Is it worth outsourcing essential public health services in China?-Evidence from Beilin District of Xi'an.

Abstract

Essential public health services (EPHS) is general welfare public health interventions led by the Chinese government and provided by the primary medical institutions to all residents. In Beilin District, Xi'an, EPHS producers can be divided into outsourced institutions and public institutions. Can outsourcing EPHS reduce costs and improve efficiency and quality? There is still no definite answer to this question. This paper compares the performance of outsourced institutions and public institutions in terms of efficiency and quality, explains the reasons for this phenomenon. This paper uses a theoretical and two-stage DEA model Based on a "triple subject" research framework. The results show that the difference between public institutions and outsourced institutions is mainly reflected in service quality. When the quality is not measured, outsourced institutions' production efficiency is higher than that of public institutions. When there are quality measurements, the production efficiency of outsourced institutions is lower than that of public institutions. Outsourced institutions perform worse than public institutions. The reason is that a bilateral monopolistic market structure has formed between local governments and outsourced institutions. This situation makes it difficult for the government to replace poor quality outsourced institutions under the constraints of a limited budget.