Deregulation and pricing of medical services: a policy experiment based in China

Zang, Wenbin; Zhou, Muke; Zhao, Shaoyang

doi:10.1186/s12913-021-06525-x

Cited by 6 publications

(6 citation statements)

References 28 publications

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“…We assume that the public hospitals shifted profit sources in this period. On the one hand, the policy of volume-price contracts removed the profit from drug sales, but corresponding compensation through increasing prices for medical services is insufficient ( 31 , 32 ). On the other hand, the policy of volume-price contracts has not been extended to the procurement of consumables in the first reform.…”

Section: Discussionmentioning

confidence: 99%

“…Most respondents repeatedly mentioned that compensation for lost revenue by adjusting medical service prices is insufficient and delayed. A long time, the prices of medical service items in public hospitals were adjusted irregularly by the Chinese government ( 31 , 32 ). However, the dynamic and scientific price adjustment mechanism was not established and put into practice, which resulted in the medical service pricing schedules were not updated in timely in most provinces following the pricing reform guidelines ( 21 ).…”

Section: Discussionmentioning

confidence: 99%

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Intended and unintended impacts of the comprehensive reform of urban public hospitals: A mixed-method study in Hangzhou, China

Zhang

Liu

et al. 2022

Front. Public Health

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ObjectivesPublic hospital reform is a key area in the Chinese healthcare system reform with the aim of controlling excessive growth of medical expenditures. This study aims to evaluate the impacts of two rounds of urban public hospital reforms respectively starting in 2018 and 2019.MethodA mixed-method method was conducted in Hangzhou. In the quantitative phase, monthly data covering 7 provincial, 12 municipal, and 35 district hospitals from March 2017 to June 2020 was analyzed using a panel-interrupted time-series. Thematic content analysis was conducted using qualitative data collected from 32 in-depth interviews.ResultsQuantitative data showed a considerable reduction in the proportion of drug revenue (provincial hospitals: −4.937%; municipal hospitals: −2.765%; district hospitals: −2.189%) and an increase in the proportion of consumable (provincial hospitals: β2 = 2.025; municipal hospitals: β3 = 0.206) and examinations (provincial hospitals: β2 = 1.354, β3=0.159; municipal hospitals: β2 = 1.179) revenue after the first reform. In post-reform 2, The respective instant decrease and increase in the proportion of consumable (provincial hospitals: −2.395%; municipal hospitals: −0.898%) and medical services (provincial hospitals: 2.115%; municipal hospitals: −2.604%) revenue were observed. Additionally, quantitative and qualitative data indicated inpatient expenditures dropped considerably after the reform. However, insufficient compensation for medical services and increased financial pressure on hospitals were repeatedly mentioned as unintended consequences in qualitative interviews.ConclusionsOverall, the urban public hospital reforms in China created positive effects in adjusting hospital revenue structure and constraining soaring medical expenditures. Unintended consequences remind policymakers to establish rational and dynamic compensation mechanisms for public hospitals.

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Section: Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Intended and unintended impacts of the comprehensive reform of urban public hospitals: A mixed-method study in Hangzhou, China

Zhang

Liu

et al. 2022

Front. Public Health

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“…After the proportion of drug fees is also regulated, medical examinations become a staple for hospitals to generate extra revenue, which transfers the burden to the patients who can afford to pay for care [ 26 , 49 ]. A further effect is that this could destroy the medical system’s structure of expenditures [ 50 ]. Consequently, hospitals have a strong incentive to provide excessive medical examinations to gain extra income and lower the proportion of drug fees, leading to increased medical costs.…”

Section: Discussionmentioning

confidence: 99%

Impacts of the medical arms race on medical expenses: a public hospital-based study in Shenzhen, China, during 2009–2013

Liu

Xue

Yao

et al. 2022

Cost Eff Resour Alloc

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Background Has the medical arms race (MAR) increased healthcare expenditures? Existing literature has yet to draw a consistent conclusion. Hence, this study aims to reexamine the relationship between the MAR and medical expenses by the data from public hospitals in Shenzhen, China, during the period of 2009 to 2013. Methods This study’s data were collected through panel datasets spanning 2009 to 2013 from the Shenzhen Statistical Yearbook, Shenzhen Health Statistical Yearbook, and annual reports from the Shenzhen Municipal Health Commission. The Herfindahl–Hirschman index and hierarchical linear modeling were combined for empirical analysis. Results The MAR’s impact on medical examination fees differed during the inpatient and outpatient stages. Further analysis verified that the MAR had the most significant impact on outpatient examination fees. Due to the characteristics of China’s medical system, government regulations in the healthcare market may consequently accelerate the MAR among public hospitals. Strict government regulations on the medical system have also promoted increased medical examination costs to some extent. Once medical service prices are under strict administrative control, only drug and medical examination fees are the primary forms of extra income for hospitals. After the proportion of drug fees is further regulated, medical examinations will then become another staple method to generate extra revenue. These have distorted Chinese public hospitals’ medical fees, which completely differ from those in other countries. Conclusion The government should confirm that they have allocated sufficient financial investments for public hospitals; otherwise, the competition among hospitals will transfer the burden to patients, and especially to those who can afford to pay for care. A core task for public hospitals involves providing safer, less expensive, and more reliable medical services.

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“…Due to the drug markup policy, the price of the medical service is rigorously controlled by the regulatory authorities, and its value has been underestimated in the last several decades ( 10 ). Wang et al ( 11 ) analyzed the medical service pricing strategies in 30 provinces and found some problems in the charging range, standards, and medical insurance reimbursements.…”

Section: Literature Reviewmentioning

confidence: 99%

Medical service pricing and pharmaceutical supply chain coordination contracts under the zero-markup drug policy

Zhou,

Li,

Zhao

et al. 2023

Front. Public Health

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To implement state policies of zero-markup drug policy and medical service fee adjustment for public hospitals, this study constructed game models of the pharmaceutical supply chain, consisting of a drug supplier and a public hospital. The study obtained the optimal medical service level and pricing under the new state drug policies. In addition, it analyzed the impacts of the degree of public benefit of hospitals on the medical service level, the medical service price, and the drug price. Finally, from the perspective of cooperation between drug suppliers and public hospitals, the specialized coordination contract was designed to maximize overall social welfare. This study found an anomalous but meaningful conclusion: in the background of the zero-markup drug policy, a higher public benefit of hospitals could increase the drug prices, but it could reduce the medical service prices further to cut down on the overall treatment fees for the patients. The novel coordination contract can optimize the pharmaceutical supply chain and achieve a win-win situation for the drug suppliers, public hospitals, and patients. When the public benefit of hospitals is higher, the profit of a decentralized decision-making supply chain is greater than a centralized one, while the pharmaceutical supply chain will not coordinate itself.

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Deregulation and pricing of medical services: a policy experiment based in China

Cited by 6 publications

References 28 publications

Intended and unintended impacts of the comprehensive reform of urban public hospitals: A mixed-method study in Hangzhou, China

Intended and unintended impacts of the comprehensive reform of urban public hospitals: A mixed-method study in Hangzhou, China

Impacts of the medical arms race on medical expenses: a public hospital-based study in Shenzhen, China, during 2009–2013

Medical service pricing and pharmaceutical supply chain coordination contracts under the zero-markup drug policy

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