RESTRUCTURED HOSPITALS (Operational cost)

[Mr Speaker in the Chair]

Mr Yeo Toon Chia asked the Minister for Health (a) what is the operational cost of running restructured hospitals, giving a breakdown of the profit/loss of these hospitals from 1990 to 1992 and (b) whether there will be an increase in the charges of these hospitals and, if so, what measures his Ministry is taking to curb the rising charges.

The Minister for Health (Mr Yeo Cheow Tong): Mr Speaker, Sir, the total operational cost of running the Singapore General Hospital, Kandang Kerbau Hospital, Toa Payoh Hospital and the National University Hospital for 1990, 1991 and 1992 are as follows: Operating Operating Government Net Year Cost Surplus/(Deficit) Subsidy Surplus/(Deficit) 1990 $486m ($201m) $181m ($20m) 1991 $534m ($195m) $187m ($8m) 1992 $547m ($182m) $208m $26m $1567m ($578m) $576m ($2m) ------ ------- ----- ------

The net surplus of $26 million in 1992 was mainly due to an increase in the subsidy received by NUH. This was because NUH's subsidy in earlier years was under-computed by about $10 million and this shortfall was paid to the hospital in 1992.

Sir, manpower costs account for 65% of the operating costs of hospitals. As long as Singaporeans enjoy good pay increases, medical cost must rise accordingly. This is because hospitals also have to pay competitive wage increases in order to be able to recruit and retain their staff. It is therefore better that hospitals increase their fees by small amounts every year to cover their cost increases, rather than to defer such revisions and have large increases every few years.

The hospitals will, however, continue to improve and streamline their operating systems and procedures, and optimise on the use of manpower. Other measures which the hospitals are taking to control costs include:

a) Restricting the purchase and regulating the use of expensive medical equipment;

b) Controlling the use of expensive drugs;

c) Automating labour intensive procedures; and

d) Avoid duplication of services amongst hospitals.

Since hospital operating costs will continue to increase, it is inevitable that part of the cost increases be absorbed by the patients. However, for subsidised patients, because of Government subsidies, much of these cost increases will be borne by the Government. The Government will pay for as much as 80% of the cost increases for Class C patients and 65% of the cost increases for B2 patients.

Mr Yeo Toon Chia (Ang Mo Kio GRC): Sir, could the Minister ask the restructured hospitals to present statements of accounts to Parliament?

Mr Yeo Cheow Tong: Sir, the hospitals are private companies owned by the Government and their accounts are published every year. If Members of Parliament wish to have them, I can arrange for Members to receive their annual reports.

Mr Heng Chiang Meng (Cheng San GRC): Sir, may I ask the Minister what was the percentage of manpower cost of these restructured hospitals before they were restructured?

Mr Yeo Cheow Tong: Sir, the manpower cost of the hospitals appeared to be higher before they were restructured. In fact, the manpower cost amounted to slightly over 70%. This is because a fair bit of the operating cost was actually hidden subsidies provided by the Government. By restructuring, we were able to recognise these hidden subsidies and therefore the manpower cost, as a percentage of the total operating cost, went down to 65%.

Dr Toh Keng Kiat (Nominated Member): Sir, does the Minister envisage an improvement of the deficit situation now that there will be a revision of the Consultation Fee Scheme?

Mr Yeo Cheow Tong: Sir, the revision in the Consultation Fee Scheme will in no way affect the operating cost. This is because the Consultancy Fee Scheme comes out from more or less a fixed pool of money. The revision only affects how that sum of money is to be distributed amongst the doctors.