How do tensions between medical professionalism and financial incentives play out under case-based payment reform in China

To address rapidly increasing healthcare expenditures of social health insurance, the Chinese government has recently introduced a provider payment reform. While some studies have examined the payment reform effects, findings are mixed, and the deeper mechanisms of how these changes influence physicians’ behaviours remain unclear. Drawing on semi-structured interviews conducted in 2024 with 21 hospital-based physicians from two hospitals with different incentive structures, we examine how they have responded to the new system reform in China and the underlying factors driving these responses. We use thematic analysis on the verbatim transcriptions of digital recordings of face-to-face interviews. We find that physicians simultaneously serve as agents for health insurance authority, hospitals and patients, with their service delivery decisions shaped by awareness of the principles that underpin these priorities. We describe five tensions that physicians perceive as conflicts within their agency relationships: optimal care and cost control pressure; institutional policy and professional autonomy; immediate gains and future sustainability; professional development and financial returns; and information asymmetry and relationship risk. The tensions physicians experience, and their preferred response tendencies are notably shaped by hospital incentive mechanisms. We conclude that designing incentives that align principal and agent objectives and incorporating organizational mediation are needed to improve healthcare efficiency under the new payment reform.