The Rising Tide of Mainland Pregnant Women Giving Birth in HK

1. The Rising Tide of Mainland Pregnant Women Giving Birth in HK Ricky Leung (Class 1001B, fall semester 2006)

2. Part One: Why Are They Rushing To HK? Some Facts And Figures (The Right Of Abode + The One-child Policy) = Explanation Using Cost-benefit Analysis Part Two: How Can The Government Gain More Profits From Hospital Service? Maximizing Condition Of A Price Searcher / Monopolist Single Pricing Price Discrimination*** 4 Conditions For Price Discrimination The Result Appendix Content

3. Part One: Why Are They Rushing To HK? Some Facts And Figures • In recent years, there are more and more pregnant women from mainland China giving birth in HK. • Most of them enter HK using the document called “two-way exit permits”. They get it from the mainland government easily. Source: Oriental Daily (online edition on 28-9-06)

4. The number of mainland mothers giving birth and its percentage in the total number of delivery Source: http://www.info.gov.hk/gia/general/200506/08/lcq10_e.pdf

5. Services (obstetrician and neonatal services) Charges Source: http://www.baotoo.com/down_zhazhi.asp?id=70 Source: http://www3.ha.org.hk/pwh/content/patinfo/payment/charge_c.html

6. Obstetrician and neonatal services in public hospitals are filled to capacity. • The government proposes to increase the charge on mainland women to $48000, the same as that in private hospitals. • Can it stem the tide? Source: http://www.takungpao.com/news/2005-8-16/GW-442846.htm

7. The Right Of Abode • According to the judgment of a case in the Court of Final Appeal in July 2001, the mainland women’s babies born in HK can get the right of abode, even though the parents are not HK citizens. • A person having the right of abode can enjoy benefits such as education, health services and so on in HK, which have higher qualities than those on the mainland. Source: http://morimorihongkong.gateau.jp/the_court_of_final_appeal_001.htm

8. The One-child Policy “With Hong Kong’s declining birthrate, China`s One Child Policy is not a problem. “ Source: http://www.earthycartoons.com/cartoonviewer.asp?cid=1292

9. It is a kind of birth control. • The parents will be fined if they have an additional baby AND the baby is born on the mainland. Penalty on having extra children (Examples) Source: Sun Daily (online edition on 24-7-06) Source: Sun Daily (online edition on 24-7-06)

10. Nevertheless, if the baby is NOT born on the mainland, then parents do NOT have to pay the fine. Source: http://chineseculture.about.com/library/china/cia/nmaphk.htm

11. Explanation Using Cost-benefit Analysis Compare the benefit of giving birth in HK and its cost Benefits (B) = parents’ valuation on the right of abode (V)+ the money saved from evading the fine (P) Cost (C) = money spent in HK (payment to hospital service + Expected hotel + food in HK + transport expenses) (M)+ parents’ income forgone during their stay in HK (I) For the sake of simplicity, assume expected expenses and income forgone are insignificant and zero. B=V (Very Great) + P (e.g. $100,000) C=M ($48,000, the proposed new charge) Then B>C. Even if the government implements the new proposal, mainland women will come here.

12. Part Two:How Can The Government Increase Profits From Hospital Service? Source: http://www3.ha.org.hk/pwh/Index_c.html

13. Maximizing Condition For A Price Searcher/ Monopolist • A price searcher/ monopolist faces a downward-sloping demand curve for the entire market. It maximizes profits where MR=MC. It is not efficient. P Deadweight Loss MC P Efficient output level Output level Q D MR

14. Single Pricing Can it gain more profits? P MC It charges a single price in the whole market. P Output level Q D MR

15. Price Discrimination (Third-degree Price Discrimination) • Different prices • Different groups of customers • The same product/ service (with same production cost) Source: http://www.matchstick.com/matt/port/ww/money.jpg

16. P P P Market 1 (High Elasticity) Market 2 (Low Elasticity) The Whole Market P2 MC P1 MR1 + MR2 D1 MR2 D2 MR1 Q Q Q Q1 Q2 Q1 + Q2 • By market segmentation • a higher price is charged on consumers with lower elasticity of demand, • a lower price on those with higher elasticity of demand, • so that MR in two markets are equal, • and also equates with MC. • Then profits will be larger than those under single pricing. MR1=MR2=MC

17. 4 Conditions For Price Discrimination • The government has some monopoly (negatively-sloped demand) power. • At least two groups of customers with different elasticities. • (Mainland parents: low elasticity, no substitute for benefits in HK.) • Resale is not allowed. • (Can we resell obstetrician and neonatal services in HK?) • The government is able to ascertain which customers have high/ low elasticity.

18. The Result • Will Profits Rise? • The government can increase profits by practising price discrimination. Otherwise it would charge a single price. • Normative Analysis: • The government should practise price discrimination in order to gain more profits from mainland women. It should carry out some measures to avoid mainland women’s outstanding payment. The practice is beneficial to local people. My conjecture is that the price $48000 is not high enough to equate MR in the two markets. • Will Output Rise? • It can rise or fall. Even if it rises, its level is still lower than the efficient one.

19. THE END Thank you Ricky Leung Appendix: Some information (Legislative Council Q&A) about the issue

20. Appendix LCQ19: Mainland women gave birth in Hong Kong (26-11-03) link: http://www.info.gov.hk/gia/general/200311/26/1126192.htm • Following is a question by the Hon Lau Kong-wah, and a written reply by the Secretary for Security, Mr Ambrose S K Lee, in the Legislative Council today (November 26): • Question: • It is learnt that there is an upward trend in recent years in the number of cases in which Mainland women overstayed in Hong Kong after entering the territory on Exit-entry Permit for Travelling to Hong Kong and Macao (commonly known as "two-way exit permits"), and gave birth during the overstaying period. In this connection, will the Government inform this Council: • (a) of the measures to curb this trend; whether actions will be stepped up to arrest and repatriate pregnant Mainland women overstaying in Hong Kong; • (b) whether childbirth by Mainland women in Hong Kong has put a strain on manpower and other resources in public hospitals; and • (c) whether it knows if the relevant Mainland authorities have stipulated that two-way exit permits should not be issued to women whose pregnancy has reached a certain number of weeks; whether it will discuss with the relevant Mainland authorities so that they will be more prudent in vetting and approving applications for two-way exit permits from pregnant women?

21. Reply: • Madam President, • (a) The number of Mainland women who overstayed after entering Hong Kong on Exit-entry Permit for Travelling to Hong Kong and Macao, and gave birth during the overstaying period has mildly risen in recent years, from 6 442 in 2000 to 7 300 last year. The figure in the first ten months of this year was 6 462, representing an increase of 9.6 per cent over the same period last year. It accounted for 16.5 per cent of babies born in Hong Kong during that period. • About 84 per cent of the spouses of the women mentioned above are Hong Kong residents. Children of Hong Kong residents may apply to settle in Hong Kong in accordance with the law even though they are born in the Mainland. In the light of the prevailing birth rates, the birth of these babies in Hong Kong should not pose pressure on our population and social services facilities. As regards Mainland women who overstayed and gave birth during the overstaying period, they will be repatriated to the Mainland afterwards. • Article 22 of the Basic Law provides that people from other parts of China must apply for approval for entry into the Hong Kong Special Administrative Region. Having obtained approval from the Mainland authorities and subject to normal immigration requirements, Mainland residents holding valid travel document and relevant visit permit may stay in Hong Kong as visitors, but they must leave before their limit of stay expires. Hong Kong's enforcement agencies will arrest, prosecute and repatriate all overstayers including pregnant women in accordance with established policy. The SAR Government does not, at this stage, see the need to take targeted measures against pregnant women. • (b) The number of childbirths by Mainland women in Hospital Authority (HA) hospitals has been relatively steady in recent years. There were 7 885 such cases in 2000, 7 377 in 2001, 8 235 in 2002 and 4 214 in the first six months of 2003. Owing to the decline in the overall childbirth rate in Hong Kong, we have actually observed a decline in the total number of childbirths in HA hospitals during the same period. Therefore, the obstetric service of public hospitals has been able to cope with this workload. • (c) Under existing arrangements, Mainland residents who wish to visit Hong Kong must apply to Exit-entry Administration Department of Public Security authorities at their place of household registration for an Exit-entry Permit for Travelling to Hong Kong and Macao and a relevant visit endorsement. We understand that whether or not the applicant is pregnant is not a relevant consideration when Mainland authorities examine such an application. As pregnancy per se is not against any existing regulations, the Government has no intention at this stage to request Mainland authorities to tighten the examination and approval of applications by Mainland pregnant women to visit Hong Kong. • Ends/Wednesday, November 26, 2003

22. LCQ14: Mainland women giving birth in Hong Kong (27-10-04) link: http://www.info.gov.hk/gia/general/200410/27/1027176.htm • Following is a question by the Hon Li Kwok-ying and a written reply by the Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council today (October 27): • Question: • It has been reported that the number of Mainland women giving birth in Hong Kong has been on the rise, resulting in an upsurge in the demand for obstetrician and neonatal services in hospitals, and that some woman patients who are about to give birth or have just given birth have to rest in mobile steel wheeled beds which are normally used for transporting patients into and out of nursing wards. In this connection, will the Government inform this Council whether it: • (a) knows the respective numbers of cases in which Mainland pregnant women have used the services provided under the public health and medical care system in Hong Kong, and the resources involved, in 2002, 2003 and so far in 2004, and the number of cases in which fees have not been paid and the total amount involved, as well as the measures the Hospital Authority (HA) has put in place to ensure that patients must settle the fees before they are discharged from hospitals; • (b) knows the current usage rates of obstetrician and neonatal services provided in public hospitals in various districts, whether they are being used to capacity, and the short-term measures adopted by HA to alleviate overcrowding in nursing wards as well as the pressure faced by front-line medical personnel; and • (c) has reviewed the demand for obstetrician and neonatal services in Hong Kong, having regard to its population policy and the trend of Mainland women coming to Hong Kong for childbirth; if so, of the review results; if not, the reasons for that, and whether it will review the relevant medical services in the light of the demand, and formulate long-term policies and measures accordingly?

23. Reply: • (a) The number of non-resident Mainland women giving birth in Hospital Authority (HA) hospitals, the resources involved, the number of default cases and the consequential amount written off are shown in Annex. • The following measures have been taken to minimize the write-off of medical fees: • * On admission, private inpatients and non-eligible persons are required to pay deposits. At present, the amount of the deposit is fixed at $19,800. • * During hospitalization, interim bills are sent to patients on a weekly basis. • * In case a patient fails to settle the bills, his/her next of kin will be contacted for payment. • * Reminder and final notice will be sent to the patient after dispatch of the final bill. • * In addition to mailing, telephone calls will be made to patient or his/her next of kin to request for an early settlement of medical fees. • * If the bills remain outstanding, legal actions will be instituted where appropriate, taking into account factors such as the amount in arrears and the chance of successful recovery. These legal actions include submission of cases to the Small Claims Tribunal and execution of bailiff. • In addition to the above, • * Patients are reminded of their responsibilities to pay hospital fees and provide correct correspondence details. • * To facilitate collection of outstanding debts from frequent defaulters, a 'frequent defaulter report' is generated on a weekly basis. The report lists out the amounts due by patients who are currently under maintenance at a particular hospital. Based on the list, hospital staff would follow up the outstanding fees with the patient and / or his next of kin. • * To facilitate payment by patients, various means of settlement are accepted including local and foreign currency cash and cheque, EPS, PPS and credit card. Settlement by Octopus card is being piloted and introduction of the China Union Pay card is being arranged. • (b) The overall utilization rates of obstetrics and neonatology services in HA hospitals were in the range of 56 per cent to 78 per cent over the past few months and there was no evidence of substantial increase. There is a seasonal pattern of workload with relatively high usage rate between August and January each year. Also, the majority of NEP mothers, who have little antenatal care, often discharge themselves within 24 hours after delivery, leaving very little time for optimal observation of the newborn babies and education of mothers on baby care. This has resulted in an increase in the number of babies requiring medical intervention because of infection, dehydration, severe neonatal jaundice or congenital anomalies. • For individual hospitals, United Christian Hospital recorded a bed occupancy rate of 113 per cent in September 2004. Prince of Wales Hospital and Tuen Mun Hospital recently reported relatively large number of NEPs presenting to labour units after 12 midnight, resulting in an increase in workload for the night-shift staff, which is normally smaller in number compared to other shifts. • To address rising workload of NEP deliveries, hospitals are improving mid-night staffing levels, with the deployment of more nurses with midwife qualifications to obstetrics units. To develop staff capacity, midwifery refresher courses are being organized for nurses with midwife background and more part-time nurses are being recruited. • (c) Obstetric services in HA hospitals have, in the past, been adjusted in view of reducing birth rates based on population projections. The HA has all along been monitoring the trends in births rates and will continue to do so in the light of rising proportion of NEPs. It is predicted that there will be a continuous rise in total birth rates and obstetric workload for the coming year. The areas of our concern are : lack of antenatal care for these NEP pregnancies and the short stay of NEP mothers, both of which would lead to increase of maternal and foetal complications and possible longer term health implications to mothers and children. Obstetric service and manpower will be adjusted accordingly. The Government and the HA are conscious of the importance of appropriate deployment of resources to ensure quality medical services for the local population, and are considering how best to tackle the rising trend of Mainland pregnant women coming to give birth in Hong Kong. • Ends/Wednesday, October 27, 2004

24. LCQ3: Mainland women giving birth in Hong Kong (10-11-04) link: http://www.info.gov.hk/gia/general/200411/10/1110201.htm • Following is a question by the Hon James Tien and a reply by the Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council today (November 10): • Question: • The number of pregnant women from the Mainland giving birth in public hospitals in Hong Kong has been on the rise, putting pressure on staffing in hospitals in New Territories East and New Territories West, and may thus affect the provision of medical services for residents of the districts concerned. In this connection, will the Government inform this Council whether it knows: • (a) the monthly usage rates of obstetrician and neonatal services provided in public hospitals in the above districts over the past year, and the percentage of Mainland people among all the users of the services; • (b) as many Mainland pregnant women seek admission to public hospitals in the districts concerned after midnight, the number of such pregnant women over the past year, as well as the reasons for this phenomenon; and • (c) the estimated time for completing the night-time staffing improvement programme for labour wards, the staffing levels assessed to be adequate under the programme, as well as how the day-time staffing for such wards will be arranged?

25. Reply: • Madam President, • (a) The average utilisation rates of the obstetrics and neonatology services in public hospitals in the New Territories East (NTE) cluster over the past year were 72 per cent and 86 per cent respectively, and in the New Territories West (NTW) cluster 67 per cent and 80 per cent. The monthly utilisation figures are provided in the Annex. In NTE, 32 per cent of the pregnant women who used the obstetrics services were from the Mainland. In NTW, the percentage is 30 per cent. • (b) Of the pregnant women from the Mainland who presented themselves to a public hospital for admission to give birth over the past year, 29 per cent of them have done so after midnight and before morning (i.e. from 12 to 6 am). This percentage is slightly higher than the proportion of local pregnant women who sought admission in the same time period of the day at 23 per cent. A possible explanation for the slightly higher percentage by Mainland women is the higher fees charged by the Hospital Authority (HA) for non-eligible persons, which is $3,300 per day as compared with $100 per day for eligible persons, that caused some Mainland women to wait until after midnight before presenting themselves at a hospital in order to avoid one extra day's charge. • (c) In order to ensure that there is sufficient manpower to handle the added workload in the obstetrics wards, both the NTE and NTW clusters have made appropriate and flexible deployment in the light of the demand situation in their respective districts. The improvement measures taken include more flexible deployment of staff within the clusters, strengthening of the training for nurses on midwifery, recruitment of additional part-time staff and better arrangement of the staff level in all shifts at obstetrics wards. The HA will closely monitor the demand in obstetrics services in the New Territories. It will also determine the appropriate staff level to ensure the quality of its obstetrics and neonatology services, taking into account the workload at individual hospitals, the environment at the wards, the organisation of these departments, the relevant work procedures and the composition of the medical teams. • To resolve the problem of the increasing use of HA services by non-residents, we are considering a number of proposals, which include - • * Increasing HA's medical fees (including imposing a minimum charge) for non-entitled persons; • * Increasing the deposit to be paid by non-entitled persons upon admission into an HA hospital for emergency cases; • * For non-emergency cases, requiring the payment of a deposit at the time when a non-entitled person makes an appointment for consultation at a specialist outpatient clinic or an elective procedure at a hospital instead of at the time of consultation and hospital admission respectively; and • * HA refusing to provide further medical services to non-entitled persons who have yet to settle an outstanding fee. • The Administration is still at an early stage in its assessment of the above possible measures. Once the assessment results are available, we will submit the Administration's recommendations to the Council's Panel on Health Services for discussion. • Ends/Wednesday, November 10, 2004

26. LCQ10: Non-Hong Kong residents giving birth in local public hospitals (8-6-05) link: http://www.info.gov.hk/gia/general/200506/08/06080154.htm • Following is a question by the Dr Hon Kwok Ka-ki and a written reply by the Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council today (June 8): • Question : •     The number of Mainland women (non-Hong Kong residents) giving birth in local public hospitals has surged and the amount of medical charges they have defaulted on is enormous. On the other hand, the authorities have proposed to introduce a minimum package fee of $20,000 for obstetric services in public hospitals, in order to address the problems that the existing charges of public hospitals are substantially lower than those of private hospitals and even below the Hospital Authority's own cost for obstetric services, and that the existing fee structure encourages non-eligible expectant mothers, including those from the Mainland, to deliberately minimise their length of stay in hospitals. In this connection, will the Government inform this Council: • (a)  if it knows the number of Mainland women (non-Hong Kong residents) who gave birth in local public hospitals over the past three years, its percentage in the total number of child-delivery in-patients, the types of identity documents held by such women (for instance, entry documentations such as Hong Kong Identity Card, One-way Permit, Permit for Travelling to and from Hong Kong and Macau (commonly known as "two-way exit permit") and that for travellers under the Individual Visit Scheme), the number of cases in which they defaulted on payment of medical charges and the amount involved, the percentage of such amount in the total amount of defaulted medical payment, as well as the number of cases in which the authorities succeeded in recovering the outstanding medical charges and the amount involved, broken down by individual hospitals; • (b)  how the authorities calculated the cost to be recovered when determining the proposed fee of $20,000; whether they have taken into account the costs relating to the additional health care personnel required in the hospitals for the provision of such services, the extra medical services arising from the emergency medical consultations sought by expectant mothers from the Mainland who tried to minimise their length of stay in hospitals, and the medical incidents during delivery; and • (c)  whether it will consider strengthening the co-operation with the Central Government on deterring Mainland women from coming to Hong Kong for giving birth; as well as the reasons for the Hong Kong authorities not establishing an inter-bureau working group to jointly examine various feasible measures and iron out the possible legal issues involved, thereby formulating effective and lawful measures to resolve the problems caused by such women coming to Hong Kong for child birth?

27. Reply: • Madam President, • (a)  The numbers of Mainland women (non-Hong Kong residents) who gave birth in a public hospital in Hong Kong over the three years, their percentage of the total numbers of child deliveries in these hospitals, and the amounts of medical fees outstanding broken down by hospital, are set out in the Annex. The vast majority of these Mainland women were holders of Exit and Entry Permit when they entered Hong Kong.   • (b)  The proposed Obstetric package charge of $20,000 for Non-Eligible Persons (NEP) giving birth in a public hospital is calculated on the basis of average inpatient cost of Obstetric services, which covers the full costs of the relevant staff, operation, procedures and consumables. The late presentation of expectant mothers at public hospitals would not significantly increase the costs of medical services provided to them, although medical staff would be put under great pressure to perform the relevant tests and investigations within a short time period.   • (c)  We understand that there are difficulties for Mainland authorities to prevent pregnant women from coming to Hong Kong. There is no legal basis for Mainland authorities to refuse exit applications from Mainland women solely on the ground that they are pregnant. Furthermore, there would be practical difficulties for the authorities to ascertain whether the individual applicants are pregnant or not. According to the relevant regulations in the Mainland, the validity period for the exit endorsement on the Exit and Entry Permit to visit Hong Kong is usually three months. It would be feasible for pregnant women to file their exit application during the early stage of their pregnancy. •     The Health, Welfare and Food Bureau, the Security Bureau and relevant Government Departments have been working closely to address the problem of the increasing use of public medical services by NEP pregnant women. We would explore all possible measures, give due consideration to the relevant legal issues, and brief Members of the Legislative Council when the results are available. • Ends/Wednesday, June 8, 2005