Lessons of Singapore:
Getting Financing
and Purchasing right
Dr Kambiz Monazzam
Tehran - Jan 2007
Most slides are based on Prof Lim Meng Kin
‫هیچ چیز عملی تر از‬
‫یک تئوری خوب نیست‬
Singapore: Small but!
Singapura, the Lion City,
from the Malay words singa (lion) and pura (city).
Iran
Singapore
Area 660 sq km
Population 2006
4.48 million
Singapore
Singapore:
Ancient History
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late 1300'sp Paremswara settles in Temasik (Singapore). He later moves to Malacca to escape the invading
Siamese forces.
1400-1500 Golden age of Malacca as a trading entrepôt.
1511 Portuguese seize Malacca.
1600 British establish East India Company (EIC).
1602 Dutch establish United East India Company (VOC).
1613 Singapore burned by the Portuguese.
1641 Dutch take control of Malacca.
1786 Sir Francis Light takes possession of Penang for Britain.
1795 Malacca transferred from Dutch to British.
1811 Raffles appointed Lieutenant-Governor of Java.
1819 Raffles signs treaty with Sultan Hussein of Johore and Temenggong Abdul Rahman of Singapore to allow
British to establish a trading post in Singapore.
1819-1823 Farquhar in charge of British settlement in Singapore (reporting to Raffles in Bencoolen). Singapore
thrives as a duty-free trading port.
1823 Raffles oversees transition of Singapore's administration from Farquhar to Crawfurd, then returns to England
(and dies there three years later).
1824 Dutch formally recognize British rights to Singapore under Treaty of London.
1826 Penang, Malacca, and Singapore joined to form Straits Settlements.
1825 Value of Singapore's trade double that of Penang and Malacca combined.
1832 Singapore becomes administrative headquarters of Straits Settlements.
1860 Singapore's population exceeds 80,000.
Independent Singapore was admitted to the United Nations on 21 September 1965, and
became a member of the Common wealth of Nations on 15 October 1965.
Singapore:
Recent History
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1 Ancient times
2 Founding of modern Singapore (1819)
3 Early growth (1819–1826)
4 The Straits Settlements (1826–1867)
5 Crown colony (1867–1942)
6 The Battle of Singapore and the Japanese Occupation (1942–1945)
7 Post-war period (1945–1955)
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8 Self-government (1955–1963)
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8.1 Partial internal self-government (1955–1959)
8.2 Full internal self-government (1959-1963)
8.3 Campaign for merger
9 Singapore in Malaysia (1963–1965)
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7.1 First Legislative Council (1948-1951)
7.2 Second Legislative Council (1951-1955)
9.1 Merger
9.2 Racial tension
9.3 Separation
10 Republic of Singapore (1965–present)
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10.1 1965 to 1979
10.2 The 1980s and 1990s
10.3 2000 - present
Chinese
Malays
Indians
Others
75%
14%
7.7%
1.4%
Independent Singapore was admitted to the United Nations on
21 September 1965, and became a member of the Common
wealth of Nations on 15 October 1965. On 22 December 1965, it
became a republic, with Yusof bin Ishak as the republic's first
President.
144 years
GDP per capita (PPP) USD 27,330
Infant Mortality Rate
Iran: 26
2.5
Life Expectancy
Iran: 70
Health care expenditure trends:
OECD countries & Singapore 1965-2000
16
14
U.S.
Percentage
12
Germany
10
Canada
8
Japan
U.K.
6
4
Singapore
2
0
1965
1970
1975
1980
1985
Year
1990
1995
2000
Cost-effectiveness Comparisons:
Health Expenditures and Infant Mortality
Taiwan
UK
Germany
Australia
Hong Kong
Singapore
Japan
Health expenditure as % of GDP
US
Efficiency: WHO Rankings 2000
Health spending as
% of GDP
1. France
2. Italy
3. San Marino
4. Andorra
5. Malta
6. Singapore
7. Spain
8. Oman
9. Austria
10. Japan
37. U.S.A.
93. Iran
9.8%
9.3%
7.5%
7.5%
6.3%
3.1%
8.0%
3.9%
9.0%
7.1%
13.7%
4.4%
Per capita
spending
$2,369
$1,855
$2,257
$1,368
$551
$876
$1,071
$370
$2,277
$2,373
$4,187
$108
Singapore Inpatient Care System
Hospitals
Hospital Beds
24
10500
Public Hospital beds 80%
200-2500 Bed H
Private Hospital beds 20%
60-500 Bed H
Public Hospital
Tiered Pricing
Bed Occupancy Rate
80%
Average Length of Stay
5 day
Singapore Inpatient Care System
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Large Important Centers:
– Singapore General Hospital (SGH)
– National University Hospital (NUH)
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National Health plan : 1983
1. First Financing
2. Then Hospital Reform
Public – Private Mix
Outpatients: 80% go to Private
20% go to Public
Inpatients:
20 % go to Private
80% go to Public
Public vs. private health expenditure
Public
Private
Taiwan
66%
34%
Hong Kong
54
46
Thailand
51
49
China
49
51
Malaysia
48
52
Korea
Japan
41
32
59
68
Indonesia
25
75
Iran
43
57
Singapore
21
79
Key Health Care Reforms
1983 National Health Plan
1984 Medisave
1985 Hospital Restructuring
1990 Medishield
1993 Medifund
1993 White Paper-Affordable Health Care
2000 Clustering / Eldercare fund
2002 Eldershield
Reasons Behind Reform
• Demand for Hospital Care is going up
• Anticipated Tax revenue expected to go
down in relative terms
Reform Goals
• To secure healthy population through
active prevention & promotion of
healthy lifestyle
• To improve health system cost –
efficiency
• To meet rapidly aging population
growing demand for health care
Reform Threats
• Complete Dependence to GOV Taxes
• Moral Hazard
• Hospital Induced Demand
• Low People Responsibility
• Punishing of people who stay healthy
Social
Context
Singaporean Values
& Famous Proverbs
• Self Reliance
• Strong Family Ties
• “Save for rainy day”
• “Charity begins at home”
Financing reform: 3M system
Public vs. Private financing
Singapore 1965-2000
100%
Percentage
80%
60%
40%
20%
0%
1965
1970
1975
1980
1985
1990
1995
Year
Government Expenditure
Private Expenditure
2000
Singapore’s Health Care
Financing Philosophy:
Avoid either extremes
Free Market
(open–ended
health insurance)
Free Healthcare
(egalitarian
welfarism)
“Singapore believes that welfarism is not
viable as it breeds dependency on the
government. It has adopted a policy of copayment to encourage people to assume
personal responsibility for their own
welfare, though the government does
provide subsidies in vital areas like housing,
health and education.”
Philosophy:
• Personal responsibility
• State as payer of last resort
Formula:
Government:
subsidy
+
People:
co-payment
Financing Options
• Self pay (include user fees)
• General tax revenue financing
• Insurance:
– Social insurance: Compulsory; Public or
private management
– Private: Voluntary
• Community Financing
• Individual Savings Account
Reforms in health care financing
- 3 “M”s
Medisave
 Compulsory for working individuals
 Contributions to personal accounts.
Contributions
matched
by
employer

 Tax exempt
 Earns interest
Medisave
• Employer & Employee paid 20% of Wages to
Central Provident Fund
• X % of employee’s wage go to Employee’s
Medisave Account.
Age
% to Medisave
X <34
%6
35 - 44
%7
45> Retirement or reaching to
%8
a ceiling 20,000 S$
Medisave
• Employer & Employee paid 20% of Wages to
Central Provident Fund
• X % of employee’s wage go to Employee’s
Medisave Account.
Age
% to Medisave
X <34
%6
35 - 44
%7
45> Retirement or reaching to
%8
a ceiling 20,000 S$
Status of Medisave:
Payment :
Full Charges of low class wards
Partial charges of high class wards
Have maximum daily limits
In 2001, 262,000 Singaporeans (or 85 per
cent of the total number hospitalized that year)
used Medisave to pay their hospital bills.
On average, each patient withdrew about
S$1,500.
MediShield
Can Medisave cover catastrophic
health Expenditures?! Why
Catastrophic insurance, covers expenditure
for major illness such as:
Long HOS stay
Cancer Chemotherapy
MediShield
Premiums automatically
deducted from Medisave / or
If people wants to pay separately
MediShield:
Claim limit /Year
Claim limit /Person
"deductible"
coinsurance: 20%
%0.5 ?
MediShield
Present status of Medishield:
In 2001,
MediShield covered 2.02 million
CPF members and their dependants.
MediShield paid out 91,000 claims
amounting to S$64 million.
Medifund
Endowment fund
interest distributed to public
hospitals, to pay hospital bills of needy.
Hospital Medifund Committees
appointed by Government
Status of Medifund
In 2001, 156,800 applications
(or 99 per cent of all
applications)
for Medifund assistance
amounting to S$26.9 million
were approved.
MEDISAVE:
compulsory savings plan
MEDISHIELD:
catastrophic insurance plan
MEDIFUND:
a health endowment fund
Hospital reform
Markets\Private
Sector
Broader Public
Sector
Core Public Sector
B
B - Budgetary Units
A - Autonomous Units
C - Corporatized Units
P - Privatized Units
A
C
P
Hospital Reform Goals
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Raise efficiency & service standards
Improve productivity
Cost control
Give Management flexibility
Hospital reform
• Select 11 HOS for pilot (6+5)
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Started with one new HOS
Corporatized pilot Hospitals
Use commercial accounting
Increase Price for Quality
Make HCS ( Health Corporation of Singapore )
& Pilot HOS is under it, (HOLDING of HOSPITALS)
Hospital reform
Elements
Decision Rights
Residual Claimant
Market Exposure
Accountability
Social Functions
Delegation of each element
Labor, Remuneration, Deployment of
labor & other resources
Full to their budget + GOV
subsidies decreasing over time
subsidies decreasing, Less budget
allocation, more revenues from
“sales” (15% to 55%)
accountability to board of directors
Internal Cross Subsidization, GOV
Subsidies for poor
Hospital reform problems
on Implementation
Problems
General Resistance
Staff Resistance
Doctors go to private
Extra Demand for not
C/E services
Solutions
Implement over time
3 Options: join 80%, 1 Y Delay,
Stay as Civil Servants
Increase their earnings 5-6
times greater average wage
-
Graded ward subsidy
Cross Subsidization
Class
A
Subsidy Difference
0%
1-2 bedded, air-conditioned, attached
bathroom, TV, Phone, choice of doctor
B1
20%
B2+
50%
B2
65%
4- bedded, air-conditioned, attached
bathroom, TV, Phone, choice of doctor
5-bedded, air-conditioned, attached
bathroom
6-bedded, no air-condition
C
80%
>6 beds, open ward
Admissions- Public & Private Hospitals
120
Percentage
100
Private
80
A
60
B1
40
B2
20
C
0
1980
1985
1992
Year
1995
1996
Hospital Reform Results
Admissions Go UP
Cost recovery 40-60%
Administrative costs
increase 5-10%
Administrative Staff 1/6 of
Cure staff
Length of stay decrease
but increase in C wards
Revenue increases more
than costs
Waiting time decrease
Medishield
Medisave
Medifund
Example 1:
Example 2:
But 3Ms is not enough…
Elderly as % of Population (1997)
United States
United Kingdom
Japan
Hong Kong
Taiwan
Korea
Singapore
Iran
13
16
16
10
8
7
7
5.2
Demographic transition:
Percentage of population over 65
% population > 65years
30.0%
25.0%
Hong Kong
20.0%
Japan
S. Korea
15.0%
Singapore
Indonesia
10.0%
Malaysia
5.0%
Thailand
China
0.0%
1995 2000 2005 2010 2015 2020 2025 2030
Years (1995-2030)
Eldercare Fund (2000)
• $200m Initial capital injection;
further capital injections from budget
surpluses.
Interest income to fund operating subsidies to
voluntary nursing homes for elderly & other
step-down care services.
• Goal: $2.5billion capital by 2010
Now: $900 m.
ElderShield (2001)
• National severe disability insurance
covering long-term care (home care or
nursing home).
• Low annual premium from Medisave.
• Cash payout $300 per month up to 60
months.
Summary of financing philosophy:
individual responsibility
+
risk pooling
+
government subsidies
Framework for financing healthcare
Medisave: + ElderCare Fund
MediShield:
+ ElderShield
Medifund:
“No one will be denied needed health care
because of lack of funds”
- Prime Minister Goh, 1993
Hybrid Healthcare Financing
Framework
Total Healthcare Expenditure
Employer
benefits
(36%)
Medi
save
(8%)
Medi
Shield
(1.7%)
Individual
Financing
Cash
(29%)
Medi Government
Fund
Subvention
(0.3%)
(25%)
No matter who pays at point of care,
whether it is
Government
Employers,
Insurance,
Medisave,
Out of pocket
ultimately, citizens themselves
bear the burden
Singapore’s health care
delivery reforms:
• Autonomy - free from civil service constraints.
• Integration – seamless healthcare
• Accountability – cost and quality indicators
• Competition - clusters
Hospital Restructuring
MOH
Management
Responsibility
HCS
Hospitals
1985
1988
1989
1990
1990
1990
1992
1993
1997
1998
1998
1999
2000
2000
National University Hospital Pte Ltd
National Skin Centre Pte Ltd
Singapore General Hospital Pte Ltd
Kandang Kerbau Hospital Pte Ltd
Toa Payoh Hospital Pte Ltd
Singapore National Eye Centre Pte Ltd
Tan Tock Seng Hospital Pte Ltd
Ang Mo Kio Community Hospital Pte Ltd
National Dental Centre Pte Ltd
National Heart Centre Pte Ltd
National Cancer Centre Pte Ltd
National Neuroscience Institute Pte Ltd
Institute of Mental Health
Alexandra Hospital
2000: “Clustering”
Western Cluster
Eastern Cluster
Tertiary Hospital
Tertiary Hospital
Regional Hospitals
Regional Hospitals
Polyclinics
Polyclinics
National Healthcare Group
National University Hospital
•Seamlessness
Tan Tock Seng Hospital
Alexandra Hospital
Woodbridge Hospital / Institute of Mental Health
•Synergy
National Skin Centre
National Neuroscience Institute
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
NHG Polyclinics
(9 polyclinics)
Rationale behind Singapore’s
Health Care Reforms
Moral Hazard
Problem
Solution
Demand-side
(Patient)
Cost-sharing
Medisave
MediShield
Medifund
Supply-side
(Provider)
Case-mix
Quality
Utilization
Competition
Goals of health care system
• Quality
• Access
• Cost
Health care expenditure
as % of GDP
United States
14
United Kingdom 6
Iran
4.4
Singapore
3
Spending enough?
USA
UK
Singapore
Iran
Public or private?
Provision
Financing
Public
Private
Public
Traditional
Market
Private
New paradigm: Partnership?
Society’s values
Who?
What?
Private
Private
{
Self-pay
Social Insurance
Public
Public
{
Self
Reliance
Private Insurance
Community Financing
Mixed
Why?
Risk
Pooling
}
Government Revenue
Solidarity
Affordability
Quality
Access
Lessons of Singapore
Why Singapore Is Successful?
In the hospital organizational reform
1. High Capacity of its Public
Administration
2. Political system that are
conductive for Structural
Reform
Lessons of Singapore
1.
2.
3.
4.
Innovative Financing
Organizational reform
Cross Subsidies in delivery
Risk Transfer to people
Lessons of Singapore
1. High Social Capital
2. Disciplinary People
3. Imitate the best but adapt
THE END
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Singapore: Getting Financing and Purchasing right