(Refer to Table on SJMC Dr Fee Increase vs Inflation (1992-2002))
The last major fee revision for the doctors was for financial year 1993, that is, from July 1992. Since then, there have been a few small increases, which when compounded, amount to a total of 8.7 %.
However, this must be reduced by the 1.0 % increase which was allocated to us to compensate for the shifting of the credit card charges from the hospital to the doctors. The assumption then was that the average credit card charge was 2 % and that approximately half of the payments were made with credit cards. Hence, 1.0 % would be the appropriate amount to compensate us for our increased expenditure. What this ignores is that with time, the percentage of patients making payments with credit cards would increase and hence the 1.0 % would become inadequate.
Nonetheless, assuming the 1.0 % figure, this meant that the effective increase was only 7.7 % percent. As this was spread out over 11 years, it worked out to an average of only 0.67 % per annum.
Meanwhile, inflation over the 11 years was 40.4 % from 1992 to 2002. This meant that our fees were “behind” rates of inflation by 30.4 %. Hence, it is only logical that our fees be increased by at least this amount (30.4 %) to catch up with inflation. This will merely allow us to maintain the same standard of living that we would have expected after the increase in financial year 1993. The 30 % is therefore not an increase but a request for status quo. While this sounds like a very large increase, it must be realised that this is for a period of 11 years. Averaged out, this amounts to only 2.44 % per annum.
To soften the impact of this increase, we should perhaps spread out the increase into two (15 % + 15 %) or even three (15 % + 7.5 % + 7.5 %) 6 monthly “installments”. The downside to a multi-step increase is that we may be perceived as increasing our fees too often.
Note that the 30 % increase only represents approximately one-third of the cost to the patient and hence will only appear as a 10 % overall increase to the patient. So a single increase of 30 % may not be all that unacceptable to the public. Unfortunately, many patients are aware of the charges for consultations and will notice the increase in their outpatient bills. This is less of a problem for procedure fees which are less well known by the patients.
Furthermore, in order that we do not again fall into this trap of large and sudden increases, we should set up a new mechanism whereby our fees are automatically adjusted for inflation every year. With such a mechanism, the yearly increases will probably be limited to 1 to 5 % most of the time, which is much more palatable to most patients (and corporations).
The increase should be automatic and there should not be any need for any committee or sub-committee to be set up. Only when a major revision is needed or if we want to adjust our fees by an amount different from the official rate of inflation (or whatever other index we choose to follow) should there be a need to set up a committee.
This would be similar to the automatic price revisions that the hospital imposes based on its vendor prices.
The hospital often says that it has not even implemented the planned increases of say 4 % for a given year. However, this is not totally true because many of its prices are automatically increased based on formulas which automatically increase the price based on vendor price changes. Hence, even without a “price increase” the hospital charges, and hence profits, will still go up. These increases are often more than the announced 3 to 5 % because the vendor prices often increase by more than that.
It may also be claimed by the hospital that our operating expenses are minimal and hence our incomes should not increase with inflation. However, this ignores the fact that our incomes are not really profits but more akin to salaries which we need to feed, cloth, house and educate our families.
A large corporation like Sime Darby may be able and willing to have minimal profits or even short-term losses during the lean years while waiting for the good times when they will reap huge profits. However, this option is not open to doctors as our “profits” are really our salaries which we need for our day to day living. And if these daily living costs go up, our fees will have to increase commensurately just to maintain a reasonable lifestyle.
A freeze on our fees is like freezing our salaries. Would the hospital staff take kindly to an 11 year freeze on their salaries? How would a nurse earning RM 2000 a month take to a pay rise of RM 13.40 (0.67 %)?
Our fees are due for a major increase. This is fully justified and any attempt to disallow such an increase is totally unreasonable and unconscionable.
Dr. Ngun Kok Wah.
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Created:- 22 Feb 2003
Last Updated:- 22 Feb 2003