Hong Kong is confronting a rising healthcare cost crisis. Hospital fees are increasing, insurance premiums are going up, health insurers are struggling to make profits, and patients are paying more out of pocket. This problem is expected to worsen as the city’s population grows older.
Experts say avoiding this crisis requires better cooperation among healthcare providers, insurers, and health authorities. Technology must be integrated throughout the entire healthcare system to support this change.
Ignoring Covid-19’s effects, healthcare costs in Hong Kong rose by 23% from 2018 to 2023. During this period, government funding covered 52% of total healthcare costs, up from 50%. Out-of-pocket spending made up about 30%. Government healthcare spending grew by 28%, but insurance funding has not eased the financial burden on taxpayers or patients.
Private and employer-based insurance schemes have not increased their share of healthcare funding in the last five years. They still cover about 17% of total spending. Health insurers face rising medical costs due to inflation, which forces them to raise premiums. This situation limits the growth of private insurance and adds pressure to the system’s sustainability.
To meet rising healthcare costs, there are only three options: higher insurance premiums, increased government spending, or more out-of-pocket expenses. There is no alternative fourth option.
Improving the efficiency of the healthcare system and controlling cost inflation are crucial for long-term sustainability. However, private providers and insurers often have conflicting priorities. They sometimes disagree on which treatments are necessary. This lack of cooperation can lead to overprescribing and stricter insurance policies, which push costs higher.
Many people mistakenly believe this conflict between providers and insurers does not affect them. In reality, all users face higher premiums, reduced insurance coverage, and more out-of-pocket costs.
The ongoing financial struggle between private providers and insurers means there is no shared responsibility for the system’s overall sustainability. Meanwhile, taxpayers, the government, and patients bear the growing financial burden.
Experts argue that Hong Kong’s healthcare must operate as a true, integrated system. Currently, it is fragmented and inefficient, with value contested among stakeholders. True integration requires structured cooperation and coordination among all parties. The main goal should be sustainable, high-quality care for patients.
This transformation involves four key steps:
- Operational Connectivity: Public and private healthcare organizations must connect their processes and resources. Clinics, hospitals, insurers, and health authorities need to work together closely to improve efficiency and patient outcomes. For example, insurers’ claims processes should align with healthcare providers’ patient management.
- Technology Integration: The system needs a technology upgrade to support this cooperation. Hong Kong’s Financial Services Development Council has advised the government to push for this integration.
- Data Sharing: The current reliance on paper-based information slows service and causes errors. Digital systems must be connected to enable fast, accurate, two-way data sharing across the healthcare ecosystem. This integration will allow better system management and the use of advanced analytics and AI to improve healthcare delivery. Protecting data privacy is critical but achievable with existing technologies, such as the government’s iAM Smart platform, which could serve as a trusted hub for health data exchange.
- Joint Management and Shared Goals: Once integrated, healthcare providers, insurers, and authorities can work together more strategically. This will lead to better cost control and foster innovation in primary and preventive care.
Hong Kong’s healthcare system needs to evolve from its current fragmented state into a unified, efficient, and innovative system. While the government is not solely responsible for the crisis, its leadership and support are essential for transformation.
Secretary for Health Lo Chung-mau believes that Hong Kong’s advanced medical capabilities could turn the city into a global healthcare hub. However, this vision depends on building a sustainable healthcare system first.
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