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*Based on an addressing delivered to the Royal Australian College of Surgeons on 13th May 2008

The topic “Financial Pressure of Providing Quality Health Care Services”, I would like to bring you through 4 key thoughts:

‧ General global facts;
‧ Expounding the Financial Burden of Health Care Services in HK as an example;
‧ What are the solutions if any; and
‧ Certain principles that cannot and should not be changed.

The global facts

Nobody would deny the fact that all over the world health care cost is rising, and rising is an exponential fashion.

Figure shows that everywhere health expenditure is growing faster than economy. Yet everyone would have to agree that any responsible government cannot absolve its duty in caring for its citizens when they are sick.

How can we solve this dichotomy?

HK as an example

Let me now expound the above pressure on any government using HK as an example

As a start, a glimpse of the HK health care system would enable us to understand the problems better.

HK’s has a dual healthy care system- public system financed by the public purse, and a private system which functions on fee for services. The public medical system looks after some 95-97% of patients who required hospital care and about 15% primary health care. The private services, on the other hand, take care of some 3-5%of inpatient services and some 75% of primary health care.

In terms of numbers, the public medical service runs 41 hospitals and 27555 hospital beds; 48 special outpatients and 74 general outpatients, through the Hospital Authority. It has a total staff of over 54,000 of different disciplines.

The private medical services runs now around 2300 hospital beds in some 12 hospitals. Most private practitioners irrespective of specialties and specialists do practice some primary health care work.

In terms of finance, the governmental spends some HK$30 billion in 2007 on public health care amounting to 15% of total government spending and is about 2.5-3% of GDP. It is difficult to estimate accurately the amount spent on private health care. On a rough estimate, again 2-3% GDP is being spent on private health care.

The public health care system is a heavily subsidized service. In fact the patients contribute a token fee for food only. The charge for hospital stay is HK$100 inclusive of all services----medications, treatment modalities etc. that are needed. In fact, a high percentage of patients actually received total or partial waiver.

The public health system is run by the Hospital Authority, a statutory body financed by the government to provide all public medical services within the decided government policy framework. It is of no surprise that the public medical service is forever overloaded. The average bed occupancies are 80%.

Financial Pressure on the HK public health care service

Just now I mentioned that healthy care cost is increasing globally, and HK is no exception. In some areas HK faces an even bigger challenge. There are four factors:

‧ Increase health needs,
‧ Increase medical cost from new technologies,
‧ Higher public expectation, and
‧ Medical Inflation

Let me elaborate:

1. Increase health care needs
a. Aging population. Elders have a much greater health care needs. Figures have shown that persons over 65 uses 6 times more in-patient care than those below. Furthermore, illnesses encountered in the older age are usually chronic illness and catahophic illness requiring bigger financial budget. Statistics have shown that HK ranks among the first in aging population. Today one in eight are 65 or above. These will double to one in four in 2033. The elderly dependency ratio (the number of 65 or above per 100000 person aged 15-64) will increase from 170 today to 428 in 2033. The forever-increasing financial burden on the public purse is thus obvious.

b. Increase occurrence of certain life style related diseases; Hypertension, for example has increased from 18% in 1995 to 27% in 2003. Colorectal cancers in the male has increased from 47 per 100,000 to 56 per to 100,000 thousand population.

2. Increase medical cost from advance medical technology and new medicine.

Yes, we can understand that these may provide more accurate diagnosis and effective treatment yet, they are expensive and in many cases cannot totally replace the cheaper traditional methods. Yes, the upside of these may result in longer life, the downside however is that patients with chronic illness or other conditions may in turn require longer treatment. New technologies too have left us to require more substantial investment both in equipment and in manpower training.

Figures from a private hospital shows that the operating room charges for a laparoscopic procedure could be more than double that of the more conventional methods. These of course has not taken into consideration the surgeons and anaesthetists fees.

3. Higher public expectation and greater consumer demand:

With a more knowledgeable public and the improved access to medical information, the public and consumers would demand health care to be that of the latest cutting edge technology. They would also demand for second and third opinion and alternative options of treatment.

All those has brought on what is known as “Medical Inflation” Statistics have shown that public medical costs per capita has increase on an average of one percentage per year faster than the growth of the economy. This is not particular to HK but is a global trend.

What then is the impact on public health expenditure? It is estimated that the financial pressure will be more on the public health care system in the years to come as the elderly population rely more on the public health care. Expenditure required for public services would thus increase even faster than the total health expenditure.

The HKSAR government postulates that

‧ Public health expenditure will increase 3.9 times between 2004 and 2033 when GDP will grow only by 1.7 times
‧ In real dollar terms public health expenditure will increase from $37 billion to $186.6 billion between 2004 and 2033.
‧ In per capita terms public health expenditure per capita will be 4 times in real term from $5600 to $22300 between 2004 and 2033.

What can we do and who pays?

I have no intention to “cry wolf”. The above data are by courtesy of the HKSAR government and is available in the public domain. The figures though alarming are true projections.

Obviously something needs to be done. I would like to propose two basic principles.

‧ Firstly we have to explore new or supplementary funding options.
‧ Secondly we have to reform our culture of and our approach to health care services. It is imperative that we must devote more on maintenances of health or prevention of diseases rather than to rely on expensive treatment after we develop the illnesses. We have to critically look at how we utilize our advance yet expensive diagnostic tools. Today expensive tests are being ordered at the “drop of hat” We have to apply our clinic judgment and not to be persuaded to practice “defensive medicine”. We have to balance when to utilize modern technologies to its fullest efficiency and not be swayed by patient’s demand through half-baked knowledge.

Finally I would like to say that there are a few basic mottos that we use in HK for our public health care services, which I believe should never be altered.

‧ Nobody should be devoid of care because of lack of means;
‧ Government has a responsibility to provide a safety net; and
‧ Public money should be used where it is needed most.