Pri­vate hos­pi­tals need help

Pro­vid­ing 10 per­cent of na­tion’s beds, treat­ing 43 per­cent of agencies

China Daily (Canada) - - CHINA - By LI YANG in Shang­hai liyangi@chi­

Al­though the Chi­nese govern­ment vows to make pri­vate hos­pi­tals com­pe­tent med­i­cal providers, they re­main weak com­pared with the pub­lic ones.

In Shang­hai, there were 170 pub­lic and 147 pri­vate hos­pi­tals by the end of 2012. Clin­ics in vil­lages, towns and coun­ties are mostly state op­er­ated. Only in the field of small specialist out­pa­tient clin­ics, do pri­vate clin­ics out­num­ber their pub­lic coun­ter­parts — 1,458 to 391, ac­cord­ing to the Shang­hai mu­nic­i­pal govern­ment.

Pri­vate hos­pi­tals and clin­ics only ac­count for 10 per­cent of the na­tional to­tal of sickbeds, al­though they treat 43 per­cent of the na­tional med­i­cal agencies. But there is still a long way to go for pri­vate hos­pi­tals to be­come com­pe­tent com­peti­tors with the pub­lic ones and win people’s recog­ni­tion.

Di­ag­no­sis and treat­ment costs are much cheaper at the crowded pub­lic hos­pi­tals than pri­vate hos­pi­tals, while medicines are more ex­pen­sive. The doc­tors and nurses are markedly un­der­paid, be­cause of govern­ment con­trol. They have no choice but to pre­scribe cer­tain medicines for kick­backs, and tak­ing small amounts of gift money from pa­tients.

China’s re­form of its med­i­cal sys­tem needs to not only fix the dis­torted medicine sales sys­tem, which fat­tens mid­dle­men, but also to pro­mote the healthy growth of pri­vate hos­pi­tals to com­pete with the pub­lic hos­pi­tals.

But there are ob­sta­cles to over­come to help pri­vate hos­pi­tals.

The planned econ­omy in­stilled an en­trenched con­cept in people’s minds, in­clud­ing of­fi­cials of pub­lic health ad­min­is­tra­tions, that state-run hos­pi­tals pro­vide the best med­i­cal care, and are the place for most to de­part from the world.

Commercial med­i­cal in­sur­ance is less de­vel­oped be­cause people over­whelm­ingly rely on the govern­ment med­i­cal-in­sur­ance sys­tem, which in­te­grates well with the na­tional pub­lic hos­pi­tals.

Re­stric­tions on the free flow of hu­man talent also hin­der the growth of pri­vate hos­pi­tals. Most good doc­tors work at pub­lic hos­pi­tals. The med­i­cal author­ity’s sym­bolic per­mis­sion of al­low­ing doc­tors to work for dif­fer­ent hos­pi­tals does not make a dif­fer­ence be­cause the rule is that doc­tors must ob­tain the ap­proval of their first em­ployer be­fore go­ing else­where.

It is much eas­ier for doc­tors to ap­ply for higher pro­fes­sional ranks and be­come med­i­cal ad­min­is­tra­tion of­fi­cials in pub­lic hos­pi­tals, which have close re­la­tions with med­i­cal au­thor­i­ties at var­i­ous lev­els, than in pri­vate hos­pi­tals.

The govern­ment needs to re­move pol­icy con­trols on the non-profit pri­vate med­i­cal agencies, in­vest­ment in and fi­nanc­ing of pri­vate hos­pi­tals, and ease their tax bur­dens.

Cur­rent rules stip­u­late that in­vestors do not own the or­ga­ni­za­tions they in­vest in if the or­ga­ni­za­tions are reg­is­tered as non-profit in the civil af­fair de­part­ments.

The non-profit med­i­cal agencies are col­lec­tively owned by their work­ing staff, but not the in­vestors. The own­er­ship is­sue ex­plains why most pri­vate med­i­cal agencies are non-profit in China.

The govern­ment sets the min­i­mum in­vest­ment thresh­old for joint-ven­ture hos­pi­tals at 20 mil­lion yuan ($3.28 mil­lion). That high min­i­mum re­quire­ment means the govern­ment only en­cour­ages big for­eign in­vestors to set up large hos­pi­tals in China. But the coun­try needs pri­vate hos­pi­tals of var­i­ous sizes to meet the de­mands from vil­lages to me­gac­i­ties.

The China (Shang­hai) Pi­lot Free Trade Zone, a na­tional-level show­case ini­tia­tive to ex­plore new poli­cies in fi­nance, trade, ser­vice sec­tors and gov­er­nance, main­tains the 20 mil­lion yuan re­quire­ment in its new sup­port­ive poli­cies.

Ap­pli­ca­tion and reg­is­tra­tion pro­ce­dures of set­ting up a pri­vate hospi­tal dif­fer from place to place in cer­tain med­i­cal fields, and are very com­pli­cated. There are strict soft­ware and hard­ware re­quire­ments for pri­vate hos­pi­tals.

Al­though the govern­ment says that pub­lic and pri­vate hos­pi­tals are equal in terms of med­i­cal -care tech­nol­ogy, some key tech­nol­ogy can only be used in hos­pi­tals of cer­tain rank.

There is not yet a rank-eval­u­a­tion sys­tem for pri­vate hos­pi­tals in many places, mak­ing the tech­no­log­i­cal equal­ity in of­fi­cial’s dis­courses only ex­ist on paper.

Pri­vate hos­pi­tals, re­garded by the govern­ment as par­tially pub­lic-in­ter­est or­ga­ni­za­tions, can­not be mort­gaged to raise funds. The tax for pri­vate hos­pi­tals is much heav­ier than pub­lic coun­ter­parts, and it is much more ex­pen­sive for pri­vate hos­pi­tals to buy med­i­cal equip­ment from abroad.

The cen­tral govern­ment sends out clear sig­nals that lo­cal gov­ern­ments should en­cour­age the de­vel­op­ment of pri­vate hos­pi­tals and for­eign in­vest­ment in the field. But some key sup­port­ive files of the cen­tral author­ity are vaguely worded and do not set a dead­line for changes.

The State Coun­cil is­sued a file as early as 2010 to “grad­u­ally abol­ish the re­stric­tions on for­eign cap­i­tal’s eq­uity share to pro­mote the de­vel­op­ment of pri­vate hos­pi­tals”. But the spirit of that ef­fort has not yielded the de­sired re­sults.

Such files of prin­ci­ples and di­rec­tions leave con­sid­er­able room for lo­cal au­thor­i­ties to com­pro­mise the im­ple­men­ta­tion, or slight over their re­spon­si­bil­i­ties as grass­roots re­form­ers.

Last month, the State Coun­cil gave pri­vate hos­pi­tals the author­ity to set prices for their di­ag­no­sis and treat­ment, which had been con­trolled by the govern­ment.

This is an­other good be­gin­ning to im­prove pri­vate hos­pi­tals’ com­pet­i­tive­ness. They can pay the doc­tors more, and save the pa­tients more money from ex­pen­sive drugs.

But an­a­lysts still hold a wai­t­and-see at­ti­tude to­ward how lo­cal gov­ern­ments will put this de­ci­sion-mak­ing author­ity into prac­tice.

To trans­late the cen­tral govern­ment’s sup­port into the healthy ex­pan­sion of pri­vate hos­pi­tals, there should be co­or­di­nated ef­forts by au­thor­i­ties in var­i­ous sec­tors to sim­plify pro­ce­dures for set­ting up pri­vate hos­pi­tals.


A scene at the Shang­hai No 6 People’s Hospi­tal.

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