Is the pro-competition policy an effective solution for China’s public hospital reform?

Abstract

The new round of health care reforms in China achieved significant initial results. New and emerging problems coinciding with the deepening of the reforms, however, require further institutional changes to strengthen the competition mechanism and promote public hospital efficiency. This paper provides a conceptual framework and preliminary assessment of public hospital competition in China. Specifically, we distinguish between two closely related concepts - competition and privatization, and identify several critical conditions under which hospital competition can be used as a policy instrument to improve health care delivery in China. We also investigate the current performance and identify several unintended consequences of public hospital competition - mainly, medical arms race, drug over-prescription and the erosion of a trusting relationship between patients and physicians. Finally, we discuss the policy options for enhancing the internal competition in China's hospital market, and conclude that public investment on information provision is key to reaping the positive outcomes of pro-competition policies.

What do patients care most about in China’s public hospitals? Interviews with patients in Jiangsu Province

“…These phenomena might be probably caused by the fact that China has no strict referral system, and patients can go directly to public hospitals for all outpatient care [ 4 ], including simple health problems [ 3 ]. In China public hospitals serve the largest number of patients [ 7 ], which in consequence leads to long waiting time for various health care services in public hospitals. Such long-time wait also lay heavy caseloads on doctors, which causes minimal individual consulting time.…”

“…In 2009, the Chinese Government launched a nationwide health-care reform, and identified the public hospital reform as one core target [ 6 ]. The desired results of China’s health-care reform cannot be fully achieved unless the efficiency in public hospitals has been improved and the growth of health expenditure has been under control [ 3 , 7 ].…”

Does Hospital Competition Harm Inpatient Quality? Empirical Evidence from Shanxi, China

“…Therefore, in-hospital mortality for those hospitals in a competitive market is more likely higher than other hospitals. Second, in China, patients have no official platform to get comprehensive, unbiased and detailed information of hospital operations and outcomes, even for public hospitals, especially regarding quality and safety of a specific hospital [ 5 ]. In the absence of reliable information about hospital service delivery, patients are attracted by technology and facilities (e.g., beds and medical equipment).…”

“…Hospitals in lower levels have strong incentives to be promoted to higher levels, and hospitals in high levels tend to maintain their existing accreditation status. As a result, hospitals have incentives to expand bed size, introduce high-technology therapies and purchase new medical equipment, which is known as the “medical arms race” [ 5 ].…”

“…While public hospitals still dominate China’s healthcare market in terms of health care delivery and medical resources, the competition between public and private hospitals is expected to become more intense due to the recent policy of encouraging private capital to improve the healthcare system [ 7 , 8 ]. The internal competition occurs among individual hospitals, where they compete on service quantity, quality of care and cost per patient, regardless of the ownership and hospital accreditation level [ 5 ]. While the accreditation system is designed to guide patient referrals, the referral system that has been established in China is not effective.…”