Singapore’s healthcare has consistently been ranked as one of the most efficient healthcare systems over the last decade. Now the nation’s health ecosystem faces growing cost challenges, as an ageing population, chronic disease, advancing medical therapies, and manpower costs transform the healthcare landscape.
The national healthcare ecosystem is acting quickly to address these challenges, pivoting the model of care across three paradigms of the ‘Beyond’ strategy — beyond hospital to community, beyond healthcare to health, and beyond quality to value.
In the first of our three-part series of articles on the fascinating topic of evolving healthcare provision in Singapore, we dive into the challenges and opportunities of a capitation model to address population health outcomes.
Shifting landscape of healthcare challenges
Singapore’s national health expenditure is projected to increase more than 2.5-fold to $59 billion in 2030, up from $22 billion in pre-Covid-19 2018 according to data from the Ministry of Health. This investment represents a step in the right direction, but more needs to be done to embed population health with positive societal outcomes.
Current healthcare provision is still delivered through multiple institutions with varying capabilities and financial models. Despite increased focus on health and prevention, this system still presents several systemic challenges, including lack of a holistic view of the patient-healthcare life cycles across public and private sector providers, narrow scope of specific healthcare delivery, and often divergent provider incentives resulting from different funding models.
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The existing landscape means that, although on the rise, proactive interventions for preventative health remain limited. In his 2022 Budget speech, Singapore’s Health Minister Ong Ye Kung announced a pivotal shift in healthcare financing — moving from a workload-based model to a capitation model that integrates the efforts of three healthcare clusters within a new payment ecosystem.
In these efforts to reinforce a life-course approach to population health, National Healthcare Group, National University Health System and SingHealth will receive a predetermined fee for every resident living in the region to provide greater flexibility around healthcare support.
This marks a welcome shift in approach, but unless structural elements in the healthcare system are also addressed, the benefits of this shift are likely to be limited, and healthcare costs will continue to be unsustainable. These efforts must include a holistic view for implementation of sustainable population health systems.
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Execution will be key
The principles of population health are well-established for long-term societal well-being. Despite this, there are clear gaps between the promise and impact of population health roll outs across several healthcare systems. In Boston Consulting Group’s (BCG) work with different healthcare environments, we have observed several limiting factors which inhibit the outcomes of population health implementation that are important to learn from in Singapore.
Population health requires scale to succeed, but the limited initial scope of pilot schemes which cover small patient volumes or spend often limit the potential for meaningful and visible systemic change.
Limitations in access to good data and analytics also result in incentives aligned with adherence to processes, rather than outcomes. Often key performance indicators include too many metrics while not focusing on those that are the most valuable.
Payment scope is also often siloed and fails to extend beyond institutional or professional boundaries. Providers are often exposed to multiple payment models due to lack of coordination between the payers and programmes.
Finally, while policy and financing model changes take a top-down approach, there is often a lack of on-the-ground change management with stakeholders to fully align them with new frameworks.
The importance of alignment across four lenses
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While Singapore has demonstrated progressive thinking about population health, launching several initiatives in recent years with defined population cohorts, a transition to a whole-of-population model will require a paradigm shift at several levels. Attitudes will have to shift across four key stakeholders in order to deliver on the actions required to improve population health:
• Providers: Care delivery activities which are revenue drivers today will become cost drivers in the capitation construct. How should providers adapt their care pathways? For example, most general practitioners (GPs) have a fee-for-service model covering their consultation and medications. With a fixed payment per member per year, GPs will need to transform service delivery.
• Payers: Additional expenses today in areas such as preventative care and ancillary services will yield savings tomorrow. How can payers measure those savings in future profit and loss statements to justify expenses today?
• Patients: Continuity of care in the assigned provider network may mean restricted choice. How can patients balance the immediate desire to consult the best specialist for their condition versus waiting for long-term outcomes?
• Policy makers: Capitation would require new payment frameworks. How can the new policies synergistically co-exist with legacy policies, taking into account elements such as block budgets and subsidies, to achieve impact?
Systematic approach is required right from the start
Transitioning to a population health model at scale will require simultaneously addressing several key elements of the healthcare system. Without this, the risk is aiming for well-intentioned change that is unable to deliver longterm healthcare impacts. Investment will be required in several key enabling dimensions.
This includes data and analytics which will be vital to helping define the value in a population-health construct through three key components of patient outcomes, cost, and risk. Singapore needs to consider how data can be leveraged in this context, and what foundational elements are needed to build an informed strategy.
Clear principles and framework are required for determining the capitation rate and how clusters allocate it across the different providers in their respective ecosystems. Long-term sustainability of the capitation model requires aligning financial incentives of all stakeholders — including different providers across primary, acute, intermediate, long-term, and ancillary care — as well as patients. Funding and financial incentives should be structured to deliver a win-win for all participants.
Clinical pathways and care models must also be transitioned. The journey from prevention to care and through different care settings must be seamless and optimised for patients as well as providers. Providers must consider how clinical pathways can be designed to ensure this end-to-end journey.
Operating models and governance must also be addressed. In Singapore, specialised care such as cancer, cardiac, paediatrics and others are concentrated in select institutions to optimise resources. Future models must take into account how capitation can operate for referrals across institutions, and what the guiding principles for providers are to ensure effective collaboration.
Workforces will also need to transform, as caregivers will ultimately be the foundation on which a capitation model achieves its goals. Investment into appropriate workforce transition to optimise new models, specialisms, and ways of working must be considered.
Finally, risk management strategies will also need to be redefined. Capitation shifts financial risks from the payer to the provider. Mechanisms must be introduced which allow risks to be equally distributed to ensure the sustainable operation of the healthcare ecosystem.
This article frames how capitation offers a powerful opportunity to transform Singapore’s population health dynamics through alignment with all relevant ecosystem stakeholders. Successfully delivering such a transformation will rely on two key enablers — data and analytics, and an effective payment capitation model.
These critical pillars will be explored in more detail in the following articles in our series.
Prasanna Santhanam is managing director and partner at BCG while Manav Saxena is a project leader at BCG