Tan Kin Lian's Blog: Competition and medical fees

Friday, August 20, 2010

Competition and medical fees

There was a decision by the Competition Commission that the guidelines issued by the Singapore Medical Association on medical fees is anti-competition. I do not agree with their decision.

A sick patient is in no position to negotiate the fees with the doctor. If a doctor over-charges a patient for the consultation or medication, the patient may not be aware about it, or may not have any recourse. The guidelines provided by the Association is actually helpful to the patient to know what is the reasonable level of fees

I do not know what the Competition Commission wish to achieve by removing the guidelines. I think that the unintended consequence is that consumers will have to pay more in medical fees.

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Tan Kin Lian

3 comments:

Jamesneo said...: The Competition Commission thinks that without any guidelines, things will become more competitive. However, they are being too naive: Here are some of their false thinking:
1)Doctors will freely compete with each other and this will lead to reduced or fair price.
Rebut: The commission is assuming that this doctors do not know the "market rate" and do not speak to each other. However, the truth is that many of this private doctors knew or keep in contact with each other either privately or though conferences/courses they attended. Hence it is in their incentive to not sabotage each other by keeping a lower price than others. Moreover some of them are affiliated with each other.

2)Quoted from Newpaper" Charges in restructured hospitals provide a benchmark for comparison" and prevent overcharging
Rebut: Competition between hospitals are nonexistent. There is little incentive to keep down the price. For the subsidized patients at SGH for example, the fee for consultant is $29. I remember that the typical consulting for GP is less than $20.(Can anybody verify this)

3)Quoted from Newpaper "The Health ministry also lists hospital bill sizes on its website"
Rebut: Many elderly still are unfamiliar with the Internet. Listing hospital sizes do not means the patient can benefit since the hospital bills have been increasing tremendously over the past decade.

Free market(competition) in medical services do not work if the free market is actually rigged market controlled by the medical cartels such as pharmaceutical companies or other monopoly. Hence proper guidelines done by people with no conflict of interest actually help in promoting real free market in defining the boundary and preventing monopolies from rigging the market.; August 20, 2010 4:31 PM
Lye Khuen Way said...: I like jamesneo's comments. Spot-on , like Mr Tan's. CASE was mostly a joke. Lately, started to make a diff with the 'toy' issue. The Act that was long overdue has now created a strange body with ideals that do not make the consumers happy. We took 1 step forward, then hopped back two ! My unique Singapore, as usual.; August 20, 2010 6:51 PM
newsjunkie said...: my economics 101 is a bit rusty, but i recall that for competition to be effective, free markets is a pre-requisite. and one attribute of a free market is free and easily available information to all actors in the market.

in medical care, there are vast informational assymmetries between the medical professional and his patients.

so doing away with guidelines may not help patients at all.; August 23, 2010 5:08 PM