Abstract
Objectives: To test the hypothesis that higher salary levels of the medical staff are associated with lower medical service utilization and expenditure.Methods: Using longitudinal data from 31 Chinese provinces for the period 2007-2016, we constructed fixed effects models to analyze the association between the salary of medical staff and medical service utilization, medical expenditure, medication expenditure, and medication proportion.Results: A 10,000 CNY increase in medical staff's salaries was associated with a 0.89% decrease in the average number of annual inpatient admissions per person; 1.88 and 1.59% decreases in average expenditures per outpatient visit and inpatient admission, respectively; 3.05 and 2.66% decreases in drug expenditures per outpatient visit and inpatient admission, respectively; 0.58 percent point and 0.39 percent point decreases in the share of drug expenditure in outpatient and inpatient, respectively. When medical staff's salaries increased by 450,000 CNY, the turning point was reached when the maximum medical expenditure savings offset the medical staff salary increases, yielding a 634 billion CNY surplus from medical expenditure.Conclusions: Our results supported the hypothesis that higher salary levels of the medical staff are associated with lower medical service utilization and expenditure. Further studies are requested to test whether higher medical staff's salaries will attenuate over-treatment and that savings from reduced prescriptions and service charges will offset the increased salaries of medical staff.
Highlights
Containing health care costs is a critical challenge for China’s health system
Between 2010 and 2015, per capita health care expenditure grew by 14.7 percent annually outpacing the 11.2 percent growth rate of per capita gross domestic product (GDP) [1]
All models adjusted for province and yearly fixed effects
Summary
Containing health care costs is a critical challenge for China’s health system. Between 2010 and 2015, per capita health care expenditure grew by 14.7 percent annually outpacing the 11.2 percent growth rate of per capita gross domestic product (GDP) [1]. Over-treatment, over-use of medications with no positive health outcomes, has been identified as the major component of China’s health expenditure [2]. Previous studies have revealed that half of all Chinese health care expenditure is accounted for medication payments [3], with this percentage as high as 70-80% in some areas [4, 5]. One of the major reasons for over-treatment is the compensation system, which allows the hospital to acquire benefits from drug by around 15% mark-ups on sale prices [6]. The compensation setting creates financial incentives for physicians to over-prescribe and greatly aggravates the financial burden on both the government and patients
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