Drivers of Cost Increases in Healthcare

Ms Ng Ling Ling asked the Minister for Health what are the key drivers of cost increases in healthcare and what is the target to keep cost increases in the next five years to a publicly announced range.

Mr Speaker, Sir, several factors contribute to healthcare cost increases.

First, our population is ageing. Older patients tend to have more co-morbidities and complications, requiring more medical attention, more medications, procedures and longer hospital stays. For example, in 2019, the average stay in our public hospitals for those aged 65 and above was 6.9 days, compared to those who are below 65 where the average stay was about 3.9 days. So, it is almost a doubling of the number of days of stay.

Therefore, as we grow older, we are likely to spend more on healthcare. And collectively, as we have increasingly more older persons in our population, our overall expenditure on healthcare will also rise correspondingly. For example, MOH's expenditure on the long-term care sector increased from $296 million to $723 million between 2013 and 2018. Or if you work it out, it is a 20% increase per annum.

Second, with medical advancement, new treatments will become available. Previously untreated conditions may now become treatable. Older treatments that were less costly may now be replaced by better but more costly new treatments. These advances can improve life spans and the quality of life, but they come at a price. For example, Total Knee Replacement surgeries have become more prevalent among those aged 65 and above over the last 20 years, rising from 187 patients for every 100,000 people aged 65 and above in 1999, to 499 patients in 2019. That is a 2.7-times increase in the prevalence rate over that time period. Previously, when such procedures – this kind of total knee replacements – were not widely available, elderly suffering from knee conditions would have to bear with poor mobility, which can affect their quality of life.

Third, operating costs may increase over time. For example, manpower costs account for about 60% of healthcare costs. Healthcare workers who do important work, must be appropriately recognised and remunerated. Eventually, increases in manpower cost will translate into higher overall healthcare cost.

While these factors are likely to put pressure on healthcare cost, we can work together to moderate the increases to ensure our healthcare system remains affordable and sustainable. Managing healthcare cost has been a key priority of MOH. The three Beyonds – Beyond Healthcare to Health, Beyond Hospital to Community and Beyond Quality to Value – are key strategic planks that guide the transformation of our healthcare system to one that is future-ready and sustainable.

By looking after our health, we can avoid or delay the need for healthcare, reduce our healthcare bill, and more importantly, we can enjoy a better quality of life. For example, we declared the War on Diabetes, to get all of us, to not only better manage our chronic conditions, but to also choose healthier meals and more active lifestyles. We enhanced Screen for Life subsidies to encourage Singaporeans to go for regular health screenings, to detect and manage health conditions early. These efforts will help us to live long and live well, and avoid future complications that will require much more costly healthcare services.

When we go beyond Hospital to the Community, we ensure that we do not overuse expensive hospital care when we do not need it. We have therefore invested in raising capacity and capability in the primary care and the intermediate and long-term care sectors, so as to provide care that better meet the needs of patients. CHAS Green card was introduced last year and MediShield Life coverage to inpatient hospice care was also introduced in April this year, being part of this overall strategy.

Moving Beyond Quality to Value calls for all of us to be better informed and to be more discerning in how we consume healthcare. Are we stretching our healthcare dollars by choosing therapies that are cost-effective and well supported by clinical evidence? So, we established the Agency for Care Effectiveness or ACE to evaluate healthcare technologies and issue guidances on drugs and other technologies to share with both the public and private healthcare sectors. The Agency for Logistics Procurement and Supply or ALPS was set up to aggregate demand and secure better prices for drugs and other supplies, as well as streamline and reduce supply chain costs. We continue to put emphasis on raising productivity and tapping on technology where available.

We introduced fee benchmarks for common surgical procedures in November 2018 to guide private sector doctors and healthcare providers in charging appropriately and to enable patients to make better informed healthcare decisions. This complements MOH's annual publication of hospital bill sizes. Both the bill size publication and fee benchmarks are available at the MOH website.

Finally, we provide substantial subsidies to cushion the impact of healthcare cost on patients. To help patients pay for the remaining share of their costs, we have MediShield Life and MediSave. For Singaporeans who need extra help, there is MediFund. So, this constitutes our S plus 3M Framework – subsidies plus 3Ms.

As I have laid out, while there are measures we can take to manage healthcare cost, there is unfortunately, no silver bullet. We will need a sustained effort over many years and for all stakeholders to play their part and do so together. We will ensure that Singaporeans will always have access to good quality healthcare that is appropriate and affordable.