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Artillery Row

Why Singaporean healthcare works

It’s the incentives, stupid

Wes Streeting has declared that Singapore’s healthcare system has lots to teach the NHS. He’s right, of course. Something that produces similar, possibly better, outcomes at half the price would seem like a pretty good idea. However, what Our Wes is unlikely to take away as his lesson is the first and most basic commandment of economics — incentives matter. Which is something of a pity. 

Streeting has said, “This is a system that is designed around patients”: 

The NHS is perfectly capable of arranging appointments in a way that maximises the convenience of patients — it just often chooses not to, or the system isn’t wired to think about that.

Full marks for observation there, but perhaps not so many for the reason why he thinks it works this way:

…he believes that replicating the approach of countries such as Singapore — embracing technology, data and population-level health interventions.

That’s not the reason why. 

In Singapore the patient is the customer. More than that, the patient is the customer waving real cash money at the people thinking about treating them. As people like cash money, the patient gets treated in a manner that leads to the money flowing to the people doing the treatments. 

Yes, it’s that foul idea of treatment not being free at the point of consumption. Except that foul idea does lead to what is seemingly desired — a joined up health care system that treats people efficiently. 

In one sense the system’s not all that different to Britain’s. Nearly all of the hospitals are government owned and run. You pay a tax – akin to national insurance – for access to medical care. But the big difference is that your taxes go into your healthcare account to be spent by you. Anything you don’t spend over a lifetime gets added to your pension — an incentive to spend enough on health care to live long enough to spend the pension. As your tax pays your healthcare you are, when entering a temple of healing, a cash waving customer and therefore gain the same attention as a maitre d’ gives in an expensive restaurant. OK, perhaps less fawning than known big tippers but still.

There is another level of economic geekery here — and who doesn’t like further levels of economic geekery? Singapore differentiates, righteously, between assurance and insurance. Assurance is that stuff that’s going to happen but perhaps we might want some privileged manner of saving for it. In healthcare, blood tests, vaccinations perhaps, up to and including those knee replacements of old age. Those come out of those individual accounts. We are therefore using market processes — that cash coming through the door — and competition to increase efficiency, productivity, and better that consumer experience. 

Insurance is a different thing. That’s the vast cost which no personal savings can hope to deal with. But which comes with a low probability. The horrendous car smash, the particularly vile cancer. Here we need risk sharing, we all pay some into the pot, the unfortunate get those house price level pile of bills paid for them. This insurance part of the Singapore system is carried by the logical person to spread and finance that risk over the population — the government.

After all, it is true that markets are pretty cool things but they don’t work for everything, are not optimal for more. Taking competing bids to stitch up that sliced jugular isn’t rational — so don’t try to use the cash carrying patient version of markets when dealing with A&E. But do use those market driven efficiencies, both in throughput and also the consumer experience, where they do work. Like that regular and boring blood work, the PSA test, or the GP visit for the sniffles.    

Personal savings, driven by the tax paid into those medical accounts, deals with the assurance part of healthcare in Singapore. The logical insurer, the government, deals with the insurance part. It works — as our starry eyed Wes can see. But why it works is not technology, or data and it is certainly not population-level interventions. It’s the incentives faced by those providing healthcare.

Think on it. A British GP is paid an annual amount for each person on their list. The capitation fee – which is paid whether they see the patient once, twenty times a year or not once a decade. The Singapore GP gets a fee per patient seen. Coughed up by the patient being seen. British GPs are paid not to see patients, Singaporeans are.

Which system is going to embrace the tech, data and so on to see patients promptly, efficiently and in the way that patient wishes to be seen? Well, yes Wes. So, when are you going to adopt the core and heart of the Singaporean system? That doctors only get paid for actually doing something? For, as that first and most basic lesson tells us, incentives matter.  

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