What HK needs are business-class public services
Updated: 2013-11-25 06:51
By Richard Harris(HK Edition)
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Hong Kong is a bastion of free enterprise, perhaps, the No 1 place in the world where regulation (or lack of it) least affects the lives of its citizens. Our government performs best - better than any - at being the old Urban Council in providing health, immigration and education services, building infrastructure to keep people moving and in making sure the rubbish is collected on time. The legal structure is independent and incorruptible. We are, in that sense, as free as almost anywhere in the world - and that is why Edward Snowden came here first.
We are the perfect experiment in the benefits and excesses of the free market. I broke my arm last week and was exposed to the free market. To fix my broken arm required a titanium plate, eight screws, an operation, 16 hours in hospital, and a series of highly competent (at least at the sharp end) medical staff. When one is going to be anaesthetized and cut open, it is good to have the best. However, in the free market, that little break cost me more than HK$200,000.
To the young people of today, I say, become a surgeon. A five-minute inpatient call costs HK$3,000 - that's a cool HK$18,000 an hour, if you have only five patients on the go. I have seen a surgeon (not mine, who would never do such a thing) actually running between rooms to get his five patients in before breakfast. My bone-setting operation took 90 minutes, with the surgeon alone charging HK$1,000 a minute, HK$60,000 an hour. Consultations are 15 minutes long and at merely HK$6,000 an hour.
The doctor can charge what he likes because the customer (the patient) has no power and, after the event, has little chance to protest. It is somewhat churlish to complain if fundamentally he has been made well - and he has less desire to do so if the insurance company is paying. The insurance company is dealing with these matters third-hand and has little influence on proceedings. The surgeon cannot quote a price to the patient before the operation because the charging system is deliberately complex.
The surgeon's costs can be matched against a top lawyer in Hong Kong, the most expensive of which could come at around HK$12,000 an hour, but there are a handful of those. A senior international lawyer could be had for HK$5,000 and a local lawyer would bill half that. An accountant or a consultant would be in the range of HK$3,000 to HK$5,000 an hour.
In economic terms, the doctor has all the power; the customer has none so the cost of medical treatment in Hong Kong - in the first-class private sector - is extraordinarily high.
In fact, Hong Kong has an excellent public medical system, especially for permanent residents. It will treat regardless of income level or payment. As a result, third-class wards in many public hospitals are full to overflowing; crowded with hundreds of beds, often filled with elderly patients with relatives pressuring the system to keep them alive. This is economy class.
What Hong Kong needs is a business class in services - and this is where the government should step in. A world city like Hong Kong must have first-class medical services but this does not help Hong Kong people in the growing middle class who can't afford excessive pricing. Business-class hospitals could be established and paid for by government who would then charge fees to cover the full costs on a non-profit basis. So, an operation to set a broken bone would have a realistic market price, but a fixed price. The process would reduce costs because customer power would be higher than doctor power, while standards would be maintained.
And why stop there? Hong Kong has first class and economy class in most of its services, notably housing and education. It is often quoted that Hong Kong people live in the same average 400-square-foot space as they lived in 30 years ago despite our great increase in wealth. Half our people live in economy-class public housing because first-class private housing is extremely expensive. Perhaps, it is time for government to develop a business-class housing sector, using public sector resources, but charging business-class prices to cover the costs.
A root-and-branch reform is needed to ensure that our young people coming out of public schools are good enough to service a global city. We need more than economy-class education. Parents know that it is the international schools that provide the first-class education, which is why they are oversubscribed.
Hong Kong can easily afford the cost of upgrading our public services, which will be paid for anyway by the middle class. Let us reward the people of Hong Kong for their hard work and build services for the middle class that the middle class will pay for. Just the HK$125 billion cost of one bridge to Zhuhai would kick-start this new method of public service - that could be the envy of the world.
The author pioneered the modern investment management industry in Asia and is Founder of Port Shelter Investment Management in Hong Kong.
(HK Edition 11/25/2013 page9)