Study | Medicine and healthcare | 2019-04-17

Hong Kong tops world’s highest spending in private primary healthcare
Diversified financing to ease healthcare burden

The Bauhinia Foundation Research Centre (the Centre) today released a study on ‘Enhancing Hong Kong primary healthcare with additional resources and expanded channels’, which examined the changes in Primary Healthcare (PHC) expenditure in the past 10 years (financial year 2007/08 to 2016/17) and certain factors contributing to the changes. The Centre aims to pave a data-based foundation to propel the development of PHC with the effective use of financial resources.

The Centre’s Chairman Mr Lau Ming-wai said, ‘Primary healthcare is the key to “Health for All”. Enhanced primary healthcare can reduce the need for specialist and hospital care services, and thus optimising the resources of healthcare services and increasing the efficiency of our healthcare system. By analysing the PHC expenditure, the Centre hopes it helps review the strategic direction of PHC services, enable the monitoring of the overall healthcare service demand and the growth of healthcare expenditure, and promote public health.’

Hong Kong tops world’s highest spending in private primary healthcare[1]

The study reveals that the percentage of Hong Kong’s PHC expenditure to the total healthcare expenditure is already much higher than many OECD member countries. For example in 2016/17, the proportion of PHC expenditure in Hong Kong accounted for 27.5% of the annual total healthcare expenditure, which was higher than the developed countries such as Korea (27.1%), United Kingdom (26.2%) and Netherlands (20.7%). However, during the same period, Hong Kong topped the list in terms of the percentage of private PHC expenditure to the overall PHC expenditure, with a proportion as high as 75.1% (HK$30.98 billion), far exceeding the second placed country Hungary (55.5%) and the third placed country Switzerland (53.2%)[2] . This raises concerns over the citizens’ burden on healthcare expenses.

About 60% of the overall PHC bills are paid by the citizens directly

The ratio between public and private annual PHC expenditure in the past 10 years was about 1:3, which means the majority of PHC service fees (including Chinese and Western medical practitioners and dentists) were borne privately, including those ‘paid by the citizens directly’ as well as those settled by health insurance plans purchased by citizens or employers.

For example, private PHC spending accounted for 75.1% of the overall PHC expenditure (HK$41.24 billion) in 2016/17. Among the overall PHC expenditure, about 57.8% of the bills were ‘paid by the citizens directly’, only 15.8% of the medical expenses were absorbed by the aforesaid insurance plans, while merely 1.4% were covered by non-profit institutions and enterprises.

The GDP growth rate per capita is falling behind the private PHC expenditure

From 2007/08 to 2016/17, Hong Kong’s private PHC expenditure increased by 85.1%, surging from HK$16.73 billion to HK$30.98 billion. Although the public PHC expenditure doubled from HK$4.86 billion to HK$10.26 billion (the growth rate was 110.9%) over the same period, it is still difficult to reverse the phenomenon that citizens have to bear the majority of their PHC expenditure.

Over the decade, private PHC expenditure per capita has increased 74.5% from HK$2,419 to HK$4,222, much higher than the GDP growth per capita (41.4%). This means that for those citizens in need of private PHC services, it could be a financial burden that is not easy to shoulder.

Government funding is not a long-term solution; diversified financing could alleviate the burden

Although the proportion of public PHC expenditure has been increasing in the past 10 years, its proportion in the Government’s overall healthcare expenditure was only 13.7% in 2016/17. In view of this, the Centre recommends the Government to allocate more resources to effectively plan and continually promote preventive care and community-based PHC services. However, solely relying on Government’s funding is not ideal. To manage the overall healthcare demand and the growth of expenditures in the long run, it is worth considering a multi-channel service model and diversified financing arrangements, to encourage cross-sector collaboration for the development of PHC and to strengthen preventive care. Key strategic directions are as below:

Direction 1 – Reducing burden via Public-Private Partnership

As the majority of PHC services is provided by the private sector, strengthening the Public-Private Partnership (PPP) could better utilise the resources from both sectors and provide more healthcare service choices for the citizens. Government’s subsidised services, such as the General Outpatient Clinic Public Private Partnership Programme, District Health Centre and the Elderly Health Care Voucher Scheme, can enhance PHC services at the community level. The Centre believes that whether there is any room for expansion in areas such as the coverage and target groups of relevant services, and how to strike a balance between reducing citizens’ burden and ensuring the sustainability of public spending will need to be further explored.

Direction 2 – Encouraging the public to purchase insurance

Medical insurance plays a vital role in the whole medical system, which helps balance the overall risk sharing. However, the study shows that the proportion of using personal insurance plan to settle PHC expenditure is still considerably low. Thus, incentivising citizens to procure private medical insurance for cost-sharing is a strategic direction for alleviating their PHC expenditure burden, which also helps further develop a twin-track healthcare financing system to deliver services in both public and private sectors in Hong Kong.

The Centre’s Director Dr Donald Li Kwok-tung said, ‘Despite the Government has earmarked over HK$150 million to the Kwai Tsing District Health Centre for its operating expense and staff cost, it is still unknown whether such funding covers the training for primary healthcare professionals. The Government should put more resources to strengthen the training at the community level to improve the quality of healthcare services, which can effectively enhance preventive care as well as the health of all citizens.’

1 Compared with 28 OECD countries, including Hungary, Switzerland, Portugal, Spain, Lithuania, Poland, Korea, Estonia, Iceland, Italy, Netherlands, Austria, Slovenia, Finland, Ireland, Canada, Sweden, Czech Republic, France, Norway, Turkey, Mexico, United Kingdom, Denmark, Germany, Belgium, Slovakia and Chile.
2 Based on the 2016 figures of OECD countries.


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