web_vol47 4.pdf - International Hospital Federation

Policy: China
The evolution of the hospital
system in China
XIAOHUI HOU
SENIOR ECONOMIST, WORLD BANK, WASHINGTON DC, USA
TAO DAI
DIRECTOR, INSTITUTE OF MEDICAL INFORMATION AND
EXECUTIVE DIRECTOR, HEALTH POLICY AND MANAGEMENT
CENTRE, BEIJING, CHINA
ABSTRACT: The Chinese health care system has improved rapidly, especially in the areas of health insurance and the
movement toward universal coverage. Public hospital reforms have been much slower, however, and have encountered
significant challenges. The objective of this article is to describe the current challenges in public hospital reform in China
through the lens of the evolution of the hospital system. The authors also draw general lessons that could be applied to
other countries.
Hospitals are a vital part of the health care delivery system.
In China from 1960 to 2010, the number of hospitals grew
from 6,020 to 20,900, and the number of beds increased
from 0.89 per 1,000 population to 2.17 during the same period of
time. In addition to the scale increase, the hospital system in China
has evolved from a community-based and government-financed
system to a complex and semi-autonomous system with both
public and private providers. This evolution coincided with marketoriented
reforms in the health care system and rapid economic
growth throughout the country.
The Chinese health care system has improved rapidly, especially
in the areas of health insurance and the movement toward
universal coverage. The public hospital reforms have been much
slower, however, and have encountered significant challenges.
The system is also increasingly being criticized by the public for
being “too expensive and too difficult”. Under enormous pressure,
in April 2009 the State Council unveiled a blueprint for health care
over the next decade, launching a much-anticipated reform of the
ailing medical system with the goal of ensuring fair and affordable
health services for all of the nation’s 1.3 billion citizens (Xinhua
News 2011).
The objective of this article is to describe the current challenges
in public hospital reform in China through the lens of the evolution
of the hospital system.
The evolution of hospital system reform can be divided into three
eras (Figure 1). The first era, before 1980, established the public
hospital system before market reform; in the second, from 1980 to
2009, the financial burdens were transferred from the government
to public hospitals; also, some private medical facilities emerged
during this period; the third era, which began in roughly 2009 and
is ongoing, is exploring how to improve access and cost issues in
the public hospital system and the further development of private
medical facilities.
Era I: Establishing public hospitals before the market reform
(before 1980)
In 1949, when China was newly established, the country faced
famine, high mortality and morbidity rates, a high prevalence of
infectious disease, and low life expectancy. In order to provide
basic medical services to the population, control infectious
diseases, and improve life expectancy, the government
established a large, hierarchical public hospital system with three
tiers in both urban and rural areas: street, district, and municipal
hospitals in urban areas; and village station, township health
centers, and county hospitals in rural areas. The medical staff
were public employees and were paid a fixed salary.
The system was quite effective. In two decades, it reduced the
infant mortality rate to a level comparable to that in developed
nations; it eradicated smallpox and nearly eradicated tuberculosis
and schistosomiasis; the average life expectancy of Chinese rose
from 35 years in 1949 to 68 years in 1979 (World Bank 1984).
While the system has conquered a number of challenges in a
relatively short span, it became increasingly challenging for the
government to fund this system. Smaller government subsidies
and reimbursements for actual costs led to the slow adoption of
new technologies; hospitals could not replace outdated medical
equipment or refurbish the hospital infrastructure. The underlying
payment incentives did not encourage providers to contain costs,
and the efficiency and quality of services were quite low.
Era II: Transferring fiscal burdens to public hospitals and the
emergence of private medical facilities (1980–2009)
In order to alleviate the financial burden on the central government
and promote efficiency, the government changed its policy,
6 World Hospitals and Health Services Vol. 47 No. 4