Case study: Primary healthcare in S'pore

Some background information

• A recent study by Wong CY et al revealed that, which quantified the perception that as compared to last decade, GPs are operating under more trying conditions.
  
• Costs have increased: rentals by 31.4%, drugs by 41.7%, utilities/ laboratory by 58.8%. However consultation fees have only increased by 25.4%, and the GP's income has largely stagnated over the past 10 years (mean monthly income 2006: $10,524, 2007: $10,271).

How will this trend lead to market failure in Singapore?

• Figure 1 above shows how low quality standards and especially low pricing, led to a lower combined supply curve.
  
• The actual demand for good GP care by patients has also declined.
  
• An uninformed patient faces a combined supply of good (well trained) and less well trained GPs, and knows he has a chance of drawing an "adverse selection", because he may have little knowledge on how to differentiate between the two - there is asymmetry of information.
  
• He thus lowers his demand curve, and is not willing to pay a premium, even if he sees a doctor with "GDFM" or "MMed" tagged to his name.
  
• Lower price (consult fees) drives out better quality.
  
• Less doctors are willing to supply service at this price. Junior doctors are not keen to take up further FM training, and trained ones are not keen to join the market.
  
• Consumers will then face the GP market with even worse adverse selection.
  
• As the demand curve adjusts lower and lower (the red line in Figure 1 above), and the combined supply curve shifts further from that of good GP care, there will come a point in time when supply of bad quality exceeds demand, and only the bad ones are left in market. This is market failure of healthcare.

Solution?

• The Family Physician Register introduces an Appraisal Mechanism to objectively resolve the asymmetry of information and differentiate the well trained GPs from the rest.
  
• Doctors who chose to take up the 2-3 year of FM training would be able to signal to the patients that they were serious about upgrading of skills in order to offer better treatment.
  
• The need to invoke the support of the so-called 4Ps - people, press, policy makers and profession is recognized. The public and our patients need to be convinced that they are well trained and capable to take on mainstream Family Medicine, chronic disease management, right-siting, integrated care.

In conclusion, when more consumers are aware of the value and willing to pay the due worth of good care, then the demand-supply curves will meet at a different point, preventing market failure.

P.S:Other information not mentioned such as full background information can be found here. Source is taken from same place as well.

-yuncheng