An analysis of the managed care market in Hong Kong

Document Type

Technical Report

Publication Date



In July 2006, the Bauhinia Foundation Research Centre commissioned the Public Policy Research Institute (PPRI) of The Hong Kong Polytechnic University (University) to survey and analyze the existing managed care market in Hong Kong.This Executive Summary summarizes the major findings of this Study. For this Study, managed care is defined as any health care financing system in which employers and purchasers of health care services contract the delivery of service with a provider organization (or through a third party) based on capitation or other pricing mechanisms other than simple fee-for-service. Managed Care Organizations (MCOs) are sometimes referred to as Health Maintenance Organizations (HMOs), contract medicine, panel doctors or medical networks. This Study shows that MCOs are a major form of primary care delivery in Hong Kong. The majority of doctors in the private sector participate in MCOs.

Huge variations exist within the managed care industry in terms of the financial strengths of the MCO host, the supply chain configuration (the hierarchy of intermediaries and contracting), the nature of ownership, the size of the MCOs, the range of services offered and the method of compensating providers.

Due to their economies of scale in operation, MCOs are able to provide convenient and cheaper health care services to the general community, employers in particular. The existence of MCOs has enhanced market competition in the provision of primary medical services, and their services are, in general, welcomed by consumers.

The rapid proliferation of MCOs has also aroused concerns from many doctors and doctors associations. They demand that MCOs should be subject to the same controls as individual doctors. This Study confirms this concern.

This Study confirms the existence of a number of controversial practices by some MCOs – utilization reviews, clinical protocols, guidelines on referrals, ordering tests, dispensing expensive drugs, and ordering drugs from specified suppliers. Whether these practices constitute unethical or unprofessional acts require further investigation.

This Study further confirms that doctors receive significantly lower fee-for-service payment for seeing network patients compared to regular patients. Consumer satisfaction appears to be correlated to the level of fee payment to doctors.

There is consensus amongst doctors that greater government regulation, in the form of either registration with some regulatory authority or having a registered doctor as a director on their board, is desirable. The Consumer Council suggests a code of conduct be drafted and implemented for MCOs.

This view is not shared by many MCOs, which are of the opinion that existing legislation is adequate to safeguard public interest. Potential benefits of MCOs – such as shared equipment and facilities among network doctors, more emphasis on prevention and early detection, 24 hours clinics, training and development opportunities – are not fully realized in many MCOs in Hong Kong.

This Study, in general, corroborates the findings of the Department of Health Working Group’s study conducted in mid 2006.

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