Saturday, 21 December 2013

China's healthcare system to open up to private sector

The State Council, in a document for promoting the health service industry published on October 14, called for stepping up supply and fuelling demand, and to these ends proposed a series of initiatives. The document defines the health service industry as medical services, health management and promotion, health insurance and related support services, and the pharmaceutical, medical equipment, health supplies, health food, health products and other associated industries. A key emphasis in the document is the promotion of health management and physical fitness. Normally, people in China only take care of health and visit hospital when they are ill, and there is a lack of awareness of health care and rehabilitation before and after sickness.

The building of a comprehensive health service is still at the initial stage, and further development may be hampered by factors such as insufficient service supply, the flawed management system, the inadequate regulatory mechanism and resource waste. However, the two most serious problems facing the health service are the difficult access to and the high costs of treatment. According to the “Development of the Medical and Health Service Survey Report” issued by the National Health and Family Planning Commission, there were 954,000 medical and health institutions in China at the end of 2011, of which 22,000 were hospitals and 918,000 were primary health care institutions with 3.81 beds, 1.82 licensed doctors (assistants) and 1.66 registered nurses per thousand of the population. The data reveal that the numbers of medical and health institutions and medical professionals is failing to meet the growing needs of health care. Data from the International Statistical Yearbook 2011 show that in 2008 only 55% of the Chinese population had access to health care, far lower than the 100% in the developed countries and below even some developing countries such as Myanmar with 81% and Egypt with 94%.

In view of the low level of development, the central government is determined to increase investment in and vigorously develop health care services, with the focus on allowing easier access to treatment, improving health care facilities and equipment, expanding the supply of health services, and narrowing the gap between service conditions in urban and rural areas. A major problem has been the high cost of health care. According to the country’s medical and health plan for 2012, the proportion of private spending in total expenditure on health care will fall to less than 30% by 2015. Compared with 60% in 2000, this represents great progress, but still remains high. The cost of medical care for individuals can be exorbitant, often far more than people budget for. It is a relatively frequent occurrence for patients to be reduced to poverty as a result of paying expensive medical bills.

With the substantial expansion of medical insurance coverage and the fall in drug prices promoted by the new health care reform, the problem of expensive treatement will be eased. However, more financial support from the central government will still be needed. China is the world’s second largest economy. But investment in medical and health care services falls far short of what might be expected of such a major economic power. The proportion of total expenditure on health in GDP last year was 5%; this compares to a figure of above 6% for most low-income countries, 8% in high-income countries, and 9% in two of the BRICS countries, Brazil and India. In regard to government spending, less than 6% of the national budget was invested in health care in 2012 in China, compared to 15% to 20% in the developed countries and 10% in the developing countries. In 2011, 600 billion yuan (US$97.8 billion) from the central budget was earmarked for health services which, or just 2% of GDP, was lower than the 3% target set by the United Nations for developing countries.

Although China’s insurance sector has made significant progress in recent years, there is still considerable room for improvement. According to a National Health and Family Planning Commission survey regarding medical insurance coverage, urban residents on average have 72.6% of outpatient and emergency medical expenses covered; and 94.8% of inpatient medical expenditure is reimbursed. As for residents covered by the new rural cooperative medical system, 33.5% of outpatients receive reimbursement, while 65.6% are obliged to pay medical costs themselves; as for inpatient care, on average 85.3% receive reimbursement.
The State Council has set a target by 2020 of building a health service system with full life coverage which meets the entire population’s basic needs. The scale of the health service industry is planned to reach more than 8 trillion yuan (US$1.3 trillion). According to statistics, the health service industry was worth 2.4 trillion yuan (US$391.2 billion) at the end of 2011. So, over the coming years primary medical services, high-end services, health care for the elderly and other fields of the health service will see rapid growth. The State Council has also set out some specific requirements for medical services, health management and promotion, health insurance, and the supporting industry. The aim is substantially to improve the service capability and system and create a diverse network of facilities for hospital care, rehabilitation and nursing while significantly improving the standard of health care management and services. In addition, the health insurance service will be improved and the scale of support services for the health care sector will be further expanded. In terms of supervision, a more comprehensive set of laws and regulations will be drawn up. And the promotion of health awareness will aim at creating an environment in which the whole society can participate.

To facilitate access to health care, more areas of health care provision should be opened to the private sector. The procedures should be simplified for entry into such sectors as rehabilitation, geriatric and child care, nursing and other specialist medical services, and the restrictions on the number, size, layout and equipment of for-profit hospitals should be eased. The State Council encourages financial institutions to invest in health services and to launch new products and services while expanding the sector’s scale. Eligible health service enterprises will be given support in listing and financing, as well as in issuing bonds. Venture capital and financing institutions will be permitted to expand their business with a view to creating innovative new formats, such as small and micro health service enterprises. Governments at all levels will offer guidance aimed at promoting the establishment of a health service investment fund co-financed by financial and industrial capital. Innovative health service solutions will be eligible for using foreign capital, including direct investment, concessional loans offered by international organizations and foreign governments, and international commercial loans.

The State Council is also proposing increased fiscal and tax policy support for profit and non-profit medical institutions. The government will be responsible for guaranteeing health service products and will gradually increase the scale and type of government purchasing. Through the innovative use of fiscal capital, financial institutions will be guided and encouraged to support the development of the health service. To support private capital investment in non-profit health service institutions, certain high-tech pharmaceutical companies will enjoy preferential tax policies. Non-public medical institutions will be granted the same policies with regard to water, electricity and heating supply as public medical institutions. Building non-profit medical institutions will be exempt from administrative fees, and in the case of for-profit medical institutions, the administrative fees will be halved. The pricing policy of non-profit health institutions will be allowed to respond to the market.

The government plans to increase investment in health care services particularly for low-income groups. Measures will be introduced to improve access to primary medical and rehabilitation services, and improve basic medical, injury and other insurance plans. Enterprises are expected to provide supplementary medical insurance for their employees in accordance with the relevant regulations. The State Council has also called for improving the laws and regulations relating to health care, raising the standard of service, and strengthening the supervision mechanism. In addition, creation of a sound social environment in also urged for promoting health care. Various forms of media is suggested, such as radio, television, newspapers and magazines, as well as the internet and other new media to promote public understanding of health issues. This will involve establishing channels for communicating information on a healthy lifestyle and raising health awareness.

The development of health services, being consistent with deepening medical reform, advances the health of the whole nation. Medical reform focuses on the protection of people’s basic health needs and using government guidance to mobilize society to participate. It also meets people’s diverse health needs, covering basic and non-basic services. It is hard for the market mechanism to play a role in medical treatment because of its unique characteristics. By contrast, health care services have a larger market demand and room for development. Government guidance will supplement the role of market forces in allocating resources. Non-basic health services will be provided by the market, while some basic medical and health care services can also be purchased by the government.
Source: Shangbao

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