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Submission to the Health and Welfare Bureau on the Study of " Improving Hong Kong's Health Care System: Why and For Whom? "

  • Consultation Papers
  • 1999.08.15

Full Submission


1.1    This paper provides the Consumer Council's response to the main observations and recommended options in the Study Report entitled Improving Hong Kong's Health Care System: Why and For Whom? by the Harvard Team. The recommended options proposed by the Harvard Team largely address how universal health care can be funded in the future, although there are also observations made as to how the system can be improved.

1.2    The Council's response to the Harvard Report is framed from the perspective of a competition and consumer advocate. As such, it largely examines issues that go to the heart of competitive choices, and consumer satisfaction in the provision of health care services. Therefore the paper looks not only at those issues that need to be addressed in any future reform, flowing from the Harvard Team's Report, but what can be done now to improve the overall health care environment. In addressing these issues, the Council makes a number of recommendations for consideration by the Government. For ease of reference, the Council's recommendations are highlighted in boxed text throughout the paper.


2.1.    The Harvard Report placed emphasis on future financing suggestions. In the Council's opinion, financing is just one segment, albeit an important one, of the whole health care system. While there may be a need to change the present system of financing, changes may need to be made in other areas as well. Putting more money into a system which has basic structural and organizational problems would only mean that consumers, as patients and taxpayers, are spending more money but getting less value for their money.

2.2.    The Council sees the health care reform as an opportunity to:

  • find ways to make health care system more responsive to consumers;
  • increase consumer participation in health care decision-making; and
  • examine the roles consumers, health care service providers and the Government should play in this field.

2.3.    It is important to note that in using the term 'health care service providers', a wide interpretation should be taken of what that term means. In the same way that the development of health care services is a dynamic process, with constant advances in the field of prevention and cure, the providers of health care services should not be viewed in a static sense. While to a major extent the term encompasses registered medical practitioners, it also refers to the wider range of persons involved in providing health care, from administration and ancillary care, to what are sometimes termed alternative practitioners.


3.1.    In addressing the issue of reform, the Council emphasizes that a partnership exists in the provision of healthcare services. The partnership has three key stakeholders - healthcare service providers, consumers, and the Government. Each of these stakeholders has certain rights and obligations.

3.2.    Regardless of the commercial imperatives that might apply in maximizing efficiency or in finding appropriate remuneration levels, the provision of healthcare services is unlike any other in the economy. A non-negotiable goal in any reform will be that everyone in Hong Kong has access to a decent standard of healthcare. While there will always be some who are able to afford a higher standard than others in the community, the challenge Hong Kong faces in the future is to ensure that no one particular group is disadvantaged, to the extent that the community as a whole suffers.

3.3.    As a basic starting point for addressing healthcare needs, the Consumer Council has regard to the 'principles for a healthy consumers', as espoused by Consumers International, the global body for 245 consumer organizations worldwide. Those principles are defined as follows:

        All patients have the right to:

  • Appropriate and accessible health care;
  • Freedom from discrimination;
  • Information and education;
  • Choice of a doctor or other health worker;
  • Choice of a health care establishment;
  • Informed consent about treatment;
  • Participation in their own health care;
  • Respect for privacy, confidentiality and dignity;
  • An avenue for making complaints about unsatisfactory service; and
  • Redress in the event of injury.

3.4.    The elements of information, a range of choices, and the freedom to participate are functions of a fully competitive market. Theoretically, the most economically efficient way of financing health care and meeting the objectives of competitive choices would be for those who want the product and those who can provide it, to come together and trade.

3.5.    However, it is manifestly clear that the provision of health care cannot be reduced to simply that of a consumer and a trader. There are social obligations that go to the heart of communal values which require that all citizens have access to an affordable and effective range of health care services regardless of their access to funds. Nevertheless, the Council believes that the elements of competitive markets can serve as important tools to ensure that services are provided efficiently, and that consumers' health care rights are maintained at optimal efficiency.

3.6.    Under most conditions, the free market will yield maximum benefits from an economy's resources. Unfortunately, the conditions under which markets can yield greatest benefit do not occur very often in the area of health care provision. Markets in health care are not very contestable. Some health care providers have a high degree of market power. Entry, governed by the service providers themselves and government, is difficult and costly.

3.7.    Information, the foundation of a competitive market, is usually skewed in favor of the service provider. This provides scope for the unscrupulous to behave opportunistically, to the disadvantage of patients. The avenues for redress, where consumers are dissatisfied with service provision, are complicated and place consumers at a disadvantage. In addition, the mode by which a large number of transactions in the market are financed means that in some circumstances there is little incentive for patients to ration their demand for services, leading to misuse of the payment system. By the same token there may be little incentive for service providers to explore ways to provide services at the lowest possible cost.

3.8.    A common theme in reform nowadays is to apply market mechanisms where possible, recognizing that the best way to provide services at the lowest possible cost is through ensuring that there is competitive rivalry between providers of goods and services in the three dimensions of product, price and performance.

3.9.    Quality assurance comes into play as well. All accept the reality that there are variations in the different goods and services on offer. In fact it is commonly seen as a right that if consumers so choose, they can make a trade off between low priced goods or services with passable features that meet their particular expectations, and higher priced ones that deserve a highly rated quality assurance seal of approval. It has also come to expect that in keeping with the basic principle that an informed marketplace is the cornerstone of competition, consumers will have adequate information made available to them so that they can make informed choices.

3.10.    To what extent do the above actually apply today in the provision of health care, and to what extent should they in the future? While the quality of health care might not be negotiable, in terms of effectiveness of treatment, the means by which the care is provided, and therefore the cost, can be. For example, consultations for minor ailments or preventative treatment might not need to be provided by high cost service providers. A common term used for such processes is 'gold plating' - an indication of allocative inefficiency.

3.11.    The Council, as a competition and consumer advocate, approaches the issue of healthcare by examining the patient to service provider relationship in terms of the free market imperatives of access to competitive choices and access to information. However, it is clear to the Council that while market mechanisms should be used as much as possible to meet those objectives, the means by which consumers' rights can be assured is through acknowledging the partnership that exists between three key stakeholders - medical service providers, the government, and consumers. Each of these stakeholders has an equally important role to play in ensuring that the partnership addresses issues such as maximizing efficient provision of health care, resolving information asymmetry, increasing consumer choice and providing avenues for consumer redress.


4.1.    A major concern raised in the Harvard Report is the financial sustainability of the existing health care system in Hong Kong. Based on maintaining the current level of quality and access to public health services, the Harvard Team projected that total health expenditure will increase from 4.6% of GDP in 1996/97 to 5.6%-6.4% of GDP in 2016. [1]   This is based on projections of the aging population, technology adoption, increased specialization, and rising public expectations for quality health services.

4.2.    Recognizing that health care financing will have implications for quality of health care and for efficiency of service provision, any proposals of financial reforms must be carefully studied. The Government currently spends a considerable amount of public resources towards hospital services. This is contrary to many advanced economies which have engaged in a transition to shift public resources towards more cost effective prevention, primary and outpatient care, as well as nursing care. Having regard to international comparisons, most OECD countries allocate two-three times higher proportion of total health expenditures to extended care. [2]

4.3.    The assumptions used by the Harvard Team in deriving the percentage increase in public health expenditures are based on status quo in terms of accessibility and equity in the system. Present health care delivery might not be at optimal efficient levels. If there are improvements in health care delivery methods, this may either reduce the need for extra financing (if the improvements lessen costs) or increase the need (because the improvements add to the existing cost base). By the same token, if improvements are made to the current system, the level of funding required, either through the tax base, or through insurance premiums, might not be as great as currently projected.

4.4.    A long term and comprehensive health care policy should be established to determine a reasonable level of basic health care services which include criteria of necessary care, effectiveness, efficiency and individual responsibility. The Government must recognize the need for actuarial work to be undertaken to quantify the demands on health care for future demographic changes and areas where cost savings can be made. In determining the best use of scarce resources, the Government needs to collect relevant output data to measure economic efficiency. The Council supports conducting a detailed study on efficiencies in allocation and appropriate targeting of limited resources.

4.5.    The Harvard Report noted that as the quality of public hospital services improves, the public sector is increasingly attracting a greater proportion of the affluent population who would be otherwise able to pay for higher priced private sector services. It noted that the trend resulted in increased demand for public services which compromised quality of care for the needy, as it led to longer queuing time for services. [3]

4.6.    It follows that if there are no disincentives, patients might misuse health care services regardless of the means by which they are funded. Misuse in this context does not necessarily mean that consumers are abusing the system. Misuse could arise through ignorance of appropriate lifestyle choices, leading to health problems. Misuse could also equate to over use of services through ignorance, borne out of a lack of fundamental information that would assist consumers in realizing the true extent of a perceived illness. In other words, recognizing when it is necessary to seek costly consultation or treatment. Similarly, on the supply side, there will be no efficiency gains if there are not mechanisms to prevent service providers' creating unnecessary or artificial demands of services. Again, this might not necessarily be abusing the system for self-interest. If there are no checks and balances on demand, service providers could become passive participants in the wasteful cycle of misuse.

4.7.    Introduction of universal taxing arrangements may solve a problem in raising funds to finance healthcare, but it will not address the issue of efficiency and the need to keep costs as low as possible. In the absence of patients and service providers being equipped with appropriate health care knowledge or appropriate mechanisms to manage demand for services, the idea of 'money following the patient' [4] (as suggested in the Harvard Report) will not by itself help to manage inflation of health care expenditure. Moreover, there is no reason to believe that the problems with abuse of insurance-based schemes that are prevalent in some advanced economies will not happen with any future schemes such as the Health Security Fund Incorporated.

4.8.    The problem of moral hazard is difficult to control. Moreover, given the need to ensure a ubiquitous and affordable health care system it will remain a perennial problem. Nevertheless it is an issue that has to be confronted. In the absence of intrusive government intervention, for example in rationing supply and demand, the Council believes that the only effective and equitable means to address the issue is to apply some degree of market based principles in setting demand and particularly supply at optimal efficient levels. 

4.9.    The experience of Health Maintenance Organizations (HMOs) in Minnesota [5] may be a useful case study in respect of means by which costs of supply can be lowered. Minnesota has had a significant degree of 'managed care' in the supply of health care services, for at least 20 years. In the beginning, HMOs were very successful at bargaining with hospitals on the services to be supplied to their clients, and negotiating very low rates. This had the effect of wringing excess horizontal capacity out of the health care system and reducing the number of hospitals from 40 to 20. In time, however, hospitals became better negotiators and banded together in their dealings with HMOs. This has led to the situation where HMOs no longer have as much negotiating power as they once did. However, in the face of rising costs, employers have now banded together to negotiate with providers directly. It remains to be seen what effect this will have on maintaining downward pressure on costs. [6]



5.1.    For a market to operate efficiently, there must be informed consumers. Providing information is crucial as consumers cannot have choice without information. Consumers need to know what will happen, what their rights are and to whom they can ask questions. There must be adequate information on medical procedures as well as a complete listing of alternatives. If consumers can get a quote and information in regard to other consumer purchases, they should have the same in obtaining healthcare services. Consumers' satisfaction with the health care system will only be fully realized if they have the right of access to necessary information and they can actively participate in making informed choices.

5.2.    Information asymmetry between patients and the health care service providers is a problem that must be addressed. As far as doctors are concerned, this involves the time that doctors give to patients and the range of information made available. The Patient Studies Summary Report, attached to the Health Care Report revealed that under half of patients surveyed felt that consultation times were too short and that explanations about their illnesses were inadequate. [7]    Some patients reported that investigations were not as comprehensive as they should be and that only drugs were offered. The Study noted that 'perhaps this situation perpetuates the lack of strong doctor-patient relationships, which is a characteristic of the Hong Kong health care system.' Information asymmetry also applies to the lack of information available that can assist consumers in choosing a service provider, and particularly one suited to a patient's individual needs.


5.3.    Professional dominance is a direct consequence of information asymmetry. In market place terminology, this leads to market power and inevitably market failure. While it is accepted that a professional would have more information than a client, there is an obligation for that information to be adequately dispensed. The key to an effective partnership, is access to information and effective communication. In many highly competitive industries, businesses have found to their cost that if they ignore their customers' needs and do not communicate how they can satisfy their needs, they soon go out of business. The same principles should apply in the provision of health care.

5.4.    For a free market to function properly, patients must have sufficient medical knowledge to make informed choices on hospitals, physicians, treatments and drugs, in order that they can shop for the 'best value for money.' Unfortunately, experience has long shown that these conditions do not exist sufficiently in the health care market. Under these circumstances, suppliers can obtain high profits by charging monopolistic prices as well as by compromising quality of health services.

5.5.    Consumers' satisfaction with the health care system will only be fully realized if they have the right of access to necessary information and they can actively participate in making informed choices. One of the issues commonly raised with the Council is that some doctors tend to treat diseases, not individuals and patients often are only passive recipients of medical services rather than active partners in minding their own health.

5.6.    The Council considers that options should be considered to improve the level of information dissemination to consumers on the range of health care services and providers in Hong Kong. For example, encouraging health care providers to produce information sources describing the services they offer, the qualifications and background of providers (including doctors and other practitioners) the areas in which they specialize, the fees that will be charged and the way in which complaints will be handled. It is important for patients to have a clear, concise explanation in lay terms of the proposed procedure and of any available alternative procedure before any treatment or investigation. When applicable, the explanation should incorporate information on significant risks, side-effects, or after-effects, problems relating to recuperation, likelihood of success, risks thereof. While some information can only be disseminated on a one to one basis, the means by which general information is publicly disseminated should take advantage of advances in on-line information technology [8] , public broadcasting, in addition to the publication of brochures and other printed material.

5.7.    Criticism has also been raised on hospital and doctor charges. The Council firmly supports the principle of increasing market transparency. [9]

5.8.    Accordingly, the Council considers that hospitals and doctors should be encouraged to publish a fee list for patient information when they check into hospitals or doctors' consulting rooms. Issuance of medical fees should be put in prominent place to allow patients to have advanced information and compare medical charges in the market. Furthermore, patients should have the right to an itemized bill after any treatment or consultation, separating the charges for drugs from consultation, or procedure.


5.9.   Hong Kong currently has legislation regulating the description and promotion of pharmaceuticals and healthcare treatments, with a view that restricting the flow of information will prevent its misuse.

5.10.    The Council recognizes that the dissemination of health care information can be a sensitive issue. There may be a reluctance to criticize professional colleagues or promote particular services because of the variable nature of disease, patient needs and reactions. Likewise, access to information on pharmaceuticals and treatments may lead to improper use of that information by patients and frustrate the efforts by doctors in their dealings with patients.

5.11.    Nevertheless, the publication of factual information is managed very well in other jurisdictions without infringing ethical codes. Governments in other jurisdictions are finding ways to ensure the information is properly presented. In fact, with the development of an 'information society', there is increasingly more information being available to consumers through official and unofficial means. A primary means being the Internet. It is unavoidable that information dissemination will increase. This should be viewed as a positive step towards empowering consumers.

5.12.    There are means available to monitor and eliminate inappropriate information from society - to ensure that claims as to health treatment are properly represented, to prevent raising false expectations in the minds of the sick, and to prevent the unfair disparagement of other service providers. For example, the issue of bogus health claims being promoted over the Internet was a matter that the Council targeted in a joint operation with world wide consumer protection bodies in September 1998. The intention being to have unsuitable web sites removed from the Internet.

5.13.   The policy imperative for the Government and industry, on information dissemination, should be to ensure that there are adequate laws and safeguards in existence to protect consumers in respect of unfair comparisons, misleading information and false representations, rather than discouraging the dissemination of that information because it may give rise to problems.

Records follow patients

5.14.    The Harvard Report found that patients with chronic illnesses expressed concern about the lack of continuity of care across the public and private sectors noting that there is limited communication among providers so that patients themselves must assume a role in relating their histories, diagnoses and treatments. The Harvard Report cited patients who, returning to the private sector, rarely have their records from public hospital stays transferred to private GPs or specialists. According to the Harvard Report, more than half of the sampled private doctors who have referred patients to the public sector received reports for less than 7-10% of times. [10]

5.15.    The Harvard Report also noted that referring doctors rarely communicate directly with the referred doctors. The most common form of communication being through a referral letter. Moreover, the Patient Studies Summary Report revealed that only 55% of the referral letters reviewed contained the patients' symptoms, and many lacked vital information such as symptoms, diagnosis, and the name of the referring doctor. [11]

5.16.    The Council recommends that doctors should provide patients' details of the investigations conducted, the results of these investigations and a copy of the medical reports when they are transferred to other health care service providers or discharged from hospitals. The Council further recommends a study be conducted examining how information technology can be deployed thereby enabling patients to have a full record of their own medical history. This would eventually facilitate effective treatment by medical professionals and hence the health outcome of patients.

5.17.   Information asymmetry problems can also arise when it comes to describing the costs to consumers of obtaining health care. This problem goes to the finer details of how insurance policies work and the long-term costs of insurance policies, and similar payment contribution schemes - such as tax payments. In order for consumers to make informed choices about the options that might be available, information must be reliable, complete and objective.Health care insurance

5.18.    In Hong Kong, medical insurance is sold to individual consumers as an extension to life policies. Certain corporations also acquire medical insurance for their employees. The market for medical insurance is, however, nowhere near the life insurance and other insurance policies in terms of product variety and market size. As the companies classify diseases and treatments differently, it is almost impossible for consumers to make a comparison on the different types of medical insurance policies. This has posed an information asymmetry problem for consumers and rendered a major impediment to fair market competition.

5.19.    Likewise, consumer organizations in overseas jurisdictions[12] , have found that with more complicated funding arrangements, combining tax payments and variable insurance options, meant that providing basic information sources was no longer practical. The whole system of health care insurance in other jurisdictions had become so opaque that consumer organizations found they had to explore ways of giving individual consumer advice on health care needs.

5.20.    A solution was to construct a computerized database of all aspects of contracts that were available. From that database, each consumer was able get complete and specific information about the range of insurance possibilities, by modeling their needs in special computer programs, against the information available on costs and returns. This enabled the consumer to choose a contract corresponding to their individual characteristics and preferences; leading to a better-informed, and therefore highly competitive, marketplace.

5.21.    In view of the inevitable reforms of the health care system in Hong Kong, and the probability of increased competition between health care providers and insurance companies, there is a need for the business community, the Government and the Consumer Council to work together and ensure that the information needs of individual consumers will be met. These information needs will optimized by utilizing advances in computerized databases and computer software. The most important issue, as far as consumers are concerned, will be impartiality on the part of the information provider.


5.22.    Consumers must accept, as much as is possible, responsibility for their own health. Even though there are unforeseen illnesses that can occur, the state of one's health is often determined by choice of lifestyle, and there is a predictability about the circumstances that either will or can arise, in addition to the associated costs. This responsibility therefore extends to the manner in which one can extend a healthy life span by undertaking preventive measures and planning for health care services.

5.23.    Nonetheless, while consumers have not only an obligation to pay and plan for health care where possible, they have a right to be satisfied that there are suitable choices in the services they plan and pay for. They also have a right that the services are provided at optimal levels in terms of price, product and performance. However, neither government, nor the health care service providers can expect consumers to fully exercise their obligations, unless meaningful choices are made available.

Dollars follow patients

5.24.    The issue of consumer choice raises the question of what role competitive integrated health care treatment has in any reforms and the need to explore options for alternative processes and procedures within the current system. For example, what possibilities there are for integrated services between private and public practitioners and hospitals and similar treatment centers, allowing patients the flexibility to move between them.

5.25.    With the dollar following the patient [13] proposed by the Harvard Team, the patient is better able to put pressure on the system to promote a patient centered culture and service. This tends to improve the range of choices, reduce administrative rigidity, and the 'goal keeper' mentality evident in many government services.

5.26.    The advantage of integrated systems is that providers are given incentives to consider the entire disease process from prevention through cure to rehabilitation and follow-up. With this approach there would be greater emphasis on prevention and patient education, not just on treating the sick. Communication and coordination across providers, especially primary care physicians and specialists who care for the same patients, would give patients better continuity of care. Such continuity would enhance patient satisfaction and technical quality, reduce needless duplication of diagnostic tests, and promote cost-effective alternatives such as appropriate home care substitutes for hospital care.

5.27.    Given current demographic and epidemiological trends it seems clear that the health care system will become increasingly in need of integrated continuity of care and alternative treatment settings. In fact, it seems that the current organizational structure obstructs efforts to remedy the situation. For example, improvement in the quality of Hospital Authority services diminishes allocative inefficiency to the extent that public resources are drawn away from public health services and become less targeted on those who cannot afford to pay. To assure sustainability of the system, policymakers need to formulate a coherent, rational health policy that takes into account the interaction of the many currently fragmented components of the systems. An action plan should also be drawn up to monitor the progress of proposed initiatives. This would enhance effectiveness and transparency of the reforms.

Alternative health care

5.28.    At present, Hong Kong's health care system lacks not only integrated service but also the institutional framework to promote greater integration in the future. Health services are delivered in a compartmentalized institutional setting which is characterized by a lack of interface across the different levels of care. Moreover, Chinese medicine, which many patients find beneficial, are excluded from the current system. [14]

5.29.    Implicit in the notion of consumer choice and the drive for efficiencies is acceptance of the need to broaden the avenues of health care available to consumers that fall within the universal health care system. This means that universal funding mechanisms, and reimbursement of fees should go beyond the traditional doctor/patient connection. Introducing alternative medical treatments within the health care system, including but not limited to Chinese medicine should be seen as a legitimate means of widening choice for consumers. The competition between alternative health care delivery and 'traditional' health care may very well drive down health care costs.

5.30.    Moreover, patients suffering from chronic health conditions can benefit from a system that integrates a wide spectrum of services from community to tertiary-level care. Without coordination among these levels of services, patients suffering from chronic diseases can suffer lower quality care at a higher price because tests are repeated and costly inpatient services are used for rehabilitative and convalescent care services that might be better suited to alternative treatment.

5.31.    The Council recommends that integration of health care service be enhanced to provide 'seamless care', e.g. following up of patients discharged from public hospitals by private doctors. To complement the Government's initiatives in promoting Hong Kong as a Chinese medicine center, the Council considers that the means by which payment and interface matters of these services, and other alternative health care services, can be made within the current health care funding system, should be examined.


5.32.    Quality of health care is complex and difficult to quantify. Even in the best of circumstances measurement of quality cannot be definite and quantifiable as there are many sophiscated methods of setting standards and assessing professional attainment. Nevertheless, there are two essential requisites for a quality service:

  • consumers must be involved in setting quality standards, and
  • there must be openness in setting standards and in measuring how far services meet these standards.

5.33.    The Harvard Report examined the extent to which patients are actually brought into existing mechanism for setting and monitoring standards and targets. Unfortunately, it concluded that structures to safeguard and represent patients' interests are inadequate.

5.34.    The Harvard Report further pointed out that quality of care is highly variable in Hong Kong. Judging by the study findings [15] , half of the patients were generally seen for less than 5 minutes by their general practitioners. By comparison, the proportion of brief visits with Hong Kong doctors is greater than in other countries. Even though more time with a physician is not a guarantee of better medical outcomes, it would be a challenge for doctors to provide good quality medical care within a 5-minute visit. Particularly when a physician needs to understand a patient's complaint, diagnose the problem, recommend a treatment, educate and involve the patient into sharing responsibility for the treatment process.

5.35.    This is compounded by the lengthy waiting/queuing times noted in the Harvard Report. The Harvard Report indicated that patients generally have to wait up to 2 hours in public clinics. The study also found that patients waited an average of 92 days to get a first appointment at the specialists after being referred by their doctors.

5.36.    It was also found that private doctors prescribe a larger number of drugs compared to government doctors [16] , leading to both cost and safety implications. Over-prescription of drugs not only means patients paying more for the drugs, it may also have negative implications for patient health outcomes. Allegation of malpractice such as unnecessary investigations, prolonged hospitalizations, unregulated charges, referrals with vested interests, promotion of particular brands of drugs for monetary gains, makes one wonder whether Hong Kong residents are getting 'value for money.' The Harvard Team reported that one explanation for large variations in the quality of medical services may be 'the privilege enjoyed by the medical profession to self-regulate without interference and inadequate oversight from external organizations.'

5.37.    It is clear to the Council that there is a need for the Government and the industry to initiate reform of professional self-regulation by physicians, and address any deficiencies in internal checks and external accountability. [17]    The Council welcomes the proposals of setting up an Office of Quality Assurance to develop practice guidelines and monitor the quality of health care.

Quality assurance

5.38.    While the notion of competition and competitive choices suggests an acceptance of differences in treatment and standards, basic quality assurance/performance benchmarks still have a place in the features of healthcare facilities. Accreditation of facilities is the institutional equivalent to provider licensing. It allows some quality control over the practices of hospitals.

5.39.    In Hong Kong, private hospitals and nursing homes are required to register with the Department of Health and must comply with the Guide to Hospital Standards. However, the Council understands the requirements are quite broad and do not include quality standards. Public sector hospitals only rely on internal organization and management to maintain quality standards, rather than an external review and monitoring system.

5.40.    It also does not appear that Hong Kong has adequate outcome measures, such as complication rates, disease-specific mortality rates by hospital, functional states of patients after treatment - the ultimate indicators of quality - to assess quality of care, particularly for the private sector. Instead, structure and process measures are used to measure quality of care. While the Hospital Authority should be commended for initiating data collection on clinical outcomes by diagnosis and Patient Related Groups in some of its acute care hospitals, such outcomes data reports are not made public and therefore do not provide patients with information for making choices. For private hospitals, while there may be internal checks to ensure high standards, there is no public evidence that outcomes are systematically monitored or assessed.

5.41.    The Council agrees with the Harvard Report that Hong Kong at present lacks a suitable body that has as its sole aim the assurance of quality of care provided to the public, much like similar accreditation schemes in other industries. Further efforts to collect, and make public, standard information that is regularly collected to assess quality and comprehensive outcome measures should be encouraged. In an effort to compensate for these informational deficiencies, the Council welcomes the setting up of an Office of Health Care Quality Assurance to monitor and improve quality of health care. The Council is in support of the proposed tasks to be undertaken by a separate Office of Quality Assurance for collection and publication of outcome information, and the accreditation of facilities that comply with standards. Of course, as with service provider standards, any agency tasked with this responsibility should have appropriate consumer representation, in addition to participation by the medical school faculty.

Patient involvement in medical audit

5.42.    There are several measures that can be taken to make medical practice purposeful and efficient. Leaving aside the issue of redress in response to complaints about the quality of a service (which is discussed later in this paper) external quality audits of the medical profession and the establishment of a committee on quality assurance would be a satisfactory means of identifying problems with standards, and the means of addressing those problems. However, any reforms must acknowledge that consumers have both a right and an obligation to be equal partners in the partnership that oversees the process.

5.43.    The Council considers it is critical, to ensure objective evaluation of quality health care standards, that there is user participation in any mechanism that sets and oversees the standards. Accordingly, any mechanism that is developed to develop and audit standards should have oversight by a patients' peer group. Not only would patient involvement help to detect deficiencies in the health care service, from a patient's perspective, it would also improve service providers' attitudes and ensure collective responsibility and accountability. Medical audits should involve not only an assessment of the economics of health care provision but comprehensive monitoring of patient satisfaction. In addition, audit parameters should cover ongoing assessment of how health care related legislation and self-regulatory ethics work to the advantage or disadvantage of efficient health care services.

Continuing medical education

5.44.    Entry into Hong Kong's medical schools is based upon academic excellence. Thereafter, licensing and registration is the prime means of quality control, applied at the point of entry into service. There is little dispute that the medical and scientific knowledge possessed by medical students in these institutions compares favorably with international standards. After the point of entry, however, there is a need to ensure that practice quality is maintained at optimal levels, and enhanced. The Council supports the establishment of a mechanism to assure the quality of all health care providers throughout their career. For example, through the use of continuing medical education, application of practice standards and guidelines, and peer review.  [18]

5.45.    The Council supports the proposal that healthcare service providers should be required to equip themselves with advanced medical technologies and satisfy an approved auditing body that they maintain standards compatible with contemporary patient needs. The Council considers that health service providers should have either obtained continuing medical education, or have demonstrated through other means, that in order to be eligible for practicing certificate renewal, that they have maintained standards in their field of activity, during the course of their career. The requirements should also require development of effective communication skills appropriate to current social needs.


Redress systems

5.46.    The test to determine whether any scheme that provides services to consumers is effective or not is how responsive it is to complaints about the service provided. Providing full and accurate information to a complainant as to how and where to lodge complaints, or to seek assistance, can only help retain the degree of trust in the partnership relationship. The key elements of an effective redress mechanism are: ˙ Low cost accessibility to the process; ˙ A fair hearing for both sides; ˙ Impartiality by those that sit in judgement; and ˙ A certainty that judgements will be enforced.

5.47.    Hong Kong does currently have various avenues for consumer redress, in the provision of healthcare. For example the Hospital Authority has hospital Patients Relations Officers and the Public Complaints Committee that handles and reviews complaints of public hospitals. There is also the Medical Council, set up to examine complaints of professional negligence of all registered doctors in both public and private sectors. The Medical Association handles complaints against its members.

5.48.    However, findings from the Harvard Report suggest that these redress systems may not be ideal in resolving complaints in a satisfactory manner. Figures in the Harvard Report revealed that only 44 of 190 complaints received in 1997 were dealt with by the Medical Council, of which only 10 cases were heard by its disciplinary committee. [19]    The complaint procedures in the Medical Council have been critised for being physician dominated. In the case of public hospitals, the Harvard Team also found that the Public Complaints Committee settled most complaints and appeals as 'unsubstantiated'. From the patient's perspective, it could appear there is little recourse in the case of poor treatment and that there is little point in going to the effort of lodging a formal complaint.

5.49.    The success of current redress systems is difficult to gauge as there is no clear accountability framework. The options currently available to patients are the various formal processes of the courts, the Medical Council or professional associations. From what the Council can ascertain there is no systematic method in place to monitor the number, substance or outcome of all healthcare complaints, across the spectrum of redress mechanisms for healthcare services.

5.50.    The Council considers the lack of information on the effectiveness of redress mechanisms, which could substantiate or clarify whether problems exist across the spectrum of existing redress mechanisms, should be seen as a major concern. Accordingly, it is an area that should be rectified.

Independent Ombudsman

5.51.    Notwithstanding the existence of current redress mechanisms, and the Council's recommendations above, the establishment of an Independent Ombudsman [20] , to handle medical complaints lodged against the private and public health care providers and institutions would provide additional improvements. Understandably, complainants do not always have the requisite degree of medical knowledge to assess the medical information presented and they require expert and impartial support. At present, health care complaints are investigated by professionals who are very often themselves in private practice. This may constitute a conflict of interest and investigators should be independent. In some cases, the fact that an Ombudsman has investigated a complaint from a patient could lessen the instances of complaints being referred onward to more formal redress mechanisms, such as the court.

5.52.    Accordingly, the Council supports the creation of an Ombudsman Office proposed in the Executive Summary to the Harvard Report to provide assistance and redress to consumers with complaints about health care. In the long run, the operation of a 'neutral third party' would enhance credibility of the overall redress system, and lessen the use of more formal action. Moreover, it would remove both fragmentation (by centralizing the redress facilities) and duplication of process. The function of the Ombudsman Office, however, should not be perceived as being limited to examining individual complaints against healthcare service providers. The jurisidiction of the Ombudsman should also extend to include practices that have a detrimential effect on consumer interests by healthcare service providers, and institutions in general.


5.53.    At present, private sector physicians prescribe drugs and include corresponding fees in the overall charge for a patient visit. The combination of this drug dispensing system with fee-for-service reimbursement, may open to question whether there is a strong incentive for physicians to increase revenue through sales of drugs to patients. Nevertheless, there are claims that the practice of prescribing drugs to patients is for the convenience of patients, whereas there is no data available decomposing physician practice income derived from drug prescriptions. The Harvard Report has quoted experience in other countries such as China, Taiwan and Japan, that a prevalent trend is over-prescription of drugs that may compromise quality of care.

5.54.    From information provided in the Harvard Report, it is apparent that there are instances of over-prescribing and for prescribing unnecessary short courses of treatment. Patients, as a result, may take more than necessary drugs or need to make unnecessary follow-up visits in order to receive a full course of medication. The current financial incentive structure appears to influence the amount and type of medication prescribed.

5.55.    The Harvard Report also noted that patients are not well informed due to the lack of informative labeling and little information given by physicians regarding the nature and side effects of different drugs. Hong Kong has introduced drug-labeling requirements to impart information and improve health care. Nevertheless, there are indications from the study that these aims are not being met - medication labels lacked information about dosage and there was use of non-generic names (i.e. trade name of local pharmaceutical companies). These inadequate labels provide little information to other medical professionals, not to mention patients.

5.56.    Patients have rights to adequate and intelligible information on prescription and over the counter medicines, and the right to choose among competitive products where available. Further, all medicines should be labeled, and should include the international non-proprietary name of the medicine, the dosage and how often the medicine has to be taken. This is in addition, to information about possible side effects; the avoidance of any food, alcoholic beverages or other drugs; and the duration necessary for any medication prescribed.

5.57.    The Council believes that there are a number of issues in the area of pharmaceuticals, related to consumer choice, which need to be addressed by all concerned, from manufacture, regulation and dispensation:

  1. Whether, in the interests of promoting competitive supply, there should be separation of prescription from dispensation. [21]

    Areas for consideration are:

  • Maximising consumer choice
  • Improving consumer safety  - Pharmacists advocate for separation of functions, i.e. doctor prescribes, pharmacist checks and pharmacy supplies. Are there other ways of monitoring doctor's practice, and importantly, who is to monitor the practice of pharmacists and pharmacies?
  • Lowering price  - whether it would be cheaper/expensive to get a prescription from doctors or from pharmacies?
  • Enhancing convenience
  1. Patients being unaware that lower priced generic drugs may be available (as a result of patents having expired) because labels are not required to carry the generic name.

    The Council therefore requests the different parties involved in this process to present their case to consumers, in order to answer the above questions.


5.58.    When discussing education, people generally focus on the consumer side. To assure the quality of health care, it is important that patients are provided with adequate knowledge and information to judge the quality of care provided and to articulate their concerns and dissatisfactions. In this respect, the proposed Office for Patient Education may serve a worthwhile purpose.

5.59.    It is equally important that healthcare service providers should also be provided with adequate and advanced medical knowledge to provide up to standard and effective services to their patients. Failure to do so means poor quality of service. Medical service providers also need to ensure they have effective communication skills in order to deliver clear information to patients.


6.1.    The Council has made a number of recommendations in the preceding part of this paper on ways in which there can be an improvement of the current health care system. Some of these recommendations have direct relevance to the options proposed in the Harvard Report, and in a sense could give indirect support to particular options. In those circumstances, little further comment may need to be provided. Nevertheless, it might be considered by others that the Council's submission would not be complete if it did not comment directly on the options. The comments should of course be read in conjunction with the preceding comments.

Capping the Government budget on health

6.2.    Without a corresponding cut in demand on government funded services, this option could lead to a lower quality care and less accessibility to public health services. Accordingly, it could act so as to encourage those able to afford it, to purchase private health insurance to cover their health care needs, due to a diminishing of standards. However, this option does not address the structural issues of the current health care system, nor meet the future needs of an increasing population. Particularly for those who have no alternative but to use publicly funded services. Cost cutting does not guarantee improved efficiency. It is more important to ensure that health service provision is provided at optimal efficient levels, thereby ensuring that scarce resources are used at maximum advantage.

Raising user fees

6.3.    This option will shift the burden of increasing health care cost from the Government budget directly to the patients. In order to keep the Government portion of health care financing at a constant share of the GDP, those who can afford to pay their fees will have to bear 50-70% of the costs, after giving appropriate exemptions to those who cannot afford to pay.

6.4.    The Council is concerned that the concept of affordable universal health care must be maintained. Consumers who have difficulty in funding health care should not be expected to make payments for treatment that will address health problems on the one hand, but on the other, lead to penury. Raising fees may resolve some of the funding problems, but this does not address the longer-term issue of efficiency. The key issue is whether there will be effective measures to arrest escalating costs of health care.

Introduction of Health Security Plan, Medisage and Competitive Integrated Health Care

6.5.    The option of introducing a Health Security Plan and Medisage [22] , consists of two separate components:

  • individual savings accounts to be used to purchase long-term care insurance upon retirement or disability (Medisage); and
  • compulsory enrollment in an insurance (HSP) that protects people against unexpected large medical expenses, such as hospitalization and specialist outpatient services for certain serious chronic diseases.

6.6.    These funding mechanisms could address to some extent present funding difficulties, and the need to maintain legislated budget to GDP ratios. The concept behind these options is that of money follows the patient. The notion of money follows the patient should greatly enhance patients' power.

6.7.    In summary, there are a few points that need to be considered:

  1. Affordability. Health care carries a high investment cost for both patients and insurers. If patients were to be responsible for payments up to a very high threshold, before an insurance company pays for the remainder of the medical cost, this would be little more than a variation of the user pay option. Accordingly, there would be little incentive for patients to invest in insurance schemes. By the same token, this could result in uncertainty on the part of insurers as to adequacy of funding, leading to a lack of incentives for them to invest for the long term.
  2. Health Insurance Planning. The notion of money follows the patient also requires consumers to weigh risks, to understand complicated contractual relationships and complex documentation such as insurance premiums. For example, what qualifications might arise in premiums such as penalizing smokers or high-risk consumers. Many consumers will lack the sophistication to understand the risks and the detail of insurance policies. This will need to be addressed through adequate consumer education measures.
  3. Planning Long Term Cost. Being a cross-sectional risk pooling option, the Health Security Plan brings in the moral hazard problem, which requires demand management. Medisage, being a prefunded intertemporal pooling option, has an accumulation problem that needs social pooling to backup catastrophic risks. As with the problem underlying the MPF a long-term increase in the user to taxpayer ratio must be addressed to limit intergenerational transfers. It is inevitable that for these issues to be addressed, measures will be required to fund the services, while at the same time exhausting the means by which costs can be kept to a minimum.
  4. Health Security Plan and Competitive Integrated Healthcare. The issues of consumer choice and operational efficiency of these options need to be addressed. The Health Security Fund Inc. negotiates on behalf of consumers. The expectation is they will do it well, as consumers will have no choice but to pay at the agreed price level. Likewise, the issue of maximizing consumer choices under competitive integrated healthcare needs to be considered.


7.1.    The nature of the relationship between patient and medical professional is a complex one and certainly cannot be simply reduced to that of a 'trader' and a 'consumer'. Nevertheless, there are basic principles of the market that can and should apply.

7.2.    By the same token, the provision of universal health care, at a common high standard, has become a covenant between government and its citizens. It is incumbent, in order for that covenant to be honored, that medical professionals are held to a standard that reflects the commitment made by the Government and is expected by consumers. 


  1.  see Harvard Report, p. 73.

  2.  see Harvard Report, p. 76.

  3.  see Harvard Report, p. 77. 

  4.  see Harvard Report, pp. 109-112. 

  5.  'An American Perspective of Health Finance Reform' by Trudy Lieberman, Consumer Unions of the US, Inc., July 1993.

  6.  The issue of negotiating power raises the question of whether or not market power exists and is being abused. In the absence of a general competition law, price fixing agreements between service providers or other market participants, and collective boycotts by those participants, in collective negotiations on terms and conditions for engagement, would not be immediately open to challenge and resolution. See for example a recent report on the settlement of a price fixing case brought by the Australian Competition and Consumer Commission against the Australian Society of Anaesthetists, under the Trade Practice Act, reported in 'Health Law Update' Blake Dawson Waldron, Vol 2 No1 February 1999. Such conduct, if remained unchecked could defeat the benefits in reducing the costs of services, that competitive supply would be expected to bring.

  7.  Special Report #5: Hong Kong Patient Studies Summary Report, pp. 24-25. 

  8.  An article 'Health on the Internet: a mixed blessing' published in Consumer Policy Review (May/Jun 1999) examined the role of the Internet in providing health-related information to consumers. In view of the potential downside arising out of the huge volume and variability of information placed on the internet, the UK Government is considering an 'accreditation gateway' where health sites will be reviewed and given an official stamp of approval if they are determined to be worthy. The Council supports similar arrangement to be adopted in Hong Kong which allows more immediate access of information on medical conditions and consequent scope for patient empowerment.

  9.  The Council has become aware of the Medical Council's new proposal of requiring doctors list fees for standard treatments. The Council is in support of the proposal to prevent doctors overcharging but is concerned what benchmark will be used by the Medical Council to judge whether a doctor had overcharged, and whether consumers as patients will take up a role in setting the Benchmark rather than only by medical professional.

  10. Special Report #4: Hong Kong Private Practice Survey; also see Harvard Report, p. 80.

  11. Special Report #5: Hong Kong Patient Studies Summary Report; also see Harvard Report, p. 81.

  12. For instance, the Dutch Consumers' Association (Consumentenbond); details see 'Information on Health Care Insurance - A Dutch Example' by Peter de Klerk, 1993.

  13. For details, see Harvard Report, pp. 96-112.

  14. The Government has lately proposed developing Hong Kong into a Chinese Medicine Centre.

  15. Special Report #3: Hong Kong Household Survey Report; also see Harvard Report, pp. 66-71.

  16. see Harvard Report, p. 62.

  17. In an interesting turn of event, the Medical Council has recently decided to take up the task of scrutinizing the functioning of the private sector and the complaints system, having been seriously concerned over the mounting complaints of medical negligence.

  18. It is acknowledged that The Hong Kong College of Family Physicians has recently proposed organizing a programme aimed at raising the quality of general practitioners. The programme involves a voluntary assessment by ways of written examination and on the spot inspections. Certificates will be honored to GPs who pass the assessment. The Council supports these initiatives as means to ensure practitioners' medical knowledge and clinics' standard. But a constant review of the programme is necessary.

  19. see Harvard Report, pp.58-59.

  20. Although the idea of setting up an Ombudsman Office was mentioned in the Executive Summary to the Harvard Report, it did not appear in the main Report. It is not clear whether the Government has any detailed plans for establishing this office.

  21. According to press reports of 9 July 1999, the Medical Council has indicated a plan to give patients the option of having their medicines dispensed by pharmacies rather than only by doctors. It appears to the Council however, that the plan is to give patients a prescription on request. The Council would query why, if the objective of the plan is to give patients' choice, patients should have to ask before they are given prescriptions.

  22. The main features of the HSP+MEDISAGE option include the concept of "money-follows-the patient"; the setting up of a Health Security Fund Inc. to negotiate with health care providers in establishing standard payment rates; employers and employees will pay their own premiums. The Government subsidy of the HA will be shifted to pay premiums for the poor and to subsidize premiums for low-income residents. The option of a competitive integrated health care, features prepaid integrated health care, including preventive, primary, outpatient, hospital and rehabilitative care. The financing arrangements and many other features of the HSP+MEDISAGE option will remain. The main difference from HSP+MEDISAGE is that under the integrated health care option, health care providers and institutions can form themselves into 12 - 18 regional health care organizations, with appropriate inpatient, outpatient and specialist expertise providing a comprehensive range of health care services to their clients.