last 15 years, has also resulted in an increased preference for B2 or higher class wards because these offer a higher level of comfort. Dr Aline Wong and Dr Lee Siew-Choh have attributed this also as being due to the availability of Medisave funds. In fact, I think other MPs have also mentioned that. Sir, Medisave is a factor. I will not deny that. However, the preference for the better class beds, in fact, started way before Medisave was launched in 1984. We had to start closing the unoccupied C class beds from 1980. And since then, the number has been gradually reduced from 4,000 in 1980 to about 2,000 today. Yet the occupancy rate has, in line with our closing, gone down to 65%. That means, as at today, 35% of the beds still remain unoccupied. And while these beds are unoccupied, there is a long queue of patients clamouring to be upgraded from the C class beds to B2 or B1. We receive such requests almost daily. Sir, Singaporeans are supposed to be able to choose which type of ward they wish to be admitted into. Unfortunately, this is not so. Many have chosen to be admitted into the B2 or higher wards. Unfortunately, we do not have enough of them and there are no vacancies, and instead such people are being forced, therefore, to stay in the C class wards. I think if we have additional B2 and B1 beds today, the occupancy of the C class wards will plummet again. Sir, the large number of C class beds is a carry-over from the colonial days and the time, not so long ago, when unemployment was high in Singapore and wages were low. Wages have gone up significantly over the last 15 years, and most Singaporeans can afford and do prefer something more than just basic facilities. They can afford also to not take advantage of the subsidies that are available in the C class wards. Sir, the redeveloped hospitals will be configured to meet the actual demands of the public. When completed in 1994, they will continue to have C class beds, but in much reduced numbers, as pointed out by the Member for Tampines GRC, Dr Aline Wong. We will, however, closely monitor to ensure that no one is denied a C class bed should he require one. Let me move on to hospital fees, the topic of much great concern to all our Members here. I will first address this topic generally, before going into the details later. Hospital care is highly labour intensive, with staff salaries making up over 80% of the total running cost. The cost of running a hospital will therefore continue to rise as wages and salaries are increased. Modern equipment, sophisticated technology and operations also contribute significantly to these higher costs. Hence, irrespective of whether a hospital is restructured, our hospital fees will have to be increased periodically to take into account these cost increases. However, Members may not be unduly worried that the lower income group will be denied medical care as a result of these cost increases. My Ministry will continue to ensure that as fees are increased in the future, subsidized wards will still remain highly affordable to the poor and the indigent. For the indigent, since they cannot afford to pay even the highly subsidized fees, we will continue to liberally grant them waivers or partial remissions. However, those opting for greater privacy and greater personalized services that are available in the A class and the B1 wards must be prepared to pay the full cost of these services without subsidies. Sir, yesterday the NCMP claimed that those in the subsidized wards would not have access to specialists and consultants. Some of our Members here also fear that and, not being doctors themselves, that is quite understandable. But being a medical doctor himself, the NCMP must surely know that this is not true. He must know that the medical team in each ward is headed by a consultant and he is supported by a team of specialists as well as housemen and medical officers. In fact, the likelihood of the subsidized patient being treated by a specialist has never been higher today. In 1980 we had only 378 specialists in both the University and the Government hospitals. Today, this number has increased to 677, almost doubling of the strength. Members can therefore be assured that the proper level of care appropriate to the medical needs of each patient will be provided, regardless of the class of wards he is in. Sir, let me go into a detailed discussion of the level of subsidy and as to whether the Members' fears on the affordability of the subsidized C class wards are correct. First, the bill size for C class patients. In 1984, the average bill size for the C class patients came to $160. Four years later, this figure has increased to $203, an increase of $43. The cost to the patient a day in that case has increased from $29 in 1984 to $38 today, an increase of $9 per day to the patient staying in a C class bed. On the other hand, the cost of providing the service to the patient has increased from $151 in 1984 to $195 today. That means the cost has gone up by $44 within these four years, as compared to the $9 a day that a patient is paying. This means that the average subsidy for a C class patient amounts to $850 for each stay of about 5� days. This subsidy that is being provided to him has increased by $180 over the past four years. So of the $180 subsidy that has been increased arising from the increase in running cost, he only pays $43. Sir, this shows that the Government has been very generous and fair. Let us see how a C class bill and a B2 class bill compare with an A class bill for a patient who is receiving the same treatment but enjoying the comfort of being in a single-bedded ward. For a Table 5 operation which involves the removal, for example, of part of a stomach (this is a fairly major operation), the A class patient will end up paying $4,600 (operation plus stay in hospital). The B2 class patient will end up with a bill of only $790, 17% of the A class bill. The C class patient will end up paying $493, that is about 10.6% of the A class bill. And for a very major operation, for example, open heart surgery or multiple digit replantation, the class A patient will be facd with a bill of $13,700. The B2 class patient will be paying $2,200, which is about 16% of the A class bill. And the C class patient will only be paying 8.8% of the A class bill, and this amounts to about $1,100. Sir, the figures show that the subsidies are very significiant. Members must take care that they do not confuse the public when discussing subsidies. There are two aspects to subsidies. One is the available subsidy, the other is the utilized subsidy. We must not confuse the two, thereby confusing the public. Let me give an example. Supposing we have a service where the subsidy today is $10 and there are a thousand people using it a year. It means that the total subsidy that we are providing for this service is $10,000. Supposing tomorrow or sometime in the future we increase the subsidy, we double it to $20. But for various reasons, the public prefer to use alternative treatment and only 100 people use it. The total subsidy now has dropped to $2,000. The question is: has the subsidy to the user dropped or increased? This is the situation facing our hospitals today. The subsidy for C class beds has gone up significantly. Fewer people are using this service. More are opting for the higher class wards which are less subsidized and this has therefore slowed down the growth of the total subsidies required. Let me give you a profile of the C and B2 bills, because sometimes averages may hide what is actually facing the patient. The average bill for a C class patient is $203. What does this represent? For 1988, the 75th percentile for C class bills was $235. That means 75% of all C class patients pay $235 or less. And the 90th percentile, 90% of all C class patients face a bill of $414 or less. What about B2 patients? The average bill for a B2 patient is $346, not very high. The 75th percentile comes to $392, whereas 90% of all B2 patients pay $690 or less. The question asked by the Member for Pasir Panjang GRC, Dr Wan Soon Bee, is: are these figures affordable? It is not a subsidy. It is the actual bill size. Are these bill sizes affordable? Sir, undoubtedly, Medisave has made it very much so. It is therefore much easier for them to pay the bill and the reason is this. In today's labour market, a household income of $700 is, I think not uncommon. In fact, most people earn much more than that. But taking $700 per month as being the income for the household, the Medisave contribution comes to $42 a month. The average C class bill of $203 will require only five months of Medisave contributions. The average B2 bill size will only require eight months' worth of Medisave contributions from a person in the low income group. Let us look at the 90th percentile, some of the highest bills that are being faced. For C class bill, $414 which is the 90th percentile will require 10 months of Medisave contributions. Similarly, for the B2 90th percentile bill of $690, the low-income worker earning $700 per month will only require 16 months to accumulate that quantum. In terms of hospitalization, Singaporeans thankfully are quite healthy. So most people do not require hospitalization especially when they are within the age group of 20-50. For a married couple, for every 10 years of their life within the age of 20-50, they will on the average expect to be hospitalized a total of 12 days, which means that during that 30 years, they can expect to be hospitalized a total of 36 days, which is about 5 hospitalization episodes. So in terms of hospitalization requirements, if you are hospitalized five times, each time you require anything from 5 months to 10 months of savings. Or if you opt for the B2, you require 8 months to 16 months of Medisave contributions. What about those without Medisave? What do these bill size and the expected hospitalization requirements mean to a person who is self-employed or who does not have Medisave? Sir, a husband and wife team together will need to put aside $4 every month, between the ages of 20 to 49. That is only one-tenth of what the Medisave contribution would have been. And this would have allowed them to go into a C class ward and pay the bill quite easily. Sir, as regards the litmus test as to whether our bills are affordable, which the Member for Cheng San GRC, Mr Heng Cheng Miang, has asked for, if they are not affordable, then we will expect the settlement of Class C bills to be very low with plenty of bad debts or people asking for waivers. Most C class patients have no problem settling their bills. This is understandable based on the figures I have just given. For financial year 87 which ended at the end of March 1988, 92.7% of all patients had settled their bills within six months of the ending of the financial year. 1.44% have been granted waivers. The remaining 5.9% which are outstanding will be investigated by our medical social workers. If we find that they cannot afford to pay but they are not very comfortable about applying for waivers, we will still proceed to grant them the waivers. That has always been our policy. And this is reflected in the number of waivers and partial remissions that we granted in 1987. For the financial year 1987, 1,444 of those who applied for waivers received the waivers. On the other hand, upon investigations, 22,190 of the other patients were either granted waivers or partial remissions, mainly partial remissions, because we found that they required some assistance. And the total amount waived came to $1.87 million or about 1.3% of our total revenues. So our commitment to a liberal grant of waivers and partial remissions is something that we take very seriously and that is a very important safety net for all Singaporeans, especially those in the lower income group. Sir, the NCMP yesterday claimed that the fee increases over the years have deprived poor Singaporeans of hospital care, and that the Government is shirking its duty to look after the medical needs of the poor. Singaporeans, and the NCMP himself, know that hospital services have been vastly improved over the last 20 years. We have today a hospital service that is the envy of many, including those in the developed countries. And it is available to all Singaporeans, regardless of his social status or his income level. This would not be so if the Government had shirked its duty. Hospital fees have risen because, as I have shown, costs have gone up. In particular, the general salaries of Singaporeans have gone up because of the strong economic growth generated by Government policies. But because the actual quantum of subsidy has increased substantially for the Class C and B2 wards, and because Singaporeans are generally better off and most have Medisave funds, we are in the happy situation today of patients and their families complaining that they are being deprived of beds in the less subsidized wards. Sir, on the other hand, the indigent and those who are genuinely poor are given the same medical treatment, free of charge. And that is the true measure of how well the Government has discharged its duties. Sir, Dr Aline Wong yesterday also cited Britain and the USA as examples of countries with generous health care funding because they held deeply the beliefs about social responsibility towards the needy and the under-privileged. She mentioned that these systems are now facing problems and they are now trying to reform the systems rather than doing away with them completely. And she suggested that we could perhaps learn from them. The British and the Americans started their systems with good intentions. Where the British went wrong was that instead of focusing on those needy and under-privileged who required help, they gave free treatment to everybody, regardless of whether they required subsidizing. That was a big mistake. And the result is a tremendous demand for treatment, leading to long queues and waiting time. In fact, in some parts of Britain, a patient requiring elective surgery may have to wait up to two years before he gets one. In Singapore, anyone requiring elective surgery gets it within a week, two weeks at the very most. The British government has just set out to introduce some drastic reforms, to decentralize control over the hospitals and to allow them some autonomy. Sir, this is what we have already introduced way back in 1985, with the opening of NUH. As to whether the British can focus more on the target groups who require heavy subsidies, I am not too sure as to whether they can succeed in this. But I wish them well. The American system is also facing tremendous problems. They are spending over 12% of their GNP on health care and this is projected to go up to 15% within the next few years and to 18%, maybe 19%, by the turn of the century. Yet despite this heavy expenditure, over a third of all Americans cannot afford to obtain medical care. If you are involved in an accident in America and you are not covered by health insurance, your chances of getting into a hospital that is prepared to accept you are extremely slim. In Singapore our philosophy and policy is also aimed to help the needy and the under-privileged. That is our commitment. Our total expenditure on health care equals 2.7% of our GDP. But no one is deprived of medical care. Sir, the Singapore model is a far safer one and a more effective one. Our aim must be to ensure that our economy continues to grow and that everyone is gainfully employed, hopefully and preferably with ever increasing wages. This way we help them to build a safety net through their Medisave contributions and they can then choose how they wish to spend their money and their Medisave funds. We also encourage them and help them to stay healthy at the same time so that the best option is they do not have to spend anything on health care. We also let everyone have a choice of service according to what they can afford. The luxury of the A class or B1 beds or for those who cannot afford it, provided we make-do with the less privacy, the B2 and the C class wards which, whilst heavily subsidized still accord them the necessary and same level of medical treatment. In our system there is very much less wastage and abuse and no one is denied medical care. Sir, let me move on to some of the other points raised by the other speakers. The NCMP made some very strong remarks. He accused the Government of playing a dirty trick on Singaporeans. He said that in SGH what we have done is to convert C class wards into B2 and call them B2. That means giving them the same C class facilities but charge them more by just a neat trick of changing the name. Sir, I guess the NCMP has not been to SGH since it was opened. If he had, he would have seen that the B2 beds in GH are highly superior to any B2 beds that we have in the other hospitals, NUH included. That is why our B2 wards in GH are so heavily utilized that we have in fact, unfortunately, turned away patients or delayed the operations until beds are available. Singaporeans are no fools, despite what the NCMP would like them to believe. They know whether they are getting value for money. If those are C class beds at such a much higher cost, those beds would be empty today. They will all be using the C class beds in the other hospitals. The NCMP accuses us of profiteering. He gave the example of Hepatitis B vaccinations. Sir, the Hepatitis B vaccincations in the Government hospitals and clinics are far cheaper than any that can be obtained elsewhere in Singapore and the reason is because we are able to use our purchasing power to tender for the vaccines and obtain extremely low prices. All these savings are passed on to our patients. Unfortunately, because we tender, it also means we are locked in to a price for a certain time. We started off offering Hepatitis B vaccinations, for example, for newborns at $45 and in June 1988, because we had used up the old stocks we were able to obtain new stocks at a lower price, we have reduced the vaccination price to $30, and for adults we have reduced it from $120 to $90. Sir, that is not the end of the story. I am happy to inform Members that stocks are being used up. We expect when the new tender is delivered that prices for the new supplies will further go down and we would, as we have done before, pass on the savings back to Singaporeans. Sir, we do not believe in profiteering. Dr Vasoo, among his points, talked about the older hospitals losing the staff to the hospitals that have been restructured. Sir, we have made it clear and we will enforce it very strictly that a restructured hospital will not be allowed to poach staff from the other hospitals that have not been restructured. He is right. If we leave it to them all the best staff will go to the restructured hospitals and why not? Because they can expect to have better conditions of work, they can have greater authority to do what is correct, they do not have to wait months and years before their requests are approved because all the requests have to go up all the way to the Ministry of Finance for approval. So it is highly efficient and therefore highly desirable in terms of staff perceptions. Sir, we will also be ensuring that the standards in our restructured hospitals do not deteriorate. And in fact we expect the standards in the hospitals that are restructured to improve because with the authority and the responsibility being given to them, there is no other person they can pass it up to. The buck stops at the table of the Chief Executive Officer there, not at the Ministry of Finance or the PSC. So therefore we expect results and we expect results to be obtained relatively quickly. He talked about nursing homes. Sir, at the present moment our policy is to allow the development of private nursing homes to provide care for the convalescent and the chronic sick and the nursing homes are at present not subject to any legislation. However, they will be subjected to periodic checks by the Ministry of Health when the relevant legislation is brought into operation. In the mean time the Ministry of Health will work with the Ministry of Community Development on the licensing of nursing homes and homes for the aged and we will ensure that certain minimum standards are being complied with. Encik Abbas asked about the progress of the redeveloped hospitals. I have already replied to that. In terms of what restructuring will mean to the terms and conditions of the staff, Sir, the staff will be entitled to no lesser terms than what they are presently enjoying, except for pensions. They will have their pensions recomputed into a lump sum and henceforth they will be paid the full CPF. Mr Choo Wee Khiang has made a suggestion that we should perhaps rename the B2 into C class. I find that suggestion rather strange and in fact if he had done that earlier, I think the NCMP would have jumped on it and said, "See, you do not have to ask him. They have already done in GH." Sir, there must be the clear gradations between A, B1, B2 and C. C is a basic level of care. No frills but full medical treatment. Anyone who prefers to have a little bit more luxury must be prepared to pay for that little bit of luxury and those who want to go all the way to an A class bed, they had better be prepared to pay for the full cost for the A class bed. He has also asked about how the restructured hospitals will achieve excellence and how do we assess them. I will address that afterwards when I come to Dr Tan Cheng Bock's questions. Sir, Dr Tan is worried that whilst he has no objection to our brining in American consultants to help us manage SGH in the interim period, he is afraid that being profit-oriented they will also bring their profit motive into SGH. Sir, there are two aspects to profit, as all accountants will tell him, maybe more, I do not know. One is the cost. The other is the revenue. If you can increase the revenue you make more profits. On the other hand, you can reduce your cost and make more profits. Our objective, Sir, is to ensure that we are able to reduce our cost or at the very least ensure that our costs do not go up rapidly. And to do that we must have all the modern management tools to allow us to monitor what is being done, what is being used, how much time is being spent, so that we can ensure that everyone is cost effective. At the same time we will have a full team of medical professionals, a medical board, which will ensure that whilst we look at costs, medical standards are not jeopardized. So these are two independent bodies. One is a day-to-day management, the other is the professional standards. How will the restructured hospitals continue cooperating with each other? How will we ensure that their self-interest does not lead them to preclude cooperation? Sir, we have ensured that by having all the restructured hospitals under one holding company. This way there is still a policy setting body that would guide the hospitals on what they should be doing in terms of cooperation, in the sort of specialities that they should be developing or they should not be developing in order to avoid duplication. So whilst they have the autonomy for their day to day operations, developmental and policy decisions will still have to be vetted by a central body. Patients will still continue to be transferred as and when required. For example, radiotherapy is highly expensive. Each machine costs a million, two million, the latest one, maybe even $3 million. It does not make sense for every hospital to have a radiotherapy department. So whilst we have cancer patients spread throughout the hospitals, we will still have them ambulanced to SGH whenever they require radiotherapy. In this way, the links will still be maintained. Also, the support which is presently being given by the Singapore General Hospital to the various regional hospitals, for example, Tan Tock Seng Hospital, in terms of eye, ENT, will still continue. SGH will still continue to send the specialists and consultants to help out in the smaller hospitals. Nothing will change. As to conflict on whether a specialist would be penalized if he spends too much time with a subsidized patient, Sir, specialists are required to spend a certain amount of time with the subsidized patient. At the present moment, it is between six and seven sessions per week out of 11 sessions and we will closely monitor to make sure that they do not spend less time but if they are more efficient, they can spend more time, so be it. We will be quite happy but what we want to be sure about is that their time is efficiently utilized. Sir, as to the profit motive, he says that the hospitals must show a profit. The hospitals will have to continue to receive subsidies, like NUH, SGH. The subsidy level for financial year 1989 will be $60 million for SGH, and about $22 million for NUH. The subsidies are still very significant. Sir, Dr Wan Soon Bee has raised some very pertinent points. I agree with him that in terms of use of Medisave we have to try to ensure that Medisave account holders do not see their Medisave funds as being someone else's money but money which must be conserved because they will need it in their old age. We will be looking into how we can better communicate with the account holders and educate them more effectively.