Health policy: China moves towards universal coverage and reimbursement reform

It appears that what doesn't work in US health care also doesn't work in China, at least when it comes to paying providers. China's health care system has long used fee-for-service, the ultimate capitalist incentive system, to pay its physicians. Fee-for-service pays providers based on the amount of services they provide (screenings, procedures, etc..). Do more, earn more. This would be a good idea if more services meant better health outcomes, but in actuality it results in no better outcomes, at drastically higher cost. China's experience bears this out: Their fee-for-service experience has led to skyrocketing cost, and inefficient, low quality health care that is unaffordable to patients. It has also led to a general decline in medical ethics as providers heap unnecessary care on their clients in an effort to increase their own income. Accompanying these efforts is a $123 billion effort to bring universal coverage to its population of 1.3 billion over the next 3 years.

Since Chinese physicians earn a premium for prescribing medications, their patients are, in general, over prescribed drugs, in addition to receiving unnecessary screenings and treatments. The Chinese are banking on a shift to pay-for-performance (P4P) and global budgets—essentially a salary-- to reduce costs and improve quality. P4P measures include incentivizing primary care providers to increase vaccination, education, maternal and child care, home visits, and the control of infectious disease. Village clinics that put docs on salary also add incentives for improving community health status, and providing basic preventive care. This of course suggests that some measures of community health status must be in place, which is also a good thing.

Hospitals are being encouraged to curb over-utilization by following treatment protocols spelling out recommendations such as minimum length of stay, and the types of drugs, surgeries and services that are best able to diagnose and treat specific conditions. One hospital that implemented such measures managed to reduce expenditures on the treatment of 128 different diseases by 33% over two years. Perhaps coincidently, it has been estimated that about 30% of elective procedures in the US, such as non-emergency angiography, are also unnecessary.

The Chinese health policy reforms will require rigorous and evidenced-based analysis to determine whether it succeeds in achieving the ultimate goal of any health system: To improve the health status of the population in an equitable and sustainable manner. Even nations whose health systems are the envy of the world, such as Sweden, are struggling to meet those goals. In the meantime, the possibility that payment reforms can lead to improvement in health care quality and population health should be an encouraging prognosis for everyone.