Inappropriate incentives as part of China's fee-for-service payment system have resulted in rapid cost increase, inefficiencies, poor quality, unaffordable health care, and an erosion of medical ethics. Recent experiments to change this system using a variety of methods have yielded some positive early results, in general improving basic primary health care and reducing costs, in both urban and rural centres. In a Review in this week's China Special Issue of the Lancet, Dr Winnie Chi-Man Yip, Department of Public Health, University of Oxford, UK, and colleagues, say they are cautiously optimistic about these findings.
After nearly two decades, the changes introduced in the mid-1980s in China have been recognised as creating an incentive system for hospitals and physicians that is not appropriate. These incentives had powerful effects on the behaviour of providers and their treatment decisions. China's fee-for-service payment and a price schedule that overpaid for drugs and high-technology diagnostics tests and underpaid for basic primary health care had led providers to overprescribe drugs and diagnostic tests, resulting in a rapid increase in health expenditure and inappropriate treatment. These changes reduced access to health care and imposed a heavy financial burden on the people. In response, the Chinese Government committed to a new reform, promising an additional 850 billion Renminbi (US$123 billion) during the next 3 years to provide universal and affordable basic health care for its 1•3 billion population.
Experiments to improve the system almost all have two things in common—incentives to reduce overprescription of drugs and expensive and unnecessary diagnostic tests, by moving from a fees for service to an aggregated payment system; and second, incentives for primary-care providers to cover as many citizens as possible with vaccinations, health education, maternal and child care, home visits, infectious disease control, and prevention and management of emerging chronic conditions.
In community health centres in Shanghai, Tianjin, Hangzhou, and Chengdu cities, the Minsitry of Health in 2005 began a pilot scheme to disconnect the revenue of primary health facilities from their service revenue. In Shanghai, community centres are paid by a global budget and pay for performance. In village clinics in rural China, a social experiment, called Rural Mutual Health Care (RMHC), began in three towns in the provinces of Guizhou and Shaanxi. It changed payment for village clinics from fee for service to salary plus a bonus tied to performances. This is aimed to improve villagers' access to cost-effective basic health care and improve their health status. Both sets of experiments suggested quality of and access to care could be improved while reducing costs. For reform in payment for hospitals, the authors point to an innovative experiment at Jining Medical College Hospital, initiated in 2004. To set payment levels, a group of medical experts standardised the treatment protocols for diseases by specifying the minimum requirements for length of stay, drug use, service use, and surgical procedures for the disease. With this protocol, a maximum price was set based on estimated treatment costs for each disease. The expenditures for the 128 diseases included in the experiment reduced by 33% between 2004 and 2006, with the largest savings for expensive treatments such as heart surgery.
The authors say: "In China, innovative methods have been used to control the widespread overprescription of drugs and diagnostic tests caused by the present payment system, and to confront the rising disease burden of chronic conditions like hypertension and diabetes mellitus. Although the many provider payment experiments that are in progress in China are encouraging, definitive conclusions cannot be drawn about how well these experiments have improved the quality and efficiency of health care because many are still in the early stages of implementation, and some were not designed to allow rigorous scientific assessment."
They conclude: "we are cautiously optimistic about these innovations. China needs to have rigorous and objective, evidence-based assessment, with focused attention of the effects on quality and health outcome before conclusions can be drawn about which models are best... Rational financial incentives can profoundly affect a physician's medical practice. However, to have lasting social benefits, any reform has to include the constellation of factors that affect physician behaviour. In particular, the re-establishment of professional ethics and norms in China, and the disconnection of profit motives for hospitals from incentives given to their employed physicians have to be considered."
Dr Winnie Chi-Man Yip, Department of Public Health, University of Oxford, UK. T) +44 (0) 1865-289429 E) winnie.yip@dphpc.ox.ac.uk
For full Review: http://press.thelancet.com/chinaproviders.pdf
Journal
The Lancet