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Following is the speech (English only) by the Secretary for Health and Welfare, Dr E K Yeoh, in the motion debate on improving the imbalance in the utilization ratio between public and private medical services moved by Hon Mak Kwok-fung in the Legislative Council today (June 20):

Madam President,

First I would like to thank Honourable Members for their views expressed on this very important subject. But before I respond specifically to the various points Honourable Members have made, allow me, for the benefit of a more informed discussion, to put our deliberation of the respective roles of the public and private sectors in a broader context.

There are a number of very unique features about health and health care. For instance, it is an inalienable asset every individual desires and needs, but yet it is subject to unpredictable risks and cannot be accumulated, as knowledge and skills can. Unlike other goods and services, the need for health and protection from the risks of ill-health applies equally to every citizen in a community, regardless of one's age, gender, social status and income level. These basic differences between health and other assets, exaggerate forms of market failure such as moral hazard and imperfect and asymmetric information. Another unique feature is the maintenance and enhancement of health cannot be achieved by isolated episodes of care, however good. A health care system that can fulfil this role, needs to have policies, programmes and services which protect the health of the population, prevent disease and disability, promote lifelong wellness and provide treatment, care and rehabilitation to the sick, injured and disabled. This has to be organised and provided to individuals in a contiguous manner over an individual's life time and requires sustained collaboration of health care providers and purchasers, both private and public. The efficiency and effectiveness of health system is therefore contingent not only on the individual episode of care but also on the organisation and continuity of care delivered by different health care providers. That is including both the private and public. It is in recognition of these facts that most governments have an active role and complicated role in the financing and provision of health care, in order to ensure that it benefits society as a whole, not just those who are willing or able to pay. So you cannot depend on the markets to provide that. Talking about market share is very irrelevant to our discussion. This also helps explain why even a country like the United States, where the main financing driver is voluntary health insurance, public expenditure on health care still account for 44% of its total health care expenditure. In Hong Kong, our recurrent figure is 46%. It is therefore essential that health care is organised and provided to benefit society as a whole and not just those who are willing to pay for themselves. This is reflected in our long held policy that "no one will be denied adequate medical treatment for lack of means".

Bringing back the discussion to the context of Hong Kong, we have, in the Consultation Document on Health Care Reform, set up proposals for reforming the system of health care service delivery. These include strengthening preventive care, re-organising primary medical care including to provide training for family medicine as been proposed by the Hon Dr Tang, developing a community-focused, patient centred and knowledge based integrated health care service, and improving public/private interface. These proposals would facilitate a more efficient and effective distribution of work between the various levels and sectors of health care provision. We are committed to maintaining a viable dual system of health care, with the public and private sector playing a role complementing each other. As I said, the public sector does not respond to the market. The private sector does. A viable dual system not only permits patients to enjoy different choices of care based on individual needs, but also permits cross fertilization between the public and private health care sectors which leads to improvement in quality and standard of care, and more efficient use of total health care resources and medical talents.

We fully appreciate the valuable role being played by the private sector. At present, half of our registered medical practitioners practise in the private sector, and to provide a wide range of primary and specialist out-patient as well as in-patient services. The private sector offers patient a choice of doctors and more flexible in responding to individual patient's needs and requests. Many private doctors have built up continuing long term relationships with their patients and the patients' families and are respected and trusted by them. A considerable number of patients rely primarily on the private sector for many of the primary care encounters although many also receive care from the public sector, particularly for specialists care, at the same time. Better interface, communication and collaboration between the public and private sectors and among different health care providers will enhance the continuity of care, facilitate consistency in care practices, and reduce unnecessary duplication of services and abortive expenses. So we should be looking at the total health care resources and not just those in the public or private sector if we are talking in economic terms. This is called the allocated efficiency. There are several barriers giving rise to the lack of effective interface between the public and private sectors. Firstly, there are barriers relating to professional practices in different sectors. So doctors practise differently. Doctors in different sectors have their own preference for clinical practices and have dissimilar perspectives on outcome evaluation. Secondly, there are the information gaps. There is no effective mechanism for doctors to exchange health and patient information between the public and private sectors. Thirdly, there are the price barriers. The significant price differences between the public and the private sectors have been regarded by many as another reason for the compartmentalization between the two sectors.

From the latest statistics which have been quoted by members, it appears that the public and private sector play a predominant role in distinct type of health care service in Hong Kong. I wish to correct some of the figures that have been quoted by members. For in-patient service, the public sector now handles over 94% of all hospital in-patient days. The comparative figures in 1990 were 90.5%, not 85%. So the changes have been from 90.5% in 1990 to 94% in 2001. For patient admissions, the public sector accounted for 79% of all admissions in 1990 and 86% of all hospital admissions in 2001. At the same time, the private sector plays a major role in the provision of out-patient care for the community, taking about 85% of the total out-patient services. I must point out that new models of health care are moving more and more away from hospitals and into the community. This is enabled by technology. So one should not focus on hospitalization. We should be talking about the relevance of health care and they do not need to be provided in hospitals.

In order to achieve a closer collaboration and better interface between the public and the private sector, we have adopted a 3-prong approach involving the Government, the Hospital Authority and the private sector.

As I have said previously, I am chairing two dedicated working groups as forums for exchange of ideas and exploration of options to improve this public/private interface. One working group involves private medical practitioners and the other involves private hospitals. So far, a number of constructive and feasible proposals have been identified at the meetings.

In the context of the deliberations of the working group and discussions with the private sector, the Hospital Authority has already included in its latest Annual Plan a number of initiatives in enhancing collaboration with its private sector counterparts. So this is just not lip service. The proposals include developing collaborative service models, devising clearer referral protocols between the private and public sectors and enhancing information linkage between the two sectors. Some of the programmes have also included the different specialist Colleges of the Hong Kong Academy of Medicine, private sector associations including the Hong Kong Medical Association. Furthermore, individual hospitals are discussing viable shared care programmes with the private sector providers. The objectives are twofold. While the shared care programmes give patients not only greater flexibility and choices in their treatment, but also better quality of care as this will improved communications between the two sectors and better co-ordination in the provision of care. These shared care programmes will also facilitate better two-way flow of patients and leads to better use of the resources and talents in the private sector.

In addition to the deliberation taking place within the context of the two working groups, we are also contemplating other measures to enhance collaboration with our private sector. These include the development, in the longer term, of a computer-based Health Information Infrastructure to facilitate sharing of patient information between the public and private health sectors, and a comprehensive revamping of our public sector fees structure with a view to reducing inappropriate use of medical resources and as suggested by the Hon C K Law to provide price signals as to the priorities of care. This will create more scope for closer cooperation with our private medical sector and the insurance industry.

In order to bring about a better interface between the public and private sectors, we also need the full participation and the creativeness of the private sector. I completely agree with the Hon Michael Mak and many members who have given their views that assurance of service quality is a prerequisite for the private sector to attract more patients. In this connection, I am delighted to note that all private hospitals have implemented a system of accreditation to improve their service quality. This is obviously a step in the right direction. I am also aware that private hospitals are examining new measures to further enhance the quality of service provided to their patients. As I have pledged at the Working Group meetings, the Government stands ready to render our assistance to complement these worthy initiatives taken by the private sector so that the public have a greater assurance of the quality and of greater choice.

Another area which has been brought up for the private sector to consider at this debate and outside of this debate is the price factor. It has been commented that the price differential between the private sector and the public sector deter patients from selecting the private sector. This may be part of the reason but it does not represent the entire picture. A contributory factor as has been discussed in this debate is the issue of fee transparency. While there are many of patients who are willing to pay for more speedy, convenient and personalised services in the private sector, they may be deterred by the uncertainty over fee charges. The experience in one public hospital was that 30 per cent of the patients are willing to use private sector services if they were given information about the assurance of fees that they could expect in the private sector. So given the advantages of the private sector, I believe there is a much bigger role that the private sector can play. I understand that the issue of fee transparency has been a subject of discussion by Hong Kong medical practitioners and that private hospitals are also actively examining the issue. We all await with the great interest the emergence of new proposals to enhance fee transparency so that patients will have another choice.

Turning to deployment of resources to cope with service demand in the public sector, the Hospital Authority (HA) has been implementing various measures to ensure that its resources are deployed effectively and efficiently through productivity enhancement initiatives and demand management measures.

To cope with the increase in service demand arising from ageing and increasing population, as well as to maintain the existing level and quality of service, contrary to what members have been saying, in fact, HA has been increasing its staff and the number of staff had increased in the professional areas in terms of qualified doctors and nurses since 1991 by approximately 50%. HA plans to recruit about 270 doctors, 400 additional qualified nurses and 135 allied health professions in 2002-03. The intention is to continue to recruit these additional doctors, nurses and allied health professionals to meet the demand for services. The provision of health care services in HA is also being re-engineered to develop the more cost-effective ambulatory and community-based services, thereby reducing the demand on the more expensive in-patient services. Through the intake of these additional clinical staff and re-engineering and re-configuration of health services, work pressure on staff working in the public sector should be alleviated.

As I have said earlier, the reform proposals for the system of health care service delivery will facilitate a more efficient and effective distribution of work between the different levels and sectors of health care provision.

At the same time, place both Hospital Authority and the Department of Health placed considerable emphasis on the professional training and development of staff to maintain and enhance staff competency for the provision of high quality health care services. The public sector has been promoting continuous professional education and development of all its doctors, nurses, and allied health staff. A variety of training programmes and development activities are organised to improve health administration and to enhance skills in effective service delivery. HA has also recently implemented a core competency model to train and develop its staff. This new model provides a systematic framework to link professional training and development directly with enhancing job performance and improving service delivery. Core competency sets have been developed for doctors, nurses and a number of allied health grades. HA has also established an e-Learning Centre, a web-based training and development centre, in July 2001 to facilitate self-initiated learning for all HA staff.

In Hong Kong, our fundamental policy objective is to develop and maintain a health care system which protects and promotes the health of the population. It goes without saying that a healthy population will go a long way in alleviating the demand on our health care system. In this regard, Department of Health (DH) provides a wide range of disease prevention and health promotion programmes. It also offers advice to other government departments and bureaux on health matters, and works closely with them in supporting health-promoting public policies and environments for people to make healthy personal choices.

Disease prevention is carried out through various health services covering different age groups, from birth to old age, targeted at both communicable and non-communicable diseases. At present, we already have in place a well-established system, such as childhood and school immunization programmes and disease surveillance system, to prevent and control communicable diseases.

The proposal in the Health Care Reform Consultation Document for DH to adopt the role as an advocate for health and strengthen preventive care has received wide community support. As a health advocate and health advisor, DH is identifying priority health issues and will set strategic directions for health promotion programmes carried out by various providers. In the 2001 Policy Objective Booklet, we have already committed to develop a living environment conducive to health and ensure the availability of a lifelong preventive programme promoting health, wellness and self-responsibility. A number of new initiatives will be implemented by DH with the involvement of health services providers in both private and public sectors, as well as the education and welfare sectors, such as the Adolescent Health Programme, the pilot Men's Health Programme and the Cervical Screening Programme.

In line with the approach proposed in the Consultation Document, the Department of Health will be planning and implementing their programmes in an inter-sectoral manner, involving all relevant government departments, non-governmental organisations and the community, so that their input can be duly incorporated during their formulation stage, and their implementation will be supported. This participation will optimise the effectiveness of the strategies and initiatives.

Madame President, I would like to say a few words on the financing our health care in particular. Let us quickly revisit the current methods of financing health care. In Hong Kong, our health care system has all along been financed primarily by tax revenue. It has the merits of being relatively simple to administer. It is simple to manage, both in terms of budgetary control and quality assurance. However, we recognise the shortcoming on relying on tax revenue as the main means of financing health care, in fact, especially in Hong Kong where our tax base is narrow and the tax rates are low. We have therefore proposed three strategic measures in the context of the health care reform to ensure the long-term financial sustainability of our health care system. In our proposals, we have examined the three primary sources of financing health systems, and there are no more than these three, because all over the world is a mix of these three and how you design them is that matters, namely tax revenue, mandatory contributions, so you are just made to contribute, and this can either be insurance or individual savings, or the third source, are individual savings and voluntary contributions, either through private insurance or out of pocket expense.

We have reviewed these three primary sources and reviewed our current system and considered the views of the public, and the values espoused. The three measures that we have proposed are familiar, include vigorous cost containment and productivity enhancement programmes that would be undertaken and continue to be undertaken by the HA because I do not believe that productivity has a stop and end. We will also be looking at the productivity of our total health care system, so in economic term, the total allocated efficiency of health care financing in Hong Kong. The second measure which we talked about was a revamp of our current public fees structure and third would be some form of mandatory savings and the proposal was the introduction of individual saving schemes namely, the Heath Protection Account. The first two proposals are intended to be implemented in the short term while the Health Protection Account is a longer-term proposal. These in fact represent the minimum changes needed for sustainable system. We believe that we should start with the minimum.

On the cost containment productivity enhancement measures we are acutely aware of the need to first look within the system to continue to identify savings and improvements, and effectiveness and efficiency before looking for new revenue sources. Therefore, the HA has been implementing a series of measures to achieve these objectives of doing more with the same, of doing better with the same, without compromising the quality and the standard of care.

According to the Harvard Report, it was projected that there would need to be an increase of four per cent in public health care expenditure in future years. But in fact Government's subvention to the Authority is now at the level of about 2.2 per cent per annum. And this is to meet the need of our population growth and changing demographic structure.

On the subject of fee restructuring, our study on this important subject has been completed and I would like to take this opportunity to reinstate the objective of this exercise. The key objective of revamping our public fee structure is to better target our finite resources because resources would always be finite in whatever situation in whatever economic environment. We would always need to better target our finite resources to help the poor and the needy, and the medical services which carry major financial risks to patients even for the middle income individuals when there are catastrophic instances, they would not be able to afford market prices and market fees and that we should be able to reflect the priority of our targeting of services.

Through the revision of our current fees structure, we'll be able to better influence patients' health seeking behaviour and decisions, hence enabling the reduction of inappropriate use of public medical services. Furthermore, the revised fee structure will create more opportunities for participation by the insurance industry and collaboration with the private sector.

We shall present our recommended package to the Legislative Council for discussion in the later part of this year as I have said earlier. I can assure Honourable Members that in finalising our proposal we shall give due regard to affordability of the general public and there will continue to be a safety net for those who lack the means to pay the medical needs and it has also been suggested by some of the Honourable Members that we need to cover the lower incomed, individuals who are chronically-ill and have limited means, the elderly and the disabled who need frequent medical care and also with limited means. I think we should not include all the disabled, the elderly as necessarily needing support because there are many older persons who are much wealthier than many of us here and our resource should be really targeted to those who need assistance and we should not just lump everyone in one category and say that they all need help. I am sure some of the older persons in Hong Kong who have much more than our total resources put together in this room would not like to be considered as needing public assistance. Contrary to the concern expressed by some members, the fee restructuring would in fact be beneficial to the low-income and chronically ill who have limited income in the longer term.

Madam President, before I end, I think certainly the Government is very amenable and accepts criticisms and any constructive proposals. But there have been some Honourable Members who have been giving us nothing but unnecessary criticisms and unworkable solutions. I think those are not very constructive. It doesn't help the Government, it doesn't help the community, it doesn't help the sector that they represent. I think this debate can only be helpful and useful if all engaged in a rational discussion, look at the total health care resources in Hong Kong and to look at the strengths and weaknesses of this sector. Because I don't believe that there is one sector that we can say that we have got it right. Certainly the Government hasn't said we have got it right. We know we have not got it right. We are about to implement a series of changes. We thought that some of the changes have got the support of the community in general but maybe not everyone. I think we are very happy to continue the discussions or even to revisit some of the values and philosophies but we need to have constructive and viable proposals and alternatives. We cannot continue the debate that nothing will go on because not everyone will agree to it and of course there are people who have their own vested interest.

Madam President, our health care system, like all health care systems in the world, and the Hon Chan Yuen-han has mentioned some of them, is facing challenges. I don't think there is any single health care system in the world that can say it has got it right. No health care system has got it right. No health care system in the world can get it right. Because of the very nature of health care and the challenges we are facing. What we need is something that is workable that we can work together as a community to address because the demographic changes in the coming years, the envisaged increase in demand and expectations for better quality and the rapid advances in medical technologies are expected and will continue to exert further pressure on our system. Some are afraid that our health care professionals have got to work in this environment but that doesn't mean that we do not have solutions to alleviate their work pressure but we have to look at the system in totality. I can assure Members that the health care consultation document and the reforms that we have proposed to address the fundamental parts of our health care system, i.e. the way we deliver our services, i.e. the way we assure quality and the financing of the health care system, goes a long way in addressing those issues.

I am happy to continue to debate these issue whether you have viable alternative proposals. The only viable proposal which I have seen in the horizon is that proposed by the Harvard Report but that was chucked out by the community. If Members are willing to engage in that debate again, the Government is very open to that discussion. But other than a viable solution, I think we need to make up our mind and proceed along the lines that the community has agreed with, and that is, the reforms that we proposed in the 2000 document because we have the majority of support from the community in terms of carrying forward those proposals with the exception of some qualifications in terms of longer-term financing proposals.

Madame President, we have to view the health sector in totality, both public and private sectors in order to meet the challenges ahead. We fully recognise the value, talents and resources of the private sector and the creativity which could be generated to tackle the challenges ahead. Today's motion debate has been a timely opportunity for us to discuss these issues and I am most grateful to the Hon Mak Kwok-fung for bringing up this issue for discussion and to Honourable Members for their constructive proposals and criticisms. I stand ready to discuss this important issue with Honourable Members on a regular basis, either in this Chamber or in other forums.

Thank you, Madam President.

End/Thursday, June 20, 2002

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