Asia Healthcare Blog
Exploring the intersection of investment and development, in Asia



China, HK, Macau

February 5, 2010

Is Chinese Hospital Reform lagging because the Chinese don’t know any better?

hospitalreform

On China HB Adam Daniel Mezei was prompted by China’s recent passage of Hospital Reform Guidelines to ask whether “That the PRC’s citizens tolerate the rampant graft in the provision of prescription drugs is due to a lack of awareness of a better model of doing so? Knowledgeable Chinese that have studied abroad or who read articles by climbing the Wall know that there is a better way to receive health care in other parts of the world, do they not? What are your thoughts?”

First off, the summary of the guidelines is this;

  1. The management system of public hospitals should also be reformed so that operation and supervision of the hospitals are conducted separately, it said.
  2. The quality of public hospitals’ medical services should be improved, whereas their incentive mechanism of income distribution should be perfected, the statement said.
  3. Public hospitals should also gradually quit profiting from drugs and rely on medical service charges and government subsidies.
  4. The guideline also encourages non-governmental sectors to invest in and set up non-profit hospitals.

Next, my response to Adam;

The Chinese are fully aware that there are better ways to do things. For that matter, so are Americans. Unfortunately for both, actually bringing about change is difficult. The reason that graft in the provision of prescription medications is tolerated has to do with compensation mechanisms for doctors. The PRC statement did a marvelous job of understating this huge issue, only saying that compensation mechanisms for doctors had to be “perfected”.

Doctors in China are underpaid relative to the amount of time they put into school and work. Their status in society is, therefore, artificially low since status in China is largely conferred by the amount of money one earns. They know this to be true. The government knows it to be true. So, on the surface it might seem like doctors are at the mercy of the government, and one might be prompted to ask “so why doesn’t the government just clamp down?”

It’s hard to clamp down because the number of doctors in China is very small. So, politically, the doctors have a lot of leverage to do what they want to since a strike or something to that effect would cripple an already hobbling healthcare system.

The political compromise is that doctors are de facto allowed to take in funds through grey channels. The government makes a big show out of condemning the practice, but can’t actually take any actions to stop it until they 1) Up salaries, or 2) give doctors full freedom to go private.

The Chinese do have to be given a lot of credit for actively working to change their health system. What has to be understood is that they have made unprecedented strides in health system improvement since the early 1980s when the term “healthcare professional” was most widely associated with barefoot doctors or TCM practitioners. They are on their way, and unhindered by the state-level political considerations that are so prevalent in other nations. The political compromises they have to make with interest groups like doctors are much easier to deal with.



About the Author

Damjan Denoble
Damjan is in his second year at the University of Michigan Law School, where he is working with clients involved in the micro-finance and telecom industries. Before coming to Ann Arbor, he spent several years living and working in China. Last summer he clerked at the Seattle offices of Harris & Moure, a boutique international law firm best known for its widely respected China Law Blog. He received his BA in Public Policy, with a concentration in health policy, from Duke University. He and James Flanagan founded Asia Healthcare Blog, in 2009.




5 Comments


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  2. –"Doctors in China are underpaid relative to the amount of time they put into school and work. "

    Actually compared to American doctors, they are much more fortunate…from high school graduation to the time they actually start working, doctors in China only spend a total of 5 years in school.

    The prestige they get in China is nothing compared to the U.S. They are definitely underpaid and under-appreciated to an extent, but still some of the stories I hear about or encounter make me wonder if they have ever taken the Hippocratic oath at all.

    Like for example, a friend's mom had some heart problem and was taken to the hospital. The doctor who received her is actually a friend of the family. Yet this doctor still gave her ultra expensive drugs that didn't even match the symptoms. The friend's mom had a heart attack induced because of the medication given to her. I guess you wouldn't surprised when I tell you, my friend was PISSED.


  3. You won't find an argument from me regarding the superior schooling of American doctors compared to MDs from elsewhere in the world. Consider 4 years of pre-med, 4 summers of research as undergraduates, 4 years of med school (again, limited free time in the summer), 3-8 years of residency, another few years of fellowship…it's no contest.

    Bottom line though, when someone who studies for four years and gets a finance degree, or even a degree in English, it's not fair that they make as much as those who study much more in medical school. This is true anywhere in the world. Medical school everywhere, frankly, is much tougher than any other school or PhD program one goes through. (The only people who'll disagree with me have never been around a medical school curriculum).

    But, it's hard for me to say that Chinese doctors are much more fortunate. At the same time, I don't want to paint with too broad a brush, and say that all Chinese doctors as victims. They're not, and they are. The truth , as always, is complicated. The easiest thing to say is that there are bad ones and there are good ones. But, the system is negatively incentivized to make it easier for good doctors to become bad or for bad ones to thrive. Stories like your friends are unfortunate and all too common when doctor's think with their purse. Giving patients the ability to sue doctors in China would be a good way to curb some of the abuses; and America can provide the example of where to draw the line with medical malpractice, seeing as how, here, the system is too much incentivized towards suing doctors without cause.


  4. Naturally, it behooves us as analysts in these matters to parse out the whole Chinese medical profession so thinly. What can be fixed, what can't, what to leave alone. How to go about it, and best practices sort of thing…

    Still, I feel that the main determinant of the success or failure of a given system is how the recipients of the care doled out at China's hospitals feel — not a chat about the structural weaknesses of the Chinese medical profession.

    I suspect that the PRC's ailing citizens — already used to paying through their eye-teeth for the most elementary of medical care(s) — would have few qualms about continuing to do so if they/their relatives, etc. **are actually cured** each time they visit a hospital.

    Rather than walk away from the white stuccoed building after having been jammed with a glucose solution or a placebo and promised the moon and the stars in terms of a successful health outcome, they seem to get even sicker, so what's the point of looking at things academically? That's all I'm saying…

    Graft is tolerable as long as it doesn't affect the ultimate level of care.

    To wit, most post-Communist countries (Hungary, Serbia, Romania, Poland, and the Czech Republic) are notorious for the rampant corruption of their medical networks and of their skilled, but greedy surgeons, and once you in fact do pony up the dosh (or gifts in kind) you do receive the required care and are usually fully healed. I don't feel we're talking about the same issue in China…in China, you can't even get to "first base," as it were. Maybe you can't even get out of the dugout. Horrors!

    Just so that I'm not lambasted for this in advance by commenters:

    ** in China it's indeed a matter of scale, so I can see how drawing comparisons using a 10 million citizen statelet doesn't even come close to the complexities of running a health network in one of China's bustling city-states. I recognize this fully.
    ** the Chinese medical system is an ecosystem unto itself — albeit a putrifying one — and as such, would, say, the generic (copycat, patent infringing) drug manufacturers in China suddenly refuse to pay doctor kickbacks, perhaps doctors in the PRC might think twice about shafting their hapless patients? Things could very well take a sudden turn for the better at that stage.
    ** Chinese citizens are universally poorly informed about the medical practice, especially in rural areas, so as for that grassroots roiling change from below, it's highly unlikely to occur given the present lack of awareness of the citizenry.

    People are getting sicker in China. And not only because of the environmental degradation.

    Beware the men with the white lab coats…


  5. [...] via China’s health reform, over prescribing should become much less of a problem…though under the table payments are another problem. 5 I like This « Medical tourism and its related issues are complicated , but scholarship [...]



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