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How Do Public Hospitals Serve the Public Welfare?

2014-06-17 15:52:37 Caijing
Behind the fate of special medical services, the real focus is on the meaning of “public welfare” instate-run hospital.

  By staff reporter Wang Kai and intern Xie Yingzi

  Healthcare reform in 2014 will give top priority to the reform of public hospitals, strictly controlling the scale of public hospital beds and construction standards to ensure the basic functions of state-runmedical institutions. In this context, "special medical services," which are positioned in the high-end medical market and account for over 10 percent of public hospitals’ total revenue, seem particularly inappropriate.

  According to regulations, the pricing of special medical services should be regulated by the market and set independently by medical institutions. Medical institutions are only required to file prices with health authorities and price control authorities. Moreover, revenue earned from special medical services is tax-free, making it the income-generating project with the most flexibility and freedom for hospitals. In addition, the widespread practice of linking the income of medical staff directly with revenue for medical services has caused public hospitals to become hungry for profits. From the late 1990s until 2008, special medical services developed rapidly in China.

  The shortcomings of public hospitals started becoming the subject of widespread criticism since 2005. On Aug. 3, 2005, then Minister of Health Gao Qiang wrote an article criticizing some medical institutions for sacrificing principles for profit, stating that "the operational mechanism of public medical institutions in China is inclined toward marketization with weakened public welfare."

  A new round of healthcare reform in 2009 announced the goal of "reversing public medical institutions’ behavior of pursuing profits and returning to public service," thereby emphasizing the policy direction of controlling special medical services.

  Some scholars think the high-end medical market special medical services represents should belong in the category of “healthcare managed by social forces,” and public hospitals should withdraw from the market in order to promote the development of non-public medical institutions.

  The notion of cutting special medical services has been met with staunch opposition from public hospitals. “If public hospitals aren’t allowed to offer special medical services and serve the high-end market, and these services are handed over to private medical institutions, there’s no guarantee private hospitals could handle it, for one. Moreover, it wouldn’t befair," said Liu Yucun, president of Peking University First Hospital.

  An official from the Beijing Municipal Planning Commission said that the provision of special medical services by public hospitals is the product of specific historical conditions. "The phasing out of special medical services in public hospitals will be a major trend, but one which will happen gradually."

  Cai Jiangnan, executive director of the CEIBS Center for Health Management and Policy, said a cooperation mode that features public hospitals using their own brand resources, doctor resources, technical resources, and social capital is a more feasible solution in the near term.

  Behind the fate of special medical services, the real focus is on the meaning of “public welfare” instate-run hospitals. Currently, public hospitalsare required to pay for most of their own overhead due to limited financial investment. By simply returning to an emphasis on public welfare without appropriate reform measures, it will be difficult to make real progress.

  “True public hospitals should provide those medical services the market is unwilling to provide, for which a financial compensation mechanism should be in place,” said Cai Jiangnan.

  Full article in Chinese:http://magazine.caijing.com.cn/2014-06-16/114264748.html

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