Guidelines Of Fees (GOF) Revisited

This Hobbit must be getting really old. He seems to be revisiting a lot of stuff lately. First was residency, now the Guidelines of Fees (GOF).

On 30 Nov 17, it was reported that the Health Minister announced MOH will issue fee benchmarks. Health Minister Gan has avoided the use of the word “guidelines” and has chosen to use the word “benchmarks”. This hobbit agrees with him. Face is of paramount importance in this island. “Benchmarks” is less face-losing. “Guidelines” means someone made a grave mistake in 2007 when they killed the SMA GOF.

But there are differences. Benchmarks can be totally passive and clerical. Or benchmarks can be prescriptive, in which case, there is no big difference between “benchmarks” and “guidelines”. Passive benchmarks would be like publishing the 25th and 75th percentile price for a procedure such as angiogram. You really don’t need a committee for this. Just get a statistician to collect data, run through a software and the figures will come out. It’s passive because there is no judgement or wisdom involved because the data is totally dependent on what the cardiologists are charging and the dataset that ensues from this pool of angiograms done.

That is already being done to a large extent as MOH has been publishing bill sizes for common procedures on its website for years.

Therefore, this hobbit thinks that the benchmarks that will come from MOH soon will be “active” benchmarks, akin to the SMA GOF.

The red herring excuse is that the SMA GOF was bad because SMA represents doctors, i.e. service providers and hence there was a conflict of interest and service providers wanted to keep prices high. In face, SMA was labelled a “trade association” by the Competition Commission of Singapore (CCS) and the GOF was deemed anti-competitive by CCS in 2010.

There are two issues here, and let’s not conflate the two issues:

  • GOF are bad for competition per se, hence bad for patients, regardless of who issued them
  • GOF issued by a body of doctors are bad for patients

A sceptic can perhaps believe that because the SMA issued the GOF, it must be bad. If so, perhaps one that is issued by MOH can be good. This is the position today. If not, Minister Gan will not say that MOH will issue fee benchmarks.

But that is NOT what the CCS said on 19 Aug 2010 in a media release. It said “CCS understands that the GOF is an attempt to address information asymmetry in the medical sector. However, CCS notes that there are more effective measures in place today”.

CCS went on to describe measures such as publishing of bill sizes, itemised billing and financial counselling. Obviously, if CCS was right in 2010, there would be no need for MOH to issue fee benchmarks NOW.

If the issuing party (SMA) was the main problem, what the authorities could have done in 2007 when SMA reluctantly withdrew the GOF, was for some party to step in quickly and issue a new GOF or fee benchmarks and not wait 10 years to do so.

So what happened?

Somebody screwed up. Plain and simple. And it was a painful ten years for almost everyone from 2007 to 2017 before someone had the intellectual honesty and humility to admit this.

If you read the proceedings carefully between 2007 to 2010, MOH then did not lift a finger to keep the SMA GOF alive. Neither did MOH approach another party to issue a new GOF of sorts. And CCS firmly decided that the SMA GOF was illegal under the Competition Act.

In other words, CCS killed the SMA GOF and the SMA GOF’s death was contributed by neglect from MOH.

In 2007, just on the eve of the world financial crisis, many believed in the power of the free market, just like the then Chair of the Federal Reserve, Alan Greenspan. Market fundamentalism was at its peak. The term “market fundamentalism” was coined by George Soros, and implied that free markets provide the greatest possible equity and prosperity, and that any interference with the market process decreases social well being. In case you are wondering, Soros meant it in a pejorative sense.

That was what many believed in 2007, including many policy wonks in this island. And this adherence to dogma that free-market forces, of which competition was a key component of, led to the demise of the GOF.

But it was not always so. Certainly, in the eighties, wiser minds occupied important jobs than 2007 which resulted in the SMA issuing the first GOF in 1987. These wise minds  were the late Dr Andrew Chew and the late Dr Kwa Soon bee, successive Permanent Secretaries of Health and Directors of Medical Services. Dr Chew went on to become Head of Civil Service. They met SMA leadership and finally persuaded SMA to come up with the GOF to provide guidance for fees charged in the private sector. Obviously some geniuses in 2007 thought they were cleverer than Drs Chew and Kwa and wanted to absolutely dismantle what these two gentlemen had facilitated – the SMA GOF.

It’s a strange case of SMA never wanting to have the GOF in the first place in 1987 and never wanting to withdraw the GOF in 2007.

But what happened in these twenty years, between 1987 and 2007? These geniuses forgot that the only true test of how good a public policy is, is not dogma but what finally worked and benefited the public; i.e. “increased social well being”

The free market is not an end in itself, it is a means to an end. Likewise, competition is not an end in itself, it is a means to an end. Public benefit or policies that benefit the well being of the majority if not everyone (we can argue about long term or short-term benefits) is the end in itself when it comes to policy-making.

The other dogma is guidelines of fees that are issued by a trade or professional association, such as the SMA must be bad, because trade and professional associations MUST be self-serving. Its interesting that even communist Deng Xiaopeng was more pragmatic – he believed and declared that it doesn’t matter if the cat was white or black, any cat that caught mice is a good cat. But for overly-dogmatic people, the cat cannot be a trade or professional association cat, even if this cat caught mice.

When the GOF was killed, you can see that people were not thinking through the basics. They were just interested in ensuring there was competition and free-market forces were allowed to roam and the cat cannot be trade or professional association cat. Dogma overtook common sense.

Just read what CCS said in the above said media release in 2010, “In general, price recommendations by trade or professional associations are harmful to competition because they create focal points for prices to converge, restrict independent pricing decisions and signal to market players what their competitors are likely to charges. This is a common position adopted by many competition agencies in the world, even for the medical sector”. (Paragraph 6)

From this short passage, you can draw four quick conclusions:

  • As you can see, there was group-think here – “common position adopted by many competition agencies in the world”. A case of monkey see, monkey do?
  • Dogma religiously subscribed to – Competition is an end in itself – “harmful to competition”. What happened to the patient? Should harmful to patient take precedence to harmful to competition?
  • Another dogma adhered to without question – “In general, price recommendations by trade or professional associations are harmful….”.- The cat must go even if the cat caught mice.
  • Government’s position has changed in 2017. But it doesn’t matter who issues benchmarks and guidelines, the results are still the same, they create the same three effects which are harmful to competition, which are “focal points for prices to converge, restrict independent pricing decisions and signal to market players what their competitors are likely to charge”. What was anathema in 2007 is now acceptable in 2017 save for the fact that now the cat is the government itself.

So who really benefited from a world without GOF between 2007 and 2017? If you really think about it, only one group of people – the doctors who charged more than they otherwise would have, if some form of GOF, issued by SMA or another party, was in place

So this big hullabaloo between 2007 and 2010 which was supposed to benefit the public ended up helping some doctors make more money. You can’t get more ironic than that.

Let’s hope 20 years from now, some wise guys won’t come around and say fee benchmarks or guidelines are bad and let unbridled market forces make a mess of things again. This hobbit has lived long enough to know folly is often repeatable.




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