PUBLIC SECTOR HOSPITALS (Fee increases)

Dr Lily Neo asked the Minister for Health whether his Ministry will take steps to (i) ease the burden of patients who are affected by the increase in hospital charges; and (ii) implement health-cost saving measures to minimise future increase in hospital charges.

Mr Low Thia Khiang asked the Minister for Health what is the estimated amount of revenue the public sector hospitals projected to recover from the recent increases in charges for B2 and C class wards.

Mr Low Thia Khiang asked the Minister for Health whether all restructured hospitals are running efficiently and have fulfilled the original objective of the Government.

Mr Low Thia Khiang asked the Minister for Health when can Singaporeans expect the next round of "regular but small" medical fee hike.

Mr Chiam See Tong asked the Minister for Health whether he will postpone the implementation of the recently announced increases in hospital charges in view of the current economic situation in Singapore.

Mr Gan Kim Yong asked the Minister for Health whether his Ministry will provide a comparison of the operating costs between our hospitals and those of other countries providing similar standards of healthcare services.

Dr Mohamad Maliki bin Osman asked the Minister for Health (a) whether there is an increasing trend since 1997 of Singaporean patients (excluding those who are eligible for Medifund) who have sought help in settling their bills from public hospitals; (b) will the recent increase in hospital charges contribute to this trend; and (c) what measures are being taken to further assist this group of Singaporeans.

The Minister of State for Health (Dr Balaji Sadasivan) (for the Minister for Health): Mr Speaker, Sir, Question Nos. 3 to 9 are on the same topic, ie, healthcare increases in hospital charges.

Mr Speaker: So you would like to take them together?

Dr Balaji Sadasivan: Yes, Sir. The main responsibility of our public sector hospitals and institutions is to provide Singaporeans, especially the middle and lower income groups, good and affordable healthcare that is appropriate to needs. In this respect, our public sector hospitals have done well and Singaporeans have over the years grown to expect to be treated by competent staff using the latest procedures, drugs and equipment in our public sector hospitals.

To continue to provide quality healthcare, public sector hospitals must be responsive to medical advances, demographic changes and also able to retain good staff by offering competitive remuneration. These initiatives would, however, inevitably increase their operating costs.

MP for Holland-Bukit Panjang GRC had asked for a comparison of the operating cost of our hospitals with those of other countries. Unfortunately, such data is not readily available or comparable as hospitals may differ in their accounting treatment, size and casemix. If we, however, consider total healthcare expenditure, Singapore as a whole spends only 3% of its GDP on healthcare when other developed countries spend 7% or more. Our total expenditure on health per capita for 2000 was S$1,500. This is much lower than the per capita expenditure of countries such as United Kingdom (S$3,092), United States (S$8,243) and New Zealand (S$1,890)1. In fact, the World Health Report published in 2000 by the World Health Organisation ranked our health system sixth among 191 countries in overall cost effectiveness. This is a strong indication that our healthcare delivery system provides good value for money to Singaporeans.

Our two public sector healthcare clusters are not-for-profit entities. As not-for-profit entities, their main objective is not to maximise profits. However, like any other operating entity, public sector

1 Based on exchange rate of 1.78S$ per US$. Our total expenditure on health per capita for 2000 was US$843. Based on OECD Health Data 2002 total health expenditure per capita for 2000 for comparative countries are as follows: United Kingdom (US$1737), United States (US$4631) and New Zealand (US$1062). hospitals need to exercise financial prudence and recover cost to ensure their continued viability. Otherwise, over time, standards will decline.

While Singaporeans will have to pay for the increase in healthcare cost, the Ministry of Health has taken a four-pronged approach to minimise the impact on the public.

First, by having small, regular fee increases. Restructured hospitals conduct annual reviews of their costs, and review their fees and charges regularly to better reflect their cost profile. In the recent fee revision, the quantum of hospital fee increase has been kept quite small, around $20 for class C wards and $40 for class B2 wards, which most Singaporeans should be able to meet through Medisave. For the hospitals, this translates into an increased total revenue from subsidised patients of around $12 million a year, or 3% of their revenue from subsidised patients.

Second, by subsidising healthcare for the middle and lower income Singaporeans. MOH has put in place target subsidies for the different ward classes and services. For example, inpatients are subsidised 80% for C and 65% for B2 class wards. The subsidy rate for day surgery is 65% while the subsidy rate for SOC is 50%. Our figures show that MOH has more than met its target obligations. For example, in FY 01, MOH's subvention was 80.5% and 69% of the total C class and B2 class charges respectively.

Singaporeans pay only for the services that they use. The Government provides additional subvention to the hospitals for teaching, training and research activities. Full Government funding is also provided for building or upgrading hospitals.

On the part of Singaporeans, they should choose their ward class wisely according to their financial means. To help Singaporeans make that choice, financial counselling services are mandatory at all hospitals. My Ministry has also produced a brochure "Ten Tips to Stretch Your Health Dollar" to help lower income Singaporeans access the heavily subsidised healthcare services in the public healthcare system.

Third, by helping Singaporeans to save for their healthcare needs through Medisave. Several concerns have been raised about the timing of the fee revisions and whether the implementation can be postponed. As the last fee revision was in February 2001, the current fee revision has already been postponed by at least six months. Singaporeans must, however, also understand that the approach to paying their share of healthcare costs must be through long term savings, complemented by appropriate medical insurance plans. This is why we have put in place Medisave, which helps Singaporeans build up a sufficient sum of money over many years to fund their healthcare expenses in the future. Singaporeans can also use their Medisave to pay their MediShield premiums, which will help to further defray their healthcare expenses especially if they suffer serious/catastrophic illness. For subsidised patients, 70% of C and B2 Class bills are entirely met using a combination of Medisave and MediShield, with zero out-of-pocket payment needed.

Fourth, by providing a safety net. Singaporeans who still cannot afford to pay the highly subsidised rates even after using their Medisave and MediShield can apply for Medifund. Medical Social Workers in the hospitals are also given the flexibility to extend Medifund assistance to those who need help. So far, the approval rate of Medifund applications has consistently remained above 99%. With Government subsidies, the 3M financing framework (Medisave, MediShield and Medifund), is able to pay for 97% of the total charges for B2 and C class patients. Therefore, my Ministry believes that the small fee increases are manageable for the majority of Singaporeans.

MP for Jalan Besar and MP for Hougang have asked if our hospitals can be run more efficiently. The answer is: Yes. There is always room for improvement. Public sector hospitals must be managed efficiently and cost containment should become part of the hospital management culture, both among administrators and clinicians. My Ministry has restructured our public sector hospitals to give them more autonomy so that they are more responsive to the market and therefore achieve better cost control and productivity.

Our hospitals have introduced numerous initiatives, both big and small, to improve their productivity and manage their cost. These include bulk purchasing of drugs, improving process flows such as offering same day admission for surgery. The clusters have also obtained significant savings by outsourcing of services such as catering and promoting greater energy efficiency as well as getting their staff to multitask. The hospitals have also introduced innovative measures to lower their overheads. For example, SNEC has sought to improve utilisation and reduce fixed overheads through marketing excess OT facilities/consultation rooms to non-SNEC Ophthalmologists. All these measures have saved both clusters several million dollars each year.

Singaporeans must, however, also be realistic as to the extent to which hospitals can keep cost down while continuing to maintain healthcare standards. If Singaporeans expect the best treatment and diagnostics, short queues and good services, they must be prepared to pay for it.

While we try our best to control cost, it is inevitable that cost will increase each year. Even in the prevailing economic situation, based on MOM data, basic wages showed an average increase of 2.9% for all employees in 2001. Taking into account the 4 percentage points restoration in employer's CPF contribution, the change in overall wage costs (comprising staff remuneration and employer's CPF contribution) amounted to 5.2% in 2001. Drug costs will also continue to increase. The average growth rate in prescription only medicine in Singapore from 1997 to 2000 was nearly 8%. In comparison, the projected drug price inflation of the US healthcare system is even higher at 10%.

Nevertheless, I would like to give my assurance that the Ministry of Health is and will continue to work with public sector hospitals to minimise the cost increases to Singaporeans. I would also like to assure Singaporeans that no Singaporean will be denied essential medical care because of his inability to pay.

Dr Lily Neo (Jalan Besar): Mr Speaker, Sir, may I object to being referred to as Jalan "Bazaar" GRC MP. I am Jalan Besar GRC MP.

May I ask the Minister of State whether the hospital fee increase could have been avoided this time, since it has been announced that the hospital fee increase is small? Therefore, can the Ministry of Health not give more subvention to the public hospitals instead, in view of this economic downturn?

Dr Balaji Sadasivan: Mr Speaker, Sir, running hospitals efficiently and ensuring that all Singaporeans can afford their healthcare are two related but separate issues. Hospitals are most efficiently run if they follow cost recovery principle, that all aspects of health services are costed correctly and resources are allocated appropriately.

As demand shifts due to advances in medicine, due to shifts in demography, hospitals reallocate their resources to meet these demands. If you have a system that does not respond to these changes continuously, then you will find demand will build up, queues will form, and people have to wait long periods before they get their services. This is what happened in UK with the NHS. The NHS in UK does not follow this principle of cost recovery. And as a result, over the years, the development of services and facilities has suffered, and now patients sometimes have to wait over a year before they can get their surgery. It has reached a crisis level that in the UK, they are sending patients down to France, Germany and neighbouring countries for their treatment, while they are trying to upgrade their services. If we do not follow the cost recovery principle, we will be going down this road and, one day, may end up having to send our patients to neighbouring countries too.

On the second issue of ensuring that all Singaporeans can afford to pay for their medical care, we have the safety net. In 1996, the number of applications for Medifund assistance was 55,859. In 2001, it was 157,190. Despite the almost three-fold increase, the approval rate was 99.7%, and 156,780 applications were approved in 2001. A total of $27.23 million was disbursed. This is more than twice the amount disbursed in 1996. So, I think we need to separate the two issues.

Mr Low Thia Khiang (Hougang): Sir, while I understand the principle of cost recovery, the cost recovered for the recent round of increase for B2 and C class wards is only $12 million. My question is, given the prevailing economic situation, can the Government not, based on cost recovery, provide additional grants of $12 million to the hospitals? Can the Government not afford that, and thereby will avoid the increases and help Singaporeans to tide over the period?

Dr Balaji Sadasivan: Mr Speaker, Sir, we would like to target our assistance to those who most need it. By targeting our assistance through Medifund, we are targeting these additional funds to help those who cannot afford healthcare.

Mr Low Thia Khiang: Sir, does the Minister of State agree that it is not so much targeting those who need assistance? The fact that the increases are concentrated on B2 and C class wards, you are targeting the lower income who cannot afford. So, you are targeting those people who cannot afford the increases.

Dr Balaji Sadasivan: About 70% of Singaporeans use B2 and C class wards. For the majority of these patients, their Medisave should be able to cover the cost even with the 3% increase in charges. Through Medifund, what we are doing is we are using that money to target those people who cannot afford to pay their healthcare bills with their Medisave, whose Medisave has run out, who do not have the money to pay. Whereas if you were to give the money directly, then those who need the money most may not get it.

Mr Low Thia Khiang: Supplementary question, Sir. Is the Minister of State saying that ---

Mr Speaker: Mr Low, you have to catch my eye first, before you ask your question.

Mr Low Thia Khiang: Sorry, Sir.

Mr Speaker: Dr Michael Lim.

Dr Michael Lim Chun Leng (Pasir Ris-Punggol): Sir, while we agree that in the long term, healthcare cost will continue to increase, I think what is needed is more transparency and also clearer justification. I would like to ask the Minister of State to perhaps clarify some of these apparent contradictions in the healthcare system.

For example, he had said that part of the cost increase was due to new drugs, and yet in the same breath, one of the clusters had said that there was 10-15% decrease in the cost of drugs. And we all know that for non-standard drugs, in other words, new drugs that are in the hospitals, usually they are hardly subsidised. I am not sure how new drugs actually result in an increase in the cost of healthcare.

Secondly, another contradiction is he said that there is financial counselling in hospitals. But I was just given a very good incident where one of the grassroots leaders brought the mother to the hospital and was advised by the hospital doctor not to go to B2, but to go and see the tua luo koon to get better care, because the suay luo koon could not give good care, and was asked to go to a paying class. So, how does he ensure that this seemingly attempt for them to provide financial counselling is operational at the ground level?

Third contradiction is that while we build beautiful hospitals and we say that we have under-utilisation of assets, that means it is very expensive to maintain these under-utilised assets, and that will actually translate to increased cost as well. My question is: are we over-providing also for infrastructure as well?

Last but not least is that in this price increase, what I could not understand is if the Ministry's concern was for the subsidised class, why did they not make adjustments to the paying-class first? Why do they want to increase the cost for the subsidised class?

Dr Balaji Sadasivan: On the first question on financial advice in the hospitals, we have made it mandatory that every patient receives such counselling. If Dr Michael Lim has a specific case where such counselling was not given to the patient, in writing to the Ministry, my Ministry will investigate the hospital as to why such counselling was not given. But we have made it mandatory and directed our hospitals that they should give such financial counselling.

The second issue is about cost going up. Why do costs go up? The single biggest factor for costs going up is manpower cost, not drug cost. Manpower cost in our hospitals amounts to $1.217 billion, or 56% of the total hospital expenditure. This cost has gone up because the wages have gone up. Wages of doctors went up between 4% and 5% in 2001, and for nurses it went up 5% to 8%. In order to retain staff, the hospitals have to pay competitive wages. It is a global market for skilled medical and nursing manpower. In nursing, there are 126,000 vacant positions in the United States. There are 10,000 vacancies in UK, and over 100,000 vacancies in Europe. There is also a shortage of medical consultants in UK and they are trying to recruit surgeons from Southeast Asia. In Australia, they are short of doctors in rural hospitals.

All these countries have made attempts to recruit staff from Singapore. Some of the strategies that they have used are distributing brochures in hospitals, advertising in local newspapers and using recruitment agencies. Because of our competitive wages, the impact of these foreign recruitment drives has been minimal. If we do not pay competitive wages and retain our staff, the quality of healthcare will drop.

With regard to price rises of paying-class patients, the hospitals are free to raise their charges for paying-class patients. And that is not a major concern for the Ministry of Health because patients have a choice between the private hospitals and the private class of public hospitals, and the market can decide whether the price is too high or too low. It is only where there are price rises in C and B2 class wards that we monitor it, because this impacts most Singaporeans.

Dr Lily Neo: Mr Speaker, Sir, the Minister of State did not answer my first question earlier when I asked why is it that the Ministry of Health cannot give more subvention to the public hospitals instead, in view of this economic downturn. I have two supplementary questions, Sir.

May I ask the Minister of State whether his Ministry would give more flexible consideration to the eligibility criteria for Medifund applications to help Singaporeans who have difficulties in making ends meet, as a result of unemployment or less take-home pay.

May I also ask the Minister of State whether he would step up public education on the use of Medisave, MediShield and Medifund and on the correct choice of hospital wards. Would he also publicise the detailed charges for various conditions by the different hospitals, for example, on the web-site?

Dr Balaji Sadasivan: With regard to the first question, I have answered it. It is more efficient and effective to help people who need assistance in paying their healthcare bills by targeting the funds through Medifund. Because through Medifund, we are identifying those who do not have enough in Medisave to pay for their healthcare. Whereas if you give the same money directly to the hospitals, then the amount, or the proportion of that, which would go to the most needy would be much less. So dollar for dollar, this is a more effective way of helping those who need help most.

With regard to Medifund, over the last eight years, Medifund applications that have been approved have increased three-fold, and we are still approving Medifund applications at more than 99% rate. We are quite happy to open the Medifund process for inspection by our Members of Parliament. At the press conference earlier in September, the Minister had invited the press to visit the hospitals to ascertain for themselves that our Medifund process is transparent and is helping those who need the help. And I am not sure how many members of the press took up the invitation but, so far, the press has not reported on any case that has been unfairly rejected.

With regard to the third issue on public education, we will take up Dr Lily Neo's suggestion and distribute our brochures to more people and to all Members of Parliament so that they can distribute them to their grassroots leaders and to their constituents.

Mr Low Thia Khiang: Sir, the Minister of State, in his earlier answer, said that even with the current increases in charges for B2 and C class wards, Singaporeans should have sufficient Medisave to pay for their medical fees. Can he assure this House that Singaporeans who are admitted to B2 and C class wards will not have to fork out cash to pay for their hospital bills, since he said that there is sufficient Medisave to pay for it?

Dr Balaji Sadasivan: The majority of Singaporeans should have enough in Medisave to pay for their health bills. Where they have to fork out from pocket expenses and where they cannot afford it, Medifund will assist them.

Mr Tan Soo Khoon (East Coast): Sir, while the Minister of State has acknowledged that the controlling cost is very important and he has mentioned the difficulty he has with manpower cost, could he confirm that in the case of the KK Hospital, utility cost went up by $1.2 million in 1997 to $5 million a year today, and its equipment and medical supplies ballooned from $1.2 million in 1997 to between $7-$9 million annually today? How are costs being controlled in the hospitals, like the KK Hospital?

Dr Balaji Sadasivan: Mr Speaker, Sir, this is a new specific question and I have to check with the Ministry on these figures.

Mr Tan Soo Khoon: Sir, would it be correct to suggest that such increases in costs came about after the hospital has moved from its old premises in Hampshire Road to its present one? I understand that, today, the KK Hospital is underutilised. Would it be correct to suggest that the costs of such unutilised facilities and the wards would then have to be borne by the patients in the other wards? Just a follow-up on the second question. If that is the case, why did we have to build such a large new hospital to deliver babies, especially when we knew that the birth rate was declining?

Dr Balaji Sadasivan: Mr Speaker, Sir, the new KK Hospital was built to replace the old KK Hospital, and the birth rate had declined more significantly than was anticipated and, so, utilisation had dropped. But with regard to the specific figures that the Member has asked, I would have to go back and check with my Ministry officials on those figures because that was not tabled as a Question.

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, is the Minister of State aware that in the debate on public transport, I moved an amendment asking this House and the Government to take into consideration two factors in any price increase? One factor is the state of the economy. The other factor is the unemployment situation in this country.

Mr Speaker: Dr Tan, are you making a speech?

Dr Tan Cheng Bock: I will ask the question. Sir, I am asking the Minister of State whether these two factors were taken into consideration because I know that the economy has not improved so remarkably and I know that the unemployment situation is still around 5%.

Dr Balaji Sadasivan: My Ministry is aware that the unemployment rate is around 5% and there will be more Singaporeans who may have difficulties paying their hospital bills. That is why our Medifund approval rate has more than tripled and the funds disbursed, through Medifund, has more than doubled.

Dr Tan Cheng Bock: Sir, my question was whether these were two factors ---

Mr Speaker: Dr Tan, I have asked for Mr Ang Mong Seng who has raised his hand long ago.

Dr Tan Cheng Bock resumed his seat.

Mr Ang Mong Seng (Hong Kah): Mr Speaker, Sir, the Minister of State has mentioned that there are some cases like zero payment. I want to ask the Minister of State, for the last two years, how many cases had enjoyed this scheme through Medisave, MediShield or Medifund. My second point is, since USA spends 7% of its GDP and Singapore spends only 3% of its GDP on healthcare, whether the Government has any plan to increase the 3% to a higher rate?

Dr Tan Cheng Bock rose ---

Mr Speaker: Let the Minister of State reply first.

Dr Balaji Sadasivan: With regard to the second point that we are spending 3% of our GDP, this 3% of our GDP on healthcare is not what the Government is spending. This is what we, as a society, are spending on healthcare. So if we enjoy a standard of healthcare that is comparable to Australia and Europe, and we can get this level of healthcare at 3% of our GDP, while others are paying 6%, 8% or 9% in Europe, it means that our system is much more efficient than the system in Europe. And that is what we mean by 3% of our GDP. So we ask why are we able to do this at 3%, when to get a comparable healthcare system, people have to pay 6% of their GDP, this is for the whole country, both the Government as well as what the individuals pay. The reason we are able to do this is because we run our hospitals on a cost recovery system. Is there a second part to your question?

Mr Ang Mong Seng: How many cases are zero payment?

Dr Balaji Sadasivan: About 97% of the patients should be covered by Medisave or MediShield system without out-of-pocket payment.

Dr Jennifer Lee (Nominated Member): Mr Speaker, I do not know whether it is appropriate for me to make a point of clarification with regard to the KK Hospital?

Mr Speaker: A short one will do.

Dr Jennifer Lee: Yes. When the KK Hospital moved from the old to the new hospital, the most significant factor was the establishment of a new Children's Hospital. That added on an extra 60%, in terms of the size of the hospital, and in fact, the bulk of the increase in cost related to that move was due to the establishment of the Children's Hospital, rather than related to the capacity of the women's services.

Dr Lily Neo: May I ask two supplementary questions? May I ask the Minister of State whether his Ministry would seriously consider maximisation of our limited resource pool in the integration of the private and public healthcare sectors in the sharing of medical expertise, medical technology and facility? May I ask the Minister of State whether the two clusters of the public healthcare groups are in fact duplicating in management staff and healthcare services?

My second supplementary question is whether, in order to reduce a patient's hospitalisation cost, he would develop community care and home care services, train community carers and family members to help look after the sick patients in the community, expand hospital day surgery and train more doctors for day surgery?

Dr Balaji Sadasivan: With regard to the first question on public and private cooperation in utilising limited resources, my Ministry is fully supportive of it and I have earlier given an example of how the SNEC had allowed its facilities to be used by private doctors. Likewise, with regard to MRI and other expensive diagnostic equipment, they are open to both private and public doctors to send their patients for testing. The Singapore Gamma Knife Centre is another example whereby there is a machine that is used by both private and public sector doctors.

The formation of the clusters has led to competition between the hospitals in the two groups. One of the effects of this competition has been increased efficiency by both clusters. This also allows us in the Ministry to compare the hospitals across the clusters and see if there are any inefficiencies that need to be corrected and any systems that are extremely efficient that the other can copy. We also believe that if you can move inpatient surgery to day surgery, you can provide healthcare more effectively and efficiently. So the hospitals have increased their day surgery capacity and are encouraging day surgery. On our part, we have allowed Medisave, which is meant for inpatient care, to be used for day surgery.

In the same way, if a patient can be looked after at home through home nursing, rather than being looked after in the hospital, that is a more efficient way of looking after the person. So we have relaxed our Medisave rules on payment for home nursing. The trend will be, over the next five years, more and more surgeries will be moving from inpatient to day surgery and more and more treatments, like chemotherapy which used to be done inpatient, will become outpatient treatment. In the recent relaxation of Medisave, we have allowed Medisave to be used for IV antibiotics because, in the past, the patient stayed in the hospital for maybe three weeks for the IV antibiotics. Now, they can go home with the drip connected to their hand and they come in as an outpatient and get the IV antibiotics.

Mr Gan Kim Yong (Holland-Bukit Panjang): Mr Speaker, Sir, two supplementary questions. Firstly, I would like to ask the Minister of State whether he would assure the House that the cost of over-capacity of hospitals is not passed on to patients, and if it is, would the Ministry consider subsidising the cost of this additional capacity. The second question is with regard to Medifund. The Minister of State has repeatedly said that Medifund has been used to help subsidise the lower income group. Indeed, that is a good sign. However, in view of the high utilisation of the fund, would the Minister consider increasing the amount available for the fund and relaxing the criteria so that more can benefit from it?

Dr Balaji Sadasivan: With regard to Medifund, more than 99.7% of the applications have been approved even though the number of applications has gone up from 55,000 to 157,000-plus. So we are assisting many more people today than we were six years ago.

With regard to any over-capacity that the hospitals have, we will work with the hospitals to see whether, wherever possible, they can let others make use of that over-capacity so that their running cost would be down.

Mr Yeo Guat Kwang (Aljunied): May I ask the Minister of State how would the Ministry of Health ensure that there will be greater transparency in the healthcare and hospital charges and adjustments so as to keep the general public better informed? Is it true that the miscellaneous component of hospital bills is getting bigger, the patients are not given full details of what they are paying for or what they are being charged for? Is it also the reason that the high miscellaneous component results in the patients having to use more cash to pay their health bills than to use Medisave?

Dr Balaji Sadasivan: Every patient can find out the cost of any service that he is getting from the hospital. It is mandatory for the hospitals to tell the patients what it costs.

With regard to the hospital bills, hospitals have to provide a bill explaining to the patient what the costs of the services were and how he has been charged, and every hospital provides that.

Mr Tan Soo Khoon: Sir, I am now not so sure who I should direct my question on KK Hospital to. But am I not wrong to suggest that, earlier this year, KK Hospital closed down two women's wards owing to declining birth rates?

Sir, following up on Dr Tan Cheng Bock's point, may I also ask the Minister of State whether he agrees that the latest price increases run counter to the spirit of the resolution which this House adopted in July, when we debated the increase in public transport fares in which we urged the Government to ensure that the prices of public services are not unreasonably increased during these difficult times.

Dr Balaji Sadasivan: With regard to the first part of Mr Tan's comment on KK Hospital, the reason why the specific questions he has asked have not been answered is because he did not table a question on KK Hospital in Parliament and has added it on as a supplementary question. He can table such a question on KK Hospital for the next parliamentary sitting.

With regard to the second comment, what we have done is not against the spirit of what was debated in Parliament earlier. What we are doing is ensuring that our healthcare system continues to run as efficiently as possible in providing its services effectively to the Singaporean public. We recognise the difficulties that Singaporeans may face in paying their hospital bills and we have, as a result, increased the amount of money that we are giving out through Medifund to help people meet that difficulty. So it is not against the spirit of what we debated at the last parliamentary sitting.

Dr Tan Cheng Bock: Is the Minister aware that his answer to Mr Tan Soo Khoon's question and also with regard to my question was not good, and that it was obvious that the Ministry of Health did not take heed of this House's motion on this price increase? I must say that it is very, very disappointing.

I want to ask another supplementary question. How are these clusters run?

Dr Balaji Sadasivan: The clusters are run as not-for-profit organisations, meaning that profits are not their motive. If in a year they have a surplus, the surplus is ploughed back into the hospital for the benefit of the public. If in a given year they have a deficit, then, from their reserves, they would try to cover that.

Dr Lily Neo: May I ask the Minister of State whether, in order to promote the cost-cutting initiatives, he would implement monetary incentives for public hospitals in accordance with the cost-cutting measures adopted by their respective hospitals, and encourage inter-hospitals' cooperation to share innovative and cost-cutting measures, especially those already proven effective, for implementation by all?

Sir, may I also ask the Minister whether, in order to reduce hospitals' operating costs, he would review the number of managerial non-medical staff employed by the two clusters of public hospitals, review the duplication of services by the two clusters, discourage frills by the hospitals that incur costs, and delegate further less demanding tasks done by doctors and nurses?

Dr Balaji Sadasivan: We do not micro-manage our hospitals from the Ministry of Health. However, if there are any innovative management ideas that the hon. Member has, she can send these innovative ideas on management to the hospital management and they will consider introducing them in the hospital, if these innovative ideas are workable.

Dr Michael Lim Chun Leng: Mr Speaker, Sir, the Minister of State has said that a large part of the cost is mainly manpower cost. But, as a doctor, he is also aware that, really, the cost increases as the consumption of services and drugs increases. This definitely has an impact, more so than the manpower cost itself. Is there in fact any system to ensure that there is no over-consumption of services or drugs? I am not aware of any system at this point in time.

Secondly, when the Ministry looks at subsidies for the patients, I wonder whether depreciation costs are considered, because if they factor in depreciation costs for the hospitals, then actually the man-in-the-street has to help fund expensive hospitals as well when they pay their part of the share of hospital charges.

Thirdly, while the clusters increase competition, does it not also cause duplication? For example, I am aware that, in the past, we used to centralise the services, eg, National Skin Centre. Now, with these clusters, many hospitals also want to set up similar services and they are in fact dangling carrots to the consultants in the National Skin Centre to duplicate these services in other hospitals. While it is claimed that there is competition and, therefore, better use of resources, it seems that, on the ground, it is otherwise. There is duplication of resources. This means more equipment, more services. So how does all this add up to the Ministry being on top of this cost-containment exercise?

Last but not least, similar to what one hon. Member has mentioned, the Ministry has also put in other administrative measures, eg, casemix, which, we know cost quite significantly in terms of software, hardware and manpower costs. But I do not think casemix results in a higher subvention in the total sum for the hospitals. It only adds to the cost. So maybe the Minister of State can enlighten us as to how the Ministry translates all these very good policies into real cost-saving measures on the ground.

Dr Balaji Sadasivan: First of all, the cost of the hospital is not included in the cost recovery for the hospital. So the depreciation of the hospital building is not one of the costs included.

With regard to demand for health services, if we look across the world, as a country gets more affluent, the demand for health services increases. This is because the people have more disposable income, a larger proportion of which they are willing to pay for health services. Take the United States, for example. 14.99% of their GDP is spent on healthcare services, and the more affluent states, eg, California, spend almost 20% of their state GDP on healthcare. So, as Singapore becomes more affluent, a larger proportion of disposable income may be spent on healthcare expenditure. To try to curtail this, we need to make people responsible for their healthcare expenditure, because then they will decide how much of their dollar they want to spend on healthcare and how much of it to spend on education. Where healthcare is provided free, there is usually a buffet-syndrome and there is no control over the demand for healthcare services. But because in our system people are paying for their healthcare with their own money - Medisave is, in effect, money that they have saved - Singaporeans have been very sensible. And Singaporeans are not over-spending on healthcare. That is why we have managed to have a very high standard of healthcare, equivalent to Australia and Europe, and yet our total healthcare spending is only 3% of our GDP, while in Europe and Australia, it is between 6-9%.

Mr Low Thia Khiang: I would like to ask the Minister of State when Singaporeans could expect the next round of regular and small increases in health-care charges.

Dr Balaji Sadasivan: Our hospitals review their costs every year. So, next year, they will review their costs and look to see if they need to make any adjustments.

Dr Lily Neo: May I ask the Minister of State whether his Ministry will prioritise preventive care further in order to cushion future healthcare cost increases, identify prevalent diseases that need special attention now, continuously monitor and study the prevention of common diseases and the many aspects of preventive healthcare?

Dr Balaji Sadasivan: My Ministry fully supports preventive care as one means of keeping healthcare costs under control. Our Health Promotion Board's budget is $100 million and it supports many programmes, such as the mammography programme.