Angry Doctor

Monday, May 28, 2007

Subsidy and Other Preoccupations 16

angry doc still hadn't found a solution to our bed shortage problem, but he did manage to find this rather interesting article on 'right-siting'. Do have a read.


  • I still dont get what right siting is actually, even after reading that article. I guess I'm a dope.

    By Blogger Mike, At May 29, 2007 12:44 am  

  • The author has made the point that with the block grant, it is really up to the cluster to ensure right siting. If successful (and that depends on patient acceptance), that will require a significant re-distribution of funding and manpower from tertiary to primary health care. If doctors in hospitals are going to manage fewer but more complex cases, the cost per patient in tertiary care will rise. Hospitals must take in more private patients to fill the beds vacated by those discharged to step-down facilities or they will lose money. If right siting is successful, MOH will save on healthcare subsidies whatever happens. On the other hand, hospitals that do not manage to attract private patients may find themselves to be strapped financially.

    Why? Because it is not the patient with complex problems, the one with lymphoma requiring bone marrow transplant, that will earn you any money. A subsidized patient who spends a month in ICU will blow your budget. It's the chap with the simple medical condition without complications that will earn the hospital money. Unless MOH pump more resources to the tertiary hospital that ends up with more complex conditions, they will be in trouble..

    Best case scenario for hospitals:
    Lose simple cases, but acquire private patients with simple problems.

    Worse case scenario for hospitals:
    Lose simple cases, but acquire subsidized patients with complex problems.

    By Anonymous Anonymous, At May 29, 2007 2:28 am  

  • It is only a matter of time before hospitals will start offering mesotherapy, botox injections, chemical peels, aesthetic medicine and other lifestyle medicine services on a large scale justified by the need to generate profits to subsidize non-paying class patients.

    I cannot imagine we are talking about hospitals taking in large number of paying class patients with "simple problems" so that they can earn more money.

    It's the sad truth, but medicine is just a business that needs to make money SOMEWHERE!

    We can't run away from the fact that it's all about the money. As such I think we're all in the wrong profession because medicine is not the way to earning money!

    By Blogger Dr Oz bloke, At May 29, 2007 9:59 am  

  • mike,

    No, you are not a dope, just a foreigner. :)

    It simply means making sure that a patient doesn't get to see a specialist (who is more expensive) when his problems can be taken care of by a GP.

    In a fee-for-service system it is not an issue, but in a third-party payer or tax-subsidised healthcare system it is a concern.

    By Blogger angry doc, At May 29, 2007 5:00 pm  

  • anon,

    It is true that if the current system of subvention is maintained and tertiary institutions end up only seeing the complex and resource-heavy cases, their bottom lines will suffer.

    However, what Jeremy was arguing is that we can try to tweak the incentive system to reward them for taking care of these complex cases (and maybe disincentivise them from keeping the easy ones?).

    Under the current system the clusters hold the funds and can selectively subvent individual institutions to incentivise behaviour they wish to encourage, and vice versa.

    The devil, of course, is always in the details...

    By Blogger angry doc, At May 29, 2007 5:14 pm  

  • However, what Jeremy was arguing is that we can try to tweak the incentive system to reward them for taking care of these complex cases (and maybe disincentivise them from keeping the easy ones?).
    Yes, I know that. But I am not sure if right siting will save the clusters any money, unless we sack some staff.

    With more patients moved to the polyclinics and community hospitals, presumably the cluster will have to re-deploy their staff and shift resources out of the hospitals to the community, right? MOH is saying that should translate into net savings, because subsidized patients in tertiary care consume more healthcare dollars.

    Does that mean we can cut down the staffing levels in hospitals, reduce the number of nurses and doctors because a quarter of hospital beds are now empty? We might be able to achieve some savings in this regard, moving housemen and MOs to polyclinics etc..

    But you cannot move the radiologists, pathologists, cardiologists, general surgeons etc. They will see smaller numbers of more complex patients, that's true. Are you going to let them spend more time with each patient as they have always wanted to do? If you don't cut their numbers, where's the savings?

    The capital costs and maintenance costs of the equipment will not be affected by this either. The unit cost of treating a patient in hospital will rise. Will there be savings overall?

    Jeremy says you can incentivise the doctors by giving them time off for research if they discharge more patients rather than load new cases onto them. Makes sense, but if you do that, will the hospital enjoy any savings from having fewer patients? They still have to pay the specialists. Isn't it a greater temptation to make do with less staff now that they have fewer patients, fire a few specialists and make the remaining doctors manage the same number of more complex cases?

    The fact is, the cost of managing complex cases is more. Will MOH accept that the unit cost to treat a patient will rise or will the subvention be the same?

    For patients to agree to move to community care, they want to pay less. It's the hospital who has to deploy more resources out there.

    If hospitals manage a smaller number of more complex problems, the unit cost will rise, unless they sack some staff or fill the beds with private patients. How is Jeremy going to make it worthwhile for hospitals to look after subsidized patients with more complex problems?

    What I don't understand is: Who's paying more? The patient? The government? If there is going to be savings, who is enjoying the savings?

    By Anonymous Anonymous, At May 30, 2007 1:40 am  

  • anon,

    Great piece.

    I agree with you that part of the expenditure at the hospital level is fixed overheads, but there is also the expendables component which is also subsidised.

    Fact is, whether or not we have right-siting, the hospitals will have to handle the complex cases; with right siting, they won't have to handle the simpler cases, which also take up subvention money from them.

    There is a real danger that the hospitals will be tempted to cut staff numbers to keep pace with a decreased patient load, however, this will be a wrong move as, even with right-siting, the absolute patient load is expected to rise with an aging population - thus the savings will not come from having a lower total payroll now, but from not having to increase the payroll in the near future. With a decrease in patient number, we may be able to achieve the doubling of doctor to patient ratio MOH hopes to achieve without having to employ more doctors.

    Expendables, specialist and tertiary lab/radio staff all cost, and if we can all get into a mindset that straighforward cases can be managed effectively and safely without costly referrals and investigations, then the demand for these higher-costs services will not increase as much as the aging population in the near future. I believe it is not the actual savings we stand to make now that is important, but the potential waste we stand to avoid in the future if we achieve right-siting now.

    As for how to encourage hospitals to decant simpler cases, I think you are right when you say we need to tweak the subvention.

    We may for example give a higher profit margin to a hospital for treating complex diagnoses, while giving them a lower margin (and thus higher risk of making a loss) for simpler diagnoses. At the same time, we can give the polyclinic a higher subvention margin for handling these simpler cases, so that a cluster will actually get more subvention for treating a simple case at the polyclinic than the hospital setting (assuming that the costs and subvention for treating a patient is currently higher at the hospital than polyclinic to begin with, of course).

    Of course, there is always the moral hazard that the hospitals will 'upgrade' a patient's diagnosis to make him appear more complex than he is. I have no solution to that.

    In fact, I think we can find potential problems to any proposal to achieve right-siting - that is perhaps human nature.

    However, if we concede that all proposals will not work, then we also concede that the current system, with all its strengths and flaws, is the best possible system we can achieve. I am not sure that is the case now.

    By Blogger angry doc, At May 30, 2007 5:32 pm  

  • There are many stakeholders here, all with their own agendas.

    MOH wants any change to be at least financially neutral. Angrydoc wants to give greater subvention to various parties, but unless savings from right siting of patients is more than the added subvention needed, it will not work. I don't see the health budget being increased anytime soon.

    Patients want the highest quality service, even if they pay very little. It may be impossible to manage their expectations. How do you refuse the NS boy in the polyclinic with a back strain but demands to have an MRI to exclude a disk prolapse. If you refuse and indeed there is a PID picked up when he goes to a private radiologist, the fallout is considerable.

    If I were a polyclinic doctor, my question is: who will watch my back? If things go wrong, isn't the junior doctor first to be blamed? It is fine to say we mustn't overtreat and excessively refer, but when things go wrong, who takes the rap?

    But I do agree that we have to constantly consider if there is a better way to improve the system. We may need a multi-pronged approach that includes a two-tier, basic/advanced levels of tertiary care, right siting achievded by both financial incentives and mandatory means testing.

    By Anonymous Anonymous, At May 30, 2007 6:39 pm  

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    By Anonymous Anonymous, At December 31, 2012 2:26 am  

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