Angry Doctor

Thursday, November 30, 2006

Confidence Goods 4

Singapore's healthcare system is once again in the limelight.

The Minister gives his views on the healthcare market in this speech, parts of which I have reproduced below (emphasis mine):

"In my view, the main problem behind healthcare woes is that we have unnecessarily mystified healthcare and some economists have further endorsed the myth by concluding that the market fails in healthcare. While the observation is not wrong, it has unfortunately given healthcare providers many excuses that their activities are unique and they are different from other economic sectors. This perception has given politicians and many interest groups justification to intervene, often for their own interests, and along the way, to further distort the healthcare market. It becomes a self-fulfilling prophesy. While the healthcare market can never become a fully perfect market (few economic sectors are perfect markets, by the way), the current level of market imperfection is not the natural order of things. The healthcare market fails because we collectively, unwittingly allow it to fail.

First, if patients do not know the choices available to them and the prices and quality of these services, how can we expect them to make informed choices and reward the efficient providers?

Second, if the bills are paid by a third-party with very little direct payment by the patients, why should patients bother to search for lower-cost solutions?

Third, if the providers themselves do not know or bother to know what their true costs are, and that of their competitors, how can we expect them to improve on their performance, to deliver better services at lower cost?

Fourth, if both providers and consumers do not regularly measure the clinical outcomes of their services, how can we know whether the services provided are optimal and desirable?

Finally, if prices are distorted by subsidies, how can we expect to achieve an optimal distribution of supply and demand, with minimum wastages and maximum productivity?"

"The world is searching for better answers to many of these systemic problems. As I see it, the more we can make the healthcare market behave like a normal market, the closer the world will be to having more efficient and effective healthcare systems."

angry doc wonders if he (and his blog) had done more to mystify healthcare in Singapore or to demystify it. Do let him know, gentle readers.

angry doc is however pretty convinced that healthcare is a unique 'activity' (and try as he might, he cannot think of another activity that is totally like healthcare - education comes close).

Reading between the lines, the Minister's idea of making the healthcare market more 'perfect' seems to be:

1. Make the providers make their prices and performances more 'transparent' so consumers can make educated decisions on whom to patronise, which will in turn effect competition between the providers.

2. Remove third-party payers and subsidy from the equation.

angry doc will not look at point 2, but with regards to point 1, he can already see a couple of reasons why it may not work in practice.

Medicine is a confidence good and while patients can (and should) know the prices of the services and goods, they will not always know the quality of the care they are receiving. To many hypertension patients, paying for and taking their daily medication must be like buying a lawn display that will keep tigers away from their house.

Because of that, providers and consumers do not always have the same desired outcomes in mind. To try to measure outcomes before we even agree on what outcomes we want is putting the cart before the horse.

But underlying the first four points the Minister has raised is perhaps the belief that there are answers in healthcare, and that we know those answers.

We believe we know what quality is, we believe we know what the cost-effective solutions are, and we believe we know what clinical outcomes are optimal and desirable; good old-fashioned medical paternalism which angry doc is proudly guilty of.

But importantly, we also know that what we think is best for our patients may not always be viewed as such by them, and vice versa.

Unless we are willing to agree with the patients (or consumers) that what they want is what is best for them, then making the market more 'normal' or 'perfect' probably isn't going to change the way things are.

As long as providers think they know best, they will continue to distort the market consumption to what they think is right.

Our task then, at least within the context of subsidised healthcare, is perhaps not so much how to make the healthcare market more 'perfect', but how to make the consumers align their expectations with ours, or how to incentivise them to do so.

Your task, however, is to answer yourself this question: do you want a doctor who gives you what you want, or a doctor who gives you what he thinks is best for you?



  • Hi angrydoc,

    I think most patients would openly tell you "I would like the doctor who gives me what he thinks is best for me? Why? Because I am not a doctor what"

    That in itself throws a HUGE spanner into Health Ministers arguments. Patients in Singapore are usually very passive and lazy. They have no interest in finding out information. Even if it was presented to them on a platter they would say they do not know anything about medicine etc and hence cannot know anything. So what if you try to make it transparent? Few are willing or interesting to take the effort to know. So will it work? It takes 2 hands to clap. I guess MOH can try swinging one hand first. But will patients swing?

    Secondly, in REALITY most patients truly and deeply want to say "I want a doctor who gives me what I want and makes me feel better, is very nice, caring etc"

    Patients have little knowledge of medicine and health. How do they judge what is good medicine and care? From friends? From gut feeling? From service (laymen) standards.

    Economics? Supply and demand. Right now I can honestly say the demand is for good service and customer pleasing and satisfying "medicine practices" than truly objectively good medical practices. This is the DEMAND.

    And guess who's having to supply it?

    MOH is already quite lucky that in Singapore the people have no clue what is good, what is right and what is bad. Hence you have broad different spectrums. And thus they are able to save costs on many subsidized patients. On the other hand there are also doctors and medical groups able to rake in the dollars.

    It's the perfect system frankly. Of course it benefits the government and the medical profession largely.

    By Blogger Dr Oz bloke, At November 30, 2006 4:31 pm  

  • I suspect the Minister's continual faith in a 'normal' healthcare system stems partly from the results he got from publishing the fees for various surgeries in the hospitals, in particular the lowering of Lasik costs (which he likes to quote). He is now applying the same logic to primary healthcare.

    Will it succeed?

    First of all I personally feel that the lowering of Lasik costs is more a reaction from the hospitals from the publication of their costs, rather than a reaction to the shift in consumption pattern.

    It is probably also fair to say that Lasik is a luxury service pitched at the higher-income group. For a one-time discretionary expenditure, these patients can afford to spend more time learning more about the surgery and comparing prices.

    At the primary health level the costs are likely to be lower (in the short term) and the differences (in quantum) probably less between institutions. Patients will likely still choose their primary care physicians based on cost, proximity, and familiarity rather than performance indicators.

    Ultimately the problem as you have pointed out is that providers and consumers see DEMAND differently. The question now is whether the providers will change themselves to provide for the demand, or attempt to use incentives and disincentives to change the consumers' demand patterns.

    By Blogger angry doc, At November 30, 2006 7:29 pm  

  • "Ultimately the problem as you have pointed out is that providers and consumers see DEMAND differently. The question now is whether the providers will change themselves to provide for the demand, or attempt to use incentives and disincentives to change the consumers' demand patterns."

    Let us just talk about Primary health care for the moment.

    I think the perspective of the private sector and the public sector is different with regards to how we view the demand and supply problem.

    However we must note that the customers in the public and private sector may be the same people!

    Hence there is a problem with perception and clashes in what the private and public sector deem as "adequate" or even "good" treatment standards.

    One half of the problem is usually that the public sector is CHEAPER in terms of cost to the patient, but the service and perhaps amount of medicines and types of medicine given are viewed as "inferior".

    For the private sector cost is higher but service standards and amount of medicines and types are viewed as "better".

    Does MOH want this disparity in perception to persist? If not then would it be wise?

    You see I find it strange that MOH wants to compete with the private sector as far as the primary healthcare is concerned. They say they will match the private sector. (After all they peg their salaries to the pte sector right?) But yet they can deliver at a lower cost! Is that a realistic claim to make and a target to set out for?

    I think this is what MOH has to come to terms with. If you are going to REALLY do what you say, indirectly you are saying that you are going to put the private primary health care sector out of business.

    Does the government want to take over all primary healthcare? Do they? If not say so. Also please tell the people the truth. No point saying you can be as good as the private sector when you do not want to spend the money nor really want to take over the market.

    Make up your minds.

    By Blogger Dr Oz bloke, At November 30, 2006 9:06 pm  

  • No, I do not think MOH is trying to put the private GPs out of business. The Minister is under pressure to keep costs of primary health care low. The people want good service but they also demand low prices. By competing with the private sector through a combination of cheap generic drugs, outsourced radiology investigations and cheaper foreign medical graduates, they will force GPs to keep their fees down.

    By Anonymous Anonymous, At December 03, 2006 4:05 am  

  • Cheers for the Minister--and boohs for the commenting doctors who are simply dirty, professional monopolists protecting their turfs (and Lexuses, no doubt.)

    I, for one, do not do what the "doctor thinks is best for me." I actively seek third and fourth opinions and do what makes sense to me.

    More important, the information consumers seek is performance metrics. We want to see how many diagnoses you missed in the last six months, how many people you killed, how courteous and dedicated you and your staff are to customer service.

    Finally, the presumptiousness of you doctors sickens: "For a one-time discretionary expenditure, these patients can afford to spend more time learning more about the surgery and comparing prices. . . . Patients will likely still choose their primary care physicians based on cost, proximity, and familiarity rather than performance indicators."

    Uh--how do you know that? Any data on demand elasticities? well, you doctors are in general quacks who rely upon intimidation, rather than evidence, to do your daily killings. Can we expect any better?

    By Anonymous Anonymous, At December 06, 2006 6:48 pm  

  • Dear anonymous,

    And you are hoping that the Ministers who decide that their salaries should be pegged eternally to the top 6 earners be the ones to help you come up with these performance metrics?

    Good luck!

    PS: I am not for monopolistic markets. However, healthcare is not just about doctors. A large proportion of the cost goes to drugs and medical equipment, administrative staff, civil service pay etc. But your comments are reflective of many Singaporeans and I appreciate your honesty.

    By Blogger Dr Oz bloke, At December 08, 2006 2:58 pm  

  • Let see... in Singapore, who can you whack other than doctors?

    Politicians/MPs/Ministers? Nope. Unless you want to slip out of Singapore quietly in the middle of the night and stay in Oz or JB

    Lawyers? Nope.
    Want to get sued? Lawyers are not like the goody-two-shoes doctors who are reluctant to sue. There's an image to upkeep.... the compassionate, humble doctor. Besides if you sue, you will be known as a nasty doctor, now patients wouldn't want to see a nasty doctor, do they?

    Ever since the Elite Girl incident, I notice a lot of bashing of the so-called Elite, whether warranted or not, on the forums. Some of it is overdone. Its called bad also whack, good also whack, everything also whack.

    Ever notice any article critical of MPs/Ministers/politicians in the newspapers?

    What else can ST journos do? Write critical articles on Dog-tors LORRRR. Otherwise, how to sell those rags?

    All those articles are stoking up the public's/patients' eagerness to spill some Loctors' blood.

    Just my take.

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