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The recent reports about third-party agent contracts have raised ethical and legal concerns within the medical and healthcare fraternity. Managing Partner, Tan Chong Huat and Partner, Luo Ling Ling shared their views in their joint article published in The Business Times

RHTLaw Taylor Wessing’s Managing Partner Tan Chong Huat and Partner, Luo Ling Ling was featured in The Business Times article titled “Hospitals’ third-party agent contracts may be illegal”.

The article was first published in The Business Times on 18 October 2018.

Hospitals’ third-party agent contracts may be illegal

Source: The Business Times
Date: 18 October 2018
Author: Tan Chong Huat & Luo Ling Ling

THE recent news of public hospitals engaging agents who bring in foreign patients for a fee came as a shock to many Singaporeans. We applaud the Ministry of Health (MOH) for its directions to public hospitals to end all contracts between them and “third party agents” (TPAs).

These directions ensure fair competition among hospitals because TPA contracts give the infringing party an unfair competitive edge over other hospitals which are compliant with the rules.

What MOH has done is to ensure that public hospitals continue to serve Singaporeans first and foremost, and to ensure that our hospitals do not become excessively profit-driven.

However, we would also note that based on the Singapore Medical Council’s Ethical Code and Ethical Guidelines (ECEG), the public hospitals which engaged in such unscrupulous behaviour had violated the strict ethical code that governs all local doctors. In particular, Clause H3(5) clearly provides that a doctor “must not participate in ‘fee splitting’ or ‘fee sharing’ by offering gratuitous payments, gifts or other rewards for patients referred to you from any source”.

It is unethical for public hospitals to engage TPAs to “refer” foreign patients, especially if hospitals pay these TPAs for their services. While TPAs do help hospitals with providing patient particulars and other administrative matters, the work that these TPAs do remains the same for each and every patient. The amount of work they do for each patient is the same, whether one is suffering from a cold or needs bypass surgery.

It is highly inappropriate for hospitals to engage in “fee sharing” with these TPAs. When TPAs take a percentage of the medical fees paid by the patient, this fee does not accurately reflect the amount of work that they put in. This would imply that hospitals are “rewarding” these TPAs for bringing in patients from overseas – likely because the medical fees for overseas patients is far higher than local patients since none of their fees are subsidised.

By paying the TPAs for getting patients, the hospitals had participated in “fee-sharing”, especially because the amount payable to the TPA is pegged at a certain percentage of the fees that the hospitals would receive from the patient. If hospitals had continued to engage TPAs to bring in foreign patients, it could have resulted in a prioritisation of resources for such foreign patients over Singaporeans, which would not make sense given that public hospitals are meant to treat Singaporeans first.

We would like to further note that the arrangements the hospitals had with TPAs might even be illegal. Section 14 of the Medical Registration Act provides that only authorised persons may claim fees in connection with medical or surgical advice. Hence, not only are fee-sharing arrangements unethical, we are of the view that the fee-sharing arrangements expressly violate Section 14 of the Medical Registration Act because they allow unauthorised persons to recover fees in relation to the medical services provided by the hospitals.

It is our duty to bring this to the Ministry of Health’s attention, as hospitals, which serve the sick and the weak, are held in higher esteem than other institutions in the eyes of society. Because of this, doctors must not only follow stricter guidelines, they should also be held to a far higher level of standards, as highlighted in the ECEG.

Positive action

While most doctors fulfil their duty admirably, there are a rare few who might veer from the right path. In such scenarios, it is the public’s duty to point these lost doctors back to the road of the righteous, so that the reputation of doctors is not tarnished, and that they may continue to do work that would only serve to benefit society. It is insufficient to stop at giving directions to the hospitals to stop the practice. Some positive action ought to be taken against specific doctors who are found to have violated the ethical code.

These doctors would have gained an unlawful advantage over their peers who choose to be compliant with the rules. Doctors who stayed on the straight and narrow path would have less referral sources because the referring party would gain nothing financially.

By breaking the ethical codes and engaging in illegal fee-sharing arrangements, these unethical doctors earned more than their peers because TPAs have a financial incentive to refer patients to these doctors. By stopping TPAs, MOH not only upheld the ethical standard in the healthcare industry, but also facilitated fair competition.

The writers are from RHTLaw Taylor Wessing LLP. Tan Chong Huat is managing partner and Luo Ling Ling is a partner in the law firm.