Review of Chinese Public Hospital Reform

Abstract

China has experienced a tortuous public hospital reform process. Since the 1950s, China has repeatedly attempted extensive reforms. Such reforms comprise four stages (Yip et al. 2010). In the first stage, from 1950 to 1980, subsequent to the pre-reform phase, reform focused on fairness of and accessibility to health services. Because of the planned economic model, most hospitals utilized financial compensations to take on numerous social functions. In the late 1960s, the reform focused more on promoting medical and health services in rural areas, ensuring that almost all communes had established hospitals. However, because of a lack of government subsidies, it was difficult to compensate for the shortage of medical resources. Moreover, because of an inadequate supply of medical services, poor-quality medical treatment became a principal contradiction of public hospitals. In the second phase, from 1980 to 1996, reform was aimed at reducing financial burdens, decentralizing management rights, and mobilizing the hospital enthusiasm. Because of the market economy, the reform was aimed at reducing government spending, so the hospitals followed an enterprise reform. In April 1985, the Ministry of Health issued a report on the number of policy issues of health reform; in January 1989, the Ministry of Health and five other ministries issued a report detailing issues related to the expansion of health services. Then, in 1992, another report on the opinions on deepening the health reform was issued to encourage hospitals to operate independently. With the decline in government spending, personal burden for patients became increasingly heavy and medical services were no longer as fair. The “economic man” behavior of hospitals was worsening, service expensiveness was becoming an ever-greater problem, and social unrest with the system was increasing. In the third phase, from 1997 to 2008, health resources were often wasted and there was a clear lack of government responsibility. By combining a planned economy with a market economy, public reforms were enacted, aimed at alleviating the difficulty and expensiveness of nonprofit institutions. In January 1997, under the CPC Central Committee and State Council on Health Reform and Development, reforms were made to clarify the roles and responsibilities of the government and hospitals and build up their operating mechanisms. In February 2000, the State Council, specifically eight government departments, issued guidelines on urban medical and health system reform and has since published more than a dozen supporting documents. In July 2000 and 2001, a reform forum was held in Shanghai. Moreover, three reform work conferences in Qingdao issued a document called “opinions on how urban health institutions should be managed,” which suggested that hospital financing, taxes, and service price management policies should acquire operational autonomy. After this round of reforms, the difficulty and expensiveness problems eased, but the “economic man” behavior of hospitals continued. In the fourth stage, since 2009, there has been a clear government-led healthcare reform aimed at improving public welfare. In 2009, the CPC Central Committee and State Council on Deepening the Views of the Medical and Health System was established and issued a document entitled “the recent focus on medical and health system embodiment (2009–2011)”; on February 23, 2010, the Ministry of Health and five other ministries jointly issued the “guidelines on the reform of public hospitals.” In March 2011, the State Council issued the “2011 reform of public hospital working arrangements,” which clearly designated separations of management and surveillance, administration and operations, treatment and medication, and profitability and nonprofitability as “the focal point[s] of the reform of public hospitals, nonprofit health services persist.”