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P4P and China’s Health Care Reform: Current State, Opportunities and Challenges

P4P and China’s Health Care Reform: Current State, Opportunities and Challenges. Winnie Yip Reader in Health Policy and Economics University of Oxford “Incentives for Health Provider Performance Network” Conference, May 11, 2011. Context: Chinese Health System Reform .

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P4P and China’s Health Care Reform: Current State, Opportunities and Challenges

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  1. P4P and China’s Health Care Reform: Current State, Opportunities and Challenges Winnie Yip Reader in Health Policy and Economics University of Oxford “Incentives for Health Provider Performance Network” Conference, May 11, 2011

  2. Context: Chinese Health System Reform • April 2009: Additional government spending of USD 125 billion in the next three years: • Subsidies for insurance premium to enroll in public insurance schemes • Subsidies for a package of public health services • Government fully subsidizes the basic salary for township health center staff, but not hospital staff. • Major infrastructure building: county hospitals, township health centers and village clinics

  3. Financing for Public Health Care Facilities

  4. An Incentive Structure That Leads to Inefficient Treatment Practices • Hospitals have to earn about 90% of its revenue from fee-for-service payments • Price schedule that under-pays basic services and over-pays high-tech procedures and diagnostic tests; allow drug mark up of 15-20% • Payment method: Fee-for-service (inflationary) • Incentives to get revenue from profits on drugs and high-technology tests, and from kick-backs. • Physicians are employed by the hospitals, their compensation depends on profits from drugs and tests + under the table payments (most for specialists) + kick-backs from drug companies. • Village doctors, the back-bone for health prevention and health care in rural regions, are in private practice, earn their income from profits when selling drugs and give injections.

  5. Results from Distorted Prices and Incentives:Revenue in an average urban general public hospital • thousand • RMB • Source: China Health Statistic Year Book 2010

  6. China Total Expenditure on Health as % of GDP % 6.00 5.00 4.00 3.00 Year 2.00 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 CTEH as % of GDP China: Health expenditure has been rising as share of GDP

  7. Government’s share of health spending has been falling in China Composition of Total Health Spending, by source

  8. Prescription pattern for common cold, 3 counties in Shandong Province, 2009

  9. P4P—Who are the Purchasers? • Ministry of Finance: • Increase government funding needs to tie with improved “performances” • ~30% of public health budget, budget for PHC facilities’ salaries are with-held for performance assessment • Publicly organized insurance schemes: • Urban: employees, residents • Rural: New Cooperative Medical Scheme • Gradual trends moving from FFS to prospective payment and perhaps with p4p

  10. Design and Implementation • Decentralized • What are performances and how are they measured? • Public health: Creating health records for residents; health education; health management for children (0-3 years); imm/vaccination; health exams for elderly; pre/post natal care; infectious disease reporting; chronic disease management (TB, hypertension, DB, hepatitis B and major mental health problems) • Primary and secondary care, large focus on: • Cost control; quantity of services; antibiotic prescription/IV injection not exceeding a target rate (?)

  11. An example

  12. Effective? • Results: 83-90 scores • Performance indicators not targeted

  13. Immunization Rates: age 1-4(%) Urban Rural

  14. Antenatal care coverage and rate delivery in hospital (%) in urban and rural Antenatal coverage Hospital delivery

  15. Maternal Mortality • Source：中国卫生统计年鉴2010， 表7.1

  16. Infant Mortality • Source：中国卫生统计年鉴2010， 表7.1

  17. Effective? • Results: 83-90 scores • Performance indicators not targeted • Actual implementation: • Focus on quantity and less on quality/process • Can generate any result you want depending on how you calculate your statistics and what data you use • Rely on inspection/investigation • Rely on subjective assessment • Not external checks and balances

  18. Looking to the future • Management information system is essential, with some standardizations to allow comparisons • Improved training in management: p4p is a means to an end • External checks and balances • Targets vs relative performance • Reduce number of indicators, target at problem areas, revise periodically

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