Affordable Excellence: The Singapore Healthcare Story

How to Create and Manage Sustainable Healthcare Systems

By William A. Haseltine

BROOKINGS INSTITUTION PRESS

Copyright © 2013 William A. Haseltine
All rights reserved.
ISBN: 978-0-8157-2416-2

Contents

List of Illustrations………………………………………………viAcknowledgements…………………………………………………..ixIntroduction………………………………………………………xiiChapter 1 The Singapore Healthcare System: An Overview………………..1Chapter 2 High Quality, Low Cost……………………………………16Chapter 3 Helping Patients Pay……………………………………..38Chapter 4 Controlling Costs………………………………………..64Chapter 5 Financing……………………………………………….83Chapter 6 Design and Infrastructure…………………………………93Chapter 7 Investing in the Future through Medical Education and Research..106Chapter 8 Facing the Future………………………………………..128Appendix………………………………………………………….143Notes…………………………………………………………….148Bibliography………………………………………………………162Index…………………………………………………………….174

Excerpt

CHAPTER 1

The Singapore Healthcare System:An Overview

Singapore has achieved extraordinary results both in the high quality ofits healthcare system and in controlling the cost of care. In per capitaterms and as a percentage of Gross Domestic Product (GDP), its healthcareexpenditures are the lowest of all the high-income countries inthe world.

How did this happen? How has Singapore been able to achieve thesekinds of results?

The answers are bigger than just the process of putting a healthcaresystem together. There are larger factors that have to do with the spirit andphilosophy of Singapore itself, the way it is governed, how the governmentapproaches domestic issues, and how it deals with the world.

In my study of Singapore, I have found three compelling qualitieswoven into the fabric of the country that have enabled it to achieveoutstanding successes in so many areas, healthcare included. They are long-termpolitical unity, the ability to recognize and establish national priorities,and the consistent desire for collective well-being and social harmony ofthe country.

Political Unity and Constancy of Purpose

From the time the British withdrew from Singapore and left its formercolony to fend for itself, Singapore has been able to develop and grow asan integrated whole. The People’s Action Party (PAP) has been in powersince independence, resulting in sustained political stability. Along withstability has come a unity and constancy of purpose and action throughoutgovernment. Contrast this condition with other countries where governmentregularly changes hands and different parties espousing different agendas goin and out of power. A clear and uninterrupted approach to solving a nation’sproblems is very difficult to achieve in such situations. The government hasbeen steady in its broad general vision of what care should be and what roleit should play in the lives of Singaporeans. That continuity of philosophy andapproach, I believe, has made possible the ability to plan and execute over along period of time.

I have also observed an unusual degree of unity among the country’svarious ministries—an acknowledged spirit of cooperation among governmentaldepartments that makes possible the formulation of policiesthat reaches across ministries. A member of the team that assembledthe 1983 health plan discussed in this chapter and Health Ministerfrom 2004 to 2011, Mr. Khaw Boon Wan, has noted that each month,Permanent Secretaries of each ministry meet to focus on issues thatrequire participation by more than one ministry. It is simply assumedthat ministers will work as a team on issues that need interdepartmentalcooperation.

I find it relevant that the government realized early on that improvementin health conditions and care had to be approached as an integraland inseparable part of the overall development planning for the country.As a heavily urbanized city-state with a population of two million atindependence, caring for the health of the people meant more than justbuilding hospitals and clinics. Health would be affected by almost everyaspect of life in an urban setting: housing, water supply, food supply, airquality, waste disposal, road traffic, parks, tree planting, and more. Ensuringthe health of the people of Singapore had to be built into every aspect ofurban planning, requiring a comprehensive approach and the cooperation ofnumerous ministries over all the various sectors of government. The cultureof cooperation made it all possible.

Some have suggested that Singapore is a thinly-disguised dictatorship,and that political stability is attained at the cost of democratic freedom. Thatis simply not the case. Although one party, the PAP, has been in power sinceindependence, it is elected and does not hold power through force, and couldnot have maintained its rule without being highly responsive to the concernsof the electorate.

The government is responsive to the concerns of the electorate. In the2011 elections, healthcare was one of the issues raised. There were concernsthat the government was not doing enough for the elderly and that familieswere experiencing severe financial strain and even bankruptcy as they tried topay for older family members’ care. Opposition parties organized themselvesaround issues of healthcare affordability and eldercare costs.

Early the following year, the government responded with a newprogram of increased spending—doubling the Ministry of Health’s budgetover the next five years—to address citizens’ concerns. It announced increasedsubsidies for long-term care, even for patients being cared for in the home,and expanded eligibilities for subsidies, giving middle-income familiessome financial relief. Subsidies were increased for nursing homes (includingeligible patients in private nursing homes), day care, rehabilitation care, andhome-based care. These actions by the government seem to me to be a directresponse to the issues raised in the elections.

Establishing Priorities

The health of the populace was not a top priority for the government atthe start of independence. As Lee Kuan Yew observed in his memoirs,he had three immediate concerns to deal with: international recognitionfor Singapore’s independence; a strong defense program that would”defend this piece of real estate”; and finally the economy—”how tomake a living for our people.” Yong Nyuk Lin, the Minister for Healthat the time, stated the situation bluntly: “health would rank, at the most,fifth in order of priority” for public funds. National security, job creation,housing, and education were in the queue ahead of health, in that order.With the exception of the basics of public health, healthcare planningand development would have to wait until the nation achieved a level ofmilitary and economic stability.

It seems to me that this ordering of priorities was apt for the time,as it was vitally important first to set up the defense of this small nation,and then to attract investors to set in motion economic growth, and tackleglaring issues of unemployment, housing, and education. After these criticalproblems had been dealt with, others, including healthcare, could be takenon. Exactly where health comes in the priorities of an emerging economymay vary. In countries where HIV/AIDS is highly prevalent, or if anotherepidemic or disease threatens a broad segment of the population, health maybecome the first or second national priority.

Wisely, the initial focus in Singapore was on public health: puttingproper sanitation procedures in place, controlling infectious diseases, allsuccessful efforts. Early initiatives were launched to provide clean water,develop a vaccination program, and guarantee access to basic medications,clean food, and more.

In time, the priorities set by the government proved to be effective. Thesecurity situation stabilized and the economy grew to the benefit of all. Thecreation of the healthcare system was aided immeasurably by the outstandinggrowth. One important indicator to consider: GDP grew from just underS$8.5 billion in 1964, to over S$50 billion in 1983 (the year the governmentissued its White Paper declaring its healthcare goals and which I will bediscussing below), to almost S$300 billion in 2011. Those economic gainswere successfully translated into raising the health standards of the nationand building the care system that is the subject of this book.

Promoting a Sense of Collective Well-Being and Social Harmony

One of the most important tenets of Singaporean governance is that a strongsociety requires social harmony. If tensions between social groups and racesare to be avoided, all groups should be included in the life of the country andshould benefit, to some degree, from its successes. The government’s actionson behalf of this belief have undergirded the building of modern Singapore.As part of the social fabric, the government built a system that promotes asense of fairness and well-being through both economic opportunity anddelivery of social services. I find these words of Lee key to understandingSingapore’s approach:

A competitive, winner-takes-all society, like colonial Hong Kong inthe 1960s, would not be acceptable in Singapore … To even out theextreme results of free-market competition, we had to redistribute thenational income through subsidies on things that improved the earningpower of citizens, such as education. Housing and public health werealso obviously desirable. But finding the correct solutions for personalmedical care, pensions, or retirement benefits was not easy.

One important solution Lee and his ministers found was the CentralProvident Fund (CPF). It was set up during British colonial rule as acompulsory savings program for workers to build a nest egg for retirement.Individuals put five percent of their wages into the fund and their employersmatched it. The accumulated money could be withdrawn at age 55. Lee’sgovernment expanded the program, upping the contribution levels, andallowing funds to be used for home-buying (widespread home ownershipwas seen as vital for political and social stability).

The CPF has become one of the key pillars supporting social stability.The government had a long-range vision to increase the use of the Fund overtime and broaden it to allow individuals to save for and pay for education andhealthcare as well as retirement and home-buying. Mandatory contributionrates have risen over the years and now stand at 16 percent of wage foremployers and 20 percent for employees. After age 50, the rates decrease.

The Central Provident Fund’s contribution to the viability of thehealthcare system cannot be overstated: it helps control costs by instilling inpatients a sense of responsibility about their spending—after all, it is theirmoney to save or spend; and it helps make care available and affordable toall. Eventually, however, the government recognized that the health savingsprogram would not be enough to support care, and other systems were putin place, including a medical insurance program and a social safety net.

Respect and Education for Women

The Central Provident Fund’s contribution to the viability of the healthcaresystem cannot be overstated: it helps control costs by instilling in patientsa sense of responsibility about their spending—after all, it is their moneyto save or spend; and it helps make care available and affordable to all.Eventually, however, the government recognized that the health savingsprogram would not be enough to support care, and other systems were putin place, including a medical insurance program and a social safety net.

Specifically, women’s health education was deemed essential to thefuture of the country. The Education Ministry took the lead in educatingyoung women about important health topics. The then Health MinisterMr. Khaw Boon Wan credited that effort with creating a vitally importantadvance in healthcare: educated women were now able to look after theirown health, their health during pregnancy, their babies, and their families.

* * *

In the coming chapters, I will take you through these and other elements thathave made healthcare in Singapore such an enviable achievement: the highquality of care, more on the critical role of the CPF, financing the system,controlling costs, infrastructure, investing in medical research, and the newchallenges of long-term care and eldercare. But first, in the remainder of thischapter, I will walk you through the ideas and the history of social planningthat created the foundation for today’s healthcare system.

Singapore’s transformation from a British colonial outpost to a First-Worldcity-state is nothing short of remarkable. Since achieving independencein 1965 as a tiny, impoverished country with few assets and no naturalresources, it has turned itself into a modern, prosperous, secure city-state.Singapore’s founding father, Lee Kuan Yew, knew that without Britain’smilitary and financial support, this new country would succeed and endureonly if it could turn itself into a “First World oasis in a Third World region.”

Many institutions had to be erected before Singapore was able toreach that goal. How it was all accomplished makes for a fascinating studyin nation-building. However, the scope of this book allows me to focus mydiscussion on the underlying Singaporean philosophy and actions that drovethe development of the public healthcare system. While providing for thehealth needs of his people, Lee also wanted his country to avoid the pitfallsof Western systems—such as those in the United Kingdom and the UnitedStates—that were already showing signs of strain caused by high costs.

In the late 1940s, as a student at Cambridge, Lee witnessed thebeginnings of the English welfare state:

Looking back at those early years, I am amazed at my youthfulinnocence. I watched Britain at the beginning of its experiment withthe welfare state; the Atlee government started to build a societythat attempted to look after its citizens from cradle to grave. I was soimpressed after the introduction of the National Health Service when Iwent to collect my pair of new glasses from my opticians in Cambridgeto be told that no payment was due. All I had to do was to sign a form.What a civilised society, I thought to myself. The same thing happenedat the dentist and the doctor.

Over time, though, Lee realized that a system that took care of all of itscitizens’ needs would diminish the population’s “desire to achieve and succeed.”It was obvious to him that Singapore, upon independence, was a poor,struggling country that needed a motivated population working hard in theinterests of their country and their future. He could not begin to contemplatea system like Britain’s. If anything may be identified as the guiding philosophybehind Singapore’s success, it is Lee’s conviction that the people’s desire toachieve and succeed must never be compromised by an overgenerous state.The government made certain that Singaporeans developed and retained asense of responsibility for all aspects of their lives—including the care andmaintenance of their own physical and emotional well-being.

Building the Foundation

Bringing Care to the People

I mentioned earlier that high-quality healthcare was not a high priority inthe early days of independence. However the young government did takesome significant steps to improve the health of Singaporeans. An earlymove was to bring primary care services closer to the people by developinga network of satellite outpatient dispensaries and maternal and child healthclinics. They offered a one-stop center for immunization, health promotion,health screening, well-women programs, family planning services, nutritionaladvice, psychiatric counseling, dental care, pharmaceutical, x-ray, clinicallaboratory, and even home-nursing and rehabilitative services for non-ambulatorypatients. The move took the pressure off Singapore’s GeneralHospitals to provide such care.

Mr. Khaw Boon Wan characterized the movement to outpatient clinicsas one of the low-hanging fruits in the transformation of the healthcaresystem, yielding a high return for a low investment, a necessary conditionin the early days of the country. These outpatient clinics have since beenconsolidated into modern polyclinics, small, well-equipped medical centersproviding a range of diagnostic and treatment capabilities that do not requireovernight stays, and catering to all age groups. Although acute illnesses stillrepresent the majority of the problems being seen at polyclinics, the clinicsare increasingly focused on chronic disease management. Services such ashome-nursing and rehabilitative care for non-ambulatory patients havesince been moved from polyclinics to Voluntary Welfare Organizations,community hospitals, and private nursing homes.

Introduction of User Fees at Public Clinics

Services at the outpatient clinics had been free-of-charge—modeled afterthe practice of the British healthcare system. But the government quicklychanged that.

As Lee Kuan Yew recalled in his memoirs:

The ideal of free medical services collided against the reality of humanbehaviour, certainly in Singapore. My first lesson came from governmentclinics and hospitals. When doctors prescribed free antibiotics,patients took their tablet or capsules for two days, did not feel better,and threw away the balance. They then consulted private doctors, paidfor their antibiotics, completed the course, and recovered.
(Continues…)Excerpted from Affordable Excellence: The Singapore Healthcare Story by William A. Haseltine. Copyright © 2013 by William A. Haseltine. Excerpted by permission of BROOKINGS INSTITUTION PRESS.
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