Public hospitals have become accountable for their balance sheets since the government neglected its fiscal responsibilities since the 1980s. In your opinion, the increase in medical spending and financial burden on patients was partly a result of their increasing reliance on profits from the excessive prescription of expensive medicines and advanced technologies. During the early 2000s, pharmaceutical sales revenue accounted for more than 40% of the total revenue of public hospitals. Public hospitals more than tripled their revenue between 2002 and 2008 along with expanding coverage of social health insurance. It has impacted drastically on the nursing hospital beds heibei china supplier.

Chinese government listed public hospitals as one of five key areas in its health system reforms in order to reorient management and services toward public interests and improve efficiency and quality. From 2009 to 2013, more than $1 billion has been allocated for public hospital financing reform, pharmaceutical prices are adjusted, payment methods are reformed, referral systems are reestablished, and the role of private hospitals is increased. In addition to modifying hospital service provision, the government believed that reforming public hospital financing would also help guide the distribution of medical resources.

The Chinese government gradually reduced the mark-up on drugs in public hospitals (except for herbs referred to as traditional Chinese medicines) until its removal became complete in 2018. In addition, 30% of hospital revenue will be attributed to pharmaceuticals. In some provinces, the increased prices for medical services would cover up to 90% of the losses from eliminating the mark-up; in others, government subsidies would cover 10-50%, and the remainder would be covered by hospitals through more efficient management (see the web appendix).

In hospitals with well-defined admission criteria and treatment procedures, disease-based payment was implemented in about two-thirds of cases. Under disease-based payments, hospitals were reimbursed a fixed amount for treating certain diseases, and they were also rewarded if large numbers of patients were registered in accordance with standard clinical pathways. A few local governments have also piloted the use of diagnosis-related groups (DRGs), which describe diagnoses by their clinical procedures, costs, complexities, and individual patient factors. There was also an integrated delivery system pilot, dubbed a "medical alliance", that paid hospitals and primary care facilities a fixed amount each year as part of social health insurance. In collaboration with primary care facilities, hospitals are rewarded for reducing costs, investing in prevention, and maintaining the health status of the population.

Reforms relating to financing were implemented alongside broader reforms. In the area of pharmaceutical manufacture and distribution, human health insurance, and hospital organization, the government emphasized the importance of systemic and coordinated reforms. It was one of the outcomes that the National Healthcare Security Administration (NHSA) was established in 2018. The NHSA was formed not only to handle administrative responsibilities for all social insurance schemes, but also to merge previously independent purchasing power, including setting prices, procuring goods, and paying providers. From 2015 onwards, the reform also incorporated a systemic approach that incorporated multiple tiers of services, including hospitals and primary care facilities, as the government recognized the need to reduce over-reliance on hospitals for medical needs.

As part of the Chinese public hospital reforms, the long-standing drug markup policy was removed. Although budget allocations to the government are still based on capital projects and local fiscal capacity, fee schedules have not been appropriately adjusted, and progress on reforming payment methods has been patchy. China's health system is dominated by hospitals that provide services of varying quality and at increasing costs to patients. At the next stage of reform, we recommend that leadership in financing reform is consolidated, technical barriers to strategic purchasing are removed, value-based purchasing is implemented, the budget allocation mechanism is adjusted, and hospital management is given greater autonomy.

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