Tuesday, March 01, 2011

You Can Run a Business but you are NOT ALLOWED to make a Profit

Singapore is very proud that it is regularly considered one of the most competitive economies in the world. Every year, the nation makes a habit of encouraging some think-thank or other to come over and "assess" the nation on how "business-friendly" it is. More often than not, Singapore is usually a winner. We often duke it out with that other ethnic Chinese City-State, Hong Kong for the top prize.

In a way, the think-thanks are not wrong. Singapore has a first-world physical and legal infrastructure. It's bureaucrats are always helpful, especially if you're the type of business pumping in lots of money. We even have a serious currency and we are also at the focal point of a region of nearly half a billion consumers. When you look at all these things together, you have to ask - "Who wouldn't want to set up a business here?"

However, I'm starting to worry a little. Thanks to an impending election, the government seems determined to add an interesting twist to many of the things that make Singapore a wonderful place to do business - businesses it seems are NOT allowed to make a profit. Yes, by all means, set up a business - but remember your business is NOT allowed to make a profit.

The most obvious example of this interesting twist can be seen in a saga involving a surgeon who once operated on my thigh - Dr Susan Lim, Chairman of the Susan Lim Surgery & Group (www.susanlimsurgery.com). Dr Lim is one Singapore's most prominent surgeons whom, based on her professional qualifications alone could be what you call an ideal citizen. In her career she has already achieved some of the following:

a - In 1990 performed the first successful liver transplant in Asia
b - In 2003 started the company Stem Cell Technologies
c - In 2004 became the youngest fellow of Trinity College in the University of Melbourne.

That's just her professional achievements. On the personal level, she's also managed to "snag" a prominent "foreign" talent for Singapore. Her husband is Mr Deepak Sharma, the Head of International Wealth Management (All Wealth Management Activities outside the USA) at Citigroup. In between their busy schedule's, Mr Sharma and Dr Lim have also found the time to set up a charitable "Indiapore" trust to assist underprivileged children in the region.

Dr Lim is what you'd call a "Star," in her profession and like most "Stars," she doesn't come cheap. As her patient over a decade ago, she charged something like $100 per consultation, which is twice what the neighbourhood GP charged and ten times what the subsidised government polyclinics.

Being a star doctor in Singapore is supposedly a good thing. Singapore is working very hard to promote itself as a centre for medical tourism. The economic planners get turned on by the very idea of the very rich from around the region (we have lots of them) coming to Singapore to receive medical treatments - preferably the expensive kind. Since Singapore cannot compete on cost with places like India and Thailand, our only option is to compete on quality and quality in the medical sense means not just a good physical infrastructure - but renown doctors. It doesn't take a genius to read Dr Lim's CV to realise that she is the very type of Doctor who brings international patients (The type with money) to Singapore.

Well, it turns out that being the type of doctor that brings in the patients with money, isn't always exactly good for you - that is if you are the doctor. One of Dr Lim's patients was the cousin of the Sultan of Brunei (Once listed as the World's richest man and by no means a pauper today). The woman had breast cancer and instead of heading off to the West, she came to Singapore to see Dr Lim.

I don't want to comment on the medical issues here since I'm not qualified to do so. What I can comment on is the fact that the patient arranged it such with Dr Lim, that Dr Lim effectively became her personal assistant. When the patient didn't want to goto hospital, Dr Lim would have to set up an ICU unit in the Hyatt Hotel. When she needed to fly to Brunei, it was Dr Lim who had to arrange for a private jet as well set up the medical infrastructure in the palace. In short, the deal was simple. Dr Lim had to clear out all her other patients to deal exclusively to the patient from Brunei. The royal patient seemed quite happy was quite happy to pay her rates. Dr Lim provided her treatment and the bills were sent to the Brunei High Commission.

This went on for several years - and then the patient died (Not an unexpected outcome from someone with cancer). Brunei's Ministry of Health then decided to ask for a small discount from Dr Lim on the bill that she had provided for the last seven month's of the Royal Patient's treatment. They approached their Singapore counterparts. The Director of Medical Services, a Professor Satku, got very upset with Dr Lim for having the audacity to charge the patient for money. So he decided to take issue with Dr Lim and before you know it, Dr Lim's clinic was raided five times and the Singapore Medical Council, the supposed independent regulatory body for the medical profession, which Professor Satku happened to be Registrar of, decided to bring charges against Dr Lim for "over charging."

Much was made of the fact that Dr Lim's bill amounted to some S$25 million. She had apparently marked up some suppliers by a huge margin. Unfortunately for the good professor, there is actually no official guideline for charges for the service Dr Lim was offering (what constitutes over charging?) and one of his key witnesses even went as far as to say that Dr Lim could have charged a lot more (S$450,000 a day - the bill of $25 million for seven months comes to around S$100,000 plus a day)

Fortunately, for Professor Satku, Dr Lim decided to go directly to the Brunei government and offered a very hefty discount - a case of take less money (even lose it if you have to and get on with life). In short, Dr Lim was willing to forgo all personal monies on the last seven months of her royal patient's life.

The battle continues but was particularly interesting about this entire drama is the fact that the final bill has yet to be paid because, as Dr Lim's lawyer alleges (a good legal word), the Ministry of Health has suggested to the Bruneians that they don't pay it.

The Brunei government had no issue with paying the bills. What they wanted was a simple discount. They also had no issues with Dr Lim's professional conduct. As far as they were concerned, she did what she had to do.

So why on earth is the Singapore government telling the patients of a doctor from a private practice not to settle the doctors bills. Everyone accepts that work was done to a quality of everyone's acceptance. So where exactly is the professional misconduct here and when does a government do out of it's way to tell customers of a private business not to settle the bill.

Whatever way you look at things, this is an issue between a provider of a service (In this case Dr Lim) and the customer (In this case the Brunei Government). The customer asked for a service. One was provided and paid for. The discount should have been at the discretion of Dr Lim and Brunei government. The regulator should only have intervened had they complained of professional misconduct - ie had she promised to do something she could not.

Then there's the issue of charges. As far the Singapore market for medical services is concerned, it's a free for all. You can charge what people are willing to pay. As such, there is no set market rate - just an average of what people are offering. Some people offer below and others above. Dr Lim has never been known to be on the cheap - she's always been known to be on the premium side of things. Could you say she was expensive? The answer is yes. Could you say she was "over charging?" This is debatable, though one can easily argue that the patients were willing to pay her price. They had to choice of moving elsewhere if they found her too expensive.

So what exactly is the issue here? Why on earth is the government going after a private business for charging high prices? Let's stress again - Dr Lim is not a government official, obliged to provide a service to the people. She runs a private enterprise, selling something to a specific target market. Surely, when it comes to private enterprise, the person who should decide on whether they're being over charged are the customers.

Furthermore, here's the important principle - in a free market capitalist society (which Singapore claims to be), governments should not interfere with a customer relationship as long as no professional misconduct has taken place. The Brunei government did not allege that Dr Lim had fleeced them. It is the Singapore government that has clearly decided that Singaporean business are NOT allowed to make money.

Which is sad really, especially when you consider the fact that real economic growth comes from enterprises rather than from government dictation.

Perhaps it's hard to feel sorry for Dr Lim. She's made pots of money and as they say - how do you feel sorry for someone with money. However, let's face it, Dr Lim did not make her money exploiting the poor. She's contributed to society by running a successful business that employs people in high paying jobs. She's given time and money to charity.

So, you got ask yourself, why is it so that the government has decided that it needs to punish Dr Lim for doing what every business does - make money? Is this something new into the ethos of Singapore?

4 comments:

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