Singapore Medical Association’s Guideline of Fees (GOF) Withdrawal: Patients now have less protection!

Withdrawal of SMA Guidelines of Fees (GOF)

Singapore, April 2, 2007 – The Singapore Medical Association (SMA) announced at its Annual General Meeting on April 1, 2007 that the Association is withdrawing its Guideline of Fees (GOF) with immediate effect. This decision by the 47th SMA Council was made after it received indications that the SMA GOF might run the risk of contravening Section 34 (2)(a) of the Competition Act and also after the Council had sought advice from five of its seven Honorary Legal Advisers.

The GOF was first introduced in 1987 with the aim to protect patients from being overcharged and to equip them with knowledge on medical procedures in hope that with improved knowledge there would be lesser cases of misunderstandings. It helped doctors with an indication of the current rates and how much to charge their patients. The guideline was the result of the collaboration of the Singapore Medical Association and the Association of Private Medical Practitioners of Singapore (APMPS) in response to the Health Ministry’s call for a guide on medical charges.

To date there have been four editions of the GOF (1987, 1992, 2001 and 2006).

My comments:

Dear Friends,

This is not a sick April Fool’s joke.

I found out about this from an email sent to SMA’s members only last night and it is all in the papers today.

The marketplace

There are various known relationships with respect to suppliers and consumers in the marketplace.

Those familiar with Economics 101 will know of Perfect Competition; Monopolies; Monopolistic competition; Oligopolies and others.

Perfect competition (PC): Eg Salt/sugar. There are many suppliers/ low entry and exit barriers/suppliers are price takers/homogenous products. Ie consumers have much choice and if supplier tries to be funny and raise the price even by 2 %, the consumer will buy from the next guy.

Monopoly: eg Singapore power / PAP govt ( serious!) : Only 1 supplier/price maker/ unique product/high entry and exit barrier. Take it or leave it. I say this product cost $1 million dollars- if you want you got to rob and steal and then buy it from me only.

Monopolistic competition/ Oligopolies: I do not have time to elaborate but these are variations of PC and monopoly.

Others: The doctor and patient relation is under this category.

Asymmetric Information: The doctor (supplier) in the relationship holds all the cards, as he has the knowledge that the patient ( consumer) requires . The patient depends on the advice of the doctor. If the doctor says that he requires a tonsillectomy, the patient usually has to accept it unless he makes an effort to get a second opinion ( or surfs the net).

Hence in a situation where there is unequal power relationship (eg with asymmetric info), self-regulation is crucial or else the consumer will get fleeced.

Self-regulators are usually appointed by or encouraged by the authorities to keep its members in line so that there is no profiteering nor exploitation of the public who do not know better.

The SMA’s Guideline of Fees was formulated for this very purpose. ( see above)

Beside consultation charges, surgical fees are also included in the GOF. The surgery fees are more of less grouped similarly to the Ministry of Health’s Table of Surgical Procedures (TOSP) (Groups A-G vs Tables 1-7) which determines how much of the patient’s Medisave can be claimed for the said procedures and hospital admissions.

Types of surgeries are grouped according to degree of complexity. A range of fee is then suggested for each of these groups. It is not a price-fixing attempt and only serves as a guide. Doctors are allowed to go above or below it.

Implications for patients with withdrawal of GOF

From now on, when asked about charges, doctors can tell their patients with a straight face (and with hand on heart) that there is no guideline.Period. The fee is such and such and that he does not know whether his charges are high or low with respect to other similar specialists.

The patient would then have to decide either to seek a second opinion and then go through the whole process of consultation again or else accept the doctor’s offer for treatment and hope that he has not been overcharged.

In the event that a patient does complain to the Singapore Medical Council (SMC) that he feels that he has been overcharged, SMC is in no position whatsoever to decide whether the charge is reasonable or not, short of surveying all the specialists doing that particular surgery and then get the mean/median or any other statistical method that it feels will help determine the fairness of the charge.

In the past, SMC just picks up the latest GOF and if everything else in the complaint have been dealt with, will usually reply to the patient that yes or no, the fee was unreasonable or reasonable as the case may be.

PTC and other regulatory bodies

Public Transport Council is an example of a regulatory body set out to protect the consumer who is at the mercy of companies who run our public transport system. I know some skeptics who think the PTC behaves like a cartel with official sanction.

Even oligopolies in the communication industry (Singtel/M1/Starhub) are regulated in some ways by their respective regulatory bodies.

Although SMA ( as contrasted to SMC) is a voluntary association of doctors, which de-facto had taken on some self-regulating functions of the medical profession.

With SMA surrendering this role, SMC will be hard-pressed to come up with some measure to assess the fairness of the doctors’ pricing of services.

At the end of the day, I can only say that there is less protection for patients as there is now worse asymmetry of information. Some doctors may be wringing their handsin anticipation, thinking that there is now no longer any need to follow any guidelines and they can charge as high as they think the patients are willing to pay. Maximise the consumer surplus ( as economists will say)

My honest opinion is that the SMA's decision is ill-advised and hasty. And wrong!

( Author's note (7.30 am 4th April)- SMA President Dr. Wong Chiang Yin has clarified in the Today Newspaper: "It was, in effect, a choice of scrap the guideline now — or cough up $200,000 for a decision from the Competition Commission of Singapore that might simply lead to the same result.

Getting guidance alone from the Competition Commission to file paperwork would have cost $20,000, while getting a decision would have cost the non-profit organisation $30,000. In addition, the SMA would have had to cough up some $150,000 in legal fees."

In view of the new fact, I agree that the SMA was between the rock and a hard place and has no choice but to act as it had. The conspiracy theorists are having a field day! More exciting than Kieffer Sutherland's "24"!)

The GOF is not a cartel's attempt at price-fixing. We do not monitor members' pricing policies ala OPEC. There is no collusion and the doctors do not meet in dark alleys and smoky corridors conspiring to fix the consumers. Far from it. The GOF actually serves as a psychological barrier to doctors who want to charge fees far in excess of the guidelines as when they are put under the microscope ( eg SMC/ Insurance companies), they would have to justify why they are an outlier!

Sigh! Try to be good doctor, also difficult. Maybe should just mind my own business and make the big bucks whilst the sun still shines.

Addendum 3rd April 07 9pm:
Ways of resolving assymetric information includes:

1.Mandatory disclosure- useful only if information can be objectively verified
( also not useful if I tell the patient my price for Procedure A is $1000. So what? There is no way to compare unless he goes and call up another 10 doctors to find out their prices)

2.Regulation of conduct- eg "cooling off" period. But we don't force patients to decide on the spot anyway. At least I don't. We are not selling "timeshare" !

3.Regulation by self ( doctors association) or by higher authority- but that is the exact thing that SMA has decided against.

The question is : Can we ask SMC ( being a govt-appointed body) to take over the function of a price watchdog?

Another question: Does the Law Society still have a recommended scale of fees for legal services? So bodies like PTC is ok but SMA's GOF not?

Dr.Huang Shoou Chyuan