Defining Singapore’s Healthcare Market

With one of the highest per capita gross domestic products (GDP) in Asia ($62,100), the tiny city-state of Singapore has positioned itself as an essential destination for medical devices companies. In fact, the International Monetary Fund places Singapore fourth in the world for per capita GDP, ahead of Japan, the United States and the United Kingdom. Clearly, these figures demonstrate the high level of wealth—and thus, the potential market for consumption of medical technology—in Singapore.

Overall, Singapore’s economy is still growing despite the economic downturn. The current GDP is approximately $290 billion (at current exchange rates), which is more than that of countries such as Norway, Denmark and Ireland, all of which have significantly larger populations. In 2011, Singapore spent about $9 billion or about 4 percent of its GDP on healthcare.

Another important market indicator is health expenditure, which specifies the amount of money available to be spent on medical devices. Singapore’s per capitaannual health expenditure is more than $1,500, which, in the Asia market, issecond only to Japan.

The Singapore medical device market is valued at approximately $450 million. To be successful in the Singapore medical device market, international companies need to understand how the Singapore healthcare markets work.

An Introduction

Unlike many Asian countries, Singapore currently does not have a reimbursement plan specifically for medical devices. However, Singapore’s hybrid healthcare financing framework helps to keep medical bills covering surgical procedures and medical devices and drugs affordable. This isaccomplished through a multi-tier protection of heavy government subsidies, supplemented by the Medisave, MediShield, Medifund and ElderShield programs.

Plans & Subsidies

There are four main tiers of government subsidies that keep healthcare in Singapore affordable. The first tier of protection is provided by heavy government subsidies of up to 80 percent of the total bill in acute public hospital wards, which all Singaporeans can access.

Medisave is the second tier of protection. Medisave is a compulsory individual medical savings account plan that allows virtually all Singaporeans to pay for their share of medical treatment without financial difficulty. Working Singaporeans and their employers contribute a part of the monthly wages into the account to save up for future medical needs. The account is portable across jobs and after retirement.

Medisave covers various hospital expenses, including:

• Daily ward charges;
• Doctor’s fees;
• In-patient charges for medical treatment, investigations, medicines, rehabilitative services, medical supplies, implants and prostheses introduced during surgery; and
• Surgical operations, including use of operating theaters.

The claim limits are as follows:

• Medical/surgical inpatient cases: $360 per day for daily hospital charges for patients admitted on or after May 1, 2007. This includes a maximum of $40 for doctor’s daily attendance fees;
• Approved day surgeries: Up to $240 per day for daily hospital charges for surgeries performed on or after May 1, 2007. This includes a maximum of $24 for doctor’s daily attendance fees; and
• Surgical operations (inpatient and same-day surgery): A fixed limit depending on the complexity of the operation and according to an approved list of procedures.

The third level of protection is provided by MediShield, a low-cost catastrophic medical insurance plan. This allows Singaporeans as a collective to effectively risk-pool the financial risks of major illnesses. MediShield operates on a co-payment and deductible system to avoid problems associated with first-dollar, comprehensive insurance. MediShield can cover up to 80 percent of large medical bills at the Class B2/C level (larger, shared, less-expensive rooms).

The fourth level of protection is ElderShield, a severe disability insurance. ElderShield also is available for subscription by Singaporeans to risk-pool against the financial risks of suffering a severe disability. ElderShield supplements allow policyholders to enhance the disability benefits coverage offered by the basic ElderShield product.

Finally, as an ultimate safety net, the government has established a medical endowment fund known as MediFund for needy Singaporean patients who cannot afford to pay their medical bills despite the heavy subsidies.

Many middle and higher income Singaporeans also have supplemented their basic coverage with integrated private insurance policies (Integrated Shield Plans) for treatment in the private sector. Singaporeans must subscribe to the basic MediShield product before they can purchase the add-on private Integrated Shield Plans. This industry structure preserves the national risk pool and guards against “cherry picking” of healthy lives by private insurers.

Overview ofHealthcare Services

For the acute care sector, the public sector dominates 80 percent of the care in this sector. The primary care sector is dominated by private sector providers, which account for about 80 percent of the market. In the step-down care sector (e.g., nursing homes, community hospitals and hospices), service mainly is provided by voluntary welfare organizations, most of which are funded by the government for services rendered to patients.

Primary healthcare service: Primary healthcare service mostly is provided (80 percent) through some 2,000 private medical clinics in Singapore. The remaining 20 percent of primary healthcare is provided through the 18 public sector polyclinics. Each polyclinic serves as a one-stop health center that provides outpatient medical care, follow-up of patients discharged from hospitals, immunization, health screening and education, investigative facilities and pharmacy services. Singaporean citizens age 65 and above, children up to 18 years of age and all school children are given up to 75 percent reduction in their consultation and treatment fees.

Secondary and tertiary specialist care services: There are seven public hospitals in Singapore. They comprise of five general hospitals, one women’s and children’shospital, and one psychiatry hospital. The general hospitals provide multi-disciplinary inpatient and specialist outpatient services, and 24-hour emergency departments.

Additionally, six national specialty centers provide cancer, cardiac, eye, skin, neuroscience and dental care. The seven public hospitals and six specialty centers provide 80 percent of the secondary/tertiary

services while the remaining 20 percent isprovided by private hospitals.

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Singapore’s medtech market holds a lot of potential for international medical device firms. To be successful, though, companies must understand the complexities ofSingapore’s healthcare system.

Ames Gross is president and founder of Pacific Bridge Medical (PBM), a Bethesda, Md.-based consultant firm that helps medical companies do business in Asia. A recognized national and international leader in the Asian medical markets, he founded Pacific Bridge Medical in 1988. PBM has helped hundreds of international medical companies with business development and regulatory issues in Asia.