Private hospitals under no obligation to charge fairly
Friday, Sep 19, 2014
The Straits Times
In his letter ("Pricing: Medication no different from other goods"; below), Dr Yik Keng Yeong expressed the view that the prices of medication and medical services are subject to market forces.
While doctors are subject to professional obligations and are under ethical obligations to charge fair and reasonable fees for services rendered, there does not appear to be any similar professional or ethical obligations on the part of private hospitals ("Private hospital charges not under MOH's purview" by the Health Ministry).
Unlike other contracts, there is no prior agreement on the prices of medication and supplies.
A restaurant customer is given a menu with the prices clearly stated, and he decides what to order. But a patient, upon admission, is given only an estimate of the bill size based on past statistics.
Not only is there no indication of the price payable for each item, but charges for items bearing the same service code and description can also vary.
Unlike the restaurant customer, a patient does not have the necessary information to determine if the charges are reasonable. The lack of detailed records (apart from medication) also makes it difficult to verify the charges.
Private hospitals operating in an oligopoly cannot be compared to businesses operating in a fully competitive market.
In my letter ("Huge mark-ups for basic medication and supplies"), I gave several examples of actual charges, including that of a safety pin that cost $4.54 before goods and services tax. Apart from a mark-up of almost 50 times, the pin was something I had not asked for. It caused me great discomfort and was completely unnecessary.
I doubt any restaurant can get away with serving the supermarket variety of peanuts at a mark-up of 50 times, without making the price known to the customer beforehand. The issue of professional and ethical obligations to which hospitals should be subject to certainly merits further discussion.
Letter from Charis Mun (Mrs)
Pricing: Medication no different from other goods
I emphathise with Mr Tan Jiak Hong's call for the Health Ministry to regulate medicine costs in private hospitals ("Ministry should do more to regulate drug prices"), yet I feel he does not fully understand the nature of medical practice.
Once professional and ethical obligations are fulfilled, medication and medical services proffered are no different from other commodities. They are subjected to market forces and will rise to as high a level as the consumer can tolerate.
One knows the cost of a soft drink or a plate of peanuts at the supermarket, but is willing to pay multiples of these costs in a restaurant. Paying for overpriced medication in a private hospital is similar, distasteful as the comparison between pills and peanuts is.
Private hospitals are capitalistic ventures, and making handsome profits is as much their raison d'etre as healing the sick. They cannot be mistaken for altruistic institutions where profits are secondary.
On another note, purchasing costs of medication for doctors practising individually are far higher than those for pharmacy chains, hospitals or polyclinic pharmacies. These buy in bulk and are offered enormous discounts and bonuses, so that the unit cost is a small fraction of the list price even though the holding cost is high.
Depending on the time of purchase and the varying bonuses and discounts given by drug manufacturers, no two doctors or institutions pay the same price for the medicine stocked.
Whether to pass savings to patients is the vendors' prerogative. But constantly adjusting pricing to reflect the unit cost of different batches of medication is time-consuming and not their top priority.
Letter from Yik Keng Yeong (Dr)
Friday, Sep 19, 2014
The Straits Times
In his letter ("Pricing: Medication no different from other goods"; below), Dr Yik Keng Yeong expressed the view that the prices of medication and medical services are subject to market forces.
While doctors are subject to professional obligations and are under ethical obligations to charge fair and reasonable fees for services rendered, there does not appear to be any similar professional or ethical obligations on the part of private hospitals ("Private hospital charges not under MOH's purview" by the Health Ministry).
Unlike other contracts, there is no prior agreement on the prices of medication and supplies.
A restaurant customer is given a menu with the prices clearly stated, and he decides what to order. But a patient, upon admission, is given only an estimate of the bill size based on past statistics.
Not only is there no indication of the price payable for each item, but charges for items bearing the same service code and description can also vary.
Unlike the restaurant customer, a patient does not have the necessary information to determine if the charges are reasonable. The lack of detailed records (apart from medication) also makes it difficult to verify the charges.
Private hospitals operating in an oligopoly cannot be compared to businesses operating in a fully competitive market.
In my letter ("Huge mark-ups for basic medication and supplies"), I gave several examples of actual charges, including that of a safety pin that cost $4.54 before goods and services tax. Apart from a mark-up of almost 50 times, the pin was something I had not asked for. It caused me great discomfort and was completely unnecessary.
I doubt any restaurant can get away with serving the supermarket variety of peanuts at a mark-up of 50 times, without making the price known to the customer beforehand. The issue of professional and ethical obligations to which hospitals should be subject to certainly merits further discussion.
Letter from Charis Mun (Mrs)
Pricing: Medication no different from other goods
I emphathise with Mr Tan Jiak Hong's call for the Health Ministry to regulate medicine costs in private hospitals ("Ministry should do more to regulate drug prices"), yet I feel he does not fully understand the nature of medical practice.
Once professional and ethical obligations are fulfilled, medication and medical services proffered are no different from other commodities. They are subjected to market forces and will rise to as high a level as the consumer can tolerate.
One knows the cost of a soft drink or a plate of peanuts at the supermarket, but is willing to pay multiples of these costs in a restaurant. Paying for overpriced medication in a private hospital is similar, distasteful as the comparison between pills and peanuts is.
Private hospitals are capitalistic ventures, and making handsome profits is as much their raison d'etre as healing the sick. They cannot be mistaken for altruistic institutions where profits are secondary.
On another note, purchasing costs of medication for doctors practising individually are far higher than those for pharmacy chains, hospitals or polyclinic pharmacies. These buy in bulk and are offered enormous discounts and bonuses, so that the unit cost is a small fraction of the list price even though the holding cost is high.
Depending on the time of purchase and the varying bonuses and discounts given by drug manufacturers, no two doctors or institutions pay the same price for the medicine stocked.
Whether to pass savings to patients is the vendors' prerogative. But constantly adjusting pricing to reflect the unit cost of different batches of medication is time-consuming and not their top priority.
Letter from Yik Keng Yeong (Dr)
