Sara Hsu
Sara Hsu

Already underfunded and facing a fast aging population, healthcare in China is under pressure. Financial analyst Sara Hsu sees some encouraging tests in keeping costs down, but many more reforms are needed to pass the test, she writes in the Diplomat.

Sara Hsu:

The question of increasing competition and jobs in the healthcare sector is hardly a priority under China’s current reforms, and reasonably so, even though this would aid the transition to a highly skilled service-based economy. The main question now is whether health care costs can be kept low for the consumer, but high enough to keep service provision sustainable for health care providers. Current reforms have laid bare this dilemma.

Urban public hospital reform is at the top of the list. This is currently being piloted in 100 cities and will soon expand to 200 cities. This aims to reform the business model and particularly the cost/revenue system. The main focus is to ban drug price increases, reduce the cost of medical examinations and increase the price of medical services such as surgery. This presents a challenge to hospitals in raising sufficient revenue to cover costs, especially as the government subsidy to hospitals continues to weigh in at only 8 percent of revenue. Some hospital employees appear to be skeptical.

At the same time, however, patients benefit from the reform. A study by Jinqiu Yang, Yongmiao Hong and Shuangge Ma (2016) finds that revenue and cost reform that began in 2009 in two Xiamen tertiary hospitals lowered patient costs for both insured and uninsured patients. Other researchers have confirmed the cost reductions centered on decreases in the cost of drugs.

More at the Diplomat.

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