Dilemma of Hospital Reform
in China, Public or Private?
Yingyao Chen, PhD
School of Public Health
Fudan University
Shanghai, China
1|
Outlines
Background
Theoretical framework
Public hospital autonomy, good or not?
Private hospital, an alternative?
Policy suggestions
2|
Background
3|
Objectives of Hospitals Reform
 At the Hospital level: improve the operation of the
hospital
– Better clinical outcomes (quality)
– Better and sustainable financial outcomes (efficiency)
– Better patient satisfaction and social responsibility
 At the System level (Society level)
–
–
–
–
4|
Quality of service
Equity in access to services (affordable and accessible)
Efficiency of using resources
Financial sustainability of the system
Services organization and delivery
 Structure: public private mix, autonomous public
hospitals
– Decentralization in 1980-2007
– Public hospital: lack of government support, self-run
 Market share: public sector dominating supplemented
by the private sector
 Hot competition within public hospitals and between
public and private hospitals
5|
Urban and rural health service system
Urban
Province/city hospital
Rural
County hospital
District hospital
Community health center
Township health
center
Village Clinics /doctors
6|
Mapping Public & private hospitals’ in China
• Number of hospitals
Number of hospitals (non profit & profit)
18000
16000
15677
15783
15673
15759
15616
15650
15724
15822
16258
16767
14000
12000
10000
27.6%
8000
6000
11.4%
4000
2026
2544
2971
3575
4038
4019
4543
5096
5721
6403
2000
0
2003
2004
2005
2006
2007
2008
Non Profit
Profit
Growth rate(2003-2012): non profit hospital by 6.95%
profit hospital by 216.04%
Source: China Health Statistical Yearbook(2004-2013)
7|
2009
2010
2011
2012
• Number of hospitals
Number of hospitals (public & private by registration)
18000
16000
42.2%
15483
14309
14051
13850
14000
13539
13384
12000
9786
10000
8440
8000
7068
6240
5403
6000
17.2%
4000
3220
2000
0
2005
2008
public hospital
2009
2010
private hospital
8|
Source: China Health Statistical Yearbook(2004-2013)
2011
2012
• Number of hospitals
Number of hospitals by ownership
12000
10000
9880
9777
9651
9629
9579
9637
7504
8000
6604
6048
6046
6000
5892
5397
6474
5926
6029
2011
2012
4594
3887
4000
2219
2000
0
2005
2008
governmental
2009
collective
9|
Source: China Health Statistical Yearbook(2004-2013)
2010
private
Theoretical framework
10 |
Analytic framework
 Hospital autonomy (HA) is defined as “a reduction in direct government
control (from health authority or different level government) over public
hospitals, and a shift of the decision making from the hierarchy to hospital
management team.” (Harding and Preker, 2003)
Budgetary
units
Autonomous
units
Decision
right
Few at the hospital
Market
exposure
None
Residual
claimant
Public purse
Accountability
Direct: hierarchy
Social
functions
Implicit unfunded
Corporatized
units
Privatized
units
Many at the hospital
Full
Hospital
Indirect: regulations
Explicit funded
Source: Analytic dimensions of different autonomization of hospitals from Melitta Jakab, et al(2002)
11 |
Hospital Autonomy is
 Letting managers manage
– Hospital autonomy can be defined as a reduction in direct
government control over public hospitals, and a shift of the
routine (day-to-day) decision making from the hierarchy to the
hospital management team
 However, the governance functions reside with the
government
–
–
–
–
12 |
Providing leadership
Steering and coordinating at the system level
Providing system-wide integration and regulation
Supervision
Public hospital autonomy,
good or not?
13 |
The evolution of policies related to HA
from 1978 to 2008
Resolution of the 3rd
Plenary Session of the
11th Central
Committee of the
Communist Party of
China (CPC)
1978
1979
The opinions
of the pilot
work on
Residual
strengthenin
g hospital
claimant
economic
managemen
t
14 |
1980
Regulation
on the issue
of
Market
permitting
exposure
individuals’
practicing
medicine
Decision of the
CPC central
committee on
reform of the
economic system
1981
The interim
Decision
measures
right;
on
hospital
economic
Residual
manageme
claimant
nt
1985
Decision
Report
on
right;
regulations
Market
regarding
the
reforms
exposure;
on
health
Residual
services
claimant
Resolution
of the 14th
Central
Committee
of the CPC
1989
Decision
Opinions
right;
about
Market
related
exposure;
issues of
Residual
expanding
claimant;
health
Account
services
-ability
1992
Several
Decision
opinions
right;
about
Market
deepening
exposure;
the health
Residual
care
system
claimant
reform
1997
The
Decision
national
right;
policy on
Residual
health
reforms
claimant;
and
Account
developm
-ability
ent
2000
“Guidance on
Decision
the
healthright;
Marketreform
system
exposure;
in
cities and
towns”
and
Residual
other
claimant;
supporting
Accountability;
thirteen
Social function
measures
Health financing structure changing
in China
Percentage
100%
90%
80%
70%
60%
50%
40%
Personal health expenditure
30%
Social Health Expenditure
20%
10%
Government Health
Expenditure
15 |
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
0%
Year
Health financing structure changing in China
Percentage
100%
Budgetary
units
Autonomous
units
Corporatized
units
Privatized
units
Decision
right
90%
80%
Market
exposure
70%
Residual
claimant
60%
50%
Accountability
Personal health
40%
expenditure
30%
Social
Social Health
functions
20%
Expenditure
10%
Government Health
Expenditure
0%
Sprout of HA
16 | (1979-1984)
Year
Comprehensive
development of
HA (1985-1991)
Continuous
development
of HA(19921996)
Accelerated changes of
HA (1997-2008)
MOH
NDRC
(planni
ng)
NDRC
(pricing)
MOF
NCMS
Investment decision
MOCA
MOHRSS
(social
security)
Strategic planning
and development
MOHRSS
Medical
assistance
UEBMI
URBMI
Financial power
(e.g. income, use of funds)
Public Hospitals
Public Hospitals
Org
Dept.
Personnel
management
Public Hospitals
Use of profit or
surplus
Staffing
decisions
17 |
17 health-care reforms
Source: Yip, et al. Early appraisal of China’s huge and complex
Management and
use of assets
Evaluation on performance of HA
 Changes of service delivery and hospital operation
 Services capacity improved significantly (1980-2010)
 Hospital increased by 111%
 Hospital bed increased by 183%
 With increase of outpatient visits and hospital admissions dramatically,
the revenues and expenditures also rapid growing
 Average 3% of surplus (2002-2010)
 6-7.5% government subsidy (2002-2010)
 Expenses escalated reflecting some evidence of expensive health care
(1990-2010)
 Average expense of outpatient visit: 10.9 Yuan to 173.8 Yuan
 Average expense of inpatient admission: 473 Yuan to 6525
Yuan
18 |
Evaluation on performance of HA
 Evaluation on performance with indicators for efficiency, quality and
equality
 Efficiency of health care in controversial (1990-2010)
 Average length of stay decreased from 14.1 to 9.7
 Bed occupancy rate increased from 88.2% to 95.0%
 Revenue per doctor per year from 47,000 Yuan to 881,000
Yuan
 Quality of care moderate improved (Number and mix of qualified medical
staff; Adverse outcome rates)
 Equity deteriorated (Public expenditure per patient by socio-economic
category or insurance status; Mean out of pocket expenditure per
visitor/admission by patient socioeconomic category)
19 |
Progress of public hospital reform-urban
 16 pilot cities carried out in 2010, and Beijing became the in 2012
 Expansion of pilot cities in 2014: extra 17 pilot cities
 The reform priorities and implementation plans was city-specific,
different roadmaps, strategies, and approaches
 Reform of internal and external governance structure
 Services improvement: Clinical pathways, DRGs, appointment
system, shorten waiting time, etc
20 |
Public hospital reform
 Clearly state the roles and functions of public hospitals
 Shift strategy to market competition and private ownership of public
hospitals (Kunming and Luoyang)
 Address dispersion of responsibility and power between various
city departments
– Establishment of a commission chaired by the mayor or deputymayor
 Reorganize the responsibilities and power of government
departments
– Limit power of Department of Health to make health policy or
regulations and create a new agency to manage public hospitals
– Responsibility and power retained by Department of Health, but
responsibilities separated into two divisions, one for policy, regulation, and
monitoring of power and one for management of public hospitals
21 |
Progress of public hospital reform
-rural county
 First wave 311 pilot counties, second wave over 1300 pilot counties
in 2014
 The focus on reimbursement mechanism reform: zero markup for
pharmaceuticals
– Service prices increased/adjusted
– Prices reimbursed by health insurance schemes
– Government subsidies increased, Asset and hi-tech equipment, discipline
development, human resource training, retired staff, public health, etc
– Cost control by hospitals
 Reform of medical insurance payment system: combination of
multiple payment systems
 Establishing hospital management committee
 Reform of personnel system and income distribution system
22 |
The public hospital challenge
 Public view hospital care as expensive and difficult to access
 Lack of clearly defined functions, social responsibilities, and accountabilities
for public hospitals in China
 Hospitals are governed by bureaucratic rules and subject to conflicting policies
by the many ministries that govern them
 Current service delivery system is fragmented and acute, episodic, volumebased, based on supplier-induced demand, and poor continuity of care
 Quality and safety concerns, including unnecessary care
 Low management capacity
 Uncontrolled expansion of size of public hospitals
 End goal for reform describes a completely new model – current incentives are
not aligned to achieve this model
23 |
Private hospital,
an alternative?
24 |
Growth in Hospitals and Primary Health
Care Facilities by Ownerships
83%
58%
52%
66%
24%
24%
28%
16%
1%
32%
14%
2%
Growth in the total number of hospitals/PHC
has come primarily from private hospitals/PHC
25 |
Size of Public/Private Hospitals by Beds, 2012
60%
Most of private hospitals are small (under 100 beds)
26 |
96%
Type of Public/Private Hospitals, 2012
Compared to public hospitals, a greater share of private
hospitals are specialist facilities
27 |
Growth in Beds by Ownership
86%
94%
1% 5%
28 |
6% 8%
By 2012, private hospitals accounted for 14% of beds, 8%
private for-profit (PFP), 6% private not-for-profit (PNFP)
Growth of Out-patient and In-patient Visits in
Public/Private Hospitals
90%
95%
1% 4%
5%
5%
Growth of Hospital Admissions by Hospital Ownership (ten thousand people)
2005-2012
89%
11331
12000
9708
10000
8724
7810
8000
6000
6873
96%
4900
6079
5270
Private
hospitals accounted for 10% of all outpatient visits (5% each for PFP and PNFP); 11% of all
4000
admissions 3%
(5% for PNFP and 6% for PFP)
6%
2000
1%170
30
80
2005
2006
206
129
269
222
294
315
361
358
441
499
549
730
5%
666
0
29 |
2007
Public
2008
2009
Private not-for-profit (PNFP)
2010
2011
Private for-profit (PFP)
2012
Impact on Health Service Delivery System
 Service delivery is dominated by public hospitals, which
have strong incentives to increase service quantity
 Private hospitals have increased rapidly, but vary
significantly in scale, capacity, quality, and reputation
 Policies currently lack clarity on structure and functions
of public and private providers (e.g. role in hospital
services vs. grassroots primary care)
30 |
Policy suggestions
31 |
32 |
yychen@shmu.edu.cn