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Impact of China's Public Hospital Reform on Healthcare Expenditures and Utilization: A Case Study in ZJ Province

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  • Hao Zhang
  • Huimei Hu
  • Christina Wu
  • Hai Yu
  • Hengjin Dong

Abstract

Background: High drug costs due to supplier-induced demand (SID) obstruct healthcare accessibility in China. Drug prescriptions can generate markup-related profits, and the low prices of other medical services can lead to labor-force underestimations; therefore, physicians are keen to prescribe drugs rather than services. Thus, in China, a public hospital reform has been instituted to cancel markups and increase service prices. Methods: A retrospective pre/post-reform study was conducted in ZJ province to assess the impact of the reform on healthcare expenditures and utilization, ultimately to inform policy development and decision-making. The main indicators are healthcare expenditures and utilization. Results: Post-reform, drug expenditures per visit decreased by 8.2% and 15.36% in outpatient and inpatient care, respectively; service expenditures per visit increased by 23.03% and 27.69% in outpatient and inpatient care, respectively. Drug utilization per visit increased by 5.58% in outpatient care and underwent no significant change in inpatient care. Both were lower than the theoretical drug-utilization level, which may move along the demand curve because of patient-initiated demand (PID); this indicates that SID-promoted drug utilization may decrease. Finally, service utilization per visit increased by 6% in outpatient care and by 13.10% in inpatient care; both were higher than the theoretical level moving along the demand curve, and this indicates that SID-promoted service utilization may increase. Conclusion: The reform reduces drug-prescription profits by eliminating drug markups; additionally, it compensates for service costs by increasing service prices. Post-reform, the SID of drug prescriptions decreased, which may reduce drug-resource waste. The SID of services increased, with potentially positive and negative effects: accessibility to services may be promoted when physicians provide more services, but the risk of resource waste may also increase. This warrants further research. It is recommended that comprehensive measures that control SID and promote physician enthusiasm be carried out concurrently.

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  • Hao Zhang & Huimei Hu & Christina Wu & Hai Yu & Hengjin Dong, 2015. "Impact of China's Public Hospital Reform on Healthcare Expenditures and Utilization: A Case Study in ZJ Province," PLOS ONE, Public Library of Science, vol. 10(11), pages 1-19, November.
    • Handle: RePEc:plo:pone00:0143130
    DOI: 10.1371/journal.pone.0143130
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    1. Xuan Sun & Tao Sun & Yushan Jin & Ya Ping Wang, 2019. "Spatial Organization of Hierarchical Medical Services within the City Proper of Tianjin, China: Towards Efficient Medical Alliances," Sustainability, MDPI, vol. 11(1), pages 1-15, January.
    2. Dongxu Li & Min Su & Xi Guo & Weile Zhang & Tianjiao Zhang, 2022. "The Effect of Medical Choice on Health Costs of Middle-Aged and Elderly Patients with Chronic Disease: Based on Principal-Agent Theory," IJERPH, MDPI, vol. 19(13), pages 1-14, June.
    3. Guangwen Gong & Yingchun Chen & Hongxia Gao & Dai Su & Jingjing Chang, 2019. "Has the Efficiency of China’s Healthcare System Improved after Healthcare Reform? A Network Data Envelopment Analysis and Tobit Regression Approach," IJERPH, MDPI, vol. 16(23), pages 1-12, December.
    4. Gao, Qiuming & Wang, Derek, 2021. "Hospital efficiency and equity in health care delivery: A study based in China," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).

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