Rapid growth of private hospitals in China: emerging challenges and opportunities to health sector management

Abstract

China's private hospital market has experienced rapid growth over the last decade, with private hospitals now outnumbering public hospitals by a factor of two. This policy analysis uses available data and existing literature to analyze China's rapidly changing hospital market, identify key challenges resulting from rapid private hospital growth, and present recommendations to ensure future sustainable private hospital development in the country. Our analysis shows that while private hospitals outnumber public hospitals, outpatient visits and hospitalizations remain higher among public hospitals, while per-patient expenditure remains higher among private hospitals. Key challenges to private hospital development include limited government financial support, high tax burdens, difficulty in workforce recruitment and retainment, poor government regulation and oversight, and dissipating public trust. Recommendations to address these challenges include opening government contract bidding to private hospitals, creating a system that allows private hospitals to enter national health insurance schemes, reducing tax pressure on private hospitals, defining a legal system for market entry and exit of private hospitals, improving a system of supervision, and monitoring and evaluation of private hospital operation and performance.