HEALTHCARE IN CHINA

Healthcare in China

Healthcare in China

Introduction

China began planning for healthcare reform at the start of the twenty-first century, after several decades of market opening yielded a steady decline in the scope and quality of healthcare services. Chinese citizens had become increasingly dissatisfied with the healthcare system—which suffered from chronic government underfunding, urban and rural inequalities, and overpriced, low-quality products and services. The system had consequently left much of the population without access to medical care (OECD, 2010).

PRC leaders have made significant progress in a relatively short period to improve the healthcare system. After several failed attempts, the PRC State Council in 2010 initiated a formal drafting process for reform, which included soliciting 10 draft healthcare plans from domestic, foreign, and multilateral actors. This led to the implementation of China's ¥850 billion ($124 million) healthcare reform plan in April 2009, which aims to provide affordable medical care for the country's entire population by 2020. The reform calls for a complete overhaul of China's healthcare system, including by establishing or updating laws related to healthcare investment, pharmaceuticals, and medical devices. In the first phase of the plan (2009-11), the central government set a ¥139 billion ($20.9 billion) healthcare budget for 2010, and the PRC Ministry of Finance (MOF) in November 2010 announced it was allocating an additional ¥12.3 billion ($1.8 billion) for local healthcare reform initiatives. The pace of China's healthcare reform has matched the government's goals so far, indicating that China will likely reach its targets. The quality of medical services remains to be seen, however, and efforts to develop a social healthcare plan are still in progress (Chen, 2009).

China is working toward tough goals, such as improving medical care in rural areas and tackling, with limited funding, entrenched reimbursement plans for insurance, medical devices, and pharmaceuticals. Foreign companies in the healthcare sector should understand and track these changes, as China's changing regulatory system will affect sales and open investment opportunities.

Healthcare Reform's Focus

Because of China's urban-rural healthcare disparity, reforms focus primarily on grassroots medical networks, which can penetrate lower-tier and remote regions. The PRC government is constructing new and updating existing infrastructure and facilities to transform grassroots medical networks, including healthcare facilities and services in rural areas and urban communities. The reform lists specific targets for 2009-11: Build roughly 2,000 county hospitals and 29,000 township centers; upgrade or expand 5,000 township health centers; and build or upgrade 3,700 urban health service centers and 11,000 community health service stations. In 2009, the central government allocated more than ¥20 billion ($3 billion) to expand and upgrade grassroots medical institutions. Though the number of medical centers being built is unclear, MOF claimed to have supported the construction of 34,000 hospitals in towns and townships in 2009 (Vail, 2009).

The government has also issued separate guidance for constructing county hospitals, county traditional Chinese medicine hospitals, township health centers, community health service centers, and village clinics. The State Council's 2010 work plan called for establishing an additional 830 county hospitals, 1,900 village ...