Effects of Chinese medical pricing reform on the structure of hospital revenue and healthcare expenditure in county hospital: an interrupted time series analysis

Mengling Liu,Mingyuan Jia,Dong Wang,Qian Lin,Jiawei Zhu

doi:10.1186/s12913-021-06388-2

Abstract

BackgroundChina has initiated a medical pricing reform to combat the overuse of drugs and relieve the financial burden of patients. This paper aims to analyze the effect of medical pricing reform on revenue structure and healthcare expenditure of county public hospitals in Guangdong province.MethodsBased on the monthly data from January 2013 to August 2019, we use interrupted time series design to evaluate the effects of medical pricing reform on healthcare expenditure in both outpatients and inpatients. A counterfactual is also established to examine the net effect of the policy.ResultsThe proportion of drug revenue decreased from 35 % to 2015 to 29.7 % in 2019, and the revenue from medical services and inspection increased 3.2 and 3 % respectively. Meanwhile, the increasing trend of total expenditure and its main components is slowed down, especially the drug expense and medical consumable expense for inpatients after the Zero Mark-up Drug policy (coefficient = -18.76, p < 0.01; coefficient = -13.41, p < 0.01, respectively). However, the growth of inspection expense for outpatients continues to increase, while the healthcare expenditure for inpatients experiences an instant increase after the Zero Mark-up Medical Consumables policy. In terms of the net effect, most of healthcare expenditure in both outpatient and inpatient experienced a negative net growth from 2015 to 2019.ConclusionsThe medical pricing reform is a valuable attempt in controlling the unreasonable increase of medical expenses. In the meantime, the unexpected increase in inspection expenditure and insufficient compensation from medical service adjustment should draw the attention of the policymakers.

Highlights

China has initiated a medical pricing reform to combat the overuse of drugs and relieve the financial burden of patients
Over the past decade, China has initiated the medical pricing reforms, including the Zero Markup for Drug policy (ZMD) in 2009 and Zero Markup for Consumables (ZMC) in 2017, which is the central component of the newest round of health system reform [1]
We investigated how the ZMD policy and ZMC policy changed the structure of hospital revenue and healthcare expenditure, aiming to detect the positive influences and unintended consequences of the medical pricing reform

Summary

Introduction

China has initiated a medical pricing reform to combat the overuse of drugs and relieve the financial burden of patients. This paper aims to analyze the effect of medical pricing reform on revenue structure and healthcare expenditure of county public hospitals in Guangdong province. The purpose of medical pricing reform is to cut off the economic linkage between hospitals revenue and drug and consumable sales, in order to change the behavioral incentives of medical providers and reduce the healthcare expenditure for patients. Motivated by the revenue-related incentive system and drug markup policy, Chinese physicians prescribed more high-priced drugs and overused unnecessary medicines to increase hospitals’ revenue as well as to maximize their own income [9].In other words, there was a financial incentive that encouraged physicians to induce the demand of patients in drugs and medical service and overprescribe medicines according to profit margin rather than cost-effectiveness and clinical efficacy [10]

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