Should the Government leave the provision of medical services to the private sector?

For a while, there have been debates on whether the Government should leave the provision of medical services to the private sector. With spending cuts and debt reduction in the horizon for many developed economies, this issue has once again caught the interest of policymakers.

In my opinion, there are certainly several advantages for public provision of medical services. Letting the market does the work has the potential of causing less attention to be put in areas that are important from the perspective of a nation but less so in the eyes of the revenue-driven private sector. An example is infectious and communicable diseases. We are all aware of the crucial role played by the communicable disease center (CDC) when SARS struck in 2003.

Public provision of medical services also means that the decision to site medical facilities in certain locations are unlikely to be affected by economic factors such as whether the flow of patients will generate enough revenue to cover the cost or the economic status of the people in the surrounding areas. Additionally, by keeping fees affordable, public provision acts as a check to the private sector so as to prevent them from charging exorbitant fees that are out of reach to some segments of the society. In essence, public provision results in more equity, which I think should be the case for any society when it comes to basic medical services.

Obviously, public provision is not a silver bullet and it has its disadvantages as well. Many people have simplified the debates into equity versus efficiency. As public provision is not revenue-driven, services may be below that provided by private sector. While I have not experienced anything in Singapore that makes me question the efficiency of the public medical services, this does not mean that status quo will be maintained in the future. In the UK for example, patients have to wait for days, weeks and even months before they meet their National Health Service (NHS) consultants. Specifically for UK, the fact that patients do not have to pay consultation fees means self-censoring is non-existent and visits to local clinics appear to be their first course of action. This lethal combination of poor efficiency and waiver of consultation fees has led people to question whether equity has saved more lives or instead, caused more deaths.

Of more relevance to the current issues is the view that Government resources are limited. Any savings that can be obtained through privatization of medical services is a good thing as these resources could be used for other purposes, which the Government deemed or justified to be more important.

Likewise, leaving the private sector to provide medical services is not a silver bullet. While the disadvantages of public provision can be overcome, private sector by itself will not embrace the reasons why medical services have been mostly public driven in the first place.

A sensible model for provision of medical services is perhaps a combination of public and private sector whereby equity and efficiency can co-exist and patients have the flexibility to choose her most preferred type of services depending on her medical conditions at that point in time.

This compromise may not be a novel idea to many people. Afterall, Singapore’s healthcare sector already has a good mix of public and private players. In other words, this model has been achieved. To this, I think I would add the word ‘to a certain extent’ because this is certainly not the end of the road. There are still many rooms for improvements pertaining to this synergy. In the long run, the Government may want to pre-empt a situation whereby Singapore is presented with the healthcare dilemma faced by many developed economies now. Coming from the perspective of the Government, the more relevant question is how the private sector can be given a bigger share of the pie without affecting too much the basic tenet of public provision.

Several options can be explored to achieve this outcome. Through its land planning, Government can effectively pinpoint the best locations to site medical facilities. Instead of choosing locations based on revenue considerations, private sector has to choose designated locations. In doing so, the Government has ensured that people in different parts of Singapore are not disadvantaged when it comes to obtaining medical services. A good example is the Khoo Teck Phuat hospital.

Related to the issue of location is consolidation. In a further attempt to cut down spending, the UK has decided to close down several medical facilities that are deemed to be replicative. However, the huge distances across some facilities means that consolidation is not a viable option as it will affect provision in areas where the facilities have been closed down. In the context of Singapore, this is less of a problem because its small size and improving transport infrastructure essentially allow for more flexibility.

One worry with regards to consolidation is the strain that it will put on the remaining public medical facilities. To overcome this issue, regulations targeting both the patients as well as the private sector should be put in place. Pertaining to the patients, self-censoring behaviour can be instilled through for example the increase in the consultation fees. Of course, the possibility of exemption should always be in place to ensure equity. With regards to the private sector, the Government can establish a list of regulations that potential players should abide to if they win the tender to operate. One example is the requirement to allocate a certain percentage of their practice time to patients opting for public provision.

The options mentioned above are definitely non-exhaustive. Most importantly, their applicability in the context of Singapore should be thoroughly studied before they are implemented.

In conclusion, the issue on whether the Government should leave the provision of medical services to the private sector is a multi-faceted one and likely to be driven by the issue of the moment. Until now, no single country can claim that they have the perfect answer and debate by the two camps is likely to continue.