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Regulation of private hospitals

Private inpatient care is an important complement to public ones, providing a choice for
those who have the means. However, a local report documented transparency issues in the
areas of pricing and quality, which lag behind comparable markets, such as Singapore,
Australia, and the United Kingdom (Bupa, 2018). In October 2016, the Government together
with the Hong Kong Private Hospitals Association launched a Pilot Programme for Enhancing
Price Transparency of Private Hospitals (HKSARG, 2019c). The experience from the pilot
scheme was incorporated in the Private Healthcare Facilities Ordinance (Cap. 633) gazetted
in November 2018. The Ordinance stipulates price transparency measures which the
licensees of private healthcare facilities (including private hospitals) have to comply with.

In addition to enhancing the price transparency of private healthcare facilities, the
Government also encouraged private hospitals to provide more services at packaged
charges. The prospective packaged payment has been widely accepted as a means to
control the increasing expenditure of inpatient care in many health systems. At the time of
writing, some private hospitals in Hong Kong offer a certain percentage of services at
packaged charges according to the relevant Service Deeds.

Voluntary Health Insurance Scheme

After twenty years of debate since the “Health Security Plan” was first suggested by the
Harvard Report in 1999, and since the “My Health My Choice” second-stage public
consultation on healthcare reform in 2014, the Voluntary Health Insurance Scheme
(VHIS) was finally launched on 1 April 2019. As an example of a more recent health financing
reform effort, the VHIS offers government certification for hospital insurance products which
meet criteria and key features specified (Box 3.3). The number of insurance policies under
the scheme reached 522,000 in its first year of implementation, roughly on track towards
the Government’s estimate of one million purchases during the first two years of the
scheme’s launch (Legislative Council of the HKSAR, 2021).

The effect of the scheme is yet to be evaluated due to its premature status. There are,
however, noted limitations of the VHIS. As an example, the current design of VHIS excludes a
“high-risk pool” and rejects applications of the older population aged above 80 years old,
who are among the most vulnerable groups in our society that frequently necessitate care at
our public hospitals, pointing to potential room for the expansion of coverage to include a
wider scope of beneficiaries.

Importantly, it is not evident there will be a shift in demand from the over-stretched public
healthcare sector to the private healthcare sector as VHIS members have the option of
continuing to use public hospital services. In addition it does not cover non-hospital medical
services (including outpatient services), and thus, does not incentivise beneficiaries to seek
primary care services (FHB, 2021d). This stands in contrast with health system goals for a
primary care-led health system through the promotion of primary care uptake to decrease
demand for hospital are. At the time of writing, the Government is yet to announce any
counter measures to resolve perceived limitations apart from the emphasis on garnering
further social consensus (HKSARG, 2020c).

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