Why does a private clinic charge less for consultation than the unsubsidised cost of the same at a public polyclinic?

Healthcare is a major point of concern for Singaporeans. It’s a universal issue that is constantly debated on by both citizens and politicians alike. In fact, much has been said about how splendid healthcare is in Singapore and how citizens and PRs enjoy affordable healthcare here.
The Ministry of Health (MOH) has consistently maintained that healthcare is affordable thanks for the 3Ms – MediSave, MediShield and MediFund – which helps keep out-of-pocket medical costs low for individuals.
In fact, MOH has said on their Facebook page that “Singapore has come a long way as we work to build a healthcare system that is accessible, affordable and provides quality of care.” The website notes that the healthcare system in Singapore is designed to ensure that “everyone has access to different levels of healthcare in a timely, cost-effective and seamless manner.”
However in recent years, there has also been plenty of talk about strategies and approaches to deal with the spiralling increase of healthcare costs. The Singapore Business Review noted that “The rising cost of healthcare in Singapore is increasingly diminishing the city’s attractiveness as a medical tourism hub with patients opting to turn to neighbouring countries for their medical needs.”
Back in 2014, then-Deputy Prime Minister Tharman said that the government’s projected healthcare spending is expected to triple by 2020 to S$12 billion from S$4 billion in 2011. In 2018, the government’s healthcare expenditure was S$9.29 billion, up over S$600 million from the previous year’s S$8.64 billion, according to the MOH website.
One of the reasons cited for this ballooning of healthcare costs is Singapore’s ageing population. But as Business times SG said, costs have risen sharply among the working population as well. . HSBC added that the fact that Singapore will have only half the number of working-age adults to every senior by 2030 has significant implications for future health costs.
Constantly, DPM Heng Swee Keat has said that Singaporeans needs to focus on living a healthier lifestyle to avoid incurring hefty medical bills later in life, putting the responsibility of reducing the financial burden squarely on the shoulders of citizens.
It’s also been suggested by Prime Minister Lee Hsien Loong that the government has to be careful about how much it subsidises healthcare, “not just to save taxpayers’ money, but to avoid encouraging over-treatment by doctors and over-consumption of healthcare services.”
But the fact remains that while pivoting towards a more health-conscious lifestyle would benefit Singaporeans in more ways than one, the rising costs of healthcare is outside of the average citizen’s control. Many are still left to pay off hefty sums for the sake of their health or their parent’s health as the compulsory public insurance scheme (MediSave etc) and Community Health Assist Scheme (CHAS) don’t really provide much assistance.
The recent case of 82-year old Seow Ban Yam is an extreme example of how the can end up being a burden. The octogenarian was stuck with a bill amounting to S$4,272 as his MediShield only covered S$4.50 of his subsidised bill. The calculations involving his MediSave premium, CPF, and MediShielf payout was enough to baffle any working-class Singaporean, let alone an 82-year old retiree.
In recent years, healthcare has undoubtedly become increasingly expensive. The Singapore Department of Statistics indicates that healthcare inflation is much higher than overall inflation by about 9.5% and has been so for the past five years. The cost of medical visits and treatments have also increased by 8% and 9% respectively since 2015, noted Asia One.
Despite these rising numbers, Singapore continues to use private companies to run public healthcare which inevitably results in additional costs. After all, private companies’ primary responsibility their stakeholders is to generate a profit, not provide social welfare.
To illustrate just how much more public healthcare actually costs with private operators, let’s look at these two receipts showing how a clinic providing subsidised care charges its clients when compared to a private clinic with no subsidies.

As you can see, the receipt on the left from a National Healthcare Group Polyclinic shows a final bill of S$13.20 after deducting the government subsidy of S$34.90. That means the total price for a consultation before subsidisation is actually S$48.10.
On the right is the consultation fee incurred when visiting a private clinic with no subsidies – S$29.90. That’s about 38% lower that the full cost of a consultation at a so-called public healthcare facility. While the final total is much lower after the subsidy, the initial fee is much higher at the polyclinic. This means that healthcare cost at the polyclinic is in fact much higher than in the private sector. Why is that?
Also, the doctors you see at polyclinics tend to be junior doctors. Many are also from foreign countries. On the other hand, private clinics are usually run by senior doctors with decades of experience. Given this disparity in experience, aren’t polyclinics simply overcharging their patients and/or the government with their high costs?
Now, according to NHG’s annual report, their polyclinics attended to approximately 2.88 million patients in 2017 and 3.39 million patients in 2016. The NHG run polyclinics in Woodlands, Yishin, Ang Mo Kio, Toa Payoh, Hougang, and Geylang throughout 2017 (as well as in Bukit Batok, Choa Chu Kang, Clementi, and Jurong up to September 2017). So this one company alone provides healthcare services to millions of Singaporeans.
According to their annual report, the group generated over S$2,602 million in the 2017 financial year. Of course, this includes more than just their polyclinics. Even so, NGH Polyclinic clearly operates on a much higher economic scale than an average private clinic in terms of the number of patients they attend to.
Clearly, the healthcare system in Singapore is in dire need of restructuring. Singapore Democratic Party (SDP) Chairman Prof Paul Tambyah pointed out in his speech at official launch of SDP’s healthcare plan on in May 2019 that the current healthcare system runs as “a profit-making venture which consistently collects surpluses far in excess of the money spent taking care of patients.”
“Healthcare is treated like a commodity where people avoid important primary healthcare services because of the costs and end up spending a lot of money treating complications that could have been prevented,” Prof Tambyah said.
The alternative, Prof Tambyah suggests, is a model based on equal treatment for all individuals, “care based on clinical need and not on ability to pay.” as healthcare should be treated as a fundamental right to citizens and not something that only the wealthy can afford and be granted.