Improving Hong Kong’s health care system

This article is a modified version of the keynote address by Dr. William Ho, chief executive of the Hong Kong Hospital Authority, at the International Hospital Federation Congress on 15 May 2001 at the Convention and Exhibition Center in Hong Kong on sustainable quality of care through partnership between the public and private sectors. Dr. Ho presents a frank and eloquent case for reform, and outlines an approach to correcting some of the imbalances in Hong Kong’s health care system.

Dr. William Ho

We have made tremendous strides in improving the quality of care in our public hospitals since the Hong Kong Hospital Authority took over their management a decade ago. Today, the level of service, both in terms of access to high quality care and availability of new technologies, matches that of highly developed countries.

This was achieved by spending less than 2.6 percent of our GDP (gross domestic product) in the public sector, with nominal per patient charges of less than nine U.S. dollars a day in a public hospital ward.

Needless to say, this was not an easy task. Much of it was due to the sincerity, dedication, and hard work of tens of thousands of staff. Concepts like patient centered care, strategic planning, public accountability, and outcome focus, are not only common terms in our vocabulary, but a new way of life for our organization.

But as the old Chinese saying goes, when one climbs to the top of a hill, there is always another mountain beyond. The public’s expectation of what we should offer keeps rising. Meanwhile, new demands are coming from within the system. Our doctors remind us of our technological gap with the Mayo Clinic, for example. And a hefty 60 percent increase in our psychiatric drug budget is met with criticism that we are still not doing enough.

We share many of the challenges that all modern societies face—an aging population, technological advances, resurgence of infections, and a growing burden of mental health disorders. But we also have unique problems.

A difficult balance
We have a public/private sector imbalance, which creates problems both of sustainability and overall system efficiency. Hong Kong’s public hospital sector is bursting at the seams, shouldering some 94 percent of all hospital care in Hong Kong.

The inefficiencies spring from an over-reliance on hospitals because of an inadvertently flawed incentive system. Up to two thirds of visits to our Accident and Emergency Departments, which are free of charge, and approximately half of all visits to our Specialist Outpatient Clinics, are suitable for management in a primary care setting.

Fragmentation of care, as alluded to in the Harvard Consultancy Report, released in 1999 constitutes another dimension of system inefficiency, despite our best efforts at tackling the problem.

But fragmentation is most problematic outside the Hospital Authority. The private sector, which has about 80 percent of the market share in outpatient services, provides only 6 percent of hospital care. Yet half of all health expenditures are in the private market. With our rigid separation of the public and private sectors, patients either go for a very high level of subsidy in the public sector, or no subsidy in the private sector.

The Harvard Report concludes that we have a variable quality of care, particularly in the private sector. A systematic quality framework, like that of the Hospital Authority, does not exist in the private sector. We are heartened, however, that the private hospitals have started a system of accreditation, and it will probably not be long before we speak the same language in terms of quality of care and efficiency.

Few would disagree that fragmentation of care, variable quality, and an incentive system that is conducive to overuse all point to the timeliness and need for system-wide reform.

	Dr. Ho, left, participated in a panel discussion on China’s views of American health care at the East Meets West conference last June, sponsored by HMI and the Chinese Medical Association

The goal of reform
We have paid a great deal of attention to the public system as we’ve improved it, and perhaps it’s time to pay as much attention to the private sector.

The lifeline of Hong Kong is its capitalist system. Hong Kong’s assets are its people and systems, and 85 percent of the GDP comes from the service industry. So far, the emphasis on our health care system has been on maintaining a healthy workforce, providing a safe environment, and providing care for those in need.

But there is another reason to emphasize health care: health investments make economic sense. Not only do we lessen the burden of disease and promote well being, we focus on health care itself as a service industry. So far, we are spending 5 percent of the GDP on health. With the aging population and increasing societal expectation for more sophisticated care, there is a case for increasing our investment to be more in line with countries of comparable economic development.

Yet increased public spending on health has already occurred over the past decade (up from 10 percent to nearly 15 percent of total government expenditure). Government does not intend to spend any more. So the increase can only come from people’s investment in the private sector. And how would this come about? A change in the incentive system, by correcting adverse incentives that lead to inefficient use of public resources, could help.

Private transformations
The private sector has complained that public hospitals perform too well. Maybe it’s time for the private sector to improve in the same ways the public sector has, by organizing care according to modern system concepts used around the world.

The Hospital Authority has published Annual Plans for the past eight years, in which we have spelled out the ways we have evolved in accordance with the changing environment of health care management worldwide, which can be shared with the private sector. Gone are the days when the public sector provided second-class service, mostly by trainees, to those who couldn’t afford decent health care in the private market.

Hong Kong greatly values a free market, but policy makers tend to agree that one cannot primarily depend on the private market to improve health. Even in the United States, half of the hefty 14 percent of GDP spending on health is public spending.

Philosophy revisited
In Hong Kong, we have relied on stated government policy that:
“No one should be deprived of adequate care because of lack of means.”
However, we are also aware of the sacrifice in system efficiency that a broad interpretation of “equity” can bring. Increasingly, the concept of “fairness” seems to make both economic and humanitarian sense when it comes to running a health care system. For example, is it fair to offer those with lesser need the same level of access as those with greater need? Is there a difference between retirees who can afford to line up for government outpatient services for dry eye syndrome and diabetics who must see a provider for follow-up drug treatment? Is it fair for millionaires to enjoy the public hospital service, perhaps just to get a second opinion to compare it with that of their private doctor, as they often do?

The current system is not fair, although it appears equitable. What started as a policy of providing everyone, particularly the poor, with the same access to high quality care, may not be achieving its goal.

A system overhaul
The key to a successful partnership between the public and private sectors is the development of a new system of incentives. The government says there are three major barriers between the public and private sector: informational, clinical, and financial gaps. I am proposing a three-pronged approach to bridging these gaps.

  Information bridge
In the modern era, many diseases require multi-disciplinary care across extended periods of time. Continuity of care can only be achieved by an unimpeded flow of clinical information across different providers. For years, private doctors have called on their public counterparts to send them information on patients they see, and to refer patients back to them. But many patients are less than enthusiastic about going back to their private doctors once they enter the Hospital Authority system because of the price difference, or out of fear that private doctors don’t have access to their records or understand their medical conditions.

In order to remedy this, we need an IT infrastructure aimed at cross-sector usage. The willingness for everyone to share medical records, with the patient’s consent, and to standardize data definition and entry, will be the crucial success factors. Although participation should be voluntary, the government could provide some subsidy as an incentive for private participation, especially for solo practitioners.

  Clinical bridge
We need to have evidence-based clinical protocols that cut across organizational boundaries. They will provide guidance on the most appropriate treatments for different stages of diseases, as well as criteria for cross referral. The parallel development of information systems across sectors and system-wide clinical audits will help answer questions of clinical outcome, cost, and appropriateness of care.

  Financial bridge
We must restructure fees in accordance with our offerings. If we continue to turn a blind eye to artificially low charges, at least to those who can afford higher ones, any new technologies and treatments will only be available to some, or queues for treatment will get longer. A reasonable and cautious adjustment of public hospital fees is feasible, and I suspect it will be acceptable to the community if people are given as much information as possible so they understand the rationale.

We also need to encourage patients to go back to their private doctors. Stable patients would be managed in the primary care setting even if they stay with the public sector; they would have a choice of doctors, but would be guaranteed hospital backup if they need it.

As public resources are limited, the public sector would only provide evidence-based, prioritized treatment as the standard of care. Less proven or low priority treatments would be made available only in the private setting. This would be made explicit to patients, who would be given a choice of where they want to receive treatment.

Improving quality
Although a major objective of reform is to better utilize public money and prevent misuse, the ultimate objective should be to improve outcome and quality of care. As such, an incentive system should be designed to encourage the practice of “good” medicine among private providers. This could take the form of “preferred provider partners” or a subsidy in kind or in cash.

The criteria for “good” practice could include:

  Active participation in training and continuing education

  Participation in health promotion, prevention, and screening activities

  Participation in clinical management meetings and clinical audits

  Participation in community care, off-hours consultation, home visits to elderly patients

  Contribution to clinical data, research, and teaching

  Participation in quality improvement projects

Conclusion
The three prongs must be taken together to achieve success. It is a huge undertaking, but bold strides are required to get us out of the present stalemate. The government has the ultimate responsibility for people’s health, but to achieve that, it cannot do it alone. We must leverage the strengths of both the public and private sectors, and let consumers understand that they, too, must make a contribution to make the system work.

Neither doctors nor consumers can be forced to change, but they can be induced to change through information, incentive systems, and ultimately through their own experience in the system.