Medical Savings Accounts: The Singapore Experience

Studies | Health

No. 203
Monday, April 01, 1996
by Thomas A. Massaro, M.D., Ph.D. and Yu-Ning Wong

The Hospital Sector

Public institutions dominate the hospital sector: 13 of the 23 hospitals and 8,640 of the 10,469 beds are in facilities controlled by the Ministry of Health (MOH). But these government hospitals are being restructured with seven of the largest facilities organized as separate corporations, each with its own board of directors. The goals of restructuring are to introduce "accounting responsibility and commercial discipline" into hospital management and to improve the standard of hospital services and responsiveness to patients' needs. Their newly created quasi-independent status presumably gives the hospitals greater entrepreneurial flexibility and allows them to respond rapidly to the changing marketplace.

"More of the professional fee goes to the clinicians because of the relative freedom from bureaucratic encumbrances."

Singapore General Hospital (SGH), the largest hospital in Singapore and one of the two public tertiary centers, where high-technology procedures are concentrated, was restructured in 1989. It is managed much like a private hospital in the United States. Although the fraction of the total hospital cost due to labor in Singapore is very similar to that in the United States,23 SGH is considerably leaner than its American counterparts, with a total of 3.6 full-time equivalent employees per occupied bed. This efficiency comes primarily from fewer clerical and administrative personnel rather than from fewer direct caregivers.

  • Of the 3,640 nonphysician personnel at SGH in 1992, 2,077 were nurses and paramedical personnel, and another 953 were involved in ancillary services.
  • Only 610 were involved in administrative and clerical functions.24

Even in benchmark American hospitals, the ratio of caregivers to support personnel is 2:1.25 The 5:1 ratio seen in SGH reflects increased efficiency as a result of the lighter bureaucratic and regulatory loads Singapore places on the delivery system.

"Singapore General Hospital is efficient primarily because it has fewer clerical and administrative personnel."

Although nurse-to-patient staffing ratios in Singapore hospitals are in line with international standards,26 nurses are relatively underpaid.27 As Table II shows, a junior nurse receives about 80 percent of the average annual wage for the country as a whole, and a senior nurse receives about one-and-a-half times the average wage. This is about 50 percent of the level for junior nurses in the U.S. and perhaps 35 to 50 percent of the level for senior administrative positions.28

Quality of care. Quality of service is an important issue for the restructured hospitals. Hospital personnel are responsible for improving service, and senior management makes decisions based on the satisfaction of patients and other customers. Two examples show recent improvements:

  • Patients waiting less than 15 minutes at admission increased from 40 to 71 percent between 1991 and 1992.
  • Outpatient visits begun without the medical record were reduced from 388 per month in 1990 to one per month by 1993.29

The government is encouraging private hospital growth. By 2010, the private sector should provide 30 percent of the country's total beds. Coupled with the reduction in the proportion of Class A beds in government hospitals, this means those who opt for full amenities will increasingly be channeled to the private sector, while the public sector will focus more on providing subsidized, no-frills health care. Even though Class A service is not subsidized, MOH hospitals are generally less expensive than the private hospitals. The reduction in numbers of Class A beds began after a study showed that 17 percent of patients choosing Class A services earned less than S$1,000 per month. Thus patients are discouraged from selecting service levels beyond their means.30

The government has begun to place revenue caps on MOH hospitals. It is establishing limits on average charges per patient day and will adjust them annually.31 Hospitals that exceed the limits will have their government subsidies cut by that amount, while hospitals with a budget surplus will keep the additional funds.

Historically, the rate structure of MOH hospitals may have indirectly influenced rates in private hospitals under the assumption that the public would be price-sensitive to the incremental cost differences between the two. Recently, the government began to impose more direct cost constraints on private hospitals. For the first time, private physicians and hospitals will face limits on the balances billed to Medisave patients. Billing practices for those patients who do not use Medisave will not be changed.

"The hospital admission rate and average length of stay are comparable to the best American managed care."

Delivery of services. Singapore has one of the most sophisticated health care delivery systems in Asia, serving citizens and foreign nationals alike in both private and public hospitals. In terms of efficiency of delivery, Singapore is comparable to U.S. managed health networks and point-of-service plans.32 The admission rate for residents is approximately 1.10 per year per 1,000 population, about the same as aggressively administered HMOs in the U.S. Average length of stay at Singapore General Hospital is 5.4 days, also comparable to the best American managed care and far less than that in Organization for Economic Cooperation and Development (OECD) and other developed countries.

Community health programs. Both culturally and structurally, Singapore is ideally positioned to achieve commu Large educational and behavioral programs are in place within the public health clinic network. Smoking rates have been cut by 50 percent, and the government has set a target of less than 10 percent of the population using tobacco by the year 2000. When studies showed 13.2 percent of school-age children were significantly overweight, the government set a target of 9 percent by the year 2000, and the health system achieved a 2 percent reduction during the first two years of the program.33

Administrative efficiency. Overhead costs of the Medisave program are less than 2 percent, while the administrative costs of the U.S. Social Security insurance system are 2.8 percent of benefits.34 U.S. Medicaid shows a 4.4 percent computable administrative and training cost.35

New technology. High-technology services are provided at what appear to be appropriate levels. In 1993, of the 1,051 coronary artery bypass surgeries performed, 676 were provided to Singapore residents for a raw utilization rate of 24 per 100,000 population.36 Because the Singapore population is relatively young, on an age-adjusted basis the utilization rate, while lower than in the United States, probably approaches that of Canada, Germany and most West European nations.37 These data suggest that services are available at levels acceptable by most international standards.

They are also available at reasonable cost. The charge for coronary artery bypass surgery at Singapore General Hospital, is S$13,000, including physician fees. SGH requires a S$28,000 deposit from foreign residents to cover anticipated expenses and probably to bar overuse of the public sector by non-Singaporeans. The private hospital service is presumably more expensive, but even it is inexpensive compared to average American charges for the same procedure.38

Finally, high-technology services are available in a timely manner. Singaporeans do not face the queues and long waiting times that characterize heavily regulated systems like the National Health Service of Britain and many other developed countries. MOH data indicate that the longest waiting times - slightly less than two months - are for cataract surgery in public sector clinics, and the Ministry is working to reduce these to more acceptable levels.

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