Photo: Photoshot

By Wen Xin (温鈊), Intern Xiao Wei (肖薇)
Issue 621, May 27, 2013
News, page 4
Translated by Yu Menglu
Original article: [Chinese]

At a work conference earlier this year, the Ministry of Health (now part of the National Health and Family Planning Commission) decided to carry out further healthcare reforms aimed at allocating resources more efficiently and improving the patient experience.

Li Cheng (a pseudonym), director of a county hospital in West China, has been trying to figure out how to adapt to these and other recent medical reforms. “The healthcare reform emphasizes the welfare of public hospitals,” Li said. “But on the other hand, it neglects the economic factors behind their operations. So many problems remain unsolved and the tension between patients and doctors is still serious.”

Many hospitals are in the same boat. Traditionally, doctors have derived much of their income from markups on the medicine they sell. Critics say that this has led to a perverse incentive for doctors to prescribe unneeded drugs in order to make more money. One reform that’s gained traction in recent years is to end these markups.

However, Li says that removing these markups has reduced doctors’ incomes and made their overall performance worse. Last year, he noticed that there was no obvious increase in the number of patients, but the doctors seemed more tired and their attitudes were bad. This led to more complaints from patients.

After speaking with the doctors, Li’s suspicions were confirmed. Doctors had lost a major source of income with nothing to replace it, so they had no incentive to work hard.

“It takes medical students eight years to graduate and four or five years to become a chief physician,” Li said. “The job has heavy pressure and high risks. In foreign countries they can earn 30,000 yuan per month but in China they earn less than 6,000 yuan.”

Li says that last year, his hospital received 2 million yuan in government subsidies that came with new reforms; but the income they lost from marked-up medicine was about 20 million yuan. The gap was closed with 200 yuan service fees on patients and a reduction in pensions to retired employees.

He says that although drug markups are widely criticized, it’s reasonable for them to exist. The government should protect the interests of pharmaceutical factories and hospitals when it makes reforms and balance patients’ needs with market realities.

In order to motivate doctors under the new constraints he was facing, Li Cheng came up with his own incentives based on performance evaluations and how many patients the doctors see in a day. At the same time, the number of beds in the hospital was increased, more patients were accepted and the average length of stay was reduced. Under this new system, the doctors have had to work longer hours and often feel overworked, but their average earnings have increased to around 10,000 yuan per month.

Li doesn’t think this can work in all small hospitals though, as many simply don’t have the capacity to add beds and treat more patients. Healthcare reform has aimed to re-allocate resources and refer patients to certain hospitals or clinics based on their ailment in an effort to prevent over-crowding at top-quality hospitals in major cities. But many smaller hospitals remain unable to provide the same standard of care due to a lack of talent and resources.

Since new healthcare reforms were carried out in 2009, grassroots medical care has improved, but uneven benefits distribution and conflicts between patients and hospitals still exist. And hospital directors often struggle to make up for the income reforms have taken away.

“Quite simply, it’s the contradiction between supply and demand,” Li said. “The demands of the public have been increasing, and the hospitals can’t meet them. This is the basic contradiction.”

Deputy Secretary of the Chinese Hospital Association Zhuang Yiqiang (庄一强) said that we should focus on solving this contradiction. “What is needed next is an overall reform plan,” he said.