Agent of Change


Gleneagles CEO Dirk Schraven says this new type of private hospital can show the way to a more sustainable healthcare system

By some measures, Hong Kong healthcare is the envy of the world: It ranked first in September’s Bloomberg Health Care Efficiency Index, gauged on factors such as per-capita expenditure and life expectancy. Thanks in large part to decades of universal access to low-cost public medical services, Hong Kongers can now expect to outlive anyone else on the planet.

But what the index fails to show is that they should also expect to spend a growing slice of their longer lives waiting for treatment or lying in the cramped wards of overstretched public hospitals.

“The Hong Kong public healthcare system is of good quality but completely overburdened,” says Dirk Schraven, chief executive officer of Gleneagles Hong Kong Hospital, the 12th and newest addition to our private hospital sector – and the first in more than two decades. “They are so overburdened that it is very hard for them to sustain this model going forward.”

The government has ambitious plans to upgrade existing facilities and build new ones, adding more than 9,000 hospital beds as well as other hospital services in coming years. But history suggests that simply opening the spigot of public spending is unlikely to prove a sustainable fix by itself. A 9.5 percent jump in the health budget this year adds to a more than fivefold increase in spending since 1989, yet from 2010-17 average waiting times at A&E jumped by more than half to 114 minutes.

And in fact, public spending has significantly outpaced total healthcare expenditure as the government made up for lagging contributions in relative terms from private funding, which has fallen from 60 percent of the total three decades ago to around half today.

Which is odd, given the simultaneous uptake of private health insurance. Around half of Hong Kong people have some kind of medical cover today. They just don’t use it.

“A lot of patients do not dare to go to private healthcare because they have no idea where their bills are going to end up,” says Schraver. “They're concerned that their insurance may not be sufficient.”

And they’d mostly be correct.

Reimbursements can vary widely based on a complex and confusing pricing matrix, the level at which fees for procedures are capped, as well as the ward picked by the patient. Recent estimates reckon that 70-80 percent of claims are reimbursed. But that can leave a sizeable amount for the patient to pay – and little clarity about just what those costs are going to be.

The government has launched an initiative to increase transparency in prices at private hospitals, but according to a report published this year by Bupa, there were significant inconsistencies in the range of data hospitals chose to reveal and the lack of like-for-like price comparisons would mean the disclosures won’t help patients in choosing a provider.

It’s not just the unclear and unpredictable cost of treatments that needs fixing.

“There's no clarity on outcomes, there is very little information for patients to make any judgements,” says Schraven, who came to Hong Kong after a five-year stint as chief operating officer at one of the Netherlands’ biggest hospital groups. “The private sector in Hong Kong is a relatively opaque, relatively conservative system which did not have a lot of incentives to change.”

Which is why when the government sought bids for the new private hospital project, it included detailed demands for very transparent clinical governance to make sure there is a standardized approach and collection of data sets to help monitor quality and outcomes.

So while the 500-bed Gleneagles Hong Kong Hospital’s gleaming new site in Wong Chuk Hang bristles with the latest array of scanners and other high-tech medical kit, and the spotless facilities can sometimes feel more like a five-star hotel or high-end mall, what sets it apart is an unprecedented level of oversight, governance and operating guidelines.

For example, the government stipulated that Gleneagles must offer certain categories of services that are in demand but under-resourced.

“We are going to be the first private hospital to provide inpatient psychiatric services,” Schraven says. “Nobody else [in the private sector] does that. There is demand, we think. Nobody does it because, to be honest, you don't make much money from it, it's difficult to do, has the risk of stigma and outcomes are difficult to manage ... It's not the standard business for a private hospital to be in. One reason we are comfortable doing it is because we do offer these services within the group.”

The stipulations that grabbed most media attention were that 70 percent of inpatient bed days must go to Hong Kong residents, and 50 percent under medical packages that offer a fixed price and are designed to be wholly or almost wholly covered by the sort of policies sold by major insurers in the city.

 “We want to make sure the patients have upfront price security. We try to price our packages so that they are almost entirely covered,” Schraven says. If there is a complication during an operation and the patient requires further treatment, then the hospital underwrites that risk, he says.

Gleneagles now offers more than 120 such packages. The one for a laminectomy – typically involving the removal of part of the vertebrae to relieve nerve pressure – covers a five-day hospital stay and costs HK$95,000. Adventist gives a guiding range of HK$202,000 to HK$336,657 for a 2.4 day stay, based on historical data; St. Paul’s is a 3.4 day stay at HK$111,816 to HK$181,887.

So, a model that encourages those who can afford private treatment to use it and so eases some of the congestion on the public system. At the same time, also allowing insurers to offer products their customers can use without fear of hidden costs they will end up paying. A slam dunk, no?

"If you have a provider offering and an insurer paying for it, it doesn't mean that adoption will take off by itself," cautions Schraven. “For packages to work you have to have an ecosystem that's working.”

While the benefit of packages may be clear to the big insurance companies, they still have to put in some work to ensure their products are aligned with Gleneagles. They also must get the word to their armies of individual agents – there are almost 64,000 in Hong Kong. And both need to incentivize patients to use the new model and to ensure there is no funding shortfall.

Doctors too need to buy into the model. And then there are the patients: “The problem with patients,” says Schraven, “is that when they're not sick they don't spend a lot of time thinking about hospitals. And when they are sick it may be quite late to address the issue.”

Changing attitudes will take time. So too will expanding the hospital’s practice areas.

Schraven emphasizes the need to take a gradual approach, building a body of understanding and experience to ensure the packages are sustainable – in terms of pricing and the skills and expertise to maintain them and to deliver services that are consistent in terms of governance, procedures and the monitoring of outcomes.

Which is where the collaboration with HKU should pay off. The university provides advisory and oversight services, such as in accreditations of new doctors who want to practice at the hospital, as well as helping to establish clinical best-practices and operating guidelines. And Gleneagles becomes a training hospital that can pass on these evolving best-in-class practices.

“Around the world, the lesson with training is that you get more compliance with and more consistency in care patterns. Trainees need to be trained, and in order to train you have to be more aware of the processes and protocols,” Schraven says. “In a teaching hospital there is less variance.”

Clarity in pricing, implementing a strict and comprehensive clinical governance model and improving consistency of procedures and treatments will all be underpinned by one thing: Data.

Bupa agrees: “Hong Kong collects fewer financial, quality, and patient experience indicators than comparable developed markets,” it said. Better data collection would help develop clinical guidelines, reduce variance and inefficiencies, improve safety and strengthen clinical outcomes, it said. All of which would rebuild public trust in healthcare providers.

To be sure, the lack of robust data on quality and outcomes is a problem worldwide, Schraven says. “Patients have no idea how good this heart doctor is versus that heart doctor... practitioners themselves do not have reliable data to look at,”  he says, adding that Gleneagles is in a good position to become the leader for transparency in the Hong Kong hospital sector. “Moves towards standardizing measurement of treatments and outcomes are just beginning.”