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World Bank Group

World Health Organization
Ministry of Finance, National Health and Family Planning Commission,
Ministry of Human Resources and Social Security,
The Peoples Republic of China
Deepening Health Reform
In China
Building High-Quality And Value-Based
Service Delivery

Policy Summary

China Joint Study Partnership

World Bank Group, World Health Organization,

Ministry of Finance, National Health and Family
Planning Commission, Ministry of Human Resources and
Social Security


Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvii

Background: Impressive Gains in Health Outcomes,

but Substantial Challenges Ahead 1
Aging, chronic disease, and risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Quality of care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Inefcient service delivery: hospital-centrism, fragmentation and

Distorted incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Risk of low value care: Diminishing gains in health with escalating

Health spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Spending projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Part I Service Delivery Levers 17

Shaping tiered health care delivery system in accordance

with People-Centered Integrated Care Model (Lever 1) 19
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

D E E P E N I N G H E A LT H R E F O R M I N C H I N A iii
iv D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Core action areas and corresponding implementation strategies

for developing and implementing PCIC-based service delivery model:
lessons from international and national experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Improving Quality of Care in Support of People-Centered

Integrated Care (Lever 2) 35
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Challenges to Improving Quality of Care in China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Recommendations for Improving the Quality of Care . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Engaging Citizens in Support of the People-Centered

Integrated Care Model (Lever 3) 49
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Challenges to engaging citizens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Recommendations: Strengthening Citizen Engagement . . . . . . . . . . . . . . . . . . . . . . . . . 51

Reforming Public Hospitals and Improving their Performance

(Lever 4) 65
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Challenges and lessons in Public Hospital Governance and Management in China . . . . 66

Recommendations for moving forward with public hospital reform:

Lessons from Chinese and international experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Part II Institutional and Financial

Environment Levers 77

Realigning Incentives in Purchasing and Provider

Payment (Lever 5) 79
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Key Challenges in Purchasing Health Services and Paying Providers . . . . . . . . . . . . . . . 80

Recommendations for Realigning Incentives in the Health System in China . . . . . . . . . 82

Strengthening Health Workforce for People-Centered

Integrated Care (Lever 6) 89

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Key Challenges in the Human Resource Management in China . . . . . . . . . . . . . . . . . . . 90

Recommendations for Moving Forward with Human Resources Reform:

Lessons from Chinese and International Experience. . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Strengthening Private Sector Engagement in Production and

Delivery of Health Services (Lever 7) 97

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Key Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Recommendations for Strengthening Private Sector Engagement in Production

and Delivery of Health Services: Lessons from Chinese and International
Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Modernizing Health Service Planning to Guide Investment

(Lever 8) 107

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Key Capital Investment Challenges in the Health Sector in China. . . . . . . . . . . . . . . . . . . 108

Recommendations for Moving Forward with Service Planning Reform:

Lessons from Chinese and International Experience. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Part III Moving Forward with Implementation 117

Strengthening Implementation of Service Delivery Reform 119

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Implementation Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

An Actionable Implementation Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Moving Forward: Spreading Effective and Sustainable Implementation at

the Local Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123

Toward a sequential reform implementation plan for reaching full scale in China . . . . . . 132

Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Annex 1 Levers and Recommended Core Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Annex 2 Government Policies In Support of the Eight Levers . . . . . . . . . . . . . . . . . . . . 138
Annex 3 New Policy Guidelines on Tiered Service Delivery
(Guo Ban Fa [2015] NO.70) and Recommended Core Actions . . . . . . . . . . . . 142
Annex 4 Nomenclature and Summaries of 22 PCIC Performance
Improvement Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Annex 5 Impact Frequency of Studies on PCIC Initiatives (no. of studies) . . . . . . . . . . . 147

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
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I.1 What is Value in Health Care? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxviii
I.2 Suggestions of the CPC Central Committee on the 13th Five-year Plan for
National Economic and Social Development on the promotion of a
Healthy China (pp. 4243, English translation) . . . . . . . . . . . . . . . . . . . . . . . xxix
I.3 Report Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxi
I.4 Nomenclature, Name and Location for Commissioned Case Studies . . . . . . . . xxxiv
2.1 Dening People-Centered Integrated Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.1 Impacts of PCIC-like models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
2.1 The Potential Benets of People-Centered Integrated Care . . . . . . . . . . . . . . . . . . .22
3.1 What is Quality? Why Quality is important? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
3.2 Existing evidence of over-utilization of drugs and health interventions. . . . . . . . . .39
3.3 Core action areas and implementation strategies to improve healthcare quality . . .40
4.1 Why is citizen engagement important? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
4.2 Citizen Engagement to improve health care: core action areas and
corresponding implementation strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
4.3 Health Education in the UK: Skilled For Health . . . . . . . . . . . . . . . . . . . . . . . . . . .54
4.4 Social marketing in China: Prevention and control of Hepatitis B . . . . . . . . . . . . .55
4.5 The Million Hearts Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
4.6 Encouraging self-management of health: Examples from the UK and India . . . . . .59
4.7 Improving patient involvement at the Beth Israel Deaconess Medical Center
in the US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
4.8 Decision Aid for Stable Coronary Heart Disease by the Informed
Medical Decisions Foundation
4.9 Health Coaching to Coordinate Care in Singapore . . . . . . . . . . . . . . . . . . . . . . . . .61
4.10 Examples of using nudging and regulation to change target behaviors . . . . . . . . . .64
5.1 Management Practice Domains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
6.1 Examples of provider payment reforms in China . . . . . . . . . . . . . . . . . . . . . . . . . .85
9.1 Distinguishing Features of an Effective Service Planning Approach . . . . . . . . . . .108
9.2 Horizons Three Step Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
9.3 Physical Redesign of Northern Irelands Health System Model . . . . . . . . . . . . . . . 115
10.1 Government Administrative Reforms and International Experience . . . . . . . . . . .127

ES.1 8-in-1 Interlinked Reform Levers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviii
ES.2 Reform Implementation Roadmap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiv
1.1 Share of the Elderly in China will Rapidly Catch up with the OECD . . . . . . . . . . . .2
1.2 Prominence of NCDs in the Burden of Disease and Causes of Mortality . . . . . . . . .3
1.3 Management of Hypertension and Diabetes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1.4 Smoking and Alcohol Consumption in China Compared to Other Nations . . . . . . .5
1.5 Hospital beds in China compared to OECD, 20002013 . . . . . . . . . . . . . . . . . . . . .7
1.6 Rapid Growth in the Number of Hospitals and Shift toward Higher
Level Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.7 Rising Health Care Cost in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.8 Health Care Expenditure Growth Rate in China . . . . . . . . . . . . . . . . . . . . . . . . . .13
1.9 Composition of Health Spending in China, 19972013 . . . . . . . . . . . . . . . . . . . . . 14
1.10 Trend in Life Expectancy Compared to Total Spending on Health, 19952015 . . . 14
1.11 Diverse Paths to Better Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.1 Illness Burden Scorecard to risk stratify patients . . . . . . . . . . . . . . . . . . . . . . . . . . .26

2.2 Responsibilities of PACT team members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

2.3 PACE Continual Feedback Loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
5.1 Scores by Management Practice, China 2015 (n=110 hospitals) . . . . . . . . . . . . . . .69
6.1 Composition of Total Health Expenditure in China, by facility
or provider (percent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
7.1 Health Workers Compensation across levels of Care and Providers, China 2013 . .91
8.1 Growth in Hospitals by Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98
8.2 Growth in PHC Facilities by Ownership (2005 to 2012) . . . . . . . . . . . . . . . . . . . .98
8.3 Growth of Hospital Admissions by Ownership, 20052012 (in 10,000) . . . . . . . .98
8.4 Growth of Outpatients Visits by Ownership, 20052012 (in 10,000) . . . . . . . . . .99
10.1 Proposed Oversight, Coordination and Management for Service
delivery Reform Implementation and Scale-Up . . . . . . . . . . . . . . . . . . . . . . . . . . .124
10.2 The Transformation Learning Collaborative (TLC) model in three different
arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129

1.1 Hypertension diagnosis, treatment and control (age 3584): international
comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.1 Core actions areas and implementation strategies to achieve PCIC . . . . . . . . . . . . .24
5.1 Hospital Governance Models in Selected Countries . . . . . . . . . . . . . . . . . . . . . . . .73
8.1 Percent of Health Workers in Private Facilities by Type. . . . . . . . . . . . . . . . . . . . .102
10.1 Examples of Policy Implementation Monitoring Guidelines for Chinas
Value-Driven Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
10.2 Examples of monitoring indicators by reform goal . . . . . . . . . . . . . . . . . . . . . . . .131
10.3 Scoring System for Transformation Learning Collaboratives . . . . . . . . . . . . . . . .132
10.4 TLC Provincial Roll Out by Phase, Time Interval and Jurisdiction . . . . . . . . . . . .133

During the last three decades, there has take a huge toll on health, and non-commu-
been a momentous social transformation in nicable diseases account for more than 80
China, with 600 million people pulled out of percent of 10.3 million deaths every year. At
poverty. At the same time, China has made the same time, with higher economic growth,
impressive strides in health. Since the launch increased personal incomes, and fast changes
of a new round of reforms in 2009, China in consumption patterns, people are demand-
has invested substantially in expanding ing more and better health care. As a result of
health infrastructure, achieved nearly uni- all these factors, expenditures on health care
versal health insurance coverage, promoted have been increasing continuously. China is
more equal access to public health services, facing greater challenge as the high growth
and established a national essential medicine rates of health expenditure in the past years
system. These measures have significantly may be difficult to sustain under the eco-
improved the accessibility of health services, nomic slow-down.
greatly reduced child and maternal mortal- The Chinese government fully recognizes
ity, incidence of infectious disease, and con- the need to make strategic shifts in the health
siderably improved health outcomes and life sector to adapt to these new challenges.
expectancy of the Chinese population. Aver- President Xi Jinping and Premier Li Keqiang
age life expectancy of the Chinese people have placed great importance on health care
reached 76.34 years in 2015, 1.51 years lon- reform. As President Xi Jinping pointed out,
ger than in 2010. Chinas overall health level it would not be possible to build a well-off
has reached the average of middle- and high- society without universal health. He also indi-
income countries, achieving better health cated that China should shift the focus and
outcomes with less input. These achievements resources towards the lower levels of care,
have been well recognized internationally. with an aim to provide its citizens with public
China has now reached a turning point. health and basic health services that are safe,
It is starting to face many of the same chal- effective, accessible, and affordable. Premier
lenges and pressures that high-income coun- Li Keqiang has held several State Council
tries face. Chinese over the age of 65 now Executive Meetings to set priorities in health
number 140 million, and that cohort is care reform and asked for development of a
expected to grow to 230 million by 2030. basic health care system covering all urban
High-risk behaviors like smoking, sedentary and rural residents. The State Council has set
lifestyles and alcohol consumption, as well as up a Leading Group for Deepening Health
environmental factors such as air pollution, Care Reform to strengthen multi-sector

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coordination, which provides strong institu- This report focuses not only on the top-
tional guarantee for the reforms. level design for reform; it also addresses the
In July 2014 in Beijing, the Chinese gov- important question of how to make reform
ernment, the World Bank Group and the work on the ground. It builds on exten-
World Health Organization committed to sive analysis of literature and case studies
working together on a joint health reform from high- and middle-income countries,
study with an aim to further improve the as well as on ongoing innovations in China
policy formulation and to deepen the health that offer lessons and experiences for bring-
reform. This report, Deepening Health ing about desired change. The report draws
Reform in China, is the outcome of this joint upon cutting-edge thinking about science
study. Following the successful model of pre- of delivery that can help scaling up health
vious flagship reports such as China 2030 reformsfrom prefecture to province, and
and Urban China, this report offers a blue- ultimately, nationwide.
print for further reforms in Chinas health Our hope is that this report will provide
sector. the research, analysis and insight to help cen-
The reports main theme is the need for tral and local authorities plan and execute
China to transition its health care delivery major restructuring of the healthcare deliv-
system toward people-centered, high quality, ery system in China during the 13th ve-year
integrated care built on the foundation of a development planning period. Getting this
strong primary health care system. This sys- reform right is crucial to Chinas social and
tem offers both better health care for its citi- economic success in the coming decades. We
zens as well as better value for its economy. believe that Chinas experience with health
The report offers a comprehensive set of eight service delivery reform carries many lessons
interlinked recommendations that can pre- for other countries, and we hope this report
pare the Chinese health system for the demo- can also contribute to a global knowledge
graphic and health challenges it faces. base on health reform.

LOU Jiwei, Minister LI Bin, Minister YIN Weimin, Minister

Ministry of Finance National Health and Ministry of Human
P.R.C. Family Planning Commission Resources and Social Security
P.R.C. P.R.C.

Jim Yong Kim Margaret Chan

President Director-General
The World Bank Group World Health Organization

This study was organized jointly by Chinas and Pacific Region Axel van Trotsenburg ;
Ministry of Finance (MoF), National Health Timothy Grant Evans, Senior Director for
and Family Planning Commission (NHFPC), Health, Nutrition and Population Global
Ministry of Human Resources and Social Practice; Olusoji Adeyi, Director for Health,
Security (MoHRSS), the World Health Nutrition and Population Global Practice;
Organization (WHO), and the World Bank Bert Hofman, Director for China, Korea,
Group (WBG). The study was proposed by Mongolia; Mara Warwick, Operations
Premier Keqiang Li and the Vice Premier manager for China, Mongolia and Koreaand
Yandong Liu, Minister Jiwei Lou of MoF, Toomas Palu, Global Practice Manager for
Minister Bin Li of NHFPC, Minister Weimin Health, Nutrition and Population Global
Yin of MoHRSS, President of WBG Jim Yong Practice in East Asia and Pacific Region
Kim and Director General Margaret Chan (WBG).
provided valuable leadership and guidance at Valuable advice was provided by the
the impetus as well as the critical junctions members of the External Advisory Panel
of the study. In particular, Vice Premier Liu comprising: Michael Porter, Bishop William
hosted two special hearings on the progress Lawrence University Professor at the Institute
and main ndings for the study in March of for Strategy and Competitiveness, based at the
2015 and 2016. Harvard Business School; Donald Berwick,
Under the overall leadership of Minister President Emeritus and Senior Fellow,
Jiwei Lou (MOF) and the Managing Director Institute for Healthcare Improvement, former
and Chief Operating Officer Sri Mulyani President and Chief Executive Ofcer of the
Indrawati of the World Bank Group, the Institute for Healthcare Improvement and
report was overseen by the joint team in Administrator of the Centers for Medicare
ve participating organizations led by Vice and Medicaid Services; Winnie Yip, Professor
Ministers Yaobin Shi, Weiping Yu (MOF); of Health Policy and Economics at the
Vice Ministers Zhigang Sun, Xiaowei Blavatnik School of Government, University
Ma (NHFPC); Vice Ministers Jun You, of Oxford; Ellen Nolte, Coordinator of the
Xiaoyi Hu(MoHRSS); Regional Director European Observatory at the London School
Shin Young-soo, Bernhard Schwartlnder, of Economics and Political Science and
WHO Representative in China; and, Vivian the London School of Hygiene & Tropical
Lin, Director of Division of Health Sector Medicine; Yanfeng Ge, Director-General,
Development, Western Pacic Regional Ofce Department of Social Development Research,
(WHO); Regional Vice-President of East Asia Development Research Center of the State

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Council, China; and Shangxi Liu, Director- Ali, Todd Lewis, Hannah Ratcliffe, Asaf
General Chinese Academy of Fiscal Sciences. Bitton, Gerard La Forgia (Chapter Four);
A Technical Working Group (T WG), Gerard La Forgia, Antonio Duran, Jin Ma,
consisting of technical leads from each of Weiping Li, Stephen Wright (Chapter Five);
the government agencies as well as the WBG Mukesh Chawla, Mingshan Lu (Chapter Six);
and WHO, was formed at the beginning Shuo Zhang, Edson Arajo (Chapter Seven);
of the Study. The TWG has led technical Karen Eggleston, Barbara OHanlon, Mirja
com munications, provided impor tant Sjoblom (Chapter Eight); James Cercone,
comments and facilitated research data from Mukesh Chawla (Chapter Nine); and, Kedar
different departments of the Ministries. S. Mate, Derek Feeley, Donald M. Berwick,
Members of the TWG included: Licheng and Gerard La Forgia (Chapter Ten). Mukesh
Yao, Xiang Peng, Lei Wang, Min Wang Chawla, Joy De Beyer, Aakanksha Pande and
(MOF), Ning Zhuang, Yue Liu, Kun Qin, Rachel Weaver did the technical and content
Shuli Zhao, Yahui Jiao, Kai Chen (NHFPC), editing of the nal report.
Guodong Wang, Zhihong Zhao, Chengjin Case studies and background studies
Song (MoHRSS), Gerard La Forgia, Shuo were drawn from twenty one provinces and
Zhang, Rui Liu (WBG), and Martin Taylor, municipalities in China, including Beijing,
Chunmei Wen, Stephanie Dunn (WHO). Shanghai, Tianjin, Chongqing, Sichuan,
Within the World Bank Group, Gerard Yunnan, Guizhou, Ningxia, Qinghai,
La Forgia and Mukesh Chawla were the Anhui, Shandong, Guangdong, Jiangsu,
Task Team Leaders with signicant on the Jiangxi, Henan, Zhejiang, Hubei, Hunan,
ground supports from Shuo Zhang in the Fujian, Xiamen and Shenzhen; as well as
World Bank Beijing office as well as from internationally from New Zealand, Denmark,
Elena Glinskaya, Daixin Li and Rui Liu. Norway, United Kingdom, Germany, United
Martin Taylor was the core team member States, Netherlands, Portugal, Singapore,
from WHO, with supports from Clive Tan, Brazil and Turkey. A number of international
Ding Wang and Tuo Hong Zhang; and, and China experts contributed through these
Edward Hsu Jiadi Yu from the International studies. By chapter, they comprised: Hui
Finance Corporation (IFC). Mickey Chopra, Sin Teo, Rui Liu, Daixin Li, Yuhui Zhang,
Jeremy Veillard, Enis Baris and Patrick Tiemin Zhai, Jingjing Li, Peipei Chai, Ling
Lumumba served as the World Bank Group Xu, Yaoguang Zhang, David Morgan, Luca
internal peer reviewers of the study reports. Lorenzoni, Yuki Murakami, Chris James,
Valuable inputs were received from Simon Qin Jiang, Xiemin Ma, Karen Eggleston,
Andrews (IFC); and Hong Wang (Bill and John Goss (Chapter One); Zlatan Sabic,
Melinda Gates Foundation). The Joint Study Rong Li, Rui Liu, Qingyue Meng, Jin Ma, Fei
team acknowledge media coordination work Yan, Sema Sar Sumer, Robert Murray, Ting
from Li Li, translation, proofreading work Shu, Dimitrious Kalageropoulous, Helmut
from Shuo Zhang, Rui Liu, Tianshu Chen, Hildebrandt, Hubertus Vrijhoef (Chapter
editing work from Rui Liu, Tao Su, and the Two); Xiaolu Bi, Agnes Couffinhal, Layla
tremendous administrative support from Tao McCay, Ekinadose Uhunmwangho (Chapter
Su, Sabrina Terry, Xuan Peng, Lidan Shen, Three); Weiyan Jian, Gordon Guoen Liu,
Shunuo Chen, and Xin Feng. Baorong Yu (Chapter Five); Christoph
The report was prepared and coordinated Kurowski, Cheryl Cashin, Wen Chen,
under the technical leadership of Gerard La Soonman Kwon, Min Hu, Lijie Wang, Alex
Forgia. The chapter authors comprised Tania Leung (Chapter Six); Guangpeng Zhang,
Dmytraczenko, Magnus Lindelow, Ye Xu, Barbara McPake , Xiaoyun Liu, Gilles
Hui Sin Teo (Chapter One); Asaf Bitton, Dussalt, James Buchan (Chapter Seven);
Madeline Pesec, Emily Benotti, Hannah Jiangnan Cai, Yingyao Chen, Qiulin Chen,
Ratcliffe, Todd Lewis, Lisa Hirschhorn, Ian Jones, Yi Chen (Chapter Eight);Dan
Gerard La Forgia (Chapter Two); Ye Xu, Liu (Chapter Nine); Aviva Chengcheng Liu
Gerard La Forgia, Todd Lewis, Hannah (Chapter 10). Licheng Yao, Xiang Peng, Yan
Ratcliffe, Asaf Bitton (Chapter Three); Rabia Ren (MoF); Ning Zhuang, Kun Qin, Rui

Zhao, Chen Ren (NHFPC); and, officials Yongsheng Fu, Kaihong Xing,Wei Zhang,
in provinces provided significant support Jiayue Liu, Chao Li(MoHRSS); Yanfeng Ge,
with the coordination of field studies and Sen Gong (Development Research Center
mobilizing research data. of the State Council), Shangxi Liu (MoF
Du ring the st udy preparation, si x Academy of Fiscal Sciences); Hongwei Yang,
technical workshops and several consultative Zhenzhong Zhang, Weiping Li (NHFPC-
roundtables were organized with active CHDRC); Dezhi Yu, Junwen Gao, Lijun
participation from MoF, NHFPC, MoHRSS Cui, Beihai Xia (Anhui Commission for
and select provincial governments. These Health and Family Planning, CH F P);
workshops served as platforms for reciprocal Dongbo Zhong, Haichao Lei (Beijing
policy dialogue and for receiving timely and CHFP); Xiaochun Chen, Wuqi Zeng, Xu Lin
constructive feedback from the government (Fujian CHFP); Xueshan Zhou, Shuangbao
partners and researchers on the preliminary Xie (Henan CHFP); Patrick Leahy, Henrik
study findings. The following leaders, Pederson (IFC); Xiaofang Han, Qingyue
officials, experts made presentations and Meng, Gordon Liu, Jiangnan Cai, Asaf
important contributions to the discussions: Bitton,, Jin Ma, Wen Chen, James Cercone,
Shaolin Yang, Yingming Yang, Qichao Song, Ian Forde, Barbara OHanlon, Karen
Haijun Wu, Licheng Yao, , Xuhua Sun, Fei Eggleston, Fei Yan, Guangpeng Zhang,
Xie, Xiang Peng, , Lei Wang, Min Wang, Xiaoyun Liu, Qiulin Chen, Min Hu, Lijie
Shaowen Zhou, Qi Zhang, Chenchen Ye Wang,Antonio Duran, Dan Liu (World Bank
(MoF); Yan Hou, Minghui Ren, Chunlei Consultants), and Bang Chen, Junming Xie,
Nie, Yuxun Wang, Wei Fu, Jinguo He, Roberta Lipson, Beelan Tan, Sabrinna Xing,
Feng Zhang, Shengguo Jin, Jianfeng Qi, Jane Zhang, Alex Ng, Yuanli Liu, Jianmin
Hongming Zhu, Yang Zhang, Ruirong Hu, Gao, Baorong Yu, Mario Dal Poz, James
Ning Zhuang, Changxing Jiang, Liqun Liu, Buchan, Ducksun Ahn, Stephen Duckett.
Yilei Ding, Yue Liu, Ling Xu, Kun Qin, The study team recognizes and appreciates
Ge Gan, Zhihong Zhang, Yongfeng Zhu, additional funding support from Bill and
Kai Chen, Yi Wang, Jianli Han, Yan Chen, Melinda Gates Foundation via Results
Xiaorong Ji, Yujun Jin, Chen Ren, Rui Zhao, for Development, and, from International
Liang Ye, Xiaoke Chen Meili Zhang, Ru Finance Corporation of the World Bank
Yuhong, (NHFPC); Qinghui Yan, Shuchun Group. The Joint Study team is also grateful
Li, Chengjin Song, Jun Chang, Yutong for all the contribution and efforts from the
Liu, Guodong Wang, Zhengming Duan, individuals and teams not named above.
Executive Summary

Following decades of double-digit growth and water quality, education, nutrition and
that lifted more than 600 million people out housing) resulted in a huge decline in mor-
of poverty, Chinas economy has slowed in tality and an unprecedented increase in life
recent years. The moderating growth adds expectancy. The 2009 reforms have achieved
a new sense of urgency to strengthening a number of intended milestones, produc-
human capital and ensuring that the popu- ing substantial positive results. Utilization of
lation remains healthy and productive, espe- health services has risen and out of pocket
cially as the economy gradually rebalances spending as share of total health expendi-
towards services and the society experiences tures has fallen, leading to a more equitable
shifting demographics and disease burdens. access to care and greater affordability. The
The lower economic growth rates open the essential drug program is contributing to
space for much needed reforms in the health reducing irrational drug use and improving
sector as the high growth rates of health access to effective drugs. The reform, includ-
expenditure in the past years may be difcult ing subsequent regulations, has encouraged
to sustain under the New Normal: a recent greater private sector participation in part
OECD study estimates that government to reduce overcrowding in public facilities.
expenditures on health and long term care in Finally, the reform also spearheaded many
China will increase three-fold as percent of innovative pilots in health financing and
GDP over the next four decades if adequate service delivery at the local level several of
reforms are not undertaken. China now has which are examined in this report and pro-
an opportunity to rebalance its health care vide a strong foundation for the next stage
system by embarking on a high value path to of reform. China is progressing quickly to
better health at affordable costs. achieving universal health coverage and some
China was a pioneer in primary care and of the reform achievements have attracted
the prevention and control of infectious dis- worldwide attention. Significantly, a child
eases, and more recently in universal insur- born in China today can expect to live more
ance coverage. The introduction of barefoot than 30 years longer than her forebears half a
doctors, urban and rural social health insur- century ago; it took rich countries twice that
ance schemes and ambitious public health span of time to achieve these gains.
campaigns combined with higher incomes, China now faces emerging challenges to
lower poverty and better living standards meet the health care needs of her citizens,
for both urban and rural areas (sanitation associated with a rapidly aging society and

D E E P E N I N G H E A LT H R E F O R M I N C H I N A xv
xvi D E E P E N I N G H E A LT H R E F O R M I N C H I N A

increasing burden of non-communicable dis- health system as observed in some high

eases (NCDs). There are already over 140 income countries. Chinas health system is
million persons above the age of 65 in China, hospital-centric, fragmented and volume-
a number that is projected to grow to 230 driven. Service delivery has a strong bias
million in 2030. NCDs are already Chinas toward doing more treatment than improv-
number one health threat, accounting for ing population health outcomes, and serv-
over 80 percent of the 10.3 million deaths ing more people at hospitals rather than at
annually. More so than the aging population, grassroots levels. Health nancing needs bet-
high health risk behaviors such as smoking, ter integration and insurance funds need to
poor diets, sedentary lifestyles, and alcohol become more active purchasers of health ser-
consumption, as well as environmental fac- vices. There is a shortage of qualied medical
tors such as air pollution, are powerful forces and health workers at the primary care level,
behind the emergence of chronic illnesses which further compromises the systems abil-
in China. Trafc safety is another emerging ity to carry out the core functions of preven-
challenge. tion, case detection, early treatment and care
Building on past successes, more needs to integration. Quality of care and populations
be done to expand current reforms and build trust needs to improve, especially at the lower
upon front-line innovations to make health levels, waiting times are long especially at the
care delivery more effective and efficient higher levels, and peoples satisfaction with
throughout China. Health costs have been their interaction with providers often do not
growing at a rate higher than GDP growth meet rising expectations. To some extent, this
since 2008. While this growth started from situation affects citizens condence in health
a comparatively low baseline level, but still care providers.
below 6% by year 2015, the trend is not Recognizing these challenges, Chinas
likely to reverse in the near future as expen- leaders have adopted far-reaching policies to
diture pressures related to pent-up demand put in place a reformed delivery system. Since
changing epidemiological and demographic the launch of health reform in 2009, China
profiles, income growth and technologi- has invested significantly in health infra-
cal change will continue to grow. As seen structure at the grassroots level and made
in some high income countries, without progress in building the primary care doctors
adequate controls rapidly escalating health system. Basic public health services capacity
spending can lead to an unsustainable burden have been signcantly enhanced. The State
on individuals, rms and government. Council General Ofce has also issued policy
A study commissioned by the World guidance for promoting multi-tier diagnosis
Bank for this report concluded that busi- and treatment system (Guo Ban Fa,] No. 70,
ness as usual, without reform, would result 2015). On October 29, 2015 the 18th Session
in growth of total health expenditure from of the Central Committee of the Fifth Ple-
5.6 percent of GDP in 2015 to 9.1 percent in nary Session of the CPC endorsed a national
2035, an average increase of 8.4% per year strategy known as Healthy China which
in real terms. Over 60 percent of increase is places population health improvement as the
expected to be in inpatient services. China main system goal. This strategy will guide
could achieve significant savings equiva- the planning and implementation of health
lent to 3 percent of GDP if it could slow reforms under the 13th Five-year Develop-
down the main cost drivers that are the cost ment Plan, 2016-2020 (see Box). The Gov-
per treatment episode and unit cost increases. ernment has also initiated enabling legislative
To realize these savings health services to be actions. The Basic Health Care Law, which
balanced with increased utilization of outpa- will dene the essential elements of the health
tient and primary health care. The report dis- care sector including nancing, service deliv-
cusses policy options to achieve that. ery, pharmaceuticals, private investment, etc.
On the basis of the great achievements, has been included in the legislative plan of
China needs to deepen its health reform to National Peoples Congress of China and is
avoid the risk of creating a high-cost-low-value being formulated by the congress. The Basic

Law CPC Central Committee Suggestions for short, the eight levers represent a compre-
the 13th Development Plan as well as recent hensive package of interventions to deepen
policy directives contain the fundamental health reform.
components of service delivery reform. For As China continues to grow, health spend-
example, policies emphasize strengthening ing will increase. However, for sustainability
the three-tiered system, including primary and affordability the rate at which spend-
care and community-based services, human ing on health increases can be managed by
resources reform, optimizing use of social prudent choices related to the location, orga-
insurance, and encouraging private invest- nization and production of health services
ment (social capital) to sponsor health and the efcient use of resources, even while
care. Policies also support people rst prin- making care far better. China will soon
ciples such as building harmonious relation- need to come up with a new model of health
ships with patients, promoting greater care production, financing and delivery, which
integration between hospitals and primary responds to the needs and expectations of its
care facilities through tiered service deliv- population but at the same time is grounded
ery and use of multidisciplinary teams and in the economic reality of today. China has
facility networks, shifting resources towards already decided that doing nothing is not an
the primary level, linking curative and pre- option: continuing the previous health ser-
ventive care, reforming public hospital gov- vice delivery model in the current environ-
ernance and strengthening regional service ment will result in increasing health costs
planning. However, while important prog- and a heavier burden on the government or
ress has been observed, it is mostly limited households or both. One of the key messages
to pilot projects. This suggests strengthening of this report is the importance of creating
implementation and emphasizing scale-up of value. Value means working toward three
successful reforms. Acknowledging the dif- goals simultaneously: better health for the
culty of implementing these reforms and time population, better quality and care experi-
required to achieve scale, they are collectively ence for individuals and families, and afford-
referred to as reforms of the emerging deep able costs for individuals and government. It
water phase. also means bridging the gap between health
The reforms proposed in this report aim and health care. In moving forward with the
to support China during this deep water delivery reforms, China must maintain its
reform phase. Eight sets of strategic reform focus on achieving more health rather than
directions, referred to as levers, are pro- more treatment. It has to shift the focus from
posed. Broadly, these reforms focus on rewarding volume and sales to rewarding
improving downstream service provision health outcomes achieving more value for
as well as creating an enabling upstream the money spent. With proper delivery sys-
nancial and institutional environment for tem reforms, better care, better health and
that improvement. Each lever contains a more affordable costs are all well within
set of recommended core action areas and Chinas reach.
corresponding implementation strategies
to guide the what and how of deepening
service delivery reform. They are meant to Recommendations
provide policy implementation guidance The report proposes eight sets of strategic
to all governmental levels. The levers are reform directions, referred to as levers
interlocked and should not be considered or representing a comprehensive package of
implemented as independent sets of actions. interventions to deepen health reform. Each
Their roll out will require synchronization. lever contains a set of recommended core
For example, actions taken by front line action areas and corresponding implemen-
health care providers will require strong tation strategies to guide the what and
institutional support combined with nan- how of deepening service delivery reform,
cial and human resource reforms in order to and are meant to provide policy guidance
achieve the aforementioned triple goals. In at all governmental levels. The levers are
xviii D E E P E N I N G H E A LT H R E F O R M I N C H I N A

conceptualized to be interlocked and are not care and leaders in workforce development.
designed to be implemented as independent Measurement, monitoring and feedback are
actions. For example, actions taken by front based on up-to-date, easily available, and
line health care providers will require strong validated data on the care, outcomes, and
institutional support combined with nan- behaviors of providers and patients.
cial and human resource reforms in order to
achieve the reform goals. Second, continuous quality improvement is
a foundational element of PCIC and creat-
At the core of the recommendations is the ing a high value system, and is essential for
full adoption of a reformed service deliv- gaining citizen trust. Government leadership
ery model, referred to as people-centered and stewardship are vital for building capac-
integrated care (PCIC), in order to acceler- ity to improve quality of health care. The rst
ate progress toward Chinas vision of health priority is to have a full service coordination
service delivery reform and improve value architecture to oversee systematic improve-
for money. PCIC is the term used to refer ments to health sector quality throughout
to a care delivery model that is organized the service delivery system, including public
around the health needs of individuals and and private sectors. This architecture would
families. The bedrock of a high-performing be publicly responsible for coordinating
PCIC model is a strong primary care system all efforts aimed at quality assurance and
that is integrated with secondary and tertiary improvement, including linking service qual-
care through formal linkages, good data, and ity with the incentives applied by the service
information sharing among providers and purchasers, and would actively engage all
between providers and patients, and active stakeholders to facilitate the implementation
engagement of patients in their care. It uti- of quality assurance and improvement strat-
lizes multidisciplinary teams of providers that egies. Stakeholder organizations, including
track patients with eHealth tools, measures NHFPC, MOF, MOHRSS, and key profes-
outcomes over the continuum of care and sional and scientic bodies, would be repre-
relentlessly focuses on continually improving sented. Operationally, at current stage, China
quality. Curative and preventive services are may consider to have State Council Health
integrated to provide a comprehensive experi- Reform Leading Group to take this func-
ence for patients, and measurable targets for tions to ensure the highest level leadership
facilities. Large secondary and tertiary hos- and authority to mobilize public and private
pitals have new roles as providers of complex stakeholders and citizen engagement. New

FIGURE ES.1 8-in-1 Interlinked Reform Levers

Service Delivery System

Tiered health care delivery system in accordance with
People Centered Integrated Care Model (PCIC) Rebalanced and
Health Service
Reforming Public
Improve Quality of Care Engaging Citizens in Delivery
Hospitals and Improving
in Support of PCIC Support of the PCIC
their Performance

Reform Institutional and Financial Environment
Realign Incentives
Stengthening Health
in Purchasing and Better Health
Workforce for PCIC
Provider Payment Higher Quality and
Modernizing Health Patient Satisfaction
Strengthen Private Affordable Costs
Service Planning
Sector Engagement
to Guide Investment

national agencies dealing with the area of for all services. Rather, they are increasingly
quality have been created in number of coun- becoming part of a network of facilities that
tries, including Australia, England, France includes other providers such as primary
and the United States. Whatever the option, care, diagnostic units and social services.
this entity would serve as the ultimate source They are steadily shifting low complexity
of scientic information on all quality-related care to lower levels, and sharing personnel
topics for both clinicians and the public. It and providing technical assistance and train-
will also become the institutional leader in ing to them. Moving public hospitals to their
promoting quality of care and ensuring that new roles in China will require strengthen-
evidence-based care is consistently delivered ing accountabilities and improving manage-
at the highest standard. This entity could ment. Reform will entail enacting a legal
also serve as a platform for tapping interna- framework that specifies organizational
tional experience in care improvement. Many forms (such as boards or councils) that serve
OECD countries have established such insti- as the accountable interface between govern-
tutions. Commitment to improving quality ment and hospital management, setting the
of care can be further enhanced by conduct- roles, composition and functions of these
ing an in-depth national study of the state of boards or councils, granting decision-making
quality of care and quality improvement ini- autonomy to the same, and putting in place
tiatives at all levels of the system. In a number robust accountability mechanisms and incen-
of countries, efforts to improve health system tives that align hospital performance and
performance are catalyzed by comprehensive, behaviors with government priorities and
data-based reports on quality and perfor- the reformed delivery model. China would
mance. These reports helped focus the atten- also benet from professionalizing hospital
tion of leaders and professionals on avoidable management. This would require short and
shortcomings in quality and on opportunities long term measures ranging from studying
to do better for patients and communities. and adapting innovative management prac-
tices in leading public and private hospitals
Third, recognizing the key role of patient and establishing an executive management
trust for the success of the PCIC model, the program to developing career paths for hos-
report recommends that patients are empow- pital managers and working with academic
ered with knowledge and understanding of institutions to strengthen and expand degree
the health system and be actively engaged in programs in hospital management.
the process of seeking care. Optimal use of
scarce resources requires that decisions about Fifth, service delivery reform will entail
investment and disinvestment in services are realigning incentives and strengthening pur-
shaped by patient preferences, which requires chasing. Together with building the skills
a two-way communication between multi- of the health labor force (see below), PCIC
disciplinary clinical teams and their patients. service delivery requires a supporting set of
Without this exchange, decisions are made underlying system-wide incentives that moti-
with avoidable ignorance at the front lines vate and inuence the behavior and actions
of care delivery, services fall short of meeting of health providers in ways that strengthen
needs while exceeding wants, and efciency and sustain the fundamental features of the
declines over time. patient-centric model. In addition, nancial
incentives are a key mechanism of lowering
Fourth, the reformed service delivery model costs, improving quality of care and directing
requires new roles for hospitals. Public hos- the production and delivery of health services
pital reform is part and parcel of reshaping to priority areas determined by the princi-
the service delivery system based on PCIC. pals taking such decisions. Designing effec-
Internationally, the role of hospitals is chang- tive incentive programs that can align the
ing. They are no longer standalone facili- varying objectives of the different stakehold-
ties at the center of the delivery system, the ers in health is a complex undertaking, one
point of entry to care, or one-stop shops that requires regular tweaking and constant
xx D E E P E N I N G H E A LT H R E F O R M I N C H I N A

adjustment as the different players adapt their promote alternative but well-trained cadres
behaviors to changing rules, but fortunately, of health workers (such as clinical assistants,
there have been many local experiments in assistant doctors, clinical ofcers and com-
different parts of China in recent years that munity health workers) with eHealth links
offer replicable lessons. The main actions nec- to other professionals to strengthen primary
essary to realize this vision include: (i) switch care delivery.
from fee-for-service as a dominant method
of paying providers to capitation, case-mix Seventh, private sector engagement should
(i.e., DRGs), and global budgets; (ii) correct be aligned with the new shape of the deliv-
and realign incentives within a single, uni- ery system. China may consider developing
form and network-wide design in support of a shared vision of the role of the private sec-
population health, quality and cost contain- tor and build the regulatory environment
ment; (iii) correct and realign incentives to that allows qualied private actors to deliver
reverse the current irrational distribution of cost effective services while competing on a
service by level of facilities; and (iv) consoli- level playing eld with the public sector. It
date and strengthen the capacity of insurance is important that China decides and states
funds so as to equip them to become strategic its preferences for select forms and subsec-
purchasers. tors in the health sector where it would like
private enterprise to focus. This clarity will
Sixth, human resources will need to reect help private investors and health care provid-
the new shape of service delivery. PCIC ser- ers as well as subnational governments. The
vice delivery requires a competent workforce latter can then develop appropriate supervi-
teams and individual practitioners that share sory and regulatory mechanisms to guide the
its values, which raises questions of the desir- private sector in ways that best complement
able composition of the health workforce in the existing public system of health produc-
China. At the center of any PCIC model is tion and delivery. Specic strategies to secure
the need to raise the status of primary care this vision include: (i) identify areas where the
workers. This will require building consensus private sector can contribute most effectively;
and shared understanding among govern- (ii) move away from quantity targets for pri-
ment, health providers and general public vate sector market share and instead identify
of the centrally important role of primary priority sub-sectors for private sector growth
care, together with hospitals, in providing that are most aligned with the public interest;
the full continuum of care to the citizens. (iii) endorse the shared vision and articula-
Many countries have adjusted their health tion publicly and communicate widely; and
workforce in an effort to strengthen primary (iv) formalize the engagement process by
health care, and offer useful lessons that can drafting guidelines for provincial and local
be applied in the Chinese context. Specific governments to implement according to local
implementation strategies include: (i) reform conditions. Government will need to strictly
the headcount quota system and establish an monitor the effects of private sector entry
independent system of professional licensing and expansion on the health care system and
and career development prospects for PHC respond thoughtfully but with agility to what
workforce, particularly for general prac- is learned.
tice (GP); (ii) introduce primary health care
(PHC)-specific career development path to Finally, the report recommends moderniza-
develop and incentivize the PHC workforce, tion in ways that capital investment deci-
including separate career pathways for GPs, sions are made in the health sector in China,
nurses, mid-level workers and community and suggests moving away from the tradi-
health workers; (iii) establish general practice tional input-based planning towards capi-
as a specialty (such as Family Medicine), with tal investments based upon region-specic
equivalent status to other medical specialties; epidemiological and demographic proles.
(iv) enhance compensation system for PHC Shifting from a strategy that is driven by
workforce relative to other specialties; and (v) macro standards to one that is determined

by service planning based on real popula- national policy implementation and

tion needs will help China better align its monitoring guidelines. Giving more
huge capital investments, projected to reach policy weight and providing greater
US$ 50 billion annually by 2020, with the attention to implementation practices
demands of an affordable and equitable by senior policy makers and leaders is
health care system and achieve value-for- critical to the process of service deliv-
money for its massive investments in the ery reform. The central government may
health sector. Moving from capital invest- consider having a more hands-on role
ment planning to a people-centered service in guiding and monitoring the implemen-
planning model will require prioritization tation phase of the reforms by the State
of public investments according to burden of Council Health Reform Leading Group
disease, where people live, and the kind of and in crafting a series of policy imple-
care people need on a daily basis. Within this mentation and monitoring guidelines to
service planning approach, capital investment orient reform planning and execution by
planning, which is necessary to optimally use provincial and local governments. These
funding opportunities (such as insurance and guidelines can provide veriable tasks or
public reimbursements), can guide the devel- intermediate outcomes related to reform
opment of facilities of the future, change the implementation which would foster
status quo of today, and ensure that excess greater reform implementation integrity
capacity is not created to further exacerbate at local levels. However, the guidelines
inefciency and capital misallocation. are not an implementation plan or one-
size-ts all blueprint. They would need
to be operational in nature, specifying
Spreading Effective and categorically what to do. In turn, pro-
Sustainable Implementation vincial and local governments should
have full authority to decide on how
Numerous health reforms experiments are to do it --- developing, executing and
under way in China to operationalize the sequencing implementation plans based
reform policies, but for the reforms to be on local conditions. These guidelines are
successful and brought to scale, they need to best accompanied by a strong monitor-
become comprehensive and be implemented ing system with corresponding indica-
in a coordinated and deliberate manner. tors capable of independently assessing
Bridging the gap between policies and prac- and verifying implementation progress
tice requires capacity, resources, accountabil- and results (see below). Finally, the State
ity and a commitment to collaboration, eval- Council Health Reform Leading Group
uation and learning. The report recommends can craft strong accountability mecha-
putting in place a simplied but actionable nisms to enforce reform implementation
implementation framework consisting of four at provincial and local levels. For exam-
systems adapted broadly to the Chinese con- ple, the aforementioned indicators can be
text: (i) macro implementation and (external) placed in task agreements with pro-
inuence system; (ii) coordination and sup- vincial and local government. For some
port system; (ii) delivery and learning system; provinces and local governments where
and (iv) monitoring and evaluation system. institutional capacity is lacking, the cen-
The following specific recommendations tral government may want to consider
would contribute to creating an enabling financing and arranging for technical
organizational, accountability and collabora- support on implementation.
tive environment for sustained and scalable Coordination and support system:
implementation. Establishing coordination and organi-
zational mechanisms that make provin-
Macro implementation and (external) cial and local governments accountable
influence system: Establishing strong for results and support front line reform
central government oversight linked to implementation. The coordination and
xxii D E E P E N I N G H E A LT H R E F O R M I N C H I N A

support system requires an organiza- institutional fragmentation on reform

tional structure proximate to front line implementation. It does not institutional-
implementation to carry out a number of ize inter-agency coordination. A longer
critical functions, including coordinat- term solution would involve institutional
ing and ensuring buy in of key institu- consolidation which would be part of a
tional stakeholders, arranging for train- much broader reform to streamline the
ing and technical assistance, developing governments administration systems
and adapting implementation plans and and organizational structures. China
timelines, communicating reform activi- may want to examine organizational
ties and expectations to communities, structures, distribution of responsibili-
health care organizations and health ties and coordination of functions across
workers, and making front line providers agencies involved in health system gover-
accountable for implementation progress nance in OECD, especially those coun-
and results. Strengthening accountability tries with social insurance nancing and
arrangements is of crucial importance, mixed delivery systems (i.e., public and
particularly at the provincial and local private provision).
levels. Any accountability arrangement Delivery and learning system: Creating
should be sufciently powerful to align Transformation Learning Collabora-
institutional standpoints and to lever- tives (TLCs) at the network and facil-
age government interests when dealing ity levels as the fundamental building
with providers and vested interests. One block to implement, sustain and scale
option is to promote and strengthen the up reforms on the front line. The main
empowered leading groups or steer- location of implementation is the front
ing committees at the provincial level lines of service delivery: health care
led by government leaders (i.e., gover- organizations (hospitals, THCs, CHCs,
nors, mayors or party chiefs), follow- VCs), networked groups of health care
ing the practice in some provinces or organizations, and communities. Health
municipalities. Leading groups can also care organizations must adopt con-
be formed at local governmental levels tinuous learning and problem-solving
(county, municipality, and prefecture) approaches to accelerate the success-
depending on the context. Such groups ful implementation of reforms. To do
already exist in China Sanming is an this will require local customization
example and they have played impor- of policy implementation guidelines to
tant role in coordinating health service meet specic needs at the front-lines. To
delivery and health insurance reforms support this learning process, it may be
at local level. The leading groups will benecial for public and private provid-
require strong leadership and politi- ers to come together to form associations
cal support and be fully empowered to committed to implementing the PCIC
implement reform within their jurisdic- approach and corresponding reforms in
tions. A subset of these implementation the nancial and institutional environ-
performance measures can be considered ment. China can consider forming TLCs
for incorporation into the career pro- partnerships of groups of facilities
motion system for provincial and local within a county, district, or municipal-
leaders. An advantage of the proposed ity (CDM) to implement, manage, and
leading group arrangement is that it is sustain reforms on the front lines. The
a well-known inter-agency coordination driving vision behind the TLC concept
mechanism, and has been applied suc- is to assist and guide local care sites (e.g.,
cessfully within the current institutional village clinics, THCs, CHCs, county
framework. Nevertheless, the lead- and district hospitals) to implement
ing group option can be considered as and scale-up the reformed service deliv-
an interim organizational arrangement ery model and close the gap between
in part to mitigate the challenges of knowing and doing. Ostensibly,

TLCs are about putting evidence into a system to monitor health spending
practice especially in terms of adopting from all sources (i.e., fiscal by differ-
national and international standards for ent government levels, social insurance,
evidence-based clinical practice. But they out-of-pocket, etc.) and type of expen-
also entail learning from experience. diture. These performance monitoring
Provincial (and local) leading groups can systems can be achieved in partnership
select the facility alliances or networks, with academic institutions. Based on the
hospitals and primary care facilities to proposed implementation guidelines and
participate in TLCs. existing monitoring systems, SCHRO
Monitoring and evaluation system: can develop implementation bench-
Ensuring strong and independent moni- marks and other metrics to track reform
toring and impact evaluation. Monitor- implementation.
ing and evaluating the effectiveness of
implementation and reform impact is a The pathway of reforms is critical to the out-
critical but often overlooked component comes of reforms. Reform sequencing can
of the implementation process. Evidence proceed along two pathways: one relates to
needs to be gathered to learn from imple- setting accountability and organizational
mentation and contribute to evidence- arrangements while the other involves imple-
based improvements and future policy menting the recommended core actions.
making. Careful monitoring can detect In terms of the former, the first step is for
whether implementation is aligned with the central government to prepare policy
stated objectives, on track (or going off implementation and monitoring guidelines
track) or the implemented reforms match to steer implementation by provincial and
the intended reforms. Impact evaluation local governments and strengthening the
measures the intended and unintended authority and functions of the State Coun-
effects and outcomes. China may con- cil Health Reform Ofce. Establishing fully
sider establishing a strong monitor- empowered leadership groups led by high
ing and evaluation system capable of level authorities at the provincial and local
independently assessing and verifying levels will be another step in moving for-
implementation progress and reform ward reform implementation. Local govern-
impacts. It may also consider developing ment will be responsible for developing and

FIGURE ES.2 Reform Implementation Roadmap

How Long Will it Take? Reform Actions and Impacts

Patient self management
Cost containment
Impacts Actions
Better quality
Reforms and Impact

Better patient satisfaction

Care shifting from hospitals New service planning model
Level playing field for private sector engagement
PHC utilization
Human resource strengthening in support of PCIC
Quality improvement and patient engagement/health literacy
Realigning financial incentives/strengthening purchasing
PCIC model testing and scale-up; public hospital reform
Year 1 Year 5 Year 10
Time needed to implement, scale-up and achieve impacts
Adapted from Cutler, 2014
xxiv D E E P E N I N G H E A LT H R E F O R M I N C H I N A

executing implementation plans adopted to may be right now may be wrong in the
local conditions but aligned with the policy long term. Realistically, it would take
implementation and monitoring guidelines. China around 10 years to fully implement
Creating TLCs to support front-line devel- the proposed reforms, and reach full scale.
opment and implementation of an initial set How the reforms will be implemented will
of PCIC core interventions would be a third vary considerably, given Chinas size and
step. Performance agreements between cen- variations in starting and local conditions.
tral and provincial governments and between Clearly, some regions will be able to move
provincial and local governments specify- faster than others. As suggested in the chart,
ing benchmarks and anticipated results will some reforms will take longer than others to
facilitate timely execution at all stages of the implement and scale-up. For example, we
plan. Turning to second pathway related to estimate that PCIC model implementation
recommended core actions, in addition to and scale-up will take about ve years while
implementing a PCIC-based delivery model, human resource strengthening will take 6 to
a key step would be realigning incentives 8 years. Some impacts, such as cost contain-
in provider payments and building capac- ment and outcomes, may not be realized
ity among government health purchasers to until after ve years of implementation.
incentivize improved health, better quality
and lower costs. Changing human resource Caveats: This study centers on reforms to
management and compensation to elevate the improve health service delivery and the sup-
position of primary care physicians would be porting nancial and institutional environ-
another key step in sequencing the reforms. ment in China. Resource and time constraints
Building integrated care alliances or networks did not allow for analysis of other important
of tertiary and secondary hospitals, primary reform themes which can be the subject of
care providers and community health work- future research. These include: pharmaceuti-
ers, incentivized by insurance payments and cal industry, tobacco industry, education and
by budgetary contributions and supported by licensing of medical professionals, traditional
eHealth information systems, would also be Chinese medicine (and its integration with
an early intervention. Western medicine) and dissemination and use
of medical technologies. Some of the linkages
How long will it take? No one has the between aged care, health care and social ser-
answer to this question. International vices will be taken up in a forthcoming WBG
experience suggests that health reform is a study. Finally, it is important to keep in mind
long-term endeavor that requires continu- that this report is a summary of findings
ous inight adjustments. No country ever and recommendations. The nal report will
gets it right, and what is right is con- expand upon the major themes and recom-
text specic and often time bound. What mendations presented herein.

ABCS Aspirin, Blood pressure, EHR Electronic Health Record

Cholesterol, Stroke system
ACTION Aged Care Transition ED Emergency Department
program (Singapore) FT Foundation Trust (England)
AMI Acute Myocardial Infarction GDP Gross Domestic Product
ARS Regional health agencies GP General Practitioners
(France) HCA Health Care Alliance
BHRSS Bureau of human resource HMC Hospital Management
and social security Center/Council
CDM County, District, or HRH Human Resource for Health
IHI Institute for Healthcare
CHC Community Health Center Improvement
CIHI Canadian Institute of Health IMF International Monetary Fund
IOM Institute of Medicine
CIP Capital Investment Planning
IT Information Technology
CMS Centers for Medicare and
LLG Local Leading Group
Medicaid Services
MDT Multi-Disciplinary Teams
CNHDRC China National Health
Development Research Center MoF Ministry of Finance
CoG Council of Governors MoHRSS Ministry of Human Resource
(England) and Social Security
CON Certicate of Need MQCCs Medical quality control
CPAS Central physician
appointment system MSMGC Medical service management
and guidance center
CQI Continuous Quality
Improvement MTEF Medium-Term Expenditure
CT Computerized tomography
NCDs Non-Communicable Diseases
DRGs Diagnostic Related Groups
NCMS New Cooperative Medical
ECG Excess cost growth

D E E P E N I N G H E A LT H R E F O R M I N C H I N A xxv
xxvi D E E P E N I N G H E A LT H R E F O R M I N C H I N A

NCQA National Committee for QI Quality improvement

Quality Assurance RMB Ren Min Bi (Chinese Yuan)
NDRC National Development and SATCM State Administration of
Reform Commission Traditional Chinese Medicine
NFO Non-for-prot Organization SCHRO State Council Health Reform
NHCQC National Health Care Quality Ofce
Council SES Secretariat of Health of the
NHFPC National Health and Family State Government of Sao
Planning Commission Paulo (Brazil)
NHS National Health Service SFDA State Food and Drug
NICE National Institute for Health Administration
and Care Excellence SROS Regional Strategy Health
NSW New South Wales Plans (France)
OECD Organization for Economic THC Township Health Center
Cooperation and TLC Transformation Learning
Development Collaboratives
OOP Out-of-Pocket Spending TQM Total Quality Management
OSS Social Organization (Brazil) UAE United Arab Emirates
P4Q Pay-for-Quality UEBMI Urban Employee Basic
PCIC People-Centered Integrated medical Insurance scheme
Care model UK United Kingdom
PCMH Patient-Centered Medical URBMI Urban Resident Basic Medical
Home Insurance scheme
PCP Primary health Care Provider US United States
PDSA Plan-Do-Study-Act cycle VBP Value-based purchasing
PHC Primary Health Care VC Village Clinic
PLG Provincial Leading Group VHA Veterans Health
PPP Purchasing power parity Administration
PREMs Patient-reported experience VTE Venous Thromboembolism
measures WHO World Health Organization
PROMs Patient-reported outcome WMS Weighted Management Score

Deepening health sector reform is arguably insurance coverage, for example, the cover-
one of the major social undertakings facing age stayed above 95%. Service capacity has
China. In 2009, China unveiled an ambitious increased, utilization of health services has
national health care reform program, com- risen and out of pocket spending as share of
mitting to significantly raise health spend- total health expenditures has fallen, leading
ing with the goal to provide affordable, to a more equitable access to care and greater
equitable and effective health care for all by affordability. For example, by 2014 reim-
2020. Building on an earlier wave of reforms bursement rates for inpatient services of the
that established a national health insurance three main social insurance schemes (UEBMI,
system, the 2009 reforms, supported by an URBMI and NCMS) were raised and differ-
initial nancial commitment of RMB 1380 ences signicantly narrowed, reaching 80, 70
billion, reafrmed the governments role in and 75 percent respectively. Twelve categories
the nancing of healthcare and provision of of basic public services, including care for
public goods. After nearly six years of imple- several chronic conditions are now covered
mentation, China has made a number of very free of charge. The essential drug program is
noteworthy gains. It has achieved universal contributing to reducing irrational drug use
health insurance (HI) coverage at a speed that and improving access to effective drugs. The
has few precedents globally or historically. reform, including subsequent regulations, has
Benets have also been gradually expanded. encouraged greater private sector participa-
For example, the New Rural Cooperative tion in part to reduce overcrowding in public
Medical Scheme (NRCMS), which targets facilities. The governments have input huge
rural populations, has become more com- amount of financial resources in the con-
prehensive, incrementally adding outpatient struction of primary healthcare facilities. The
benets while including coverage for specic capacity of primary healthcare services have
diseases. Treatment for many conditions no been greatly strengthened. Finally, the reform
longer represents a poverty-inducing shock also spearheaded hundreds of innovative
for rural residents. pilots in health financing, public hospitals
Fueled by massive investments in health and grassroots service delivery several of
infrastructure and human resource forma- which are examined in this report and pro-
tion at the grassroots level, signicant expan- vide a strong foundation for the next stage
sion of access to basic public health services of reform. China is progressing quickly to
and achievement of near-universal health achieving universal health coverage and some

D E E P E N I N G H E A LT H R E F O R M I N C H I N A xxvii
xxviii D E E P E N I N G H E A LT H R E F O R M I N C H I N A

of the reform achievements have attracted hospital-centric, fragmented and volume-

worldwide attention. driven. Cost-inducing provider incentives
China now faces emerging challenges in and lack of attention to quality are major sys-
meeting the health care needs of her citi- tem shortcomings. The delivery system has
zens, associated with a rapidly aging society, a bias toward doing more treatment rather
increasing burden of non-communicable dis- than improving population health outcomes
eases (NCDs) and rising prevalence of risk and for admitting patients to hospitals rather
factors. Reductions in mortality and fertil- than treating them at the primary care level.
ity trends led to a rapidly aging society while Services are unintegrated (or uncoordinated)
social and economic transformation brought across provider tiers (e.g., tertiary, second-
urbanization and changed life styles, lead- ary and primary) and between preventive
ing to emerging risk factors of obesity, sed- and curative services. Given the high preva-
entary lifestyles, stress, smoking, abuse of lence of NCDs, this suggests that care is
alcohol and other substances, and exposure suboptimal. Health nancing is institution-
to pollution and trafc accidents. NCDs are ally fragmented and insurance agencies have
already Chinas number one health threat. remained passive purchasers of health ser-
These trends add to the complexity China is vices. Effective engagement with the private
facing, and to which the health system will sector is in its infancy and service planning
have to respond in order to prevent disease has not been modernized. There is a short-
through reducing the major risk factors for age of qualied medical and health workers
chronic disease, addressing those inuences at the primary care level, which further com-
that drive exposure to these risk factors (such promises the systems ability to carry out the
as the environment), and ensuring the provi- core functions of prevention, case detection,
sion of services that meet the requirements of early treatment and care integration.
those with chronic health problems. Rising Recognizing these challenges, Chinas
incomes and levels of education contribute leaders have adopted far-reaching policies to
to population demands for more and better put in place a reformed delivery system. On
health services. Chinas health system will October 29, 2015 the 18th Session of the Cen-
be judged on how well it handle these new tral Committee of the Fifth Plenary Session of
challenges. the CPC endorsed a national strategy known
China needs to avoid the risks of devel- as Healthy China which places population
oping into a high cost and low-value health health improvement as the main system goal.
system (see Box I.1). The health system is This strategy will guide the planning and

BOX I.1 What is Value in Health Care?

Value is dened as health outcomes for the money Low value care refers to services with little or no
spent (Porter, 2010). Others offer a more expanded benet in terms of health outcomes, are clinically inef-
definition involving a combination of [better] out- fective or even harmful, and are cost ineffective (com-
comes, quality and patient safety, and [lower] costs pared to alternatives). The term encompasses multiple
(IOM, 2010). In terms of reform or change strategies concepts (and terms) that contribute to excess costs,
to improve health services, value involves shift[ing] low quality care and poor health outcomes, includ-
the focus from the volume and protability of services ing inappropriate care, unsafe care, unnecessary care,
provided physicians visits, hospitalizations, proce- overutilization, misuse, overtreatment, over diag-
dures, and [diagnostic] tests to the patient outcomes nosis, missed prevention opportunities, and waste
achieved (Porter, 2010:3). The concept involves (Busse, et al., 2015).
making effective linkages between health care and
health outcomes.

implementation of health reforms under the service planning. These are some of the
13th Five-year Development Plan, 20162020 essential features and supporting elements
(see Box I.2). The Government has also ini- of a value-driven delivery system that incor-
tiated enabling legislative actions. The Basic porates a new service delivery model, the
Health Care Law, which will define the full adoption of which will facilitate achiev-
essential elements of the health care sector ing Chinas vision of service delivery reform.
including financing, service delivery, phar- However, while important progress has been
maceuticals, private investment, etc. has been observed, it is mostly limited to pilot projects.
included in the legislative plan of National This suggests strengthening implementation
Peoples Congress of China and is being for- and emphasizing scale-up. Acknowledging
mulated by the congress. CPC Central Com- the difculty of implementing these reforms
mittee Suggestions for the 13th Development and time required to achieve scale, they are
Plan as well as recent policy directives (Guo collectively referred to as reforms of the
Wei Ji Ceng Fa, no. 93, 2015) contain the emerging deep water phase.
fundamental components of service deliv- China also faces an unenviable conun-
ery reform. For example, policies emphasize drum, in that as its economy is slowing
strengthening the three-tiered system, includ- down, health spending is not likely to follow
ing primary care and community-based ser- suit. Indeed, as the population ages and new
vices, human resources reform, optimizing technologies get further integrated in pre-
use of social insurance, and encouraging pri- ferred treatment options, the upward pres-
vate investment (social capital) to sponsor sures on health spending will become even
health care. Policies also support people rst more pronounced. In the face of these oppos-
principles such as building harmonious rela- ing trends, China will soon need to come
tionships with patients, promoting greater up with a new model of health production,
care integration between hospitals and pri- nancing and delivery, which responds to the
mary care facilities through tiered service needs and expectations of its population but
delivery and use of multidisciplinary teams at the same time is grounded in the economic
and facility networks, shifting resources reality of today, based on the economic new
towards the primary level, linking curative normal. China has already decided that
and preventive care, reforming public hos- doing nothing is not an option: continuing to
pital governance and strengthening regional provide quality health services in the current

BOX I.2 Suggestions of the CPC Central Committee on the 13th Five-year Plan for
National Economic and Social Development on the promotion of a Healthy China
(pp. 4243, English translation)

China will deepen the reform of the medical and of medical resources to the grassroots level and rural
health systems, promote the interaction of medical areas, and promote work concerning general prac-
services, health insurance and pharmaceutical supply, titioners, family doctors, and the medical service
implement the tiered delivery system and establish capacity of highly needed areas, and electronic medi-
primary care and modern health care systems that cal records.
cover both urban rural areas. Efforts should be made to encourage social forces
Efforts should be made to optimize the layout to develop the health service industry, promote the
of medical institutions, improve the medical service equal treatment of non-prot private hospitals and
system featuring the interaction and complementar- public hospitals, strengthen supervision and control
ity of higher and lower levels of institutions, improve of medical quality, improve mechanisms for dispute
the model of medical service at the grassroots level, resolution, and build harmonious relations between
develop distance medical service, promote the ow doctors and patients.
xxx D E E P E N I N G H E A LT H R E F O R M I N C H I N A

arrangement will result in increasing health diseases, aging populations and cost pres-
costs and a heavier burden on the state exche- sures. Drawing on commissioned case work
quer or households or both. In fact, since and analysis as well as the broader litera-
reforms take time to work their way through ture, the report summarizes lessons learned
the complex healthcare system, the time to from Chinese and international experiences
implement and scale-up transformative mea- and recommends actions to support policy
sures is now, before it gets too late and even implementation.
more expensive. The report is intended for central and pro-
In moving forward with the delivery vincial level policy makers and regulators as
reforms, China should consider maintain- well as planners and implementers at the local
ing its focus on achieving more health rather level, including insurers and providers. Policy
than more treatment. This would suggest makers may want to focus on the recom-
shifting the focus from rewarding volume mended levers and corresponding core actions.
and sales to rewarding health outcomes, and The strategies for central and provincial gov-
achieving more value for the money spent. It ernment proposed in the implementation
would also suggest paying particular atten- model described in last chapter would also be
tion to providing affordable and equitable an area of interest for this group. Meanwhile,
health care for all population groups, so that planners and implementers can center their
the poor and disadvantaged people do not attention on the core actions and correspond-
face the risks of catastrophic medical spend- ing specic implementation strategies. They
ing and forego medical care because of unaf- would also benet from the front line elements
fordability. Making the shift from a health of the proposed implementation model.
care delivery system focused on production Before proceeding, a couple of caveats are
of treatments to one focused on value and in order. First, this study centers on reforms
producing health suggests a strategic agenda to improve health service delivery and the
that aligns all stakeholders and works toward supporting nancial and institutional envi-
three goals: (i) attaining better health for the ronment in China. Resource and time con-
population; (ii) providing better quality and straints did not allow for analysis of other
care experience for individuals and families; important reform themes which can be the
and (iii) achieving affordable costs. subject of future research. These include:
pharmaceutical industry, tobacco industry,
education and licensing of medical profes-
Objectives and Audience sionals, traditional Chinese medicine (and
The objective of this report is to provide its integration with Western medicine) and
advice on core actions and implementation dissemination and use of medical technolo-
strategies in support of Chinas vision and gies. Some of the linkages between aged care,
policies on health reform particularly in rela- health care and social services will be taken
tion to service delivery. A more immediate up in a forthcoming WBG study Second, it
objective is to contribute technical inputs for is important to keep in mind that this report
the preparation of the 13th Development Plan. is a summary of ndings and recommenda-
There is much to learn from national and tions. The nal report will expand upon the
international innovations and experiences major themes and recommendations pre-
to successfully reform service delivery. In sented herein.
China, for example, there are many success-
ful pilot initiatives that have not yet been
scaled up. These initiatives represent oppor-
Report Structure
tunities that China can build upon and scale Chapter 1 summarizes the major health and
up these experiments to shape a world class health system challenges facing China and
service delivery system. At the same time, provides a rationale for the recommendations
China can draw on OECD countries that detailed in this report. More specific chal-
are reshaping their health delivery systems to lenges are highlighted in each of the subse-
address similar challenges posed by chronic quent chapters according to theme.

The next eight chapters constitute the sets of actions. To be sure, actions taken by
main body of the report and are divided into front line providers will require strong insti-
two parts (see Box I.3). The rst centers on tutional support combined with nancial and
downstream service delivery and the sec- human resource reforms in order to achieve
ond on the upstream enabling nancial and the aforementioned triple goals. In short, the
institutional environment to support service eight levers represent a comprehensive pack-
delivery reforms. Each chapter concentrates age of interventions to deepen health reform.
on a single lever or strategic direction to A short description of the contents of each
support the planning and implementation of part follows.
governments vision of service delivery reform.
The levers aim to provide policy implementa- Part 1: Service Delivery: How health services
tion guidance to all governmental levels. Each are organized and delivered, and how provid-
lever contains a set of recommended core ers relate to each other and to patients, mat-
action areas and corresponding implementa- ter. People-Centered Integrated Care (PCIC)
tion strategies to guide the what and how is the term used to refer to a health care deliv-
of deepening service delivery reform. ery model that is organized around the health
These levers are interlocked and should not needs of individuals and families. PCIC is
be considered or implemented as independent also is referred to in the recently proposed

BOX I.3 Report Structure

Chap. no. Chapter Title (and lever number)

1 Background: Impressive gains in health outcomes but substantial challenges remain

Part 1: Service Delivery Levers

2 Shaping a tiered health care delivery system in accordance with People-Centered Integrated
Care (PCIC) models (lever 1)

3 Improving quality of care in support to PCIC (lever 2)

4 Engaging citizens in support of PCIC (lever 3)

5 Reforming public hospitals and improving their performance (lever 4)

Part 2: Institutional and Financial Environment Levers

6 Realigning incentives in purchasing and provider payment (lever 5)

7 Strengthening health work force for PCIC (lever 6)

8 Strengthening private sector engagement in production and delivery of health services (lever 7)

9 Modernizing health service planning to guide investment (lever 8)

Part 3: Moving Forward with Implementation

10 Strengthening implementation of service delivery reform

xxxii D E E P E N I N G H E A LT H R E F O R M I N C H I N A

WHO global strategy of People-Centered are experimenting with PCIC approaches

and Integrated Health Services (WHO, 2015, to address the same set of challenges facing
a, b). PCIC consists of a set of characteris- China: cost escalation, questionable quality
tics that seek to achieve better health and and stagnant gains in health outcomes. Ger-
better quality at affordable costs, or in other many, Denmark, Australia, New Zealand,
words, more value for the money spent. It US, UK, Brazil, Singapore and Canada are
is not a one-size-ts all model. How PCIC some of the countries testing reformed service
is implemented in practice depends on local delivery models that incorporate features of
conditions. PCIC. Though expanding rapidly, PCIC-like
Based on the aforementioned WHO strat- approaches remain local or regional in most
egy and the broader literature, PCIC involves of these countries. Preliminary results suggest
a number of strategic directions, referred that gains can be made in outcomes, qual-
to as levers, at the service delivery level, ity and cost containment, but results vary
including (i) reorienting the model of care considerably within and across countries.
particularly in terms of strengthening pri- Implementing these reforms at scale would
mary health care, changing the roles of hos- make China a world leader in reform service
pitals and integrating providers across care delivery and at the vanguard in health system
levels and among types of services; (ii) con- innovation and development with insightful
tinuously improving the quality of care; and lessons for many countries.
(iii) engaging people to make better decisions
about their health and health seeking behav- Part 2: Financial and Institutional Environ-
iors. A fourth lever involves improving the ment: Establishing an enabling institutional
governance and management of hospitals. environment together with strengthening
These are the respective topics of chapters incentives and accountabilities are under-
25 and constitute Part 1 of the report. lying but recognized drivers of successful
Broadly, the bedrock of a high-performing PCIC implementation and improved service
PCIC model is a strong primary care sys- delivery globally (WHO, 2015 a). China is
tem that is integrated with secondary and no different. Implementation and sustained
tertiary care through formal linkages, good development of service delivery reform in
data, and information sharing among provid- China will require fundamental shifts in
ers and between providers and patients, and incentives, capabilities, and accountabili-
active engagement of patients in their care. It ties, especially in ways that services are
utilizes multidisciplinary teams of providers purchased, providers are paid, people are
that track patients with eHealth tools, mea- reimbursed, and providers report on perfor-
sures outcomes over the continuum of care mance and are held accountable for better
and relentlessly focus on improving quality. care and alignment with public priorities.
Feedback and audit mechanisms ensure con- It will require strong governance arrange-
tinuous learning and quality improvement. ments and sustained high level government
Curative and preventive services are inte- support. The success of PCIC, for exam-
grated to provide a comprehensive experience ple, will depend on improving the primary
for patients, and measurable targets for facili- care workforce, raising compensation and
ties. Hospitals have new roles as providers of competencies of primary care clinicians,
complex care and leaders in workforce devel- and reforming human resource manage-
opment. They also adopt more robust gover- ment practices. The implementation of ser-
nance arrangements and management prac- vice delivery reform will also be enhanced
tices. Measurement, monitoring and feedback through developing more effective forms
are based on up-to-date, easily available, and of public-private engagement. Finally, new
validated data on the care, outcomes, and approaches to service and capital investment
behaviors of providers and patients. planning will be required to align invest-
Internationally, many countries are imple- ment planning with the new service deliv-
menting PCIC-like models to address simi- ery model. Realigning incentives, develop-
lar challenges facing China. Many countries ing a qualified and motivated workforce,

strengthening private sector engagement and facilities, and creating a system of medical
improving capital and service planning are disputes resolution. By using these tools, the
taken up in Chapters 6 to 9, and constitute government denes public and private roles,
Part 2 of the report. creates a level playing eld for public and pri-
China already has a mixed health delivery vate providers and develops a path for a more
system consisting of both public and private formalized and transparent public and pri-
providers, and this system requires strong vate engagements that are aligned with public
government steering to deliver on public priorities. However, international experience
objectives. In this context, the role of the gov- suggests that these tools be sufciently strong
ernment, both at the central and provincial and transparent, and government possesses
level, needs to shift from top-down adminis- adequate enforcement and data monitoring
trative management of services and functions capacity to defend the public interest and
through mandates and circulara remnant avoid policy and regulatory capture by pow-
of the legacy systemto indirect gover- erful private (and public) actors.
nance where government guides public and
private providers to deliver health services Part 3: Moving Forward with Implementa-
and results aligned with government objec- tion: The nal chapter concludes with rec-
tives. Currently, and despite policy direc- ommended strategies, coordination arrange-
tives mandating separation of functions in ments and organizational platforms to
the health sector, government is still involved facilitate sustained implementation and full
in multiple functions, including oversight, scale up. Based on the broader implemen-
nancing, regulation, management and ser- tation literature, it describes an actionable
vice provision. implementation system framework and
Many OECD countries, for example, corresponding strategies relevant to the Chi-
are converging on a health delivery model nese context to promote effective and scal-
in which the government plays a large role able implementation. Recommendations on
in financing, oversight and regulation and sequencing and timing of rollout to reach full
a relatively limited role in direct manage- scale are also provided.
ment and service provision. What matters, Finally, case studies commissioned for this
however, are the policy instruments and study are referenced throughout the report.
accountability mechanisms used to align Box I.4 below presents the case names and
organizational objectives with public objec- location as well as the nomenclature used in
tives. Tools include grants, contracts, regu- referring to the same.
lations, public information and disclosure Annex 1 displays the set of recommended
rules, independent audits, tax policies among core actions for each lever. Annex 2 lists gov-
others. Some are already in use in China. ernment policies supporting each of levers.
Other core government functions in a mixed Annex 3 matches recent policy guidelines on
delivery system include establishing public tiered service delivery (Guo Ban Fa [2015]
purchasing arrangements, guiding health ser- NO.70) to the recommended core actions.
vice and capital investment planning, setting Annex 4 presents a short description of the
and enforcing quality standard and moni- commissioned case studies. Annex 5 includes
toring, regulating public and private hospi- an inventory of studies measuring the impact
tals, accrediting medical professionals and of PCIC initiatives internationally.
xxxiv D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX I.4 Nomenclature, Name and Location for Commissioned Case Studies

In Text Reference Case Studies Location

Chinese Case Studies

Beijing, CHA Beijing Chaoyang Hospital Alliance (CHA), Four cases Beijing
Peking University-Renmin Hospital Integrated Delivery
Beijing, PKU IDS System (PKU IDS). Four cases Beijing

Feixi, SCPHC Strengthening the Capacity of Primary Health Care Anhui, Feixi
Hangzhou, TFY Twelfth Five year (TFY) Zhejiang, Hangzhou

Huangzhong, HCA Health Care Alliance (HCA) Qinghai, Huangzhong

Shanghai, FDS Family Doctor System (FDS) Shanghai

Shanghai, RLG Shanghai Ruijin-Luwan Hospital Groups (RLG), Four Shanghai

XI, IC Integrated Care (IC) Henan, Xi

Zhenjiang, GH Great Health (GH) Jiangsu, Zhenjiang

Zhenjiang, ZKG Jiangsu Zhenjiang Kangfu Hospital Groups (ZKG), Jiangsu, Zhenjiang
Four cases.

International Case Studies

Canterbury, HSP Health Services Plan (HSP) New Zealand,

Denmark, SIKS The integrated effort for people living with chronic Denmark
diseases (SIKS)

Fosen, DMC District Medical Center (DMC) Norway, Fosen

JCUH, AEC James Cook University Hospital (JCUH) Ambulatory England

Emergency Care (AEC)
Kinzigtal, GK Gesundes Kinzigtal (GK) Germany, Kinzigtal

Maryland, CareFirst CareFirst Patient Centered Medical Home United States,

Netherlands, DTC Maastricht Diabetes Care (DTC) Netherlands

Portugal, ULS Local Health Unit (ULS) Portugal

Singapore, RHS Regional Health Systems (RHS) Singapore

Turkey, HTP Health Transition Plan (HTP) Turkey

US, PACE Program for All-Inclusive Care for the Elderly (PACE) United States

VHA, PACT Veteran Health Administration Patient-Aligned Care United States

Teams (PACT)
Source: Annex 4.
Background: Impressive
Gains in Health Outcomes,
but Substantial Challenges Ahead

China was a pioneer in primary care and 2003, offering subsidized health insurance
public health, and more recently in univer- for Chinas rural population, and the Urban
sal insurance coverage. The introduction of Resident Basic Medical Insurance (URBMI)
barefoot doctors, community- or work-place for informal sector workers, children and the
health insurance, and ambitious public health elderly in urban areas in 2007.
campaigns drove improvements combined In 2009, China unveiled a second round
with higher incomes, lower poverty and better of reforms, committing to signicantly raise
living standards (sanitation and water quality, health spending with the goal to provide
education, nutrition and housing), resulted in a affordable, equitable and effective health
signicant decline in mortality and an unprec- care for all by 2020. Building on an earlier
edented increase in life expectancy (Yang et al. wave of reforms, the 2009 reforms, sup-
2008, Caldwell 1986). A child born in China ported by an initial commitment of RMB
today can expect to live more than 30 years 850 billion, reafrmed the governments role
longer than his forebears half a century ago; it in the nancing of healthcare and provision
took rich countries twice that span of time to of public goods. After nearly six years of
achieve the same gains (Deaton 2013). implementation, the reform has made a num-
In the late 1990s, concerns about afford- ber of very noteworthy gains. It has achieved
ability of health care led to a state decision near universal health insurance coverage at a
to initiate a rst round of reforms. A key pil- speed that has few precedents, reaching over
lar of this reform was the expansion of health 95 percent in both urban and rural areas by
insurance coverage. Initially, this expansion 2011. By 2014 reimbursement rates for inpa-
was focused on re-establishing insurance tient services of the three main social insur-
for formal sector workers with the introduc- ance schemes (UEBMI, URBMI and NCMS)
tion of the Urban Employee Basic Medical were raised and differences significantly
Insurance scheme (UEBMI) in 1998. This narrowed, reaching 80, 70 and 75 percent
was followed by the introduction of the New respectively. Signicant increases in govern-
Cooperative Medical Scheme (NCMS) in ment subsidies to social insurance schemes

2 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 1.1 Share of the Elderly in China will provider incentives and other institutional
Rapidly Catch up with the OECD aspects. This chapter rst reviews these three
challenges and then examines the resulting
40 inefciencies and potential spending implica-
tions if left unchecked.

30 32.8
Aging, chronic disease, and risk
% Aged 60 or above

25 factors
20 19.4 Aging: While reductions in mortality and fer-
tility represent progress, these demographic
changes are leading to a rapidly aging popu-
10 lation, which has profound implications for
economic and social policies, and places new
demands on the health system to deliver care
0 that ensures that people live healthy longer
2050 lives. In 2013, there were 202 million people
More developed regions China
age 60 or older, accounting for 15 percent of
India Brazil the total population (China National Bureau
of Statistics 2014). This number is expected
Source: United Nations 2015.
to double by 2030 and grow to more than
Note: Country groups according to the WHO criteria. a third of the population by 2050 (United
Nations 2015, 2013). China will have far less
time to adjust to the challenges imposed by
have contributed to increasing utilization of an aging population than OECD countries
some health services such as inpatient care, did (Figure 1.1). At the current rate, it will
annual medical checkups and antenatal vis- experience in 26 years a change in population
its, and reducing the share of out-of-pocket aging that took 115 years to occur in France
(OOP) in total health spending. Benets have (Kinsella and Phillips 2005).
been gradually expanded, and the govern-
ment has moved to eliminate drug mark- Chronic disease: The greying of Chinas
ups as a main source of hospital nancing. population has profound implications for
Finally, the government has made massive the countrys mortality and morbidity pro-
investments to expand and upgrade health file. A mere quarter century ago, injuries,
facilities at all levels and raise the number communicable diseases, and newborn, nutri-
and skill levels of health workers, particu- tional and maternal conditions accounted
larly at lower levels. for 41 percent of the burden of disease in
As a rst step, and notwithstanding recent China, not much different from the situa-
accomplishments, it is important to take cog- tion in the average developing country today
nizance of the major challenges in China that (Figure 1.2). Currently, non-communicable
are contributing to cost escalation, low value diseases (NCDs) are responsible for 77 per-
care and citizen discontent, and threatening cent of the loss in healthy life and 85 per-
future health system gains. The rst involves cent of all deaths, a prole similar to that
emerging demographic and epidemiological of most OECD countries. Cardiovascular
trendsa rapidly aging population and the diseases and cancers alone account for over
onslaught of non-communicable or chronic two-thirds of total mortality (WHO 2014).
diseases (NCDs) and corresponding risk fac- Strokes, ischemic heart disease, chronic
tors. The second challenge relates to measur- obstructive pulmonary disease and lung
ing and improving quality of care. The third cancer top the list of causes of premature
consists of internal system factors related to mortality while diabetes has emerged as a
the hospital centric delivery system, unbal- principle cause of years lived with disability,
anced resource allocation, cost-inducing along with musculoskeletal disorders and

FIGURE 1.2 Prominence of NCDs in the Burden of Disease and Causes of Mortality

Share of NCDs in total burden of disease

80% Communicable, maternal,

perinatal and nutritional Injuries, 8%
77% conditions, 5%
59% Other NCDs, 6%
Diabetes, 2%
50% 49%
40% 36% diseases, 11%

20% Cancers,
diseases, 45%
1990 1995 2000 2005 2010 23%

More developed regions China

India Brazil

Source: IHME 2010, WHO 2014.

Note: Country groups according to the WHO criteria.

major depressive disorders (IHME 2010, further improvements in diagnosis, treatment

Yang et al. 2013). And the NCD epidemic and control (to 56.2, 48.5 and 19.2 percent
is projected to continue to grow. By some of the sample, respectively). Nonetheless,
estimates, the number of NCD cases among this means that 33 percent of the randomly
Chinese people over age 40 is predicted selected sample had hypertension that was
to double or even triple over the next two not well-controlled (Figure 1.3).
decades; diabetes will be the most prevalent The proportions of those who are aware,
disease, while lung cancer cases are likely to treated and controlling their high blood pres-
increase vefold (Wang, Marquez, and Lan- sure in China were all lower than that of the
genbrunner 2011). average middle-income countries, whose over-
There has been steady improvement in all management of hypertension is, in turn,
diagnosis, awareness, treatment and control worse than high-income countries (Table 1.1).
of chronic conditions associated with the In the United States, for example, 85.3 percent
principal causes of loss of healthy life, though of hypertensive patients aged 35 and above
more efforts are still required. Between 1991 were aware of their health condition, 80.5
and 2002 about 130 million (65 percent) percent were on medication, and 59.1 percent
hypertension patients are still unaware of had their blood pressure controlled, compared
their condition, mostly living in rural areas to 41.6, 34.4 and 8.2 percent respectively in
(Liu 2011). Mortality from the major com- China (Chow et al. 2013, Ikeda et al. 2014).
plication of hypertensionstrokein rural In short, China is still facing signicant chal-
areas has exceeded stroke mortality in urban lenges in effectively managing NCDs.
areas. Among those who are aware, 30 mil-
lion had not received treatment (43 percent), Risk factors: More so than the aging popu-
and among those who are receiving treat- lation, high-risk behaviors such as smoking,
ment, 75 percent did not have their blood poor diets, sedentary lifestyles, and alcohol
pressure under control. In their analysis of consumption, as well as environmental fac-
the 20112012 China Health and Retire- tors such as air pollution, are powerful forces
ment Longitudinal Study of people aged 45 behind the emergence of chronic illnesses in
or older, Feng, Pang, and Beard (2014) nd China (Yang et al. 2008, Batis et al. 2014,
4 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 1.3 Management of Hypertension and Diabetes

Hypertension Diabetes
45% 45%
40% 40%
35% 35%
30% 30%
25% 25%
20% 20%
15% 15% 3.0% 0.5%
10% 10%
17.9% 7.0%
5% 7.9% 5% 8.1%
0% 0%
Hypertensive, Diagnosed Diagnosed, Controlled Diabetic, Diagnosed Diagnosed, Controlled
not aware and treated not treated not diagnosed and treated not treated

Source: Feng, Pang, and Beard (2014), (Xu et al. 2013) and (Yang et al. 2010)
Note: Hypertension gures are for 201112. Diabetes gures are for 2007 and 2010, and uses a midrange of estimates from Xu et al. 2013 and
Yang et al. 2010.

TABLE 1.1 Hypertension diagnosis, treatment and control (age 3584): international comparison

Country Diagnosed (%) Treated (%) Controlled (%)

China 41.6 34.4 8.2

Thailand 46.0 38.4 17.7
Turkey 49.7 29.0 6.5
South Africa 52.8 37.6 21.0
Germany 53.1 39.2 7.4
Mexico 55.8 49.5 28.0
UK 62.5 53.5 32.3
Bangladesh 62.7 54.6 30.2
Jordan 73.9 71.0 38.2
Russian Fed. 74.9 59.9 14.2
USA 85.3 80.5 59.1
Japan NA 48.9 22.9
Source: Ikeda et al. 2014; Chow et al. 2013.

Ng et al. 2014, Gordon-Larsen, Wang, and considerably below the OECD average of 9
Popkin 2014). Adult overweight prevalence liters per capita (Figure 1.4). In recent years,
nearly tripled from 1991 (11.8 percent) China has taken important steps to curb risk
to 2009 (29.2 percent), with the strongest factors, such as enacting public policies to
increase among men. An alarming 49 percent control the tobacco epidemic. Until these pol-
of Chinese men are daily smokers, more than icies bear fruit, the rise in risk factors associ-
twice the OECD average; alcohol consump- ated with NCDs will continue to test the abil-
tion per capita (5.8 liters per capita) nearly ity of the Chinese health system to respond
doubled between 2000 and 2010, a steeper effectively in delivering care that meets the
increase than Brazil and India, though still growing needs of the population.

FIGURE 1.4 Smoking and Alcohol Consumption in China Compared to Other Nations

% of males 15+ who are daily smokers






OECD average

United States

New Zealand


United Kingdom

Slovak Republic
Czech Republic
Liters per capita of pure alcohol (pop 15+)

10 9.1

8 7.4



2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
OECD Brazil China India

Source: OECD (2015).

Note: Data on smoking is for 2013 or nearest year.

Financial implications of NCDs: Chronic accumulation, the total economic impact of

diseases can have disastrous outcomes for the ve major NCDs is projected to be US$
individuals and society. If not effectively 27.8 trillion for the period 20122030. NCDs
managed, diabetes, hypertension and other also pose a threat to the nancial health of
conditions tend to result in complications, households, because they are expensive to
which in turn may lead to disability, suffer- treat and require care over an extended
ing or premature death. Direct medical costs period. In 2009, the average health spend-
associated with treatment and economic costs ing per hospital admission due to NCDs had
associated with lost productivity, caregiv- already mounted to 50% of the disposable
ing and loss of healthy life can be staggering. annual income of an urban resident (750 USD
At the system level, the direct medical cost per capita per year) and 1.3 times that of a
of NCDs in China was 1.48 trillion RMB rural resident (291 USD per capita per year);
(210 billion USD) in 2005, and is estimated a coronary artery bypass operation costs 1.2
to grow to over US$ 500 billion by 2015 times and 6.4 times the annual disposable
(Bloom et al. 2013). Taking into account the income of an urban and rural resident respec-
impact of NCDs on labor supply and capital tively (Chen and Zhao 2012).
6 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Quality of care1 development and improvement in China.

These include a clear vision, goals, and uni-
Although systematic evidence is hard to come ed leadership; a standardized quality mea-
by, quality is a significant issue in Chinas surement system; a coordinated institutional
health system. It is the major bottleneck for architecture to oversee systematic QI; and
re-directing patients to primary care facilities transparency/accountability for quality. All
because they perceive that disparities exist in these can be xed if China can articulate and
the quality of care among different levels of effectively implement a comprehensive strat-
providers (Yang et al. 2014, Bhattacharyya et egy for quality improvement.
al. 2011, Jing et al. 2015). Available evidence
shows that many health professionals at the
grassroots level lack the knowledge and skills Inefficient service delivery:
needed to effectively diagnose and treat com- hospital-centrism, fragmentation
mon conditions (Sylvia, et al., 2014; Wu, Luo and distorted incentives
et al, 2009). Doctors qualication is a strong
correlate of technical quality, yet there still are The continued dominance of hospital-
large variations in doctor training and quali- based care and spending: Chinas health
fication standards across different levels of system remains both hospital-centric and
care, across types of practitioners (physicians, fragmented. The number of hospital beds
nurses, etc.) and between urban and rural increased two fold between 1980 and 2000
areas. The shortage of competent primary (from 1.19 million to 2.17 million), and dou-
care doctors and the general poor quality of bled again in just thirteen years (to 4.58 mil-
primary care contributes to a rising trend of lion in 2013). China today has more hospi-
unnecessary and avoidable hospitalization tal beds per 1,000 population than Canada,
(Ma et al., 2015; Jiang et al, 2015), a recog- UK, US and Spain. Although admittedly
nized indicator of poor access to and quality starting from a lower base, the expansion of
of primary care. Although quality of care is hospital capacity in China is bucking inter-
considered better at secondary and tertiary national trends. Most OECD countries, with
hospitals, systematic evidence on whether the notable exception of Korea, signicantly
care is provided according to best evidence reduced the number of hospitalbeds over the
or guidelines (process of care) and data on last decade, in many cases by as much as 30
effects on the health of patients as a result percent (Figure 1.5). Fulfilling the predic-
of receiving care (outcome of care) is scarce. tion that a hospital bed built is a hospital
A recent study found significant variations bed lled, hospitalization rates rose rapidly
in outcomes across tertiary hospitals (Xu et from 4.7 percent in 2003 to 14.1 percent in
al., 2015). Over-prescription of drugs and 2013, an annual rate of growth of 11.5 per-
treatment, especially antibiotics and intrave- cent. The volume of hospitalization, in both
nous treatments, is a problem in all facilities secondary and tertiary hospitals, tripled
(Yin, Chen, et al., 2015; Yin, Song, 2013; in roughly the same period (Xu and Meng
Liao, 2015). In addition, patient experience 2015). Currently, hospitals account for 54
with health care could stand to be improved; percent of Chinas total health expenditure
patients complain about poor attitude and compared to the OECD average of 38 per-
lack of effort or short consultation time with cent (OECD 2015).
doctors and nurses, and over-prescription of There has also been a shift in capacity
unnecessary medications (Center for Health expansion and utilization towards higher-
Statistics, 2010). level facilities (Figure 1.6). Between 2002 and
Quality is increasingly viewed as a sys- 2013, the number of tertiary and secondary
tem property rather than simply the duty hospitals increased by 82 and 29 percent,
of a particular physician, department or respectively, while there was a decline, albeit
facility (IOM, 2000: p4). Currently, many small (6 percent), in the number of primary
essential policies and institutional structures care providers. Health workers, especially
to foster quality improvement (QI) require those with formal medical education (a

FIGURE 1.5 Hospital beds in China compared to OECD, 20002013

Hospital beds per 1,000 population


12 136%
10 9%
8 36% 29% 21%
95% 26%
6 27%
28% 29% 33% 16% 20% 7%
20% 33%

















2000 2013

Source: OECD (2015).

FIGURE 1.6 Rapid Growth in the Number of Hospitals and Shift toward Higher Level Facilities

200 90
Share of total inpatient services (%)

Number of facilities (2002 = 100)

160 70
40 20
20 10
0 0
2000 2002 2004 2006 2008 2010 2012 2014 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Tertiary hospitals Secondary hospitals Hospitals at county level or above

Primary care facilitities Township Health Centers

Source : Xu and Meng (2015).

measure of quality), are moving to high-level Although secondary hospitals still provide
facilities and have become particularly con- the largest volume of inpatient services, hos-
centrated in hospitals (Xu and Meng, 2015, pitalizations are growing faster at the tertiary
Meng et al. 2009). A number of studies point level than in secondary facilities, 18.3 percent
to inefficiencies associated with patients per annum compared to 14.1 percent (Xu and
bypassing lower level facilities to seek care Meng 2015). Township health centers are
in hospitals, particularly the better-equipped becoming marginalized as county hospitals
and staffed tertiary hospitals (Sun, Wang, are taking over the role of principal providers
and Barnes 2015, He and Meng 2015, Egg- of inpatient services in rural areas. Hospitals
leston et al. 2008). are also playing a greater role in provision of
8 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

outpatient services. Since 2004, all types of delivery system, such as reliance on the fee-
providers experienced rapid growth in outpa- for-service payment method, lack of effec-
tient visits. From 20102014, the percentage tive referral or tiered copayment, unbal-
of all healthcare services occurred in hospi- anced price schedules that favor drugs and
tals (among all the healthcare facilities) have high-technology procedures over healthcare
increased from 34.9 to 39.1 percent, while the services, concentration of health workers
proportion in primary care facilities dropped and other resources in urban areas, and
from 61.9 to 57.4 percent. medical staff remuneration tied to volume-
and revenue-based bonus payments (Li et
Incentives and Inefficiencies: Over-utili- al. 2012, Liu, Wu, and Liu 2014). Some
zation of medical technologies and high- provinces documented insurance funds
profit margin procedures in hospitals is running in the red, unable to cover reim-
well documented. For example, one of the bursements due to hospital expenses. One
most salient issues facing China is that prefecture (Sanming) had annual increases
over-servicing of medicines, diagnostic in hospital expenditures as high as nearly
tests and high-technology services contin- 50 percent prior to implementation of its
ues to afict the delivery system. Facilities hospital reform.
derive signicant revenue from the sale of
these services. Over time, this has trans- Lack of provider integration: Chinese pro-
lated into nancial incentives for individual viders at various levels do not routinely
providers to prescribe drugs and perform communicate to coordinate patient ser-
diagnostic and other procedures, while vices. Linkages between hospitals and pri-
at the same time shaping patient expecta- mary health care (PHC) providers, includ-
tions of what comprises good health ing structured referral systems, patient
care. For example, numerous studies have discharge and handover mechanisms, and
shown that over-prescription is now perva- patient outreach are generally not in place
sive in China. A systematic review found (McCollum et al., 2013; Xu et al., 2010).
that 50.3 percent of outpatient prescrip- Providers at different levels have strong
tions contained antibiotics, among which incentives to compete with each other and
25 percent prescribed two or more antibi- maximize their prots, rather than manag-
otics (Yin et al. 2013). Over prescription ing population health in a coordinated way.
leads to unnecessary health expenditures Moreover, China could benet from more
and risks to patients (as well as the public systematic adoption of cost effective deliv-
health threat of antimicrobial resistance). ery and life cycle models that focus on the
Pharmaceutical expenditure per capita has prevention, treatment and management
increased more than threefold over the past of NCDs. Weak provider integration, gate
decade. While spending on medicines has keeping and screening systems, and post
declined recently as a share of total health discharge care may contribute to costly (and
expenditure, it still accounts for 40 percent avoidable) admissions and readmissions
of overall health expenditure, which is on for mostly NCD conditions which can be
the high end compared to other countries in cost-effectively treated on an ambulatory
East Asia and the Pacic, and signicantly basis, and increasingly, in patients homes.
higher than the OECD average of 16 per- For example, a recent study of 2.57 million
cent. Additionally, the structure of insur- admissions in 822 hospitals in 31 provinces
ance reimbursement incentivizes use of found that between 8 and 12 percent of
inpatient over outpatient services; the aver- admissions were avoidable (e.g., sensitive to
age length of a hospital-stay, a key driver treatment by primary care providers) for a
of higher costs, is high in China relative to sample of NCD conditions (asthma, chronic
OECD countries (9.8 days, in contrast to obstructive pulmonary disease, congestive
7.3 days). heart failure, diabetes and hypertension).
These inefciencies have been attributed Avoidable admissions accounted for 2.7 to
to specific features of the financing and 4.4 percent of hospital expenditures.

Additional factors in the institutional and The health sector lags behind other sectors
nancial environment contribute to service in reforming civil service policies to create a
delivery inefciencies:2 functioning labor market. This also hampers
private sector development because many
Institutional fragmentation: The health sec- health workers are reluctant to leave their
tor suffers from institutional and gover- public positions in part out of fear of losing
nance fragmentation, which hampers reform their benets.
efforts. Over ten government agencies are
involved in the health sector. Each pursues Service and capital planning: China should
its bureaucratic objectives with limited vision consider transforming its regional service
of the big picture beyond its own sphere of planning model from an input- into a needs-
decision-making. Because the ministries have based model. Despite policy intent, regional
a vertical line of management, the same frag- service planning in China is driven by input-
mentation exists at the provincial and local based, such as availability of beds per 1,000
level. Coordination among institutional population. All resource planning is thus
actors has been identied as an impediment driven by bed numbers and the maximum
to innovation and sustained reform imple- size of the different facilities types. Consid-
mentation (Qian, 2015). eration of population needs are limited to
the total size of the population and the dis-
Human resource shortages at the grassroots tribution of facility types by level of care,
level: China faces a shortage of general prac- rather than the actual health service needs
titioners (GPs) and nurses, which weakens of the population, at least based on the sam-
delivery at the primary health care level. ple of localities in this study. There is also
Primary health care facilities and poor rural concern regarding enforcement of regional
areas have difculties to recruit and retain service planning. Additionally, there are no
qualied health professionals and, while the consequences for regional development of
overall health workforce has increased in the projects that are not in line with central gov-
past decade, the PHC workforce has fallen ernment guidelines or standards. Beds con-
from 40 percent of total workforce in 2009 tinue to expand despite central government
to 36 percent in 2013. A majority of health guidelines to limit the number and size of
workers at the primary care level has only hospitals.
post-high school training, which further com-
promises the health systems ability to deliver Private sector engagement: The private sec-
quality care at the primary care level. Unsur- tor has not been sufciently engaged to help
prisingly, patients prefer to bypass PHC and improve and rebalance the service delivery
seek care directly in hospitals, which produce system. The pace and scope of policies tar-
the same level of care at higher costs relative geting private sector development has accel-
to PHC centers. erated during the past ve years, including
by the 2012 national goal that private health
Headcount quota system: Health facilities care providers should account for 20 percent
have reported many quota-related issues, of hospital beds and provision of services by
such as unlled quotas and large number of 2015. Still, a unied vision for private provid-
contracted staff without a quota who have ers role in improving service delivery is miss-
no benefits and are paid less compared to ing, and government policies do not clearly
quota staff. The quota is linked to the facil- articulate what private providers should and
ity, which means that health workers stand to can do to contribute to national health objec-
lose all benets if they leave the facility. Such tives and how they t into the whole health
a system creates rigidities and inefciencies in delivery system. As a result, there is little
the recruitment and management of health consensus between different government
workers, limits the mobility of health profes- agencies and between the public and private
sionals and leaves little autonomy to health health sectors on how the private sector can
facility managers to manage their workforce. be complementary to the public sector.
10 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

There is also lack of clarity on whether the Risk of low value care:
private sector should be integral to the pri- Diminishing gains in health with
mary care delivery system. In every area,
the private health sector continues to receive
escalating health spending
mixed messages. The private sector remains
constrained by weaknesses in existing policy, Rising costs: Health expenditures in China
regulatory and nancial environments. have been rising steadily, more rapidly than
any OECD or BRICS countries. Over the
Purchasing: Chinas health insurance agen- last two decades, total spending on health
cies are yet to become strategic purchasers. increased fourteen-fold from about 220 bil-
They currently focus on fund management lion yuan to 3,170 billion yuan in real terms
rather than creating strong incentives for pro- (CNHDRC 2014). This is largely due to Chi-
viders of health services to transform inputs nas strong economic growth.
into cost-effective services. Performance of The rise in total health expenditure was
the purchasing agencies for social insurance driven mostly by the sharp growth in pub-
is assessed mainly by their ability to bal- lic health spending including social health
ance revenues with claims, rather than on insurance. This has resulted in an impressive
their contributions to achieving better care at decline of out of pocket expenditure from
lower cost for communities and individuals. 60% in 2001 to 32% in 2014. This however
In terms used in other nations, the agencies is still high relative to WHOs recommended
are passive purchasers rather than active benchmark as 20% for reducing impover-
purchasers. A lot of effort has been directed ishment due to disease. Though the coun-
toward strengthening the capacity to process try still spends considerably less on health
and audit claims. Greater attention needs to as a share of GDP (5.6 percent), lower than
be accorded to putting in place the right set of OECD countries and in the middle of BRIC
incentives and supports to motivate provider countries, but the growth of health expen-
behavior toward production of high-value diture outpaces that of GDP, to what extent
services at low costs. In addition to chang- China can continue to increase public health
ing the nancial incentives facing patients, spending at this pace under the new normal
insurance reform efforts should focus more of economy is questionable, which raises con-
on reforming incentives facing providers cerns about future affordability (Figure 1.8).
to ensure service quality and patient safety.
Insurance agencies need to invest more in Persistent nancial burden: The aforemen-
enhancing their ability to monitor the mix tioned inefficiencies entail a cost not only
and quality of services delivered or to drive a to the health system, but also to patients
more efcient rebalancing of utilization pat- who face congestion in high-level hospi-
terns. Such abilities would be enhanced by tals and incur expenditures associated with
scaling up pilot provider payment reforms, sometimes-unnecessary procedures. Out-
including prospective case-based payments of-pocket payments have been rising in real
and case-mix based global budgets for hos- terms in China (figure 1.9). This is to be
pitals, incentivizing day-care and day sur- expected: as incomes rise, households are
gery, risk-adjusted capitation based nancing better able to afford goods and services;
of primary health care with special perfor- health care is no exception. Evidence of the
mance incentives for special high priority impact of reforms in extending nancial pro-
outcomes (e.g. vaccination coverage, effective tection is mixed. At the household level, there
case management for diabetes, high blood is some evidence of positive impacts of health
pressure). If used effectively, the result of insurance. For instance, the rate of self-dis-
strategic purchasing is that scarce inputs are charge from hospital for nancial reasons has
transformed efciently into health services declined steadily since 2003. Nonetheless,
that people use, reducing costs and enhanc- the incidence of catastrophic spending has
ing nancial protection afforded by universal remained stable and impact evaluations of
coverage. both urban and rural health insurance have
B AC KG R O U N D : I M P R E S S I V E G A I N S I N H E A LT H O U TCO M E S , B U T S U B S TA N T I A L C H A L L E N G E S A H E A D 11

not found evidence that the introduction of annual household income depending on the
health insurance has resulted in a reduction measure used (Long et al. 2013, Liang and
in out-of-pocket spending (Liu, Wu, and Liu, Langenbrunner 2013). Some studies project
2014). Critically, the study found that reim- that the ratio of OOP expenditures to dispos-
bursements through insurance mechanisms able personal income may increase under a
were more than offset by increases in expen- more constrained public nance environment
diture due to the use of higher-level facilities, scenario (Zhang and Liu 2014).
longer length of stay, and use of more expen- China needs to make sure that increas-
sive treatment items. ing investments in health and health care
The reduction in the share of out-of-pocket will continue to translate into continuous
payments in total health spending, despite its improvements in health outcomes. China has
impressive decline from 60 to 32 percent in enjoyed rapid improvements in longevity but
little more than a decade, may not have ben- the progress has slowed down over the last
efited urban and rural populations evenly. decade (Figure 1.10).
Out-of-pocket payments still account for
50 percent of total per capita health spend- Unmet Patient Expectations. Fueled by rapid
ing for the rural population, and households urbanization and rising incomes, the Chi-
continue to spend a non-trivial share of their nese population has increasing expectations
income on health, roughly 9 to 10 percent of that the health system will provide more

FIGURE 1.7 Rising Health Care Cost in China

% of males 15+ who are daily smokers






Indonesia India China Mexico Russia Korea South UK Brazil Sweden Japan Germany France

35000 6%

30000 5%
Yuan (100 million)


5000 1%

0 0%
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
THE in constant yuan THE as a share of GDP

Source: World Bank (2015) and CNHDRC (2014).

12 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

accessible, affordable and higher quality from addressing coverage gaps and dispari-
care. However, there is conicting evidence ties in the health system. For example, mil-
whether these expectations are being met. lions of people with diabetes, hypertension
Many citizens appear dissatisfied with the and other chronic disease are currently undi-
delivery system and consider that providers agnosed and not receiving the care they need
dont necessarily act in the best interests of (see Table 1.1; Chow, et al, 2013; Feng, Pang
patients. This situation has contributed to and Beard, 2014; Xu et al., 2013; Yang et al.,
well-publicized disputes between patients and 2010). Extending coverage may require sub-
medical personnel, some of which turned vio- stantial increases in spending. Additionally,
lent (Chen 2012, Yuan, 2012). Surveys and extending nancial protection and reducing
press reports suggest poor attitudes of health rural-urban disparities are important policy
professionals, short consultation times, and objectives, but doing so will come at signi-
poor provider-patient communication which cant scal costs. Health insurance coverage
may contribute to these incidents (Deloitte, is now nearly universal, but coverage guar-
2011; Center for Health Statistics, 2010). antees only the very basic health needs, leav-
Recent government documents reporting on ing many important areas uncovered. At the
progress under the 12th Development Plan moment, weakness in primary care, hospital
(NHFPC, 2015) reported the 5th National centrism, lack of integration, volume-based
Health Survey found that 76.5 percent of incentives and uneven quality all contribute
outpatients and 67 percent of inpatients were to important health system shortcomings that
satised with their care seeking experiences. are an impediment to achieving better health
outcomes and higher returns to investments
in health.
Spending projections OECD projects a threefold increase
Though health policy decisions can have a from todays level of public health spending
noticeable impact on trends in health spend- (including social health insurance) in China,
ing, rising expenditures reflect, in part, to nearly 10 percent of GDP by 2060 in the
improvements in medical technologies, as absence of cost containment measures, but
well demographic and epidemiological fac- suggests that expenditures could be con-
tors. Societies, rich and poor make the trolled to under 6 percent of GDPwhich
policy choice to invest in health based on nonetheless roughly doubles current spend-
an understanding that these investments ingif adequate reforms are undertaken (de
have the potential to generate significant la Maisonneuve and Oliveira Martins, 2013).
value. This value comes from longer life Due to data limitations, these projections
and absence of disability, which, although may be severely underestimated. Neverthe-
not reflected in GDP, increase individual less, a critical component of these projection
well-being and tend to be highly valued by methodologies is the potential impact of pol-
society. Value also comes from reducing icy and institutional factors to contain costs.
the direct economic costs from poor health In the OECD econometric estimates, these
related to use of health care, as well as factors alone explain a substantial portion
reductions in labor supply and productivity (almost one percentage-point) of the annual
and possible impacts on savings and invest- increase in public health spending. These esti-
ment associated with illness and premature mates highlight that health system reforms
death (Bloom et al. 2013). contribute signicantly to the trajectory of
Cost pressures in Chinas health sector are health spending in the medium to long term.
likely to grow in coming decades. As in many Using older data, IMF projections of pub-
other countries, population aging, growing lic health spending from 201130, showed
prevalence of chronic disease and the intro- signicant differences in excess cost growth
duction and expanded use of new drugs, (ECG: the excess of growth in real per capita
procedures and other medical technology spending in health over growth in real per
are all putting upward pressure on spend- capita GDP after controlling for aging) among
ing. Expenditure pressures will also come high income countries. For example, the US
B AC KG R O U N D : I M P R E S S I V E G A I N S I N H E A LT H O U TCO M E S , B U T S U B S TA N T I A L C H A L L E N G E S A H E A D 13

and Luxemburg were projected to have ECG An inconvenient truth is that, as China
of over 3 percent during this period compared continues to grow, health spending will
to negligible ECG in Italy and Japan (IMF, increase. However, the rate at which spend-
2010). While the IMF study shows that ECG ing on health increases can be controlled by
in emerging economies is low due to lower prudent choices on the organization and pro-
initial health spending, it is likely that future duction of health services, a focus on qual-
increases will also vary considerably across ity, investment in prevention and the efcient
countries. This suggests that the challenge for use of resources. A high cost path will result
emerging markets is to choose an efcient and in two or three times the per capita spending
high value path to public spending. than the low cost path, and will not lead to

FIGURE 1.8 Health Care Expenditure Growth Rate in China

Slovak Republic
South Africa
United States
New Zealand
Czech Republic
United Kingdom
5% 0% 5% 10% 15% 20%
Annual growth rate of public expenditure on health, per capita, in real terms

Source: OECD, 2015.

14 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 1.9 Composition of Health Spending in China, 19972013


Yuan (100 million)





1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gvt (tax-funded) Social health insurance Household out-of-pocket

Source: World Health Organization, 2015.

FIGURE 1.10 Trend in Life Expectancy Compared to Total Spending on Health, 19952015

6 80

4 75
% of GDP


2 70

0 65
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Life expectancy at birth (total years) Total health expenditure (% of GDP)

Source: World Bank (2015) and China Statistical Yearbook (2015).

better outcomes (Figure 1.8). While factors structure of its health nancing and delivery
other than health care and health spending system if it wants to progress along the high
contribute to health outcomes, it is instructive value path to improved outcomes.
that the United States is a poor value health A study commissioned by the Word
care system, spending nearly $9,000 per Bank Group and carried out together with
capita (PPP). Singapore is a higher value sys- researchers from China concluded that busi-
tem, spending only US$3,000 per capita and ness as usual will result in growth of real
achieving better health outcomes and higher health expenditure of at 9.4 percent a year in
life expectancy than the United States. China the period 2015 to 2020, during which GDP
has important choices to make regarding the is projected to grow at 6.5 percent a year. In
B AC KG R O U N D : I M P R E S S I V E G A I N S I N H E A LT H O U TCO M E S , B U T S U B S TA N T I A L C H A L L E N G E S A H E A D 15

FIGURE 1.11 Diverse Paths to Better Health

Healthy average life expectancy at birth

76 Singapore
72 Luxembourg
China US
0 2,000 4,000 6,000 8,000

Health expenditure per capita (PPP)

Source: WHO (various years); Economist Intelligence Unit, 2014.

the period 2030 to 2035, during which GDP it could slow down the main cost drivers. To
growth is projected to slow down further, realize these savings, the growth in hospital-
health expenditure will grow at 7.5 percent ization needs to come down and utilization of
per year. In other words, under business- outpatient care needs to go up. This implies
as-usual assumptions, health expenditure strengthening the primary care system, rais-
in China will increase in real terms (2014 ing peoples condence in the health system
prices) from 3,531 billion yuan in 2015 to outside of the hospital setting, providing high
15,805 billion yuan in 2035an average quality people-centered care that is integrated
increase of 8.4 percent per year. This will across all levels, and enriching peoples expe-
increase current health expenditure from rience with the health care system. Potential
5.6 percent of GDP in 2015 to more than for savings also allows for affordable scal
9 percent of GDP in 2035. space for needed investments into people-
Under the business as usual scenario, over centered integrated care that would be well
60 percent of the growth in health expendi- below the potential savings to be achieved.
ture is expected to be in inpatient services.
Inpatient expenditure will grow by 7,915
billion yuan as compared to growth for out-
patient expenditure of 3,328 billion yuan,
pharmaceutical expenditure of 1,256 billion Notes
yuan and growth of other health expenditure 1. A more detailed review of quality issues is
of 155 billion yuan. presented in Chapter 3.
China could, however, achieve signicant 2. These themes are discussed in more detail in
savingsequivalent to 3 percent of GDPif the respective chapters.
Part I

Service Delivery Levers

Shaping tiered health care
delivery system in accordance
with People-Centered Integrated
Care Model (Lever 1)

Introduction (i) individuals, families, and communities;

(ii) health providers; (iii) health care orga-
How health services are organized and deliv- nizations; and (iv) health systems (WHO,
ered, and how providers relate to each other 2007). For example, in addition to respond-
and to patients, matters. A countrys health ing to patient needs and perspectives, this
care service delivery system should ensure approach prioritizes integration of services
that patients receive the appropriate high across the spectrum of care, from promo-
quality care at the best setting for their needs tion and prevention to curative and palliative
in a timely, equitable and affordable fashion. needs, in order to reduce fragmentation and
A exible model organized around the health wasteful use of resources across a health sys-
needs of individuals and their families will tem. Effective PCIC promotes primary care
help China rapidly achieve its vision of ser- as the rst point of contact for patients for
vice delivery reform in ways that is consistent a majority of their healthcare needs, coordi-
with the special but diverse characteristics of nating care between other providers such as
its health system. People-Centered Integrated hospitals at different levels of the healthcare
Care (PCIC) is the term used in this report system and across the spectrum of health
to refer to such a model. PCIC is a shorter needs. Ultimately, PCIC implies rebalancing
nomenclature for the WHO global strategy and structuring the delivery system into func-
of People-centered and Integrated Health Ser- tional and accountable networks of tiered
vices (WHO, 2015a).1 Box 2.1 denes PCIC and interconnected providers.
drawing on the WHO strategy. PCIC consists of at least four strate-
The ultimate goal of PCIC is to provide gic directions at the service delivery level:
the right service at the right place and right (i) reorienting the model of care, particularly
time. It involves far-reaching changes along in terms of strengthening primary health
major policy and service delivery domains: care and changing the roles of hospitals;

20 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 2.1 Defining People-Centered Integrated Care

People-centered care is an approach to care that con- receive a continuum of health promotion, disease pre-
sciously adopts the perspectives of individuals, fami- vention, diagnosis, treatment, disease management,
lies and communities, and sees them as participants rehabilitation and palliative care services, at the dif-
as well as beneciaries of trusted health systems that ferent levels and sites of care within the health system,
respond to their needs and preferences in humane and and according to their needs throughout their life
holistic ways. course.
Integrated care consist of health services that are WHO, 2015a; pgs. 1011.
managed and delivered in a way that ensures people

(ii) integrating providers across care levels health-promoting behaviors will be amplied
and among types of services; (iii) continu- through interaction with the formal service
ously improving the quality of care; and delivery system.3
(iv) engaging people to make better decisions Reforming hospitals is part and parcel
about their health and health seeking behav- of reforming service delivery and adapting
iors (WHO, 2015a.b; 2007; Shortell, et. al., PCIC-like models. Hospitals will continue to
2014; Ham and Walsh, 2013; Craig, Eby play an important role, but one that over time
and Whittington, 2011; Ovretveit, 2011, is less nancially dominant and more focused
Health Care Foundation, 2011; Curry and on providing only the specialized services
Ham, 2010; Curtis and Hodin, 2009; Ber- that only they can offer. As primary care is
wick, Nolan and Whittington, 2008; Hof- strengthened and the PCIC model is put in
marcher, Oxley and Rusticelli, 2007; Barr, place, a wide range of care processes will be
et al, 2003; Wenzel and Rohrer, 1994). The shifted out of hospitals to ambulatory set-
rst two of these directions are taken up in tings (e.g., certain surgeries and diagnostics,
this chapter.2 chemotherapy) and primary care facilities.
Primary health care (PHC) is the foun- Hospitals will become centers of excellence
dation of patient-centered integrated care. but with adequate volume to deliver high
Better outcomes at potentially lower costs quality care. They can perform important
are produced by systems that prioritize criti- training and workforce development func-
cal primary health care functions of acces- tions. They can also focus more on biomedi-
sibility, comprehensive capacities for most cal research and providing clinical support
general non-emergent clinical needs, con- to lower level providers. As described in the
tinuity of care and information, continual chapter, some of these functions are slowly
quality improvement and integration of care rolling out in China.
(Macincko, 2009; Friedberg, 2010). No Across the globe, PCIC initiatives are
country can provide high quality, effective gaining traction as central parts of health
person-centered integrated care while also care reform. While they have different
keeping costs low without a robust primary names, their core featuresstrengthened
health care system. Primary health care is primary care, a focus on patient needs, and
organized around the health needs of indi- integration with the rest of the health sys-
viduals and communities, not simply dis- temare ubiquitous. In the United States,
eases. Patients need to have condence in and the patient-centered medical home model
trust that their health needs will be met in a has become an important form of primary
responsive, quality and timely manner in the care improvement. Across high-function-
primary care setting. They also need to be ing European health systems such as those
empowered by knowing that that their own in the Netherlands, the UK, Australia,
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 21

BOX 2.2 Impacts of PCIC-like models

The literature reviewed in Annex 3 shows: Improved outcomes and patient satisfaction:
PCIC interventions decrease pain, and improve
Lower hospitalizations and emergency care use: quality of life and depression severity. Benets
Reviews of a wide variety of PCIC approaches, include glycemic control and lipid proles, and
including PACE and the VHAs PACT, highlight improvements in physical function, nutritional
reductions in ED visits, unscheduled readmis- status, and physical balance. When measured,
sions, and hospital days. Admission rates for patient satisfaction almost always increases.
Ambulatory Care Sensitive Conditions decline in Mixed impacts on costs; While reviews do nd
many cases. interventions in the US and Europe which gener-
Improved processes of clinical care: Interventions ate savings, the vast majority of studies produced
report improvements in pain assessment and treat- limited or inconclusive evidence on cost stabiliza-
ment, adequacy of medicine dosages, adherence to tion or curtailment, and a handful even report
prescriptions, use of care plans, and patient edu- increases. However, nearly all studies examined
cation. For example, of the 48 clinical processes short term impacts on costs.
studied in the VHAs PACT, 41 improved.
Source: Authors elaboration.

Canada and Denmark, PCIC-like reforms individuals, communities, health workers

are taking shape. And even in middle and health systems (Box 2.3).
income countries such as Costa Rica, Bra- In China, central government has enacted
zil, Singapore and Turkey there is a marked a series of policies and supported invest-
orientation toward reshaping service deliv- ments to promote a delivery system based on
ery upon the foundation of PCIC. Though PCIC (Guo Ban Fa, 2015: nos. 33, 38, 70;
expanding rapidly, PCIC-like approaches CPC, 2009). From a policy perspective, the
remain local or regional in most of these paradigm shift toward a PCIC-like model
countries. is already underway in China. Of particu-
While results are often context specific lar relevance are recent State Council guide-
and most of the evidence is based on PCIC lines outlining the roles and responsibilities
initiatives in high income countries,, prelimi- of different levels of a tiered delivery system
nary ndings suggest that gains can be made (Gu Ban Fa, 2015: no. 70). These guidelines
in outcomes, quality and patient experience. establish the essential tenets and features of
Most studies show only limited impact on the PCIC delivery model in China and set
costs in the short term, but further research the stage for the core actions presented in
is needed to determine if improved quality this chapter. Important attributes include
and outcomes will bring about cost-savings strengthening grassroots providers, promot-
in the long term. Results also varied consider- ing rst contact at grassroots levels, foster-
ably within and across countries. However, ing two-way referrals, defining provider
given the unfavorable mix of specialty vs. pri- roles while fostering integration of provid-
mary care services in China, there is greater ers across a tiered delivery system; empha-
potential for future cost savings. Box 2.2 sizing special care arrangements to treat
reviews evidence on impacts of PCIC-like and manage chronic diseases, expanding
models on health outcomes, quality and costs the supply of general practice physicians to
will be included in the nal report.4 Based staff primary care facilities; and organiz-
on an exhaustive review of the literature of ing provider networks and advancing the
PCIC initiatives globally, (WHO 2015 a,b) use of eHealth and mHealth innovations.
identified an array of potential benefits to Moreover, government has made signicant
22 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 2.3 The Potential Benefits of People-Centered Integrated Care

To individual and their families: Greater inuence and better relationships with
care providers that build community awareness
Increased satisfaction with care and better rela- and trust in care services
tionships with care providers Greater engagement and participatory represen-
Improved access and timeliness of care tation in decision-making about the use of health
Improved health literacy and decision-making resources
skills that promote independence Clarication on the rights and responsibilities of
Shared decision-making with professionals with citizens to health care
increased involvement in care planning Care that is more responsive to community
Increased ability to self-manage and control needs.
long-term health conditions
Better coordination of care across different care To health systems:
Enables a shift in the balance of care so that
To health professionals and community health resources are allocated closer to needs
workers: Improved equity and enhanced access to care for
Improved job satisfaction Improved patient safety through reduced medical
Improved workloads and reduced burnout errors and adverse events
Role enhancement that expands workforce Increased uptake of screening and preventive
skills so they can assume a wider range of programs
responsibilities Improved diagnostic accuracy and appropriate-
Education and training opportunities to learn ness and timeliness of referrals
new skills, such as working in team-based health Reduced hospitalizations and lengths of stay
care environments. through stronger primary and community care
services and the better management and coordi-
To communities: nation of care
Reduced unnecessary use of health care facilities
Improved access to care, particular for marginal- and waiting times for care
ized groups Reduced duplication of health investments and
Improved health outcomes and healthier commu- services
nities, including greater levels of health-seeking Reduced overall costs of care per capita
behavior Reduced mortality and morbidity from both
Better ability for communities to manage and infectious and non-communicable diseases.
control infectious disease and respond to crises
Source: World Health Organization 2015 a: 12.

investments since 2009 in building and ren- a program to improve capacity and service
ovating thousands of village clinics, com- provision of Traditional Chinese Medicine
munity health service centers, and township as a way to further augment frontline service
health centers to provide the infrastructure delivery capacity.
that can better support PCIC. New primary This chapter consists of two parts. The
health care provider training programs have rst briey reviews the challenges that pro-
spread across the country and thousands vide a rationale for and the constraints to
of new workers have been trained to pro- reforming service delivery based on PCIC.
vide frontline primary healthcare to address Drawing on 22 case studies commissioned
both quality and human resource gaps. In for this study, the second part, the main body
2013, the central government invested in of the chapter, summarizes the core actions
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 23

and implementation strategies required to Experience with gatekeeping is limited

rebalance the service delivery system based on and referral systems need improvement
PCIC. to support the goal of rst contact at the
primary care level.
Downward referral systems (i.e., from
Challenges hospital to primary care) function
Many of the challenges underscoring the
Hospitals have few incentives to shift
urgency in China to adapt a PCIC-like model
care to lower levels or to integrate care
were highlighted in Chapter 1. Slower eco-
with lower levels.
nomic growth adds urgency to maintaining a
While there is a clear movement toward
healthy and productive population, especially
for m i ng mu lt id iscipl i na r y tea ms ,
considering shifting demographics and dis-
the health care workforce lacks the
ease burdens. A rapidly aging population and
knowledge, skills and culture to work
increasing burdens of non-communicable dis-
eases (NCDs) constitute major demographic
Unattractive compensation levels dis-
and epidemiological challenges for China. As
courage qualified professionals and
NCDs expand, China may like to consider
health workers to seek and retain posi-
addressing both their underlying causes as
tions at grassroots levels. Higher income
well as increasing early detection and chronic
opportunities at upper levels encourage
disease management. Otherwise, these current
migration of health workers to large
silent epidemics will, over time, create steeply
rising adverse outcomes and higher costs.
Despite government calls to integrate
China must also contend with its severely individual preventive and curative care
hospital-centric and volume-driven delivery at the primary level, integration remains
system. Spurred by prots and poor manage- insufcient throughout China.
ment, many public hospitals are costly yet There are only minimal differences
achieving their societal goals. In China, nei- among copayments charged at hospital
ther vertical (across provider tiers) nor hori- outpatient departments and primary care
zontal (across types of care: promotion, pre- facilities to deter hospital first care
ventive, curative, and palliative) integration seeking behaviors.
are routinely present. This suggests that care China is experimenting with the for-
is fragmented which may compromise effec- mation of integrated facility networks
tiveness and raises costs. This gap in integra- known as hospital alliances. How-
tion also reects the current split in China ever, these alliances are often domi-
between public health (focusing on promo- nated by larger hospitals and become
tion and prevention services) and health care channels to capture patients at higher
delivery (focused on primary through tertiary levels of care.
services), the absence of an effective elec- Chinas health sector has adopted many
tronic health (eHealth) system able to ensure eHealth innovations, but often these ini-
care integration, and the nancial incentives tiatives are stand alone and lack interop-
to motivate linkages among providers. erability. Many innovations tend to cen-
The case studies (see Annex 4) identied ter on supporting hospitals rather than
the following constraints to implementing grassroots providers.
PCIC-based service delivery reforms. Impor- China should consider a unified and
tantly, as highlighted in this and other chap- standardized local and national systems
ters, innovative initiatives are underway in to measure and improve the quality
China to address these challenges. of primary health care service deliv-
ery, chronic disease management and
Registering or empaneling patients and patient satisfaction. Such measurement
stratifying them by their conditions or systems should be linked to improve-
risks are in their infancy in China. ment efforts.
24 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Core action areas and Before proceeding, it is important to note

corresponding implementation that establishing an effective delivery sys-
tem based on PCIC will require raising the
strategies for developing and incomes of health professionals and work-
implementing PCIC-based ers at grassroots levels as well as eliminating
service delivery model: lessons income-enhancing incentives for over pre-
from international and national scription and over servicing. These themes
experience are taken up in Chapters 6 and 7.

This section draws on the analysis of 22 cases

of PCIC-like initiatives commissioned for Core Action Area 1: Primary health
this study. Ten cases originated from China care is the first point of contact
and 12 from other middle- and high-income Primary health care is the focal point of peo-
countries. Annex 4 presents a short summary ple-centered integrated care, addressing both
of each case and species the nomenclature the health of the individual and that of the
used to refer to the same. Based on the cases community. One of the foundational charac-
and where appropriate the broader case liter- teristics of a strong primary health care sys-
ature, eight core action areas were extracted tem is that it establishes primary health care
that are fundamental to the establishment as the rst point of a contact for the majority
of effective PCIC systems. For each core of patients needs. When patients consistently
action area, key strategies were identied to use trusted and competent primary health
guide implementation. These are displayed care providers (PCP) as an entryway into a
in Table 2.1 below. Following the sequenc- tiered health system, they can receive care
ing indicated in Table 2.1, the remainder of that is continuous and coordinated across
this chapter describes each of the core action the range of health care delivery levels (e.g.,
areas and implementation strategies, drawing hospital, PCP, specialist). By achieving these
on examples from the cases. core components of effective PHC, patients

TABLE 2.1 Core actions areas and implementation strategies to achieve PCIC
Core action areas Implementation Strategies

1: Primary health care is the rst y

point of contact y
Risk Stratication
Ensure Accessibility
2: Multidisciplinary teams y
Team composition, roles and leadership
Individualized care plans for patients
3: Vertical Integration, including y
Denition of facility roles within a vertically integrated network
new roles for hospitals y
Provider-to-provider relationships
Forming facility networks
4: Horizontal Integration Integration of dierent types of care
5: eHealth y
Integrated Electronic Medical Record systems
Communication and care management functions
6: Integrated clinical pathways y
Integrated clinical pathways for care integration and decision support
and dual referral systems y
Dual referral pathways within integrated care networks

7: Measurement and feedback y

Standardized performance measurement indicators
Continuous feedback loops to drive quality improvement
8: Certication y
Certication criteria for local and national use
Targets for criteria and use to certify facilities
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 25

receive the needed care at the right place and the system. Empanelment by patient choice
avoid unnecessary hospital admissions and is alternative approach that was utilized
procedures thus avoiding unnecessary risk in other initiatives. Turkey, HTPs 2003
and medical expenses. National Health Transformation Program
Based on the ndings from the case stud- focused on the establishment of family medi-
ies, four strategies for ensuring that PHC is cine centers in every district of the country,
the first point of contact for patients for a each with a defined reference population.
majority of their health care needs were iden- The Turkish government initially decided
tied: 1) empanelment; 2) risk stratication; to geographically assign patients to family
3) gatekeeping; and 4) accessibility. medicine doctors, creating patients regis-
trars. However, patients could request to
Use empanelment to facilitate population switch out of their geographic empanelment
health management. Empanelment is the pro- to join the panel of another family physi-
cess by which all patients in a given facility cian of their choice. This freedom of choice
and/or geographic area are assigned to a pri- prioritized patient agency but proved to be
mary care provider or care team. Empanel- a challenge for continuity of care, particu-
ment is considered a fundamental component larly when patients moved between panels
of population health management. Among without effective communication between
the 22 PCIC performance Improvement Ini- physicians. The process of transfer could
tiatives analyzed, ten described empanelment take signicant time. If China were to imple-
as a key initiative element, including three ment a similar choice-based empanelment
of the eight China initiatives. Empanelment system, it would be imperative that the trans-
is the mainstay of service delivery systems in fer of patient information as patients change
a number of European countries, including providers be done seamlessly and efciently
England, Scotland, Denmark, Finland and through effective real-time information man-
the Netherlands. In China, including empan- agement systems.
elment as an initiative element is likely to be
an important step in improving the patient- Stratify risks of empaneled population: One
provider relationship and trust, ensuring of the rst tasks PCIC planners have to con-
responsibility at the PHC level for the health sider is dening the health needs of the target
of a population and shifting health-seeking population. Risk stratication is the proac-
behavior away from hospitals. tive identification of individuals within an
There are two main ways in which empaneled reference population who are at
empanelment can be approached: allowing a higher risk for developing poor outcomes
some elements of patient choice or assign- or who have or are at risk for having high
ing patients solely by geographic region. rates of service utilization, particularly hos-
The simplest approach to empanelment is pitalizations. Individuals identied through
to assign patients based on geographic loca- this process can therefore be proactively tar-
tion. This is typically done using pre-existing geted for interventions designed to provide
community demarcations. For example, the needed higher intensity and coordinated
success of Shanghai, FDS largely hinged on care in the PHC setting. At the same time
contracting residents with primary health high utilizers can be engaged to understand
care providers. The FDS empaneled popula- and address their needs and reduce prevent-
tions by neighborhood in all of its districts. able use of higher cost and intensity services.
The program focus was on building strong Ten of the 22 total case studies included risk
relationships between patients and PCPs, stratication as an important initiative ele-
which furthered community trust in the fam- ment, although only one of the ten Chinese
ily doctors as a rst point of contact in the case studies did so.
health system. Risk stratication can be done on an indi-
Though simple, geographic empanel- vidual patient level or based on disease bur-
ment can limit patient choice for physicians den. At the individual level, risk stratifica-
and thereby decrease their acceptance of tion can be based on clinical guidelines, the
26 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

presence of particular target conditions, or Strengthen gatekeeping: Gatekeeping is an

a recent history of high utilization. Clinical important mechanism for ensuring that
staff can also use a summative process of their patients receive the right care at the right
clinical intuition to create lists of patients place at the right time. However, patients
who they predict are at high-risk and necessi- may also perceive it as limiting choice and
tate a higher level of attention from the team. imposing undue restrictions. Therefore,
The Xi, IC initiative used summary clinical gatekeeping systems must be designed with
judgment of staff to stratify patients by risk both patient autonomy and overall utili-
and identify higher risk patients who were zation controls in mind. Having primary
then targeted for integrated clinical path- health care perform gatekeeping functions
ways across referral mechanism to increase limit specialty care access and can help sys-
delivery of appropriate care and improve tems reduce overuse of inappropriate care,
outcomes of care. Past history of utilization though at times at the expense of needed
can also be used to identify patients at risk care. However gatekeeping must include
for high utilization in the future. Maryland, a strong referral system so that patients,
CareFirsts patient-centered medical home when appropriate, have access to higher
model found that risk stratication based on levels of care.
a past history of utilization was highly effec- Gatekeeping can be done explicitly or
tive without being overly burdensome to the implicitly. In explicit gatekeeping, patients
provider. The program uses an Illness Burden cannot receive secondary or tertiary care
Score to quantify patients risk. Illness Bur- without first seeing and getting approval
den Scores are calculated using the past 12 from their primary health care provider,
months of claims data and diagnoses (See the gatekeeper. This mechanism is often
Figure 2.1 below). The Netherlands, DTC enforced by imposing financial or regula-
and Denmark, SIKS initiatives applied risk tory penalties on non-compliant patients or
stratication by identifying specic diseases their providers. In Hangzhou, TFY, explicit
that were associated with high costs, require gatekeeping is employed for patients with
complicated management, or associated with hypertension or diabetes. These patients must
high risk for poor outcomes. In the Nether- access the health care system through their
lands, DTC, a diabetes management pro- primary care provider, who can then refer to
gram was implemented to take patients who more advanced care at the community health
had complications or whose diabetes were center.
out of control and give them comprehensive, In implicit gatekeeping systems, patients
coordinated care. are strongly encouraged to see their primary

FIGURE 2.1 Illness Burden Scorecard to risk stratify patients

Illness Burden (5.00 and above) Percent of Percent Cost

Advanced Critical Illness Extremely heavy health care users with Population of Cost PMPM
Band 1 significant advanced/critical illness 3% 29% $4,436
Illness Burden (2.004.99)
Multiple Chronic Illnesses Heavy users of health care systems,
Band 2 8% 23% $1,160
mostly for more than one chronic disease

At Risk Illness Burden (1.001.99)

Fairly heavy users of health care system 12% 21% $578
Band 3 who are at risk of becoming more ill
Illness Burden (0.250.99)
Stable 27% 20% $218
Generally healthy, with light
Band 4 use of health care services

Healthy Illness Burden (00.24)

Generally healthy, often not 50% 7% $49
Band 5
using health system

Source: Maryland CareFirst Case Study.

S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 27

health care provider before they visit a special- Core Action Area 2: Functioning
ist, but are not formally required to do so. This multidisciplinary teams
may be more preferable to explicit gatekeeping
Multidisciplinary teams (MDT) are a build-
because it allows patients to choose provid-
ing block for most successful PCIC initia-
ers. Turkey HTP chose not to enact a formal
tives. In principle, MDTs are non-hierarchi-
gatekeeping program, and instead encouraged
cal groups of clinical and non-clinical staff
patients to use family medicine practices as
whose goal is to provide comprehensive and
rst contact for problems through the use of
integrated care to patients. Teams composed
nancial incentives. The hospital copayment
of clinical and non-clinical members with a
is waived for patients coming to the hospital
variety of training backgrounds are able to
with a referral from their family medicine
provide a fuller range of services. Multidis-
physician. This initiative has decreased the
ciplinary teams were implemented by 17 out
number of patients coming to the hospitals,
of 22 (77 percent) of initiatives and viewed
but has also resulted in family medicine phy-
as a facilitator in most of these initiatives.
sicians feeling that they are sometimes used
The case studies contained a number of key
only for referrals to the hospital.
approaches to make the MDTs successful,
including ensuring appropriate team compo-
Expand accessibility: Providing options sition and leadership, and providing compre-
for patients to see or speak to their provid- hensive, coordinated patient care.
ers when they perceive the need is a criti-
cal function of primary health care. Com- Dene team composition, roles and leader-
pared to hospitals, PHC must be made ship: The personnel on a multidisciplinary
more accessible and convenient to people. team can vary, but having clearly defined
After-hours care options and same-day roles and responsibilities amongst team
visit opportunities strengthen the ability of members are critical for success. An expe-
primary health care to avoid unnecessary rienced primary health clinician typically
upstream utilization of more expensive care forms the core or team lead. For example, in
options. Increasing accessibility for patients VHA, PACT the leader of each care team is
was addressed in 14/22 (64 percent) PCIC a physician, and the teams consist of a nurse,
initiatives. For example, Zhenjiang, GHs medical assistant, pharmacist, care coordi-
3+X teams were required to spend three nator, and community social worker. The
days per week providing home visits to program mandates that all care teams clearly
community members. Additional services dene the role of each of their members (see
included appointment booking and online Figure 2.2). However, each team is also given
communication. These services were most the flexibility to adapt these roles to their
often used by the elderly. individual needs and context.

FIGURE 2.2 Responsibilities of PACT team members

Pysician Medical Pharmacist Care Community

(Team Leader) Nurse Assistant Coordinator Social Worker
Leads in Patient education, Pre-visit Makes medication Manages patient Works closely with
developing team goal setting, preparation, adjustments based data, track results, patients and care
priorities, patient self-management documentation, on medical records participates in team to facilitate
goals and care teaching and follow-up after visit, and patient health follow-up, community
plans, approves coaching, care team outreach status, educate facilitates in outreach and
test orders, medication assignments, and patients about referral and health fairs
medication, and reconciliation and maintain room medication use discharge process
referrals education stocking

Source: Cambridge Health Alliance in VHA Case Study.

28 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

MDTs can designate a care coordina- and strengthen the quality of care across the
tor to relieve stress of other team members, different levels. 15 of the 22 cases reported
counsel patients on improving their health, efforts to strengthen vertical integration.
and assist them navigate the delivery system. Strategies can be categorized along three
The VHA and Xi County present effective dimensions: (i) dening facility roles within
illustrations of care coordinator functions. A a vertically integrated network; (ii) strength-
large proportion of VHA patients have com- ening relationships among providers through
plicated chronic conditions that require well- technical assistance and skill building; and
coordinated care to manage. Therefore, each (iii) developing formal networks of facilities
VHA team includes a designated care coordi- based on the 3-in-1 principle.
nator who manages patients appointments,
follow-ups, referrals, test data, and discharge Redefine the role of facilities, especially
from the hospital. The VHA has found the hospitals, within a vertically integrated net-
care coordinator to be a critical position work: To ensure coordination and continu-
on the care team, explicitly responsible for ity, vertical integration requires cooperation
coordination of clinical staff and the range among health facilities at different levels of
of provided services. Xi County created the the healthcare system, many of which do
position of liaison ofcers who were hired not traditionally collaborate. It is therefore
at THCs to manage care coordination and necessary to redene the roles of facilities to
referrals and oversee the use of customized function within a robust vertically integrated
care plans for follow-up at the community network, determine what range of services
level (VCs). specific health facilities will provide, and
decide how higher level facilities will support
Form individualized care plans for patients. lower level facilities through supervision,
A care plan provides a road map for all technical assistance, and partnership.
providers who care for a patient. Care plans Internationally, the role of hospitals is
are generally used for high risk patients but changing. They are no longer standalone
can be applied to all patients. Care plans can facilities at the center of the delivery system,
also be used by the patients themselves to the point of entry to care, or one-stop shops
manage their conditions at home. Maryland, for all services. Rather, they are becoming
CareFirst has developed care plans for par- part of a network of facilities that includes
ticularly high-risk and high-utilizing patients. other providers such as primary care, diag-
Successful care plans act as a contract of nostic units and social services (Porignon, et
mutual commitments and contingency plans al., 2011). They will become centers of excel-
between the physicians or nurse practitioner lence concentrating technology and expertise
and the patient. and focusing on providing high complexity
care and valuable rescue services for life-
threatening conditions. They will also share
Core Action Area 3: Vertical integration
personnel and provide technical assistance
including new roles for hospitals
and training to lower levels.
Vertical integration is a key element of tiered Integrating county hospitals, township
service delivery and involves communication health centers, community health centers,
and coordination among primary, second- and village clinics is not a particularly new
ary, and tertiary health facilities delivering concept in China but one that continues to be
care across the care continuum. It involves difcult. Often, integration can force numer-
redening the role of and interactions among ous health facilities into new roles that may
facilities at these three tiers, especially hos- be uncomfortable and foreign to them, but
pitals. All three must work together towards clarifying roles from the outside can pro-
the 3-in-1 principle: one system; one popula- vide needed direction and guidance. A prime
tion; one pot of resources. Vertical integra- example of this is Xi, IC. In June 2014, four
tion can also link providers at different levels county hospitals and 19 THCs were con-
to provide support and technical assistance tracting with each other for inpatient care.
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 29

The IC Management Office established governance structures, appears to drive

these contracts and clearly laid out roles and vertical integration. There are many ways
responsibilities for each level of facility. Fur- China can consider creating networks that
thermore, facilities were incentivized to fulll achieve PCIC goals without fostering hospi-
their responsibilities by linking payment and tal control. The Fosen, DMC District Medi-
reimbursement to performance. cal Center created virtual networks with St
Olavs hospital through daily teleconferences
Establish provider-to-provider relation- for staff/providers and telemedicine consults
ships through technical assistance and skill for patients. Daily conferences between the
building. Linkages between providers across two sites helped to solidify their virtual rela-
the vertical levels of care can be established tionship. The Xi, IC has also created a more
and strengthened through hospitals helping formalized network of health facilities that
improve quality and competency at the lower jointly care for patients, and the financial
levels of care facilities. The majority of the incentive scheme reinforced the integration
Chinese initiatives used technical assistance across facilities and encouraged providers to
provided by hospitals to PHC facilities as a recognize how connected their system was.
way to establish the inter-facility relation- The Xi, IC initiative greatly emphasized the
ships and communication required for effec- importance of following clinical and inte-
tive vertical integration. Two examples are grated care guidelines that explicitly advised
Feixi, SCPHC and Huangzhong, HCA. Both how and at what facility level to care for a
counties established technical assistance pro- patient with a given condition.
grams between village clinics, THCs, and However, networks should not be solely
county hospitals. It was the responsibility of operated by hospitals. In Singapore, RHS,
the upper-level facility to provide clinical TA the movement to integrate public health
through training and education and joint con- services, secondary hospital care, and con-
sultations to physicians in lower-level facili- tract with primary health care providers
ties. This interaction increased coordination through Regional Health Systems aimed to
between the levels and was further supported move away from the concept of the hospital
by an eHealth system that allowed health as the anchor of the system. Instead, Singa-
facilities to communicate with one another. pore, RHS aimed to center the system on the
patients needs. Hospital capture can occur
when hospitals capture patients who could
Develop formalized facility networks: In be treated in primary care and pull them up
many health systems, vertical integration into the hospital system. In order to avoid
occurs through the creation of provider net- hospital capture, the management of the
works. At their most developed stage, these RHS is separate from hospital management
networks offer a broad continuum of care and the chairperson of the private corpora-
across all possible service lines, connected tion that oversees all RHSs is a government-
seamlessly through eHealth tools. These types appointed employee. These actions signal an
of fully integrated networks also often take on important shift away from the hospital-cen-
nancial risk for the health and outcomes of tric model and towards a PCIC system.
the populations they serve. Looser networks
also exist for vertical integration. These vir-
Core Action Area 4: Horizontal
tual networks often form out of joint prox-
imity or with the goal to negotiate favorable
contracts with payers. They often lack strong Horizontal integration aims to provide more
governance structures and shared eHealth complete and comprehensive services inclu-
tools, such as unied patient records. There- sive of promotional, preventive, curative,
fore, looser networks are often less successful rehabilitative, and palliative care coordi-
at reigning in costs while integrating care. nated by the providers at the frontline facil-
Network formation, either through vir- ity. Such service integration allows for more
tual informal mechanisms or more formal effective management of health care delivery,
30 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

and better-coordinated care within a cohe- and decision-making. Information technol-

sive health system centered on the needs of ogy also acts as an enabler of PCIC by facili-
the patient rather than the convenience of tating new forms of interaction beyond short
the delivery system. Horizontal integration in-person visits. These can include multi-
can also contribute to more efciently use of faceted, shared electronic health records
resources through reducing wasteful service with registries, tele- or web consultations,
duplication. Half of the cases reported hori- and online scheduling systems. eHealth can
zontally integrating care. greatly enhance the functionality and effec-
tiveness of PHC systems by connecting pro-
Promote horizontal integration of different viders to achieve horizontal and vertical
types of care. At the systems level, the main integration, coordination and continuity of
form of horizontal integration is the co-loca- information over time. This coordination has
tion of services within a single facility. For been shown to result in more effective care
example, the District Medical Center initia- and decrease unnecessary costs related to
tive, Fosen, DMC, integrated their public duplication of testing, inappropriate medica-
health, primary health care, and emergency tion and avoidable complications due to gaps
care into one facility. This allowed the popu- in follow-up. Within an advancing technolog-
lation to access servicesranging from vac- ical environment, a robust eHealth platform
cinations to emergency medical carefrom is the backbone of an interconnected health-
public health professions and primary care care system that puts patients at the center of
providers in one location. Hangzhou, TFY their care (Bates & Bitton, 2010).
centered on creating non-communicable However, the time, effort, and resources
disease joint centers in community health needed to achieve these putative savings are
centers. The joint centers integrated public substantial. eHealth strategies were employed
health, specialty and primary care for NCDs by 21/22 (95 percent) of the PCIC Improve-
within community health centers, success- ment Initiatives, underscoring the importance
fully transforming previously fragmented and centrality of this action area to health
care delivery. These joint centers also made systems strengthening. Three main eHealth
it easier to receive a broader array of services strategies emerged from the cases: (i) apply-
within one visit to a frontline facility. Feixi, ing electronic health records; (ii) establishing
SCPHC emphasized the importance of inte- electronic communication and management
grating holistic care into modern medical functions; and (iii) ensuring interoperability.
services, thus created a partnership between
a traditional medicine center and a township Establish electronic health records systems
health center in Zipeng. Finally, horizontal (EHR) accessible to providers and patients.
integration can contribute to greater econo- At the center of an effective eHealth sys-
mies of scale. Zhenjiang, GH consolidated tem is the electronic health records which
clinical diagnosis and laboratories across has been shown to improve clinical decision
hospitals and community health centers support, registries, team care, care transi-
into single units. This co-location of services tions, personal health records, TeleHealth
allowed for the more efcient use of resources technologies, and measurement (Bates &
through reducing service overlap. Bitton, 2010). When these key factors func-
tion smoothly in a healthcare setting, both
providers and patients experience a more
Core Action Area 5: Advanced
coordinated care pathway. Providers across
information and communication
different levels are able to communicate in
technology (eHealth)
real-time and easily access current and new
EHealth not only lays the foundation for suc- patients health information in one place.
cessful communication between facilities but In Xi, IC, a new EHR management system
also provides health workers and patients was developed that allowed township health
with the tools to more fully engage with the centers to monitor clinical services at village
care process and improve care management clinics, providing critical information about
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 31

the state of their dual referral system and regulation. Where multiple eHealth system
linked inpatient and outpatient facilities. Phy- exist, a major challenge exists in getting the
sicians at THCs can view the outcome of fol- systems to talk to each other in order to
low-up appointments and whether or not the safely and effectively share information about
referred-to physician adhered to clinical path- critical patient care needs. Interoperability
ways and the individualized care plan devel- needs to be built into eHealth systems from
oped by the upper-level facility doctor. The the onset. Fosen, DMC achieved interoper-
EHR system also captured patient referrals. ability between its records and the tertiary
hospital to which it is linked (St Olavs).
Establish communication and care man- Because the center was developed with this
agement functions. EHealth can provide particular partnership in mind, the center
patients with increased access to quality care adopted the same EHR system as the hospital
through functions including online schedul- rather than creating its own system.
ing systems, e-consultations, text messaging,
and tele-conferences. Online appointment
Core Action Area 6: Integrated Clinical
scheduling is one method to improve patient
Pathways and Functional Dual Referral
access to health services. For example, the
Turkish initiative created a Central Physi-
cian Appointment System (CPAS), which Integrated clinical pathways attempt to stan-
schedules appointments for primary, second- dardize the treatment and referral pathways
ary, and tertiary facilities over the telephone between providers across at least two levels
and online. CPAS allows patients to request within a health system to address particular
an appointment with a specific physician, conditions. They clarify relationships and
office location, or specialty area and has responsibilities between different providers
decreased long waiting times at clinics that in the system as well. Because these pathways
plagued the health system before the initia- may often lead to referrals to another level of
tive. Both Shanghai, FDS and Xi, IC aimed care, they are most effective in the context
to reach a younger generation through their of strong horizontal and vertical integration.
health initiatives and used WeChat, a Chi- Dual referrals include not only referral from
nese messaging app. It proved to be a quick primary to secondary care, but also back to
and easy way to get health information to primary health care from secondary care.
patients, and can be used by patients to check Integrated pathways and strong dual referral
physician information, make appointments, systems are important facilitators of provid-
and update patient registration and payment ing the right care at the right time. 13/22
forms. Telemedicine and video conferencing (59 percent) of case studies used dual refer-
played a particularly important role in rural rals in their initiatives and 15/22 (68 percent)
Fosen, DMCs initiative. Video conferenc- of case studies applied integrated care path-
ing expanded access in two ways: primary ways. Two main strategies were applied in
health care providers were able to consult the cases: (i) crafting integrated pathways to
with secondary and tertiary care providers facilitate care integration and decision sup-
and patients were able to see secondary care port for providers; and (ii) promoting dual
providers. referrals within integrated facility networks.

Ensure interoperability of eHealth across Craft integrated pathways to facilitate care

facilities and services. EHealth tools carry integration and decision support for provid-
great potential to improve the quality and ers: Clinical pathways can facilitate improved
safety of care; but this promise has to be met care integration across providers and act as a
with maximum interoperability capacities valuable decision support tool for providers.
between facilities. Interoperability refers to As a part of the Canterbury, HSP initiative,
the potential for eHealth tools and records a program call Health Pathways was devel-
to be viewed by different providers in differ- oped by clinicians to create 570 clinical path-
ent facilities. Interoperability often requires ways for referral. The goal of the pathways
32 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

was to make secondary care referral deci- result in improvement. A feedback loop is
sions explicit in order to reduce variation in needed to ensure that the results are com-
referral patterns and avoid unnecessary or municated back to stakeholders at all levels
duplicate referrals. The healthcare initiative from the community to providers to man-
in Xi, IC also emphasized the importance of agement and policy makers. The measure-
adhering to Clinical Pathways, which were ment can also identify early positive outliers
established for 188 diseases in county hospi- who can teach others and identify effective
tals and 104 diseases within township health intervention components for broader imple-
centers at an inpatient level. The Pathways mentation. A total of 20/22 (91 percent) of
made clear the scope of responsibility for case studies used measurement and evalu-
hospitals and THCs, claried when patients ation to strengthen their initiative. 5 Two
should be transferred to a THC for contin- common strategies for promoting measure-
ued inpatient care and provided guidelines ment and feedback emerged from the cases:
for discharge and follow-up care at village (i) development and use of standardized
clinics. performance metrics; and (ii) creation of
feedback loops to drive continuous quality
Promote dual referrals within integrated improvement.
facility networks. All Chinese PCIC cases
employed upward referrals using the Green Utilize standardized performance measure-
Channel. Through the Green Channel, ment indicators. Performance measurement
patients referred from participating facilities should be standardized through use of com-
in their system were expected to receive expe- mon, veriable and meaningful performance
dited care at hospitals. However, green chan- indicators. The German initiative included
nels functioned irregularly. Moreover hospi- standardized reports using a core set of indi-
tals were even less likely to refer patients to cators for care providers, the management
community health centers, and some patients team, and other stakeholders. The perfor-
resisted these downward referrals. It is worth mance measures covered a range from sys-
noting that the dual referral system in Xi, IC tems to technical and experiential quality
was incentivized by cost sharing and reim- (patient experience) and included indicators
bursement. Under this scheme, upper-level from the following care dimensions: 1) struc-
facilities were reimbursed for the entire cost ture, 2) process, 3) outcomes, 4) quality,
of a referred case and shared that payment 5) integration, 6) patient experience, and
with the lower-level facility depending on 7) efficiency. Use of a core set of measure-
a previously-determined price and the care ment standards facilitated communication
workload. Reimbursement however, was about progress and allowed for comparisons
dependent on whether or not the patient care across facilities. Outcomes/processes chosen
pathway was satisfactorily fullled in both for measurement should also account for pri-
health facilities. orities of the system. Many OECD countries
have established patient reported outcome
measures (PROMs) and patient reported
Core Action Area 7: Measurement
experience measures (PREMs) as part and
Standards and Feedback
parcel of health system performance assess-
Establishing a measurement system is criti- ment (OECD, 2014).
cal to ensuring the quality and performance
of PCIC-based care. Performance measure- Create continuous feedback loops linked to
ment indicators need to reect national stan- action plans to drive quality improvement.
dards, which in turn reflect and the core Regular feedback loops enable identifica-
functions and goals of an effective PCIC- tion of services gaps and drive and support
based delivery care system (coordination, continual learning and correction. To ensure
comprehensiveness, integration and tech- ongoing learning, developing a resilient sys-
nical and experiential quality). However, tem able to continuously improve and adapt
collecting performance data will not alone to new challenges, a strong focus on feedback
S H A P I N G T I E R E D H E A LT H C A R E D E L I V E R Y S Y S T E M I N ACCCO R D A N C E W I T H P C I C M O D E L ( L E V E R 1 ) 33

FIGURE 2.3 PACE Continual Feedback Loop

Design and Implement Intervention Collect Data

Incorporate improvements into standard Established and maintain a health

practice for the delivery of care; track information system that collects, integrates,
performance to ensure that improvements and reports data
are sustained Train staff in data integrity concepts and

Identify Gaps Feedback and Review Data

Use data collected to identify areas of good Document and disseminate Quality
or poor performance and prioritize Assessment and Performance Improvement
performance improvement activities activities
Immediately correct problems that threaten
the health or safety of participants

linked to action at all levels of the system is Certication was only addressed by ve
critical. This transforming of data into action of the 22 PCIC Performance Improvement
and improvement requires a process with the Initiatives. Strategies to launch certication
following main elements: performance mea- include developing criteria and setting targets
surement, feedback and review of the data,
identication of gaps, and design and imple- Develop certification criteria which are
mentation of interventionsall underpinned nationally and locally relevant. Criteria need
by support and training of staff in improve- to reflect the priorities and structure of a
ment methods. The cycle continues with re- PCIC-based delivery system. Efforts to cata-
measurement to assess if the gap has been lyze frontline facility transformation can be
closed, and if new ones have been identied. guided by certication programs. Such pro-
For example, US, PACE built the presence of grams dene model standards, addressing the
continual feedback into its charter, and the range of areas from infrastructure (resources,
process continues to be an active part of the IT, HR) systems organization (integration,
program. Providers are given feedback per- hospital and PHC role), how they deliver
formance measurement results regularly and care (people-centeredness, comprehensive,
review their personal performance and iden- continuous, coordinated) and the outcome
tify problem areas across the practice. Figure achieved. For example, in order for facilities
2.3 illustrates how US, PACE follows the to be recognized as patient-centered medical
continual feedback loops. homes, a form of PCIC recently launched in
the US, the National Committee for Qual-
ity Assurance (NCQA) requires that the
Core Action Area 8: Certification
following criteria be met: team-based care,
Certication refers to the process of facili- care coordination, patient self-management,
ties meeting certain pre-defined structural enhanced access and continuity, care man-
or performance targets within a mandated agement, and quality improvement. The mea-
time period. At its core, certification is a sures developed through these standards pro-
defined mechanism for externally assuring vide a basis to ascertain the relative quality
accountability for minimal standards to be of care being provided and compare quality
met. Implementation of certication requires performance across providers a standardized
setting standards, defining metrics against way. China may like to draw on a wide array
which facilities will be measured, and estab- of easily available and scientically proven
lishing a transparent and reliable process for protocols and guidelines for care available at
conferring certication, ideally conducted by websites sponsored by the NCQA and other
a nationally designed process. organizations.
34 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Set targets for criteria and use to certify Notes

facilities. Once criteria have been developed,
1. The shorter PCIC nomenclature was used for
setting targets and using the criteria to cer-
translation purposes.
tify facilities through a transparent and reli-
2. Quality of care and citizen engagement are
able mechanism are the next steps. In VHA, the subjects of Chapters 3 and 4 respectively.
PACT, to be recognized as a PCMH by the 3. Patient engagement is the subject of Chapter
NCQA (National Committee for Quality 3.
Assurance), the primary health care clinic 4. Annex 3 categorizes the impact of over 300
must meet certain criteria. The NCQA uses studies, including the case studies commis-
a point-based system with three levels of clas- sioned for this report, on reducing hospi-
sication. Depending on performance in this tal care, improving care processes, raising
audit, the PACT center is classied as level 1 outcomes, bettering patient experience and
(3559), level 2 (6084), or level 3 (85100). containing cost escalation. A more indepth
review of evidence will be included in the nal
In addition to the levels, there are six must-
pass elements that are required for all levels.
5. Implementing improvement initiatives with
The score for each must-pass section must feedback loops is examined in Chapter 10.
be greater than 50 percent in order to receive
Improving Quality of Care in
Support of People-Centered
Integrated Care (Lever 2)

Introduction population health, patient experience, and

efciency of health care (see Box 3.1).
A salient challenge China faces is that of Evidence from OECD countries suggests
improving quality of care to meet the rising that between 1030 percent of the reduc-
expectations of the public for better health tion in premature mortality over the past
and health care, and its success in rebalanc- decade can be attributed to improvements in
ing service delivery based on a PCIC model the quality of care (Nolte and McKee, 2011,
will depend on the health systems ability 2012). While better quality is associated
to produce and deliver high quality services with improved patient outcomes and experi-
to its citizens. Abstract and complex (Dayal ence, policy makers also cannot overlook the
and Hort, 2015; La Forgia and Coutto- close link between quality and costs. Stud-
lenc, 2008), quality in healthcare can be ies have consistently found that high qual-
described as the degree to which health ser- ity care is not necessarily more expensive,
vices for individuals and populations increase but low-quality care is associated with more
the likelihood of desired health outcomes hospitalizations, more intensive treatments
and are consistent with current professional and use of medicine, longer stays in hospi-
knowledge(IOM, 1990). In the context of tals, and unnecessary re-admissions, result-
health systems, the term quality incorpo- ing in wasted resources and poor outcomes
rates a range of positive features that contrib- (Baicker and Chandra, 2004; Berwick et al,
ute to the overall performance of health-care 2008). For example, US healthcare costs due
systems, a view that underscores the systems to improper and unnecessary use of medi-
property of quality rather than simply the cines were estimated to exceed $200 billion
duty of a particular physician, department or in 2012 (IMS Institute for Healthcare Infor-
facility (IOM, 2001). Indeed, evidence-based matics, 2013). Studies have found similar
high-quality clinically appropriate care, deliv- results in other countries. The UKs NHS
ered with high technical skills, is a key lever was found to waste up to 2.3 billion pounds
to achieve Chinas reform aims of improved a year on a range of unnecessary procedures

36 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

and processes (AoMRC, 2014). Prevention of to reduce overuse of antimicrobial drugs, and
medical errors could have saved US$3 billion adopted measures to improve patient expe-
annually in the Australian heath system dur- rience by piloting online appointment and
ing 199596 (Australian Ministry of Health, extending clinic hours. Recent policy docu-
1996). Low quality care is thus harmful to ments on urban public hospital reforms (Guo
patients health and compromises the effi- ban fa, 2015, No.38) and county hospital
ciency of health systems. reforms (Guo ban fa 2015, No. 33) restated
In China, there is a need for information the call for quality assurance and improve-
on quality of care and implications for spend- ment. In March 2015 NHFPC took an impor-
ing. It is safe to assume that the quality-cost tant rst step in developing institutional lead-
links observed elsewhere also exist in China, ership to support quality improvement. It set
though more research would be needed to up a national Medical Service Management
conrm this hypothesis. Quality shortcom- and Guidance Center (MSMGC) under the
ings have been associated with low utilization NHFPC with a range of mandates with a focus
of primary care services (Zhang et al, 2014; on providing technical support to local quality
Bhattacharyya et al., 2011) and increas- improvement efforts. Implementation is just
ing number of patient-doctor disputes over underway. However, some important quality
medical practice, resulting in litigations and improvement functions are yet covered under
violence (Heskesh, 2012; China Consumer the MSMGC mandate, including developing,
Association, 2014). A well-documented qual- validating and mandating the use of national
ity problem is the over-prescription of unnec- standardized quality measures, managing the
essary services and drugs (Yin, Chen, 2015; monitoring and evaluation of quality at the
Li, Xu, 2012; Yin Song, 2013). Patients have facility level, and coordinating efforts for qual-
expressed dissatisfaction about over-prescrip- ity improvement across various stakeholders.
tion, as well as poor attitude, lack of effort In the past decade, most OECD countries
and short consultation time with doctors and have recognized continual quality improve-
nurses (Center for Health Statistics, 2010) ment as a central goal of health sector devel-
The Government of China has launched opment and have implemented systematic
a series of policy initiatives to raise quality reforms to improve quality of care. Govern-
standards and strengthen regulation. Since ments increasingly act as stewards of the
2009, NHFPC has established national and public and payers for health care, leading the
local Medical Quality Control Committees changes in health care delivery to improve
(MQCCs), and charged them with develop- quality of care. Drawing on their experi-
ing standards and enforcing quality control ence combined with relevant experience from
within respective medical specialties. Located China, this chapter first summarizes the
in tertiary and teaching hospitals only, these major challenges in improving health care
MQCCs are considered to be the technical quality, and then proposes a set of actions and
leaders in their eld in the local area in which strategies for quality improvement in China.
they operate. A year later, NHFPC issued a set
of policy directives and guidelines aiming at Challenges to Improving Quality
improving medical quality, including medical
quality management policy (NHFPC, public
of Care in China
consultation draft, May, 2014), tertiary hos- The rapid expansion and upgrading of health
pital accreditation standards (Weiyiguan fa, care infrastructure in China has laid the
2011, No. 33), medical errors and adverse foundation for delivering higher quality care,
events reporting (Weiyiguan fa, 2011, No.4), but attention has recently been directed to
rational use of antimicrobial drugs (NHFPC, managing and improving the processes and
2012, No. 84), and implementation of clini- outcomes of care. A review of what is known
cal pathways (Weiyizhen fa, 2012, No. 65). about quality of health care in China sug-
Since 2010, NHFPC has issued several quality gests three main challenges that China may
control guidelines directed at public hospital like to address as it moves towards a patient-
reform pilots, and has initiated a campaign centered model of health care production,
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 37

BOX 3.1 What is Quality? Why Quality is important?

Quality of care is an abstract and complicated con- high quality care, thus quality standards require con-
struct to dene. It has at least two dimensions: tech- stant revisiting and updating. Ensuring the highest
nical and personal. Technical quality refers to the standard of quality means all patients receive the right
correctness of diagnosis, the appropriateness of pre- care, at the right time, in the right setting, every time.
scribed interventions based on best evidence, and the Quality of care is important because it is a proxi-
competency of the clinical team in delivering those mal determinant to health outcomes. The Institute
interventions, resulting in an increased likelihood of of Medicine report To Err is Human documented
improved health outcome. Personal quality refers to 98,000 preventable deaths due to medical errors each
the responsiveness of care to patients preferences: the year in U.S. hospitals. Potentially preventable hospi-
ability to see preferred clinician, continuity of care, talization due to poor primary care account for one
good communication, demonstration of empathy out of every ten hospital stays in 2008. Low-quality
and respect for privacy contribute to perceived higher care as indicated by medical errors and adverse events
quality of care. Quality can be a moving target with also drive up health expenditure. In that same year
the change of time because new medical knowledge medical errors alone cost the United States an esti-
and technology tend to change our expectations for mated $19.5 billion.
Source: AHRQ. Potentially preventable hospitalization for acute and chronic conditions. (2010)
pdf; Adel, et al., 2012.

nancing and delivery: (i) institutional sup- expected to play important roles in quality
port for sustained quality improvement; improvement, according to available NHPLC
(ii) information on quality of care; and documents, they are part of the NHFPC
(iii) management practices at the facility level system and at least currently focus more on
targeted to enhancing quality and patient public hospitals only rather than providing
experience. These are discussed in turn. institutional support to all providers at differ-
ent levels and of different ownership. Many
Institutional support: Although local efforts OECD countries have established such insti-
to improve quality have expanded in recent tutional leadership by creating a coordinating
years, system level institutional support technical body to assess quality and oversee
remains under developed in China relative systematic improvements at all levels of their
to OECD countries. First, there does not health systems. Such a technical body is not
appear to be a national quality improve- always a government agency but has techni-
ment strategy, which identies and prioritizes cal authority and the ability to reach out to
areas of intervention and sets standards for all stakeholders including public and private
acceptable level of quality. Current efforts providers, professional associations, patients
seem to respond to existing problems, such and health workers.
as over-use of antibiotic drugs and violence NHFPC has taken steps to put in place the
against doctors, but these could be enhanced essential institutional, regulatory and policy
with a more comprehensive and system-wide architecture to ensure medical quality. How-
approach. Second, strong and unied leader- ever, much more could be done. For example,
ship on quality issues has yet to take shape regulation emphasizes entry qualications (for
to inuence all relevant (public and private) hospitals) and structural readiness (e.g. setting
stakeholders, dene a quality improvement up internal quality committees), but greater
agenda, provide resources for the same, build attention needs to be directed to clinical pro-
consensus around standards and quality indi- cesses and outcomes. Since 2009, NHFPC
cators, and share lessons in quality improve- established national and local Medical Qual-
ment. While the MSMGC and MQCCs are ity Control Committees (MQCCs) charged
38 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

with developing standards and enforcing qual- related to quality of care in China. Structural
ity control within respective medical specialty. quality evaluates the relatively stable charac-
These MQCCs are located in tertiary or teach- teristics of the environment where care takes
ing hospitals considered as the technical lead- place, including infrastructure, equipment,
ers in certain specialty within the local area. and human resource. Process quality assesses
Nevertheless, MQCCs for primary care have interaction between clinicians and patients,
yet to be formed. In addition, the NHFPC whether the clinician follows recommended
issued a set of policy directives and guidelines care or clinical guidelines to reach correct
aiming at improving medical quality, including diagnosis and appropriate treatment plan,
medical quality management policy (NHFPC, and skillfully deliver treatments. Outcomes
public consultation draft, May, 2014), tertiary offer evidence about changes in patients
hospital accreditation standards (Weiyiguan health status as a result of health care. All
fa, 2011, No. 33), medical errors and adverse three dimensions provide valuable informa-
events reporting (Weiyiguan fa, 2011, No.4), tion for measuring quality, but the existing
rational use of antimicrobial drugs (NHFPC, quality-of-care literature on China focuses
2012, No. 84), and implementation of clini- mainly on structural features of the delivery
cal pathways (Weiyizhen fa, 2012, No. 65). system.
Finally, the government has launched quality As far as structural aspects of quality are
improvement campaigns targeted at hospitals concerned, China seems to be doing very
(e.g. annual 10,000 Miles Medical Quality well, especially following recent investments
Inspection Tour) and quality awards (e.g. Chi- in health infrastructure that resulted in the
nas 100 Best Hospitals). construction of many health facilities and
While these valuable efforts are taking equipping them with adequate equipment for
China in the right direction, it is uncertain better diagnosis, treatment, and patient care.
whether government administrative agen- However, the essential medicine policy may
cies alone have the capacity to oversee the have negatively affected drug availability at
implementation of these regulations. Further, grassroots facilities (Shen, 2014). In addition,
government uses inspections as the main grassroots facilities still face a shortage of
approach to assess and enforce regulatory qualied health professionals, especially in
compliance which may alone may be insuf- rural areas.1 Not much is documented about
cient to drive continuous quality improve- process quality, but available evidence sug-
ment on the front lines. It would be important gests room for improvement, especially at
for policy makers to consider complementary grassroots institutions. Knowledge of and
approaches that will create the right incen- experience in managing common chronic
tives for raising quality. In many OECD diseases is insufcient (Wu, Luo et al 2009;
countries such a comprehensive approach is Liu, Hou et al, 2013). In one study with stan-
supported through multi-stakeholder engage- dardized patients, village doctors asked only
ment and coordination. a third of questions deemed essential, cor-
rectly diagnosed a mere 26 percent of unsta-
Information on quality of care: Given insuf- ble angina cases, and dispensed medication
cient oversight of quality of care in China, assessed to be unnecessary or harmful by an
there is little systematic information on qual- auditing physician in 64 percent of interac-
ity issues that can guide effective and tar- tions in which a medication was prescribed
geted policy interventions. Most assessments (Sylvia et al. 2014). Processes of care are
of quality are descriptive studies of single or somewhat better at secondary and tertiary
a handful of tertiary hospitals (e.g. Nie et al, hospitals, but evidence is limited and mixed.
2014; Wei et al., 2010). Evidence on the qual- For example, Wei et al (2010) found a high
ity of care provided by secondary hospitals uptake of secondary prevention of ischemic
and primary care facilities is thin. stroke by doctors in a nationwide sample of
Donabedian (1980) provides a useful urban hospitals, but Qian et al (2001) show
framework of structure, process and out- that obstetric practice is not following best
comes for critically examining problems practice in four hospitals located in Shanghai
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 39

BOX 3.2 Existing evidence of over-utilization of drugs and health interventions

Over-prescription of drugs: Average number of drugs per prescription (3) exceeds WHO ratio-
nal drug use reference level (Yin, Chen, et al 2015); 50 percent
prescriptions were for antibiotics and 1025 percent were for two
or more types of antibiotics (Li, Xu et al, 2012; Yin, Song, 2013).
Over-use of intravenous injection drug: Intravenous injection rate (53 percent) exceeds WHO rational
drug use reference level (Yin, Chen, et al. 2015).
Over-use of surgical procedures: Cesarean section rate in all deliveries is 46 percent, among which
50 percent were unnecessary (Liao, 2015).
Over-use of CT scan: True positive rate of CT scan is only 10 percent, as compared with
global average of 50 percent (Liao, 2015).

and Jiangsu, with three out of six practices stent implantation, coronary artery bypass
that should be avoided routinely performed graft (Liao, 2015), but data are not reported
with rates more than 70 percent. Similar and analyzed systematically.
results were found for medication for patients
with acute coronary syndromes (Bi et al, Quality management practices at the facility
2009). Finally, regarding outcome aspects of level. Hospital management is biased by sys-
quality, available but limited evidence sug- tem incentives to reward volume rather than
gests large variations in patient outcomes in quality of care, and limited by low manage-
tertiary public hospitals (Xu et al, 2015). For ment capacity. The perverse incentives that
example a meta-analysis found that surgical encourage prot-making and increasing vol-
site infection rate in China was 4.5 percent ume of care, instead of rewarding high qual-
on average between 2001 and 2012 (Fan et ity care, affect behaviors of management and
al, 2014), which can be prevented by effec- frontline service delivery at all facilities. Hos-
tive prophylaxis. The shortage of competent pital managers lack of sufcient motivation
primary care doctors and the general poor and public hospitals face weak requirements
quality of primary care contributes to a rising from the government and social insurers to
trend of unnecessary and avoidable hospital- demonstrate improved quality. Over-pre-
ization (Ma et al., 2015; Jiang et al, 2015). scription of drugs is a common practice (Yin,
Patients experience poor attitude of doctors Chen 2015; Li, Xu, 2012; Yin, Song 2013).
and nurses and are discontent about the short A study found that even after a recent pol-
consultation time and lack of effort (Center icy pilot that tried to put a hard ceiling on
for Health Statistics, 2010). hospital cost inflation, managers were still
Over-prescription of drugs, especially reluctant to limit physicians from over-pre-
antibiotics, is a well-documented problem scribing (He and Qian 2013). While the situ-
in all facilities (Box 3.2). For example, a pre- ation has improved under the reforms, many
scription audit of rural clinics in Shandong public hospitals continue to pursue profits
found that use of a variety of drugs, including Revenue making and expanding the topline
antibiotics and steroids, exceeded the WHO are top priorities of hospital managers (Yip
reference levels for rational drug prescrip- and Hsiao, 2014). Besides investing in more
tion. Excessive use was found to be particu- advanced medical equipment, which are
larly problematic in grassroots facilities and highly protable, there are no incentives for
in less-developed western China (Yin, Song, hospitals to invest in improving the less visi-
2013). There is limited evidence of unneces- ble aspects of quality like process of care. Due
sary tests e.g. CT and MRI scans, and proce- to a lack of organizational focus on quality,
dures, e.g. cesarean section, coronary artery there is a lack of structured organizational
40 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

mechanisms and resources for leading qual- and implementation tools to foster continu-
ity improvement initiatives. ous quality improvement at all levels of the
In addition, most public hospital manag- service delivery system. China may like to
ers are lacking of training in management. A consider a comprehensive strategic frame-
commissioned on hospital management prac- work consisting of three core action areas:
tices in China2 found that quality of manage- 1) strengthening institutional leadership
ment practices in sampled public hospitals is and system support; 2) establishing quality
below the standard average score and high- measurement and feedback mechanism; and
lighted the need for improvements in areas 3) transforming organizational management
such as monitoring and performance man- to cultivate continuous quality improvement.
agement, continuous improvement and conse- Provider skills and patient engagement are
quence management (Liu, 2015). In addition, two additional core areas that are addressed
public hospitals were not given autonomy to in chapters 4 and 6. Box 3.3 displays the core
reward high quality providers and remove action areas and corresponding the imple-
poor quality providers. Weak management mentation strategies.
capacity poses barriers for improving quality
at the front line.
Core Action Area 1: Promote an
organizational structure to lead the
Recommendations for Improving creation of an information base and
development of strategies for quality
the Quality of Care improvement
The aforementioned challenges are xable, Government leadership and stewardship is
but will require unied leadership, institu- vital for building capacity to improve qual-
tional architecture, stakeholder participation, ity of health care. International experience

BOX 3.3 Core action areas and implementation strategies to improve healthcare quality

Core action areas Implementation Strategies

1. Promote an organizational structure to lead to Explore options to cultivate a national authority

the creation of an information base and develop- to lead improvement efforts
ment of strategies for quality improvement Conduct an in-depth national study of the state
of quality of care
Develop a national quality improvement strategy

2. Systematically measure data on quality of care, Establish a standardized quality measurement

and use it continuously to support quality system with emphasis on processes and outcomes
improvement of care
Create and maintain an Atlas of Variation in
process quality and outcomes
Use quality performance information for accred-
itation, public reporting, and payment incentives.

3. Develop and promote use of tools to improve Promote evidence-based standardized care
quality of care in health facilities Promote the use of management tools to foster
quality improvement in medical organizations
Use eHealth innovations to support quality
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 41

points to three categories of activities that Over the last 15 years, many OECD
the government can consider: expanding countries have established such institu-
the mandate of current bodies or setting up tions. Well-known examples include but not
coordination architecture to lead, oversee limited to: (i) National Institute for Health
and implement quality improvement ini- and Care Excellence (NICE) in UK which
tiatives; conducting national reviews; and is responsible for developing evidence-
developing national strategies for quality based clinical guidelines and pathways,
enhancement. and evaluation of clinical interventions. (ii)
the French National Authority for Health
Explore options to cultivate a national coor- (Haute Autorit de sant, HAS) which is
dination architecture to oversee systematic tasked with the assessment of drugs, medi-
improvements to health sector quality. This cal devices and procedures to the publica-
architecture would be publicly responsible tion of guidelines and accreditation of health
for coordinating all efforts aimed at qual- care organizations and certication of doc-
ity assurance and improvement, and would tors (Chevreul et al. 2010) (iii) the Qual-
actively engage all stakeholders to facilitate ity Institute in Holland which crafted a
the implementation of quality assurance and mandatory framework for the development
improvement strategies. Key functions would of care standards, clinical guidelines, and
include: (i) ensure that national aims for qual- performance measures; (iv) the Agency for
ity are set; (ii) establish quality standards Healthcare Quality and Research (AHRQ)
and develop quality measures; (iii) measure in the United States, which supports qual-
and report on continuous progress toward ity measure development, national quality
those standards; (iv) develop a standardized reporting, and healthcare quality research;
national medical curriculum, incorporating and (iv) the Institute for Quality and Ef-
the best available scientific knowledge; (v) ciency in Health Care (IQWiG) in Germany,
ensure that the medical professions are certi- which is tasked with reviewing the evidence
ed to deliver care in accordance with these of diagnosis and therapy for selected condi-
standards; (vi) oversee efforts to accredit and tions, providing evidence-based reports on
certify both public and private providers; (vii) for example drugs, non-drug interventions,
dene treatments and interventions that are diagnostic and screening tests, and develop-
reimbursable under social health insurance ing recommendations on disease manage-
based on cost-effectiveness analysis and ethi- ment programs.
cal considerations; (viii) assess and promote Operationally, one option would be to
clinical guidelines; and (ix) conduct research broaden MSMGCs mandate, incorporate
and build the capacity needed to advance the additional government and non-government
continual improvement of quality care. actors, and enhance its capacity to perform
Stakeholder organizations, including the recommended functions. While the
NHFPC, MoF, MOHRSS, key professional MSMGC is mandated with some of these
and scientic bodies, private providers and responsibilities, its limited staff (30), lack
the public, could be represented in this coor- of stakeholder representation and narrow
dination architecture.3 The entity could also focus on public hospitals may be insufcient
serve as the platform for tapping interna- to perform the proposed functions. Another
tional expertise and sharing knowledge in option would be to establish an coordina-
care improvement. In the long run, it would tion architecture under the State Council,
serve as the ultimate source of scientic infor- such as the current State Council Health
mation on all quality-related topics for both Reform Leading Group, to ensure the high-
clinicians and the public. It will also become est-level authority to mobilize various pub-
the institutional leader in promoting qual- lic, private and professional stakeholders.
ity of care and ensuring that evidence-based Importantly, the institution will apply the
care is consistently delivered at the highest same quality standards to both public and
standard. private facilities.
42 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Conduct an in-depth national study of the nation. To make this happen, an independent
state of quality of care and quality improve- panel including both Chinese and interna-
ment initiatives at all levels of the system. In tional health care quality experts, together
a number of countries, efforts to improve with Chinese academic research institutions,
health system performance have been cata- can be enlisted and commissioned to conduct
lyzed by comprehensive, evidence-based the proposed study. The independent panel
reports on quality and performance. These would summarize the findings and issue a
reports helped focus the attention of lead- comprehensive report on quality of care in
ers and professionals on avoidable short- China, as well as recommendations for goals
comings in quality and on opportunities and targets for quality improvement and
to do better for patients and communities. reforms in policy, training, and practice.
In effect, such studies can serve as game
changers in bringing quality issues to the Develop a national quality improvement
forefront of the policy debate. Moreover, strategy. Drawing on the results of the afore-
by showing commitment to addressing real mentioned study, a strategy can be developed
needs, these reports can also help improve that would an acceptable level of quality, set
public condence in the health care system. forth quality goals, clarify roles and respon-
For example, prompted by mounting evi- sibilities of stakeholders, and mandate activi-
dence of quality failures, public demands, ties at different levels. For example, the U.S.
and increasing costs, several countries car- National Strategy for Quality Improvement
ried out systematic reviews of national in Health Care was launched in 2011 (US
approaches to quality, assessment of the Department of Health and Human Services,
status quo, and proposed recommenda- 2011). It articulated three national aims (bet-
tions. Two seminal reports include the Insti- ter care, healthy people/healthy communities,
tute of Medicine (IOM)s To Err is Human and affordable care), and six priorities:
(2000) and Crossing the Quality Chasm
(2001) which exposed the breadth and making care safer by reducing harm
depth of quality issues in the US and set out caused in the delivery of care
a strategy to address these failures. Another ensuring that each person and family are
example is the Quality in Australia Health engaged as partners in their care
Care Study (QAHCS), commissioned by the promoting effective communication and
Australian Ministry of Health, which used coordination of care
retrospective clinical auditing methods to promoting the most effective preven-
assess adverse events in hospitals. England tion and treatment practices for leading
also replicated the study and published A causes of mortality
rst-class service: quality in the new NHS. starting with cardiovascular disease
This report highlighted key mechanisms for working with communities to promote
enhancing accountability, performance mea- wide use of best practices to enable
surement, and inspection in health care. healthy living.
Such studies, which are not yet available in making quality care more affordable
China, contribute to collecting reliable infor- for individuals, families, employers, and
mation on quality performance and analyz- government by developing and spreading
ing problematic areas. China has piloted new health care delivery models.
collecting data and monitoring quality and
patient safety in hospitals, but rigorous The aims and priorities of the strategy are
analysis of these data has yet to be published the basis for designing local initiatives, and
(Jiang et al., 2015). Led by the proposed for monitoring progress. The strategy builds
national quality authority organization, simi- on existing work (the national reviews pro-
lar research in China can systematically doc- vide inputs to the strategy), and serves as an
ument quality problems related to structures, evolving guide for the nation, and can be
processes and outcomes. This would help gal- revised and enhanced annually with increas-
vanize quality improvements throughout the ingly rened strategies.
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 43

Core Action Area 2: Systematically useful for comparing provider quality. For
measure data on quality of care, and example, mortality analysis in China does
use it continuously to support quality not typically conduct case-mix adjustment to
improvements take into account health risk differences of
patients admitted to hospitals, leading to esti-
An outstanding feature of quality improve- mates that are not comparable across health
ment efforts in the past decade in OECD facilities.
countries is the broad use of quantitative Many OECD countries are making efforts
data on health care processes and outcomes. to engage patients in quality assessment and
Thanks to both proliferation of data and developing tools to measure health outcomes
advancement in statistical methods, reliable from the patient perspective. Patient-reported
quality indicators are much easier to obtain outcome measures (PROMs) and patient-
today than in the past. These measures give reported experience measures (PREMs) are
policy makers a powerful tool to benchmark patient-reported physical, mental and social
providers quality, identify low and high per- health and feedback on how well they are
formers, devise incentives to reward higher managing their chronic diseases or health
quality, and evaluate progress over time. conditions. As stated in Chapter 2, they
may be incorporated in the quality measure
Shift measurement of quality from structure framework for both integrated health sys-
to process and outcomes. Structural quality tems and single health provider.
is relatively easy to measure. For example,
reliable data on infrastructure, equipment, Create and maintain an Atlas of Variation
and human resources is readily available in in process quality and outcomes. In most
China. While adequate structural quality is nations, China included, the quality of health
necessary, it is not sufcient to improve out- care and outcomes vary from one geographic
comes or experience of health care; both of area to another and even among clinicians
which are determined in part by how struc- in the same city. This variation derives from
tural inputs to health care are used in pro- differences in professional opinions, habits,
cesses of care that take place between patients training, and application of scientic stan-
and providers. Development of measures that dards. The use of certain clinical procedures
capture such processes is more complex, and on specific conditions showing these large
should be conducted on the basis of best sci- variations are considered supply-sensitive,
entic and clinical evidence or clinical guide- since they are largely due to provider choices
lines. To make evidence-based care the norm, (whether providers deem it necessary to
doctors clinical actions must be measured admit a patient or perform a surgery), not
against recommended processes; for exam- science or patient preferences. Controlling
ple, is statin prescribed at discharge to AMI variation begins with understanding it. For
patients? What is the percentage of patients example, significant variations in elective
who had their hemoglobin A1c level mea- surgeries (e.g. tonsillectomy, prostatectomy)
sured twice in the past year? and hospitalization associated with chronic
Changes in quality of processes of care diseases have been documented in the US
are in turn reected in changes in outcomes. and internationally (Wennberg, 2010). Xu et
Outcome measures, which center on the rate al. (2015) found that after risk-adjustment,
of survival and extent of health and func- variations in patient outcomes are signicant
tional restoration as a result of health care, among Beijings tertiary public hospitals.
are arguably the measures that matter the China may consider developing a Chinese-
most to beneciaries of any health system, version of the Dartmouth Atlas of geo-
and as such are critical to measuring the per- graphic variations in health care4 to inform
formance of any patient-centered care model. the public and professionals about differ-
Although data on patient outcomes like ences in practice on important health topics.
mortality and complications are collected The Dartmouth Atlas in the US is a visual
in China, these are broad measures and not map of the variation in health care quality,
44 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

outcomes, costs, and utilization. Measur- safety and quality performance. In the
ing this regional variation allows leaders past decade, this has become the norm
to identify opportunities to improve care in OECD countries. For example, in the
through standardization. In England, the U.S., state-level quality benchmarking
NHS Atlas measurement and reporting maps can be found at AHRQs website
system offers similar insights5. Such data can , and facility and health plan level qual-
help to uncover best practices that should ity information can be found at mul-
be spread more widely, and reveal where tiple websites including CMSs Hospital
inappropriate, excessive, or decient care is Compare6, NCQA7, Joint Commission8.
occurring. Under the supervision of the pro- Similarly, provider quality information
posed authority responsible for quality, a des- was publicized online in France on the
ignated team could create an Atlas of Varia- Scope Sante website9, and in Canada by
tion for China. the Canadian Institutes of Health Infor-
mation (CIHI)10. For example, Hospi-
Use quality data and measures in a meaning- tal Compare allows users to compare
ful way: In general, there are three impor- three hospitals at a time on six quality
tant uses of quality measures that can con- dimensions: surveys of patients experi-
tribute to front-line quality improvement: ence, timely and effective care, compli-
accreditation, public reporting, and pay-for- cations, readmissions and deaths, use of
performance. Together they provide a com- medical imaging, payment, and value-
prehensive system for providing performance of-care. Patients may choose the most
feedback and incentives for improvement. suitable hospital based on their need and
Accreditation: In the U.S., reporting of Link payment to quality improvement:
quality data and measures is mandatory Pay-for-quality (P4Q) schemes provide
for hospital accreditation and accredita- nancial incentives to improve quality.
tion is a pre-requisite for hospitals to par- Although P4Qs impact is mixed and
ticipate in the public insurance schemes depends on the design of incentives,
Medicare and Medicaid. The Joint several countries have adopted such
Commission, an independent organiza- schemes. In 2004, CMS in the US began
tion responsible for accrediting health nancially penalizing hospitals that did
facilities in the US, requires accredited not report to the CMS the same perfor-
hospitals to report data for at least six mance data they collected for the Joint
core measure sets for specic conditions Commission, an accreditation body. It
or processes (e.g. AMI, perinatal care, also decided it will no longer pay for 28
stroke, emergency department, surgical never eventsserious, preventable,
improvement project, VTE), drawing and costly medical errors that should
from medical charts or electronic medi- never happen starting in 2008 (such as
cal records. China can consider mandat- falls and trauma; surgical site infection
ing quality data reporting requirements after certain orthopedic procedures and
for public and private hospitals seeking bypass surgery, catheter-associated uri-
accreditation. nary tract infection, and air embolism).
Publicly disclose information on qual- It also initiated two P4Q programs: (i)
ity of care of providers: Making quality the Hospital Readmission Reduction
measures publicly available is an effective program focusing on linking payments to
way to create peer pressure among pro- reducing readmissions for selected high-
viders, or to nudge them to consciously cost or high-volume conditions like heart
pursue quality improvement by making attack, heart failure, and pneumonia;
them aware that they are being moni- and (ii) the Hospital Value-Based Pur-
tored. Public disclosure of provider qual- chasing (VBP) program, in which Medi-
ity can also help patients make informed care adjusts a portion of payment to hos-
choices about providers based on their pitals based on how well they performed
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 45

on quality measures and how much have joined together to form the Partnership
progress they made in quality improve- for Patients. They have adopted the common
ment. The UK government introduced a goals to make care safer and improve care
Pay-for-Performance scheme for family transitions. The Hospital Engagement Net-
practice quality since 2004, covering the works help identify solutions already working
management of chronic diseases, prac- to reduce hospital-acquired conditions, and
tice organization, and patients experi- work to spread them to other hospitals and
ence of care. Payment makes up as much health care providers. A form of provider-to-
as 25 percent of family practitioners provider peer networks to share information
income (Kroneman and Madelon, 2013; and learning is proposed in Chapter 10.
Doran, 2010). Some evidence showed
that the impact on quality improvement
Core Action Area 3: Transform
is enhanced when coupling public report-
management practice to improve
ing with pay-for-quality incentives (Wer-
quality of care in health facilities
ner, 2009; Lindenauer, 2007).
Effective organizational management is indis-
The concept of pay-for-performance has pensable for safe and quality assurance. Even
gained prominence in China in recent years. capable health professionals can make mis-
While a payment system based on workload, takes in hectic and often over-crowded clini-
service quality, and patient satisfaction can cal environments in which they are practicing
be implemented, the lack of standardized increasingly complex medical interventions.
measures and the still dominant fee-for-ser- Managers can use known and tested tools to
vice incentives for revenue generation make support quality improvement.
this challenging. Pay-for-quality schemes
are ideally designed to avoid unintended Promote evidence-based standardized care:
cost-shifting. For example, an experiment Clinical guidelines and pathways are valuable
in Guizhou removed incentives for over-pre- tools to standardize care and reduce varia-
scribing medication, but doctors increased tions in practice. In 2009 Chinas Ministry
non-drug services such as injections and of Health signed two memoranda of under-
unnecessary referrals to hospital care, which standing with UKs National Institute for
in turn increased total health care costs Health and Care Excellence (NICE) to begin
(Wang et al, 2011). But there are promising technical assistance on the development of
examples. For example, in Ningxia Province, evidence-based clinical pathways. The clini-
an intervention combining capitation with cal pathways developed were used in several
pay-for-quality incentives reduced antibiotic pilot rural public hospital reforms, to stan-
prescriptions and total outpatient spending, dardize procedures and limit providers dis-
without signicant adverse effects on other cretionary prescription of services and drugs.
aspects of care (Yip et al, 2014). A preliminary evaluation suggested that
implementing the pathways reduced aver-
Establish an engagement model to support age length-of-stay and unnecessary services.
peer learning and energize collective qual- Patients paid less out of pocket, and there
ity improvement: Besides benchmarking its was substantial improvement in communica-
own quality to peer organizations, hospitals tion and relations between patients and pro-
should be encouraged to share valuable les- viders, leading to higher patient and provider
sons and support each other in organiza- satisfaction (Cheng, 2013). However, other
tional transformation toward better quality studies noted resistance from both managers
and collectively achieving clearly defined and physicians in implementing the clinical
goals. An example is the CMS Partner- pathways due to risks of income loss. Manag-
ship for Patients in the U.S. and its Hospital ers were driven by revenue generation and did
Engagement Networks. Physicians, nurses, not see clinical pathways as a useful manage-
hospitals, employers, patients and their advo- rial instrument (He and Yang, 2015). China
cates, and the federal and State governments may considering analyzing lessons from these
46 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

experiences to inform further development of the U.S. patient safety climate in health
and adoption of clinical pathways. care organizations found that although hos-
Although an undetermined number of hos- pital staff are generally positive about the
pitals have implemented a subset of clinical safety climate in their workplace, but fear
pathways, China has no standard, evidence- of blame and fear of shame are two
based system for ensuring standardized care outstanding concerns. In the U.S., they are
throughout the nation, nor for continually among the least concerns (Zhou, 2015).
aligning Chinese guidelines with appropri- Sound scientic evidence exists for treat-
ate world-wide clinical standards, adapted ing many conditions and can drive care
to China. It is important to scale up this improvement, and in some cases, lower costs.
effort both in terms of broadening the scope But much of this science is not fully applied
of standardized clinical pathways and man- in daily clinical practice. Identifying and ll-
dating all hospitals to use these clinical stan- ing the gap between what is known and what
dards. Under the guidance of the proposed is done requires continuous quality improve-
national authority, and with the assistance ment efforts at each health organization.
of prestigious Chinese hospitals, professional Health organizations can benet from using
associations and clinical leadership groups, modern managerial approaches to improve
evidence-based care guidelines can be created quality through changing health worker
or adopted (based largely on international behaviors and optimizing clinical care sys-
standards), and then modified to suit the tem (Langley, Nolan and Nolan, 2009; Dem-
specic characteristics of the Chinese health ing, 2000). For example, Continuous Qual-
system. The standards could focus on (a) evi- ity Improvement (CQI) and Total Quality
dence-based care protocols, (b) appropriate Management (TQM) approaches emphasize
medication use, (c) person-centered care, and a continuous effort by all members of the
(d) continual quality improvement skills and organization to meet the needs and expec-
methods. tations of clients. Managers and clinicians
work together to identify undesirable varia-
Embed the quality culture in medical tions in process of care and try to eliminate
organization management philosophy and them. Six Sigma targets reducing error rates
promote modern managerial techniques. to six standard deviations from the process
High quality health care does not arise from mean to ensure standardized service, where
inspection alone, and that safety assur- appropriate. Plan-Do-Study-Act (PDSA) cycle
ance and sustained quality improvement is a mechanism in which clinical teams learn
requires a quality culture and continuous how to apply key change ideas to their orga-
attention to quality improvement by manag- nizations in a series of testing cycles, using
ers and staff. Important cultural factors that specic and measurable aims that are tracked
foster quality improvement include open- over time. These and other management
ness toward errors, less hierarchical man- approaches can be combined and applied
agement, more collaborative teamwork and with exibility, but the intention is to culti-
learning environment, and a focus on con- vate a sense of continuous attention to the
tinuous system improvement. In contrast, the quality improvement in management prac-
accountability mechanism centered on indi- tice through such activities. Some of them
viduals and sanction of individual providers are already under implementation in some
for errors by name and shame contribute large Chinese hospitals, for example, Anzhen
to a culture that averts reporting errors, as Hospital applied the PDSA to hospital stra-
well as a deeply embedded belief that qual- tegic management (Nie et al, 2014), Peking
ity of care is the result of being well-trained University Peoples Hospital used TQI with
and trying hard. Some evidence suggests that PDSA to improve the efciency of specialist
name and shame may still be a common clinic registration (Chen et al, 2014). Lessons
management practice. A survey of employees from these experiences should be examined
of 6 secondary, general public hospitals in and similar initiatives expanded throughout
Shanghai in 2013 using a modied version China.11
I M P R O V I N G Q UA L I T Y O F C A R E I N S U P P O R T O F P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 2) 47

Use EHR to support quality improvements: General Hospital (Du et al, 2014). China may
Electronic health record (EHR) systems pro- like to rigorously evaluate the impact of these
vide a digital version of all of a patients medi- changes to improve processes and administra-
cal and clinical records and a comprehensive tion of medication.
patient history. EHRs, correctly designed and
carefully implemented, can help with data
capture and sharing for measurement and Notes
feedback on quality of care, real time clinical
decision support, and improving coordina- 1. Health labor force shortages are dis-
tion of care and patient-provider interaction. cussed in Chapter 7.
Currently much health-related information 2. Chapter 5 discusses this study in more
in China is based on the ofcial and routine details.
reporting system without independent verica- 3. Chapter 4 includes discussion on engag-
tion. Over the past decade, China invested in ing patients and the public in quality
upgrading the health information infrastruc- measure development and reporting.
ture, introducing computers and electronic 4.
health record systems in many facilities includ- 5.
ing village clinics. This provided a good foun- atlas/nhs-atlas-of-variation-in-health-
dation for improving the national health infor- care-2015.
mation system by adding rich clinical data to 6. h t t p : // n h q r n e t . a h rq . g ov/ i n h q rd r /
the existing body of data derived from house- s t a t e /s e l e c t ? u t m _ s o u r c e = A H RQ -
hold surveys, surveillance of communicable E N & u t m _ m e d iu m = a r t i c l e & u t m _
diseases, and periodic disease-specic preva- campaign=SS2015.
lence surveys. Some localities have used EHR 7.
systems to support clinical processes. Feixi, pare/search.html.
SCPHC used medical information technology 8. ht tp://w w / H EDISQuali-
system to limit doctors prescriptions to rec- tyMeasurement.aspx.
ommended drugs for specic conditions, and 9.
to prompt physicians to follow clinical path- tation/top_performers.aspx.
ways. A similar system was implemented in Xi 10.
County, Henan province. Advanced applica- 11. h t t p s : / / w w w . c i h i . c a / e n /
tions using computer algorithms and clinical health-system-performance.
data mining are used to support real-time auto- 12. Chapter 10 presents an approach for
matic hospital-wide surveillance of nosocomial scaling up care improvement that
infections and outbreaks in the Chinese PLA applies PDSA.
Engaging Citizens in Support of
the People-Centered Integrated
Care Model (Lever 3)

Introduction studies on the comparative effectiveness of

interventions estimate the probabilities of dif-
The People-Centered Integrated Care (PCIC) ferent health outcomes, they cannot determine
organizes primary health care around the how a particular patient will benet from an
health needs of citizens and communities of
intervention. Moreover, different outcomes
China, and not simply the diseases they suf-
matter more or less to different patients.
fer from. The model hinges on patient con-
When their preferences are overlooked or mis-
dence in the system, and their trust that the
understood by clinicians, the consequences
system will meet their needs in a responsive,
can be as harmful as misdiagnosing disease
appropriate, and timely manner. At the same
(Mulley et al, 2012). Outside the hospital
time, beneciaries of the health system need
to be empowered with knowledge and under- and other acute care settings, much of health-
standing of individual-level health-promoting care, including disease prevention and health
behaviors that will be amplified through promotion, is a knowledge-intensive service
interaction with the formal service delivery industry where value is co-produced from
system. Such empowerment and engagement two-way communication between multidis-
of citizens is the foremost strategic direction ciplinary clinical teams and the patients they
advocated in the WHOs global strategy on serve (Mulley, 2009). This underscores the
people-centered and integrated health ser- need for approaches and processes that sup-
vices (WHO, 2015a). port greater health literacy and sharing of
Patient empowerment and engagement is knowledge. The latter includes patients and
central to any health system reform that aims careers knowledge of managing disease as
to improve efficiency and make providers well as the risks, harms, and benets of health
accountable for the services they deliver. For interventions. Without this exchange, deci-
optimal use of resources, patients preferences sions are made with avoidable ignorance at the
must inform decisions about investment and frontlines of care delivery, services fall short
disinvestment in services (Coulter et al, 2013; of meeting needs while exceeding wants, and
Mulley, 2015). This is because while medical efciency declines over time.

50 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Strengthening patient engagement is a goal and health status and reduced the number of
relevant for China, and is reected in a num- hospitalizations (Fu et al, 2003). The recently
ber of state policies that call on the health published Shared decision making is the core
system and its stakeholders to: (i) strengthen of humanistic spirit (Health News, June, 19,
health promotion, education and dissemina- 2015) argues for the need for shared decision-
tion of medical and health knowledge, advo- making in China. Further, the National
cate healthy and civilized lifestyle, promote Clinical Information System established in
rational nutrition among the public, and 2013 is an ofcial website that provides a plat-
enhance the health awareness and self-care form for news on quality control.
ability of the people; (ii) build sound and har-
monious relations between health care work-
ers and patients; and (iii) promote the trans-
Challenges to engaging citizens
parency of hospital information through a While these initiatives are encouraging and
regular disclosure of the nancial situation, a step in the right direction, a much-needed
performance, quality safety, price and inpa- comprehensive, system-wide approach to
tient cost, etc. (Zhong Fa [2009] No.6; Guo engage citizens in health, with well-dened
Fa [2012] No.57; Guo Ban Fa [2015] No.38; roles for patients and providers, is still miss-
Guo Ban Fa [2015] No.33; Guo Ban Fa [2015] ing. Chinas health system needs to become
No.14). The most recent state directive explic- more patient-centered. Concerns about qual-
itly mentions use of media to publicize dis- ity of care and providers not acting in the
ease prevention and treatment knowledgeas patients interest have eroded citizen trust
well as reasonable selection of medical insti- in the system. In part due to rising incomes,
tutions, and more publication to increase rapid urbanization, and increased demand for
peoples understanding toward diagnosis and health services, the Chinese population has
treatment (Guo Ban Fa, 2015: no. 70). high expectations that health system reforms
These policies are in turn reflected in a will improve service delivery performance. It
number of initiatives in China to improve is important to meet these expectations; pub-
patient engagement. Changshu, Jiangsu Prov- lic dissatisfaction with the health system has
ince, has applied diabetes prevention and sometimes led to violence toward providers
control measures as part of the Alliance for (Chen 2012; Yuan, 2012). In the recent years,
Healthy Cities initiated by the WHO, and the there is an increasing tendency of medical
approach has shown promise in addressing the disputes in China. (China Consumer Asso-
spread of diabetes (Szmedra and Zhenzhong, ciation, 2014; Moore, 2012; China Medical
2013). Among other actions, the NHFPC Tribune, 2012; Hesketh et al, 2012; Chinese
released in 2014 a 6-year plan to raise health Medical Doctor Association, 2013); of these,
literary in China through provision of infor- roughly a third caused direct injuries to med-
mation on basic health knowledge, healthy ical personnel (GuangZhou Daily, 2014). The
lifestyles, and basic medical skills (NHCP, current patient-physician relationship needs
2014). In 2005, the Ministry of Health and to be improved, in particular to avoid the vio-
the China Journalists Association launched lence targeting doctors. On a more positive
the China health communication awards. note, recent government documents reporting
Every year, the project develops health com- on progress under the 12th Development Plan
munication strategies focused on one selected (NHFPC, 2015) reported the 5th National
disease, e.g. hypertension (2005) and cancer Health Survey found that 76.5 percent of
prevention (2006). A self-management pro- outpatients and 67 percent of inpatients were
gram for hypertension based around a hyper- satised with their care seeking experiences.
tension manual and delivered in the setting of The challenge of course lies in designing
a community anti-hypertensive club in Shang- interventions and strategies to unleash the
hai showed promising blood pressure reduc- power of the ideals embodied by existing
tions (Xue et al, 2008). The Shanghai Chronic state policieshow to improve the respon-
Disease Self-Management Program improved siveness and patient-centeredness of the
participants health behavior, self-efficacy, health system, and build patient condence?
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 51

BOX 4.1 Why is citizen engagement important?

At the most fundamental level, it is people themselves to self-care or care for their dependents. Since people
who spend the most time living with and responding themselves tend to know better the motivations that
to their own health needs and will be the ones making drive these behaviors, people-centered care cannot be
choices regarding health behaviors and their ability provided without engaging them at a personal level.
Source: WHO 2015a: 22.

International experience points to patient Health providers play a vital role in patient
empowerment as a critical part of the solu- engagement by providing information about
tion; a vision of healthcare where patients are treatment options; explaining the potential
co-producers of health or autonomous risks and benets of each option; encourag-
partners in treating, preventing, and manag- ing patients to deliberate on and express their
ing disease, with health providers working preferences; and developing long-term self-
to promote and support active patient and management plans. Patient engagement in
public involvement in health and healthcare, healthcare, thus, requires change and effort
and to strengthen patient inuence on health- from both providers and patients themselves.
care decisions, at both the individual and col- Health systems use a variety of approaches
lective levels (Coulter, 2011: 10). to empower and activate patients. Box 4.2
summarizes the key elements used in these
approaches, which almost invariably rely on
Recommendations: some combination of building health literacy,
Strengthening Citizen strengthening self-management, and improv-
Engagement ing shared decision-making.1 A substantial
Broadly, citizen engagement encompasses body of evidence highlights the impacts of
two key aspects: empowerment and activa- these approaches, with benefits accruing in
tion. Engagement can occur at the level of the form of improvement in quality of care,
individual, household and community. It also appropriateness of decisions, and health out-
involves provider relations with patients and comes. A Commonwealth Fund survey of 11
families. Drawing on WHOs strategy on OECD countries found that engaging patients
People-Centered and Integrated Health Care, can improve quality and patient experience,
Box 4.1 summarizes the importance of citizen reduce medical errors, encourage compliance,
Engagement. and ultimately lead to better health outcomes
Patients and communities need to be with lower cost (Osborn and Squires, 2012).
empowered with knowledge and informa- Self-management interventions improve not
tion to make sound health care choices, rang- only patient knowledge, coping skills and con-
ing from generating changes in behaviors, dence to manage chronic illnesses, especially
selecting providers to seek services from, among the elderly, but also intermediate health
weighing the costs and benets of surgical outcomes, and in some cases even reduce hospi-
vs. non-surgical treatment options to access talization rates (Picker Institute Europe, 2010).
to timely and effective complaint resolu- Shared decision-making has the potential to
tion mechanisms and addressing potential improve patient satisfaction and health care
causes of ill health in their living environ- in multiple settings (Stacey et al 2011, Coulter
ment. Once equipped with essential informa- and Collins, 2011), and may also successfully
tion, they can be activated to participate in increase use of less invasive treatments that are
various activities for managing their health often also less expensive (Morgan et al, 2000;
and health care, addressing risky behaviors Kennedy et al, 2002; Deyo et al, 2000; Wen-
and safeguarding their living environment. nberg, 2010; National Voices, 2014).
52 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 4.2 Citizen Engagement to improve health care: core action areas and
corresponding implementation strategies

Health literacy Shared decision-making

Provision of printed, computer or web-based Joint treatment goal setting
health information and videos Patient decision aids
Targeted mass media campaigns Coaching and question prompts for patients
Targeted approaches to tackle low levels of
health literacy in disadvantaged groups Creating a supportive environment for citizen
Patient self-management of health Develop Healthy Cities
Tra i n i ng for prov ider s on com mu n ic a- Creating environmental nudges to better
tion and support to patients, teamwork, and health choices
For patients, self-management education, and
support for self-monitoring and self-adminis-
tered treatment, and telecare
Self-help group and peer support

This chapter draws on experience with people have greater motivation and ability to
strengthening patient engagement in health control their health. The concept entails the
systems around the world, and summarizes ability to understand basic health knowledge
the core actions or approaches to patient and use this to make health-related deci-
engagement, and the strategies employed sions. Health literary is essential to good
to implement these. The chapter is divided health, and fundamental to public health. If
into three parts, focusing on the three afore- people cannot obtain, understand and use
mentioned elements of engagement, namely health information, they will not be able to
(i) building health literacy; (ii) strengthen- look after themselves effectively, navigate
ing self-management; and (iii) improving the health system without difculty, or make
shared decision-making. 2 These approaches appropriate health choices for their own,
of patient engagement complement, build their family, and their communitys health.
on, and ultimately reinforce each other. For Adults with limited health literacy report
example, shared decision-making cannot less knowledge about their medical condi-
take place in the absence of a basic level of tion and treatment, worse health status, less
health literacy among patients, which in turn understanding and use of preventive services,
is linked to and cultivates a certain confi- and a higher rate of hospitalization and use
dence in the patients own ability to manage of emergency rooms (IOM, 2004, Berkman
his or her health. This experience is critical et al., 2011). Surprisingly, as much as half of
in shaping the patients ability to provide use- all adults in the United States have difculty
ful inputs to discussions with health provid- understanding and acting upon health infor-
ers when making decisions about care, and mation, which end up in confusion and inef-
hence the range of inuence the patient can fective care (IOM, 2004).
wield on the outcome of such decisions. Nutbeams (2008) distinguished two per-
spectives on health literacy: health literacy
as a risk factor and health literacy as asset.
Core Action Area 1: Building health
These two perspectives have subtle differ-
ences in their approach to the same concept.
Health literacy is the ability to, understand The health literacy-as-a-risk factor approach
and act upon health information so that focuses on identifying ways to mitigate the
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 53

negative impacts of low health literacy on targeted populations with low basic literacy
health-related behavior and health outcome. (WHO Commission on the Social Determi-
To this end, the Institute of Medicine dened nants of Health, 2007), health systems must
health literacy as the degree to which indi- also enhance the quality of health communi-
viduals have the capacity to obtain, process cations and education, and provide greater
and understand basic health information and support and tailored information to increase
services needed to make appropriate health functional literacy to understand and use
decisions (IOM, 2004). Research following health information for managing health and
this theory has linked health literacy with diseases (Coulter & Ellins, 2007).
a range of health behavior and outcomes,
including effective management of chronic Improve citizen understanding of evidence-
disease, compliance with medication and based care, the importance of health-related
other health advice, and participation in behaviors, and preventive practices. While
health and screening programs. Health illit- health literacy is the outcome of a complex
eracy can also be a demand side barrier. Par- array of individual, social and economic pro-
ticularly, low health literacy among the poor cesses, the health system is a critical interven-
and ethnic/racial minority groups is associ- tion point. Patients look to health providers
ated with poorer health status, and experi- for information and education on how to
ence of more hospital admissions, more drug manage illness and long-term conditions.
and treatment errors, less use of preventive Beyond information acquired through one-
services and poorer adherence to treatment to-one patient-provider interactions, formal
recommendations literacy (Institute of Medi- educational approaches have been imple-
cine, 2004; Berkman et al, 2011). Lower mented in many countries to target disad-
health literacy among seniors is associated vantaged population groups. These include
with higher mortality (Liu et al 2011). Tack- courses for small groups, colleges and adult
ling health literacy is considered an impor- education institutions, and one-to-one coun-
tant element in optimizing clinical effective- seling. One example is Skilled for Health, a
ness and reducing health inequities. national program run by the Department of
The health literacy-as-asset approach pro- Health in England that aimed to help people
motes the positive role of health education improve their health while boosting their
and communication in developing competen- language, literacy and numeracy skills (box
cies for different forms of health action that 4.3). Another example is genetic screening in
benets health of individuals and the popula- the UAE through student ambassadors at
tion. Particularly, the WHO (2007) proposed universities, who were trained on the basics
that health literacy implies the achievement of genetic screening and then encouraged
of a level of knowledge, personal skills and to spread the word to their peers about the
condence to take action to improve personal importance of being screened (Laurance et al,
and community health by changing personal 2014). Both interventions were enormously
lifestyles and living conditions. Gaining successful.
health literacy as asset could fundamentally
address some of the social determinants of Launch public media campaigns to encour-
health outside the narrowly-dened health- age health-promotion and prevention
care system. activities. Other strategies that tackle lit-
Clearly the two approaches are distinc- eracy across whole populations and focus
tive in their clinical versus public health on improving the provision of high quality
perspectives, but both are valuable and health information. Some media-based cam-
complementary for guiding policies to pro- paigns focus on both providers and people
mote health literacy. They imply different such National Literacy and Health Program
strategies in response to low levels of literacy in Canada that promotes awareness among
that may supplement each other. In addi- health professionals and patients of the links
tion to improving access to effective school between health literacy and health. Many
education and providing adult education to media-based campaigns also make use of
54 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 4.3 Health Education in the UK: Skilled For Health

Skilled for Health, a national program run in part in deprived areas. The programs were intended to
by the Department of Health in England aimed to provide useful information and skills, and improve
help people improve their health while boosting their peoples condence to look after their health. Partici-
language, literacy and numeracy skills. Educational pants health knowledge in the areas of healthy eat-
sessions on a range of health topics, such as healthy ing, smoking, exercise, drinking, and looking after
eating, exercise, and rst aid, were delivered to people their mental health, was targeted.
Source: Contin You (2010).

other interventions including printed mate- change. Such marketing interventions

rials, videos, websites, formal and informal aim to help people make healthy choices,
courses, etc. Good quality health informa- adopt healthier lifestyles, or make better
tion that is timely, relevant, reliable and easy use of health services and have targeted
to understand, is an essential component of healthy eating, substance misuse, physi-
any strategy to support self-care, shared deci- cal activity, and workplace health and
sion-making, self-management of long-term well-being. Box 4.4 describes an example
conditions and health promotion3. The fol- already implemented in China.
lowing methods are typically used:
In China, messaging should focus not only
Good quality information materials, pro- be on changing expectations about medica-
vided at health facilities or electronically, tions, intravenous therapy, and other diag-
tailored to the individual and reinforced nostics and therapeutics, but also on making
by verbal information from clinicians, citizens aware of harm caused by overuse
and web-based interventions as part of and misuse of treatments. A series of mes-
an educational program. sages and public education efforts should
Newspapers, magazines, and broad- be launched to change public perceptions
cast media: health education campaigns regarding medications, procedures and clini-
across the world that incorporate media cal services. It would require a continuous,
publicity as a key component have tar- multi-year, multi-channel communication
geted smoking, use of folic acid among program, and ideally would utilize the ener-
pregnant women (Netherlands), exces- gies of health care professionals as well as
sive and rising hysterectomy rates (Swit- civil society agencies. The goal would be to
zerland), stigma associated with depres- help people understand what good, evidence-
sion (UK), uptake of immunization and based care is. However, it would best that
cancer screening, education about HIV campaign planners draw on research on why
risk, and appropriate care for suspected and how people understand and use informa-
myocardial infarction. tion in choosing to seek care in China. In par-
Social marketing is used by government ticular, this education effort would need to
departments and health authorities to decrease the non-scientic over-dependency
achieve specific behavioral goals for a on procedures, such as intravenous infusions,
social good (French and Blair-Stevens medications, and hospital visits and admis-
2007), and typically involves a systematic sions that the current volume-based payment
approach to health promotion using tried system has encouraged.
and tested techniques, informed by com- Further, a national appeal to the public to
mercial insights (e.g. segmentation, mar- engage in a collective pursuit of health could
keting theory) and theories of behavior be explored. This would start with generating
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 55

BOX 4.4 Social marketing in China: Prevention and control of Hepatitis B

Chinas anti-Hepatitis B campaign has been described paigns and presenting awards to outstanding pieces
as an excellent example of social marketing whose (Cheng and Chan, 2009). The Chinese government
design and implementation maximized effectiveness played a major role in this nationwide campaign,
due to ample attention paid to social, cultural, and which was co-sponsored by the China Foundation for
regulatory context. The first public service adver- Hepatitis Prevention and Control, and the Informa-
tisement (PSA) was aired by a Chinese TV station in tion Ofce of the Ministry of Health, with donations
1986, and since then, the Chinese government and of expertise from McCann Health China and airtime
media have been hosting annual national PSA cam- and space from many media outlets.
Source: Cheng et al (2011).

a technical review of three to ve major evi- these models as examples while tailoring the
dence-based changes that individual citizens campaign to the specic Chinese context.
could make in their personal lives that would
lead to a healthier future (e.g., for smokers
Core Action Area 2: Strengthening self-
this would be smoking cessation, for alcohol
management practices to help patients
drinkers this would be reducing their intake,
manage their conditions
for the overweight or diabetic patients this
would be to walk at least a mile a day, etc.). Barring self-care for instances of minor ill-
These would be assembled into a National ness of short duration, such as a cold or other
Campaign or Provincial Campaigns to common viral infections, much self-care
get every citizen to engage in one or more of across the world today consists of the day-
these health-enhancing behaviors. However, to-day management of chronic illnesses, such
given that not all people have equal access as asthma, arthritis, and diabetes. Strictly
to information, complementary and more speaking, people suffering from these condi-
targeted interventions may needed for low- tions self-manage most of the time: they
income, elderly and ethnic population groups. manage their daily lives and cope with the
One example that could serve as a model effects of their conditions the best they can,
for China is the Million Hearts Campaign in for the most part without any intervention
the US (box 4.5), a national initiative that set from their providers. More technically, self-
an ambitious goal for prevention of 1 million management is dened as: the individuals
heart attacks and strokes by 2017 by improv- ability to manage symptoms, treatment,
ing access to effective care, raising the quality physical and social consequences and lifestyle
of care through the ABCS strategy (aspirin, changes inherent in living with a chronic con-
blood pressure, cholesterol, smoking cessa- dition (Barlow et al, 2002: 178). It is also
tion), focusing clinical attention on the pre- about enabling people . . . to make informed
vention of heart attack and stroke, activating choices, to adapt new perspectives and generic
the public to lead a heart-healthy lifestyle, skills that can be applied to new problems as
and improving prescription and adherence to they arise, to practice new health behaviors,
appropriate medications under ABCS. Scot- and to maintain or regain emotional stabil-
lands ongoing Early Years Collaborative ity (Lorig, 1993:11). By promoting systems
is another international example of this kind for patient self-management, health systems
of campaign. In this Collaborative, Scotland can empower individuals to reduce their uti-
is asking all parents nationwide to read their lization and make more informed decisions
children a bedtime story each night, which relating to office visits, medication, proce-
has been shown to improve future literacy dures as well as behaviors that contribute to
and educational attainment China could use controlling their conditions.
56 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 4.5 The Million Hearts Campaign

The Million Hearts Campaign rallies communities, Promoting optimal care with the ABCS strategy
health care professionals, health systems, nonprot (Aspirin when appropriate, blood pressure con-
organizations, federal agencies, and private- sector trol, cholesterol management, and smoking ces-
organizations around a common goal: preventing 1 sation) has achieved some early success.
million heart attacks and stroke by 2017. A small set Helped pass laws that creates a healthier envi-
of changes serve as targeted interventions to achieve ronment, e.g. smoke-free laws, sodium reduction
this goal, as illustrated below. in communities program, and trans-fat elimina-
Progress so far includes: tion laws.

More than 100 partners formally committed to

the campaign goal and specic activities

Million Hearts Targets

Changing the Environment

Reduce smoking By 2017...

The number of American smokers has declined from 26% to 24%
Reduce sodium intake Americans consume less than 2,900 milligrams of sodium each day
Americans do not consume any artificial trans fat
Eliminate trans fat intake
Aspirin use when appropriate
Or the people who have had a heart attack or stroke,
Optimizing Care in the Clinical Setting 70% are taking aspirin
Blood pressure control
Focus on the ABCS
Or the people who have hypertension, 70% have adequately
controlled blood pressure
Cholesterol management
Use health tools and technology Or the people who have high level of bad cholesterol,
70% are managing it effectively
Smoking cessation treatment
Innovate in care delivery Or current smokers, 70% get counseling and/or
medications to help them quit

Million Hearts promotes clinical and population-wide targets for the ABCS. The 70% values shown here are clinical targets for people engaged in
the health care system. For the U.S. population as a whole, the target 65% for the ABCS.

All approaches to self-management include enhance their self-management skills. For

careful elicitation of patients view of his or example, people with asthma must know
her problems, concerns, values and prefer- when to use their inhalers, people with dia-
ences; sensitive sharing of relevant evidence- betes must monitor their blood glucose levels,
based information by health professionals, and arthritis patients must learn to cope with
and discussion to find common ground. pain and when possible how to ameliorate it.
Patient self-management involves system-
atically educating patients and their fami- Train health providers to support and facili-
lies about their conditions, how to monitor tate self-management by patients. Culti-
them, and how to incorporate healthy behav- vating appropriate self-management prac-
iors into their life styles. When people with tices involves a culture shift on the part of
chronic diseases seek professional advice, practitioners. Professionals are urged to
they need appropriate help and support to stop believing that their goal is to increase
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 57

patients compliance to whatever they choose about uncertainty, the relative risks of dif-
to recommend, and instead to increase the ferent treatment options, and the specific
patients capacity to make informed deci- time frames that dene risks and outcomes.
sions. The ve As paradigm summarizes this: Interpersonal and communication skills can
(1) Assess knowledge, behaviors, and con- be learned and improved. For example, train-
dence routinely; (2) Advise from scientic evi- ees can be taught how to express empathy
dence and present information; (3) Agree on (Bonvicini et al, 2009), how to break bad
goals and treatment plan for improving self- news (Makoul et al., 2010), and how to prac-
management; (4) Assist in overcoming barri- tice shared decision-making (Bieber et al.,
ers; (5) Arrange helpful services (Glasgow et 2009). Another evidence-based educational
al, 2006). approach, the Flinders Program, is oriented
In practice, training is needed for health to chronic care management. It seeks to
professionals, who should, at a minimum: assess and improve the relationships between
providers and patients that will lead to
Inform the patient about the disease, patients actively monitoring their conditions
treatment, or management options; while promoting healthy life styles (Hors-
Educate the patient about effective burgh, et al., 2010).4 The program contains
self-management; a series of training modules to enhance pro-
Training patients on skills, for example, vider knowledge of chronic care management
how to carry out technical tasks such as with a focus on communication skills.
testing blood glucose levels for diabetics,
how to monitor peak flow for asthma, Educate and support patients on how to self-
etc.; manage. Instituting a culture of self-man-
Advise on behavior change: how to mod- agement among patients requires education.
ify existing behaviors or adopt new ones; A typical format is short (usually six weekly
Challenge unhelpful beliefs, including sessions) peer-led self-management education
beliefs about the causes of illness; courses where people with chronic condi-
Counsel patients on managing emotions, tions learn from other people with the same
how to cope with the impact of their ill- chronic conditions (Lorig et al, 2001). These
ness and its effect on their emotions; are often run by voluntary organizations.
for example, dealing with anxiety and This model of educational courses has been
depression. used across a wide variety of settings, includ-
ing England, the US, Australia, Barbados,
Training on communication, teamwork, Chile, Denmark, Japan, Peru, South Korea
and relationship-building skills should be and others. Participants learn how to set
embedded in medical school curricula, post- goals and make action plans, problem solve,
graduate clinical training, and continuous develop their communication skills, manage
medical education, with providers ability their emotions, pace daily activities, manage
to communicate competently with patients relationships with family, friends and work
becoming a condition for qualification to colleagues, communication with health and
practice and due attention paid to lessons social care professionals, nd other health-
from research on interpersonal and com- care resources in the community, understand
munication skills. One widely used model is the importance of exercise, keeping and
the Calgary-Cambridge framework, which healthy eating, and manage fatigue, sleep,
divides a consultation into ve stages: initiat- pain, anger and depression.
ing the session, gathering information, physi- New technologies have also been adopted
cal examination, explanation and planning, to create interactive approaches delivered
and closing the session, with a list of tasks electronically. For example, the Expert
that must be accomplished in each (Kurtz Patient Program in the UK is a web module
et al, 2003). Providers can also be trained with email reminders (Lorig et al, 2008).
to use decision aids and be ready to answer Web-based packages that combine health
questions, especially in communicating information with social support, decision
58 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

support or behavior change support have mechanism to ensure that doctors make cor-
been developed for people with chronic dis- rect diagnosis not only based on science but
eases such as asthma, diabetes, eating dis- also patients preferences, so that patients
orders, and urinary incontinence. In the US, receive the care they need, and no less;
telephone health coaching (providing people the care they want, and no more (Coulter
with advice and support over the phone as and Collins, 2011: vii). It offers a more col-
a component of disease management sys- laborative approach in which providers and
tems) and telecare technologies (that include patients work together to identify problems,
devices to enable transmissions for informa- set priorities, establish goals, create treat-
tion phone lines to sophisticated machines to ment plans and solve issues. As such, shared
monitor peoples vital signs and computers decision-making is a reection of the extent
that control features in peoples homes) are to which citizens feel empowered to engage
also used (Rollnick et al, 2002; Audit Com- in their health care.
mission, 2004). Giving patients access to There are compelling ethical and prac-
their medical recordseither by making it tical reasons to engage patients in making
possible for them to read and review these, shared decisions about their health. Patients
or by encouraging them to hold their own may have expectations and preferences about
copycan also increase patient condence to treatments and health outcomes that differ
self-manage. from those of their health provider. Recog-
Self-management education works best nizing those expectations and preferences is
when integrated into the primary and sec- vital for ensuring responsive and respectful
ondary healthcare systems and the learn- care. In reality, providers consistently over-
ing is reinforced by professionals. The most estimate their ability in predicting patients
effective self-management programs are preferences. In one study, doctors reported
those that are longer and more intensive, are believing that 71 percent of patients with
well-integrated into the health system, and breast cancer would rate keeping their breast
where the learning is reinforced by health tissue as a top priority, whereas in reality,
professionals during regular follow-up. The only 7 percent of patients said so (Lee et al,
VHA in the US encourages self-management 2010). In another, informing patients about
through disease-specic action planning and the trade-off of the surgical solution to the
intensive education of patients, especially treatment of benign prostate enlargement
around medication management. In general, led to a 40 percent reduction in the number
efforts should focus on providing opportuni- of patients opting for surgery (Wagner et al,
ties for patients to develop practical skills and 1995). Surgery can ameliorate urinary symp-
the condence to self-manage their health. toms associated with the disease, but many
Hands-on participative learning styles are informed patients would rather forego sur-
better than traditional didactic teaching. gery to avoid post-surgical sexual dysfunc-
Box 4.5 describes three examples of such tion. A Cochrane review (Stacey et al, 2014)
programs. found that, compared to usual care, decision
aids increased health knowledge, particularly
when the decision aid tool provided detailed
Core Action Area 3: Improving shared
rather than simple information. Exposure to
a decision aid with expressed probabilities
Shared decision-making is a process in resulted in patients more accurately gauge
which patients are involved as active part- the risks associated with health interventions.
ners with professionals in clarifying accept- Exposure to a decision aid with explicit value
able treatment, management or support clarication resulted in a higher proportion
options, discussing goals and priorities, of patients choosing an option congruent
and together planning and implementing with their values. Decision aids were also
a preferred course of action. Shared deci- found to have a positive effect on patient-
sion-making is the essential underpinning provider communication, satisfaction with
for truly people-centered care delivery, a the decision and the health care process, and
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 59

BOX 4.6 Encouraging self-management of health: Examples from the UK and India

The Year of Care in Diabetes in the UK was a pilot may avoid the need for more expensive help later
program launched to go further than simply pro- on. The community enables members to measure
viding education to actively involve with diabetes their mental health through tests and questionnaires,
patients in deciding, agreeing, and working on how access help on guided support programs, get individ-
their condition is managed. The core idea was to ual live therapy over a secure Skype-like connection,
transform the annual review, which often just checks and track their progress. While the focus is on self-
that particular tests have been carried out, into a management, the intervention incorporates elements
genuinely collaborative consultation by encouraging of health literacy as well.
patients to share information with their healthcare The 7-day Mother and Baby Health Checklist
team about their concerns, their experience of living developed by the WHO, implemented in India, helps
with diabetes, and any services or support they might mothers identify danger signs in the crucial rst week
need. Both the patient and the team then jointly agree after birth. At time of discharge from the health
on the priorities or goals and the actions to take in facility, a healthcare worker explains the list to the
response to these. mother. Texts and audio messages are sent by mobile
The Big White Wall is an online mental health phone to remind the mother to check the baby and
community in the UK where members can nd sup- herself for danger signs. This intervention too has ele-
port managing their care from clinicians, family ments of both health literacy (education on what are
members, and each other. The initiative provides the danger signs?), but also develops the capacity for
members with access to immediate support, which self-management (when to seek professional help?).
Source: Laurance et al (2014).

reduced patients decisional conict related to Cultivate an expectation of patient involve-

feeling uninformed and unclear about their ment in decisions about their health care.
personal value. The Cochrane Review Group Surveys have found that about three quar-
on consumers and communication provides ters of all patients expect clinicians to take
continuous updates to effective interventions account of their preferences and want to
to enhance patient-provider communication have a say in treatment decisions (Coulter
and patient engagement for achieving bet- and Magee 2003). For example, an NHS
ter health outcomes. 5 The China Cochrane inpatient survey found that nearly half of
Center in West China Hospital, Sichuan Uni- patients wanted more involvement in treat-
versity may expand their clinical reviews to ment decisions. Providers should communi-
cover high quality provider-patient interac- cate to patients that they are expected to take
tion using decision aids. an active role in their health care. Patients
Just as cultivating a culture of self-man- should understand that although they do not
agement cultivates a sense of empowerment have the technical knowledge, they neverthe-
through education and building patient less bring in different but equally important
condence in their ability to monitor their form of expertise to the decision-making
own condition, cope, and seek professional process. It is their collective responsibility
help when needed, shared decision-making to design and agree on participants health
too leads to a redistribution of power in goals. Under the PACE model in the US, for
the patient-provider relationship. It can be example, patients and health care teams col-
achieved by changing the ethical and legal lectively design and agree on participants
requirement of informed consent into a more health goals. In the Shanghai Family Doc-
active standard of informed patient choice tor System, patients and families are encour-
(Wennberg, 2010). Possible steps follow aged to jointly set treatment goals with their
(Coulter 2011). providers, and monthly patient satisfaction
60 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 4.7 Improving patient involvement at the Beth Israel Deaconess Medical Center in the US

At the Beth Israel Deaconess Medical Center in the and prescription rells. A trigger response system
US, efforts to improve patient-centeredness incorpo- encouraged family members who had a serious con-
rated elements of shared decision-making, patient lit- cern about the patient to request a review by the care
eracy, and self-management. A patient care commit- team. Patient education was conducted on the right
tee was established, responsible for setting up patient to see test results, read the medical notes made by
and family advisory councils. The mission was to their physicians, and communicate with their phy-
make sure that the patients voice was heard, to sicians. Strategies employed included dissemination
improve communication, and to foster innovations of information packages, and provision of support
that enhance the patients experience of care. Patient to foreign language speakers. Finally, training and
and family advisors participated in focus groups and education of staff members about building a patient-
meetings about proposed design changes. The Center centered environment began at recruitment, when
developed a web-based portal that allowed patients they were asked to work through patient-oriented
to see their results, communicate with their physi- scenarios to learn about best practices and the Cen-
cian or practice by email, and request appointments ters standards.
Source: Laurance et al (2014).

scores track progress. Likewise, the German be better prepared to discuss their preferences
Gesundes Kinzigtal system places a particu- with the doctor and decide how to treat or
lar emphasis on joint treatment goal setting manage their condition. Patient decision aids
and attainment as a core feature of the pro- can take a variety of forms, ranging from
gram. Shared decision-making tools augment simple one-page sheets outlining treatment
this process along with case managers who options, to more detailed leaets, computer
support the patient through their conditions programs (box 4.8), apps, or interactive web-
and behavior changes. The Denmark SIKS sites. An important feature is that they are not
project prioritizes patient involvement in designed just to inform patients, but to help
developing their own treatment plans, setting them think about what the different options
goals through shared care plans, and pro- might mean for them and to shape prefer-
viding feedback about whether these goals ences on the basis of scientic information.
were met in partnership with the care team. Benets achieved from use of patient deci-
Efforts to improve patient-centeredness at the sion aids can be enhanced by patient acti-
Beth Israel Deaconess Medical Center in the vation methods like health coaching and
US provides another example of for how to one-on-one interactive interviews with doc-
improve patient involvement in health care tors, as well as nurses, pharmacists, doctors,
processes at the facility level (box 4.7). psychologists, health educators and genetic
counsellors. These coaching or interview ses-
Develop and promote use of decision aid sions provide opportunities for clarication
tools at health facilities. Decision aids pro- and decision support, but they also encour-
vide reliable, balanced, and evidence-based age patients to be more condent in manag-
information outlining treatment options, out- ing their own health and to make treatment
comes, and uncertainties and risks associated decisions. Patients can also benet from ques-
with treatment options, with the goal to help tion prompts, which are checklists to spark
patients discuss their preferences with pro- ideas about questions to ask during interac-
viders. They can be prescribed to the patient tions with health professionals. Most health
before they come to the consultation, so that coaches are nurses who have received addi-
patients can review and absorb at home and tional training in motivational interviewing,
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 61

BOX 4.8: Decision Aid for Stable Coronary Heart Disease by the Informed Medical
Decisions Foundation

The decision aid for Stable Coronary Heart Disease six months later hence might choose to forgo the sur-
is an interactive computer-based resource with infor- gery. Among other features, the aid also gave patients
mation tailored to patients specic clinical circum- access to videotaped conversations with patients
stances. The aid uses predictive models that help who had already lived through various treatments
patients envision short- and long-term consequences and outcomes. This was intended to help patients
of their choices. For example, the decision aid helped struggling to assess how they might feel in the future
patients understand that surgery can both increase about health states that they had not yet experienced.
long-term survival rates and lower short-term sur- The tool also generated printouts aiming to facilitate
vival rates due to potential complications. Based on conversations between patients and caregiverscon-
such information, a patient whose only remaining versations that made it easy for patients to clearly
desire in life was to attend his daughters wedding express their preferences.
Source: Mulley et al (2012). For more information, see

BOX 4.9 Health Coaching to Coordinate Care in Singapore

To improve the quality and efciency of care, Singa- effectively articulate their preferences, and enable
pore implemented a national transitional care pro- self-management and care planning. These care coor-
gram for elderly adults with complex care needs and dinators are mostly nurses and medical social work-
limited social support called the Aged Care Transi- ers who are hired by the Agency for Integrated Care.
tion (ACTION) Program. It was designed to improve The program targeted complex cases: patients who
coordination and continuity of care and reduce re- are older than 65 year-old, had multiple diagnoses
hospitalization and visits to emergency department. and comorbidities, taking more than 5 different types
The program trained and deployed dedicated care of medication, and/or with impaired mobility or sig-
coordinators to provide coaching to help individuals nicant functional decline.
and families understand the individuals conditions,
Source: Wee (2014).

which embodies a shift from monologue to Core Action Area 4: Creating a

dialogue between patients and providers, or supportive environment for citizen
specic decision support techniques. These engagement in health promotion and
approaches avoid directive styles of teach- improvement
ing and advice-giving, which can generate
resistance or a sense of hopelessness among The conditions under which people live have
those on the receiving end. Coaching has a vital influence on their healthy behavior
also shown to be highly important in help- and the state of their health. An informed
ing patients navigate the health care system public is an essential prerequisite for health
so that they can actively choose providers promotion and improvement, but knowledge
based on their health needs, preferences, and cannot be transformed into actions and sus-
knowledge of providers. Box 4.9 describes tained over time without a supportive envi-
an example from Singapore. ronment. This supportive environment is not
62 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

solely about the clinical environment, but (Hancock and Duhl, 1986). The key factors
also pertains to the ecology of individuals, affecting health in cities can be considered
families, communities and organizations, within three broad themes: the physical envi-
and the society. All societal forces can be ronment, the social environment, and access
mobilized to create conditions that enable to health and social services (Galea and Vla-
people to live a healthy life. This important hov, 2004). Municipal governments will plan,
aspect of supporting citizen engagement in construct and manage the city in a way that
health promotion and improvement under- continuously improves the physical and social
lies WHOs Healthy Settings approach, environment and access to public services that
clearly laid out in the 1986 Ottawa Charter promotes health; for example, modifying the
for Health Promotion. In addition, recent physical environment (increase urban green
behavioral economic research has shown spaces or design wider bike lanes) or regula-
the importance of immediate environment tions of public health (e.g. smoking ban in
features on peoples behavior choices (e.g. public areas or requirement for safety belt for
Thaler and Sunstein, 2008). Designing drivers). Building a healthy city is by nature
nudges that are embedded in the physi- an inter-sectoral endeavor, for example, local
cal and social environment to cue people government policies on housing, the housing
towards adopting healthier behaviors may market, citizen action on housing conditions
be a promising health promotion strategy. and local lead poisoning control programs
These strategies were discussed below. may all interact to inuence rates of lead poi-
soning in a particular city (Galea, Freudenberg
Improving macro environment for health and Vlahov, 2005). Therefore, it will involve
promotion: develop Healthy Cities (and political commitments of the local govern-
Healthy Villages): In the physical and social ment, institutional changes, capacity build-
contexts in which people engage in daily ing, innovations and partnership. The Healthy
activities, the environmental, organizational, Cities movement includes a strong focus on
and personal factors interact to affect health citizen empowerment and participation. The
and wellbeing. These social determinants of approach promotes participatory governance
health contribute to the level of distribution by empowering individuals and valuing com-
of health in the population, and are impor- munity knowledge in decision-making and
tant targets for health promotion. With action on health (WHO, 2008: 18).
the rapid urbanization of China, a series of Globally, Healthy Cities has been a suc-
urban diseases have emerged such as envi- cessful movement in terms of the number of
ronmental pollution, traffic jams, housing participating cities (Green et al, 2015; De
shortage, insufcient public services, unsafe Leeuw et al, 2009, 2015). The Chinese gov-
drinking water and food, NCDs, increased ernment also responded positively to the
stress, accidents and injuries. These envi- Healthy Cities movement. A few cities were
ronmental and societal factors pose severe selected to participate in the Healthy Cities
threats to peoples health. Similarly, environ- collaboration project with the WHO since
ment degradation and lack of social support as early as 1994. More recently, ten cities
in rural China are prominent concerns for including Hangzhou, Dalian and Suzhou
health. To address these complex challenges, joined the Healthy Cities pilot in China. Two
the WHO promoted the global healthy cit- International Healthy Cities Mayors Forums
ies movement as a comprehensive strategy to were held in 2008 and 2010, which helped
create the supportive environment essential exchange lessons and experiences. A policy
for health improvement and addressing social is being drafted to scale up the Healthy Cit-
determinants of health problems. ies movement in China, which will put health
The Healthy Cities movement envisions at the heart of local development agenda, and
cities with health-promoting environment potentially linking local government ofcials
that enables people to mutually support each performance review to its progress.
other in performing all the functions of life An UCL-Lancet Commission on Healthy
and developing to their maximum potential Cities arrived at ve key recommendations
E N G AG I N G C I T I Z E N S I N S U P P O R T O F T H E P E O P L E - C E N T E R E D I N T E G R AT E D C A R E M O D E L ( L E V E R 3) 63

for implementing the Healthy Cities strategy interventions can signal people into making
(Rydin et al, 2012): better health choices without coercion or any
form of material incentives.
City governments should work with a Nudges might involve subconscious cues
wide range of stakeholders to build a (such as painting targets in urinals to improve
political alliance for urban health. In accuracy) or correcting misapprehensions
particular, urban planners and those about social norms (like telling us that most
responsible for public health should be in people do not drink excessively). They can
communication with each other. alter the prole of different choices (such as
Attention to health inequalities within the prominence of healthy food in canteens)
urban areas should be a key focus when or change which options are the default (such
planning the urban environment, neces- as having to opt out of rather than into organ
sitating community representation in donor schemes). Nudges can also create
arenas of policy making and planning. incentives for some choices or impose minor
Action needs to be taken at the urban economic or cognitive costs on other options
scale to create and maintain the urban (such as people who quit smoking banking
advantage in health outcomes through money they would have spent on their habit
changes to the urban environment, pro- but only being able to withdraw it when they
viding a new focus for urban planning test as nicotine free).
policies. Some of these strategies have proven to be
Policy makers at national and urban highly effective. Australia, France, Poland,
scales would benefit from undertaking and Portugal have adopted opt-in as default
a complexity analysis to understand the for indicating willingness to organ donation
many overlapping relations affecting and as a result, 90100% of their citizens are
urban health outcomes. Policy makers registered donors, compared to only 530%
should be alert to the unintended conse- in countries that do not use the donor default
quences of their policies. strategy (Johnson and Goldstein, 2003). In
Progress towards effective action on some states in the US, the default for writ-
urban health will be best achieved ten prescription is that the pharmacist can
through local experimentation in a range ll them with generics unless the physician
of projects, supported by assessment opts out by placing dispense as written on
of their practices and decision-making the prescription (Blumenthal-Barby and Bur-
processes by practitioners. Such efforts roghs 2012). An example of making health
should include practitioners and com- messages more salient to act on is the require-
munities in active dialogue and mutual ment for restaurants to put caloric amounts
learning. on menus in New York resulted in people
ordering meals containing fewer calories and
Create environmental nudges to better restaurants lowering the calories of meals
health choices: Most people value their health (Rabin, 2008). People respond to a change in
yet persist in behaving in ways that under- perception of social norm. The State of Mon-
mine it. There are many psychological reasons tana ran an intensive Most of Us Wear Seat-
underlying this gap between value/cognition belts media campaign from 2000 to 2003
and behavior, one being that peoples behav- in which the Department of Transportation
ior can be subconsciously triggered by envi- let people know that most people (85%) wear
ronmental and/or emotional cues, driven by seatbelts. This resulted in signicant increase
default, habits, or perception of social norms in reported use of seatbelts (Linkenbach and
(Thaler and Sunstein, 2008). These inherent Perkins, 2003). Finally, a successful technique
human biases offer an opportunity for non- to increase fruit consumption among school
coercive policy interventions to change behav- students is by placing fruits and vegetables in
ior towards healthier choices. By changing the prominent places in the cafeteria and display-
seemingly subtle cues in the physical, social ing them attractively, which demonstrates
and policy environment, so-called nudging the behavior-shaping effect of priming cues.
64 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 4.10: Examples of using nudging and regulation to change target behaviors

Nudging Regulating
Smoking Make non-smoking more visible through mass media Ban smoking in public places
campaigns communicating that the majority do not
smoke and the majority of smokers want to stop

Reduce cues for smoking by keeping cigarettes, light- Increase price of cigarettes
ers, and ashtrays out of sight
Alcohol Serve drinks in smaller glasses Regulate pricing through duty or mini-
mum pricing per unit

Make lower alcohol consumption more visible Raise the minimum age for purchase of
through highlighting in mass media campaigns that alcohol
the majority do not drink to excess
Diet Designate sections of supermarket trolleys for fruit Restrict food advertising in media
and vegetables directed at children

Make salad rather than chips the default side order Ban industrially produced trans fatty

Physical Make stairs, not lifts, more prominent and attractive Increase duty on petrol year on year
activity in public buildings (fuel price escalator)

Make cycling more visible as a means of transport, Enforce car drop-off exclusion zones
eg, through city bike hire schemes around schools
Source: Marteau, Theresa M., et al. Judging nudging: can nudging improve population health? BMJ 342 (2011).

Box 4.10 gave a few examples of nudging related to a large array of themes including
strategies, as compared with regulatory strat- health literacy, consumer-centered regulations
egies (Marteau et al, 2011). and policy making, quality and patient safety,
access to information, new technologies and
equitable access to care Such approaches could
Notes very well serve as a long-term goal for China
2. A related theme, providing information on
1. Several countries have taken a broader and safe and high quality providers, is taken up
more ambitious approach to citizen engage- in Chapter 3.
ment by pursuing approaches to involve 3. Public education campaigns should be part
patients and the wider public at different lev- and parcel of a comprehensive strategy for
els of the decision-making process, including health prevention that includes legislation
health services planning and, at the national and regulation, for example, legislative action
level, health care policies, e.g. in England against smoking through banning of cigarette
(, the US (http:// advertisements, banning of smoking in public, and Germany (https://www. places, taxation of cigarette sales, etc. A full The Consumer Health Forum treatment of possible options goes beyond the
in Australia ( acts as scope of this report.
a national voice and collaborative for health 4. Also see:
consumers including advocacy, research, issue cine/sites/fhbhru/self-management.cfm.
identification and consumer representation 5.
Reforming Public Hospitals
and Improving their
Performance (Lever 4)

Introduction be improved and expanded. Although some

pilots have shown significant progress (see
Hospitals consume about 54 percent of all below), reforms need to place greater empha-
health spending in China and over half of sis on reforming the governance, separating
patients rst contacts with the delivery sys- hospital management and governance (over-
tem for an illness episode occur in hospi- sight) functions, improving efciency of oper-
tals. They are the center of the health care ations through raising managerial perfor-
universe in China, the face of the delivery mance, adjusting pricing, compensation and
system for the citizenry and key drivers of hospital payment mechanisms that delink
cost escalation. As highlighted in Chapter 1, revenues and physician bonuses from service
available information suggests that hospitals volume. China State Council has acknowl-
suffer from problems in efciencies, quality edged that reforms in some in-depth institu-
of care, and patient satisfaction. Recogniz- tional issues lag behind hindering emergence
ing the importance and challenges of hospi- of comprehensive reform (State Council,
tals in terms of quality of care and efciency, 2015 a: 910).
public hospital reform was identied as one This chapter examines two major tenets
of the main pillars of the 2009 reform pro- of the governments public hospital reform
gram. There is broad agreement in China program: governance arrangements and
that deeper reforms are needed to improve managerial practices.1 State Council direc-
hospital performance in cost control, quality tives since 2009 have emphasized the
of care and patient satisfaction. importance of governance and management
There is a consensus that public hospitals reforms as part and parcel of a comprehen-
in China need to strengthen governance and sive strategy that includes reforms in pricing,
management to drive improvements in qual- compensation and care integration (State
ity and efciency, promote service integra- Council, 2012; Guo Ban Fa, 2015, No. 33,
tion, and counteract vested interests so that No 38, No. 70). Central government envi-
they act in the public interest (Allen, et. al., sions public hospitals as independent enti-
2013; State Council, 2015 a, b; He, 2011; ties with legal personality. Policy directives
Tam, 2008). Emerging evidence suggests aim to grant hospitals greater managerial
that public hospital reform initiatives need to autonomy from direct hierarchical control

66 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

by the government administrative apparatus and public priorities; (ii the organizational
in terms of major managerial functions such arrangement (e.g., boards and other entities)
as human resource, financial management in which responsibility is vested by govern-
and income distribution. However, hospitals ment to oversee, monitor and supervise hospi-
would retain their public institutional iden- tal and managerial performance; these entities
tity and their accountability to government are the usual interface between government
priorities particularly in terms of acting in owners and hospital management and are ulti-
the public interest. Upon relinquishing direct mately held accountable for hospital behaviors
control over hospitals, government agencies and performance; (iv) the autonomy or degree
would center their functions on strengthen- of decision-making authority granted to hos-
ing regulation, sector planning, standard set- pitals; and (v) the quality of managerial prac-
ting, and monitoring and evaluation of hos- tices to implement decisions and respond to
pital performance. Policy directives also aim accountabilities and incentives.
to improve managerial practices in hospitals.
They promote professionalized management Accountabilities: Mechanisms to hold hos-
and endorse strengthening managerial func- pital managers accountable for efcient and
tions such as cost accounting, clinical man- quality services or fullling social functions
agement, logistics and material management, need to be developed. Given the underlying
patient flows and nursing management. incentives to enhance revenues, managers are
Finally, it is important to note that alternative oriented toward augmenting service volume
models of hospital governance and improve- and expanding infrastructure, including the
ment in managerial practices are only two acquisition of high tech equipment. In prin-
pieces of a complex reform puzzle that ciple, lines of accountability are formalized,
involves reforms in nancial arrangements, but diffuse. Hospital directors are account-
human resources, planning and service inte- able to multiple government agencies at local
gration. These themes are taken up in other government levels. These bureaus main form
chapters of this volume. of oversight is hierarchical; usually applied
The chapter rst reviews experiences and through directives, known as red letters,
lessons from public hospital governance issued to hospitals to implement public poli-
reforms in China. The second part summa- cies and follow relevant public administration
rizes what is known about hospital manage- rules for human resource management, use of
rial practice. The nal section offers recom- funds, use of public assets, product procure-
mendations for strengthening governance ment, etc. But these directives often provide
and management drawing on national and ambiguous and sometimes conicting guid-
international examples.2 ance because functions, responsibilities and
accountabilities of public hospitals are not
clearly dened and the agencies themselves
Challenges and lessons in have unaligned policies and diverse interests
Public Hospital Governance and (Yip, et al, 2012). Enforcement is not rigorous
Management in China in part because supervision itself is divided
across different agencies. While financial
Following a framework developed to analyze reporting is strong, public hospitals face
public hospital governance and management weak requirements from government and
reforms,3 and drawing on available literature social insurers to improve safety processes,
as well as cases and surveys commissioned for quality, patient satisfaction and efficiency.
this report, this chapter examines ve major Improvements along these lines are gener-
elements of public hospital reform: (i) the ally not a priority (Tam, 2008). Directors
accountability mechanisms put in place by are rarely monitored or sanctioned for non-
government (as owner or payer) to ensure compliance with government directives or
hospitals perform well and are aligned with failure to meet agreed targets. This situation,
public objectives; (ii) the incentives facing combined with the fact that most public hos-
the organization to support accountabilities pitals receive minimal government subsidies

(less than 10 percent on average), has led to fulll their social functions. Meanwhile, hos-
a general consensus that public hospitals are pitals revenue-seeking behaviors have led to
unaccountable to public authorities and act considerable citizen discontent. Signicantly,
in their own interests.4 Dongyang and Sanming delinked physician
Public hospital reforms in Shanghai, Zhe- bonus income from revenues derived from
jiang and Sanming aim to impact hospital sales of drugs, medical supplies and diagnos-
behaviors through linking hospital director tic tests and placed them on salaries. Their
income to performance. However, insuf- salaries contain fixed and variable compo-
ficient information is available to judge nents in which the latter is linked to some
the impact of this performance assessment combination of productivity, cost control,
system and how it differs from routine sys- quality and patient satisfaction measures,
tems to evaluate managers performance. and are unrelated to revenues. Shanghai has
Anecdotal evidence suggests that Sanming placed a hard budget constraint on total per-
does a better job in hospital reform imple- sonnel spending, but the effect on the bonus
mentation because directors position are system is not yet known. `Hospital directors
at risk based on performance assessments.` can be dismissed by Dongyangs Board and
Dongyangs Board has established a compre- Sanmings LG for poor performance. While
hensive hospital-based performance assess- Shanghai and Zhanjiang rely on government
ment system that embraces financial, effi- agencies to apply sanctions for non-compli-
ciency, quality, patient satisfaction and safety ance with standards and rules, Dongyangs
domains. Unlike Dongyang, Shanghai and Board and Sanmings LG are fully empow-
Zhenjiang do not independently assess hos- ered to apply sanctions themselves.
pital performance or compliance with rules
and standards, and appear to piggyback on Organizational arrangements: Most public
supervisory practices performed by govern- hospitals in China are governed directly by
ment agencies. Sanmings LG conducts care- government bureaus. Except for a limited
ful supervision of the implementation of number of pilots, no independent supervisory
human resource, compensation and pricing structures such as boards or councils have
reforms. Nevertheless some observers suggest been created or given responsibility to over-
inuencing managers behaviors may be dif- see and monitor hospital activities and per-
cult because they appear more accountable formance. A number of cities have adopted a
to higher-level leaders who appointed them governance model in which a newly created
than to the government agencies responsible agency, usually referred to as a hospital man-
for reform implementation or on-the-ground agement center or council (HMC), is respon-
performance (Qian, 2015) sible for a set of hospitals and other facilities
within a given jurisdiction, usually a munici-
Incentives: While some services are still priced pality. HMCs in Shanghai and Zhenjiang are
by the government, hospitals earn a large typical examples and are considered pilots. In
share of revenues through selling services to these cities, the HMCs are staffed by civil ser-
social insurers and individual self-pays, usu- vants and led by high-level municipal ofcials
ally through fee-for-service payment systems. and consists of representatives of public agen-
Surpluses are distributed to staff through non- cies involved in health sector, and therefore
transparent bonus schemes that are based on not independent of the government adminis-
service production and revenues usually at the trative apparatus. The HMCs were granted
department level. Under these conditions, hos- legal personality but the hospital members
pitals and their clinicians have strong incen- also maintain their original legal personali-
tives to maximize revenues through increas- ties. In Dongyang, a fully independent board
ing service volumes, providing unnecessary was established in a single hospital with rep-
care, generating admissions and extending resentatives of government agencies, private
bed days.5 Given the incentives for capturing corporations and local and foreign medical
more patients, hospitals have little interest to schools. The hospital has special legal sta-
integrate with or shift care to lower levels or tus and its statutes are similar to corporate
68 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

governance models observed in private hospi- residual claimant status and asset manage-
tals.6 Finally, Sanming did not create a new ment were retained mostly by the hospitals
agency, but decreed a fully empowered lead- themselves. In contrast, Dongyangs Board
ership group (LG) to enact health system and Sanmings leadership group exhibits con-
reforms with an initial focus on the prefec- siderably more decision rights.
tures 22 tertiary and secondary hospitals.7
Managerial practices: How well manage-
Autonomy: Public hospital autonomy in ment responds to accountabilities and incen-
China has few parallels internationally. tives in their governance and organizational
Most enjoy considerable autonomy in nan- environments is a key determinant of hospital
cial and asset management, retaining nan- performance. Hospital management entails a
cial surpluses, opening and closing services, wide range of clinical and non-clinical func-
expanding or contracting physical plant and tions related to selecting, using and supervis-
equipment, and entering into and servicing ing resources. Studies of hospital manage-
debts. However, the legacy of command- ment in several countries have shown that
and-control remains with the appointment better management practices are associated
of senior managers and management of higher outcomes, improved quality of care
quota personnel with xed but low sala- and nancial performance (Tsai et al., 2015;
ries conducted directly by local government Bloom, et al, 2010; Mc Connell, et al, 2013;
leaders or agencies. Thus, hospital manag- Kebede, et al., 2010).
ers do not have full decision-making author- Little is known about management prac-
ity to hire, dismiss and set compensation for tices in Chinese hospitals. To address this
all staff. This may limit the quality of man- gap, a survey was commissioned to measure
agement practices (see below). The afore- management practices in a small sample of
mentioned HMC pilots have not resulted in secondary (35) and tertiary (75) public hos-
major changes in decision making rights. For pitals across 27 provinces (Liu, 2015). Fol-
example, key decisions on human resource lowing a methodology tested and validated
management and compensation and service in several counties8 , practices were scored
pricing remain with government agencies and on a scale of 1 to 5 for each of the 20 prac-
were not transferred to HMCs (or member tices across four domains. (See Box 5.1). The
hospitals) in Shanghai and Zhenjiang. Also, higher score indicated better performance.

BOX 5.1 Management Practice Domains

1. Standardizing Care and Operations 3. Target Management

Hospital layout and patient ow Target balance
Patient pathway management Target interaction
Standardization and clinical protocols Clarity and comparability of targets
Good use of human resources Time horizon of targets
2. Performance monitoring Target stretch
Continuous improvement 4. Talent Management
Performance tracking Rewarding high performers
Performance review Removing poor performers
Performance dialogue Promoting high performers
Consequence management Managing talent
Retaining talent
Attracting talent
Source: Liu, 2015; Bloom and Van Reenen, 2007.

FIGURE 5.1 Scores by Management Practice, China 2015 (n=110 hospitals)

Average Score: Standardizing care and Operations Average Score: Performance Monitoring
5.0 5.0

4.5 4.5

4.0 4.0

3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

Layout of out
patient flow

and protocols





Rationale of

Good us of

Average Score: Target Management Average Score: Talent Management

5.0 5.0

4.5 4.5

4.0 4.0

3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0



Clarity and
of targets





Time horizon
of target

T he weighted average management scored the highest in use of human resources,

score was 2.68, with a highly dispersed promoting high performers, performance
distribution ranging from 1.85 to 3.35. review and attracting talented staff, but
Compared to OECD countries where the scored lowest in standardization and proto-
WMS has been applied, China is an aver- cols, continuous improvement, consequence
age performer: scoring lower than the US management, rewarding high performers and
(3.0) and UK (2.86) but higher than France removing poor performers.
(2.4) and Italy (2.48). 9 Figure 5.1 dis- The scores combined with ndings from
plays the average scores for each manage- the interviews highlighted several manage-
ment practice across the four domains. Not rial shortcomings: (i) management practices
surprisingly, secondary hospitals scored sig- appear reactive in the sense that hospitals do
nicantly lower (2.66) than tertiary facilities not have systems to nd and prevent poten-
(2.90) and considerable variation of scores tial problems or to continuously improve
was observed across provinces. Hospitals processes and services; (ii) due to lack of
70 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

autonomy in staffing and compensation, behaviors with performance objectives and

managers have little authority to reward public priorities; (iii) developing sound orga-
high performers and dismiss low perform- nizational arrangements for governance; (iv)
ers; talent management is not a high prior- increasing decision rights of hospital manag-
ity and there are few consequences for poor ers; and (v) strengthening managerial capaci-
performance; (iii) hospitals do not system- ties. This chapter recommends specic inter-
atically analyze performance data or use ventions in each of these domains drawing
data to provide feedback for improvement; on the Chinese (ShanghaiShenkang, Zhen-
(iv) lack of care standardization may indi- jiang-Kangfu, Dongyang and Sanming) and
cate decient clinical management which can international (Brazil, England and Spain)10
negatively impact quality and outcomes; and case work, as well as the general literature.
(v) performance management is mainly used However, it is difcult to disentangle any one
to allocate staff bonuses not to improve indi- of the aspects from the others. For example,
vidual or hospital performance. Interestingly, nding a workable balance between decision-
autonomy (decision-making authorities in making autonomy and accountability is no
human resource, asset and nancial manage- easy task. Indeed, no hospital, whether pub-
ment) were associated with higher manage- lic or private, can act outside the interests of
ment scores. its owners.
Managerial performance may face other Establishing robust accountabilities and
constraints. Public hospital executives are powerful incentives to strengthen perfor-
appointed by higher level party and govern- mance and align hospital behaviors with
ment authorities and the process is not merit public objectives, core actions 1 and 2 respec-
based. Even within hospitals, promotions tively (see below), are critical elements of
are usually based on years of tenure, and are public hospital reform since they underbrace
not determined competitively. Most hospital the remaining core actions related to put-
managers have received little formal training. ting in place effective organizational gover-
Hospital presidents are generally responsible nance models (core action 3), strengthening
for all managerial, clinical and academic autonomy (core action 4), and improving
activities and tend to manage during their managerial practices (core action 5). In fact,
spare time or delegate managerial func- without strong (and enforceable) accountabil-
tions to junior staff. There are no standards ities and appropriate incentives, it is unlikely
or qualication system for hospital managers that emerging organizational arrangements
and most see managerial knowhow as some- will represent the interests of government
thing that requires investment by government and patients, greater autonomy may stimu-
authorities rather than by the hospitals them- late deviant behaviors and greater distancing
selves (World Bank, 2010). In China, as in from public priorities, and there will be little
many other countries, hospital management demand for improved managerial practices.
is not recognized as a profession and forma- Planners must nd a pragmatic formula for
tion and training of managers is inadequate. combining these elements while accounting
for local context and capacities. Implement-
ers must also display a willingness to make
Recommendations for moving the invariable inight adjustments.
forward with public hospital
reform: Lessons from Chinese Core Action Area 1: Establish strong
and international experience accountability mechanisms for
autonomous public hospitals to
International and Chinese experience sug-
strengthen performance
gests that there is no single path to pub-
lic hospital reform, but emerging models A fundamental component of hospital reform
have common elements: (i) putting in place is putting in place sound accountability
(and enforcing) accountability mecha- mechanisms to orient hospital behaviors
nisms; (ii) crafting strong incentives to align toward improved performance, compliance

with social functions and alignment with for all public and private providers (Edwards,
government priorities. International experi- 2011).7 Finally, FTs are required to produce
ence suggests that the success of any public publically available annual reports on nan-
hospital reform involving greater autonomy, cial status, patient engagement activities and
for example, depends on the effectiveness of range of quality measures including adverse
accountability mechanisms. In China, many events, infection rates, mortality rates,
consider that granting public hospitals more patient feedback, staff views and perfor-
autonomy, or similarly, freeing them from mance against targets.
direct administrative control, will result in In China, many of these indirect account-
chaos since the hospitals will be free to do ability tools are evident but appear limited
whatever they want. However, experience to a handful of hospitals. For example, the
in China and internationally suggests this is Director of Dongyang hospital signs a per-
not the case if sound indirect accountability formance agreement with the board, which
mechanisms are established and skillfully links his salary to performance. His posi-
deployed. tion is also at risk for continued under-per-
Strengthening accountability consists of formance. Financial accounts are audited
the following strategic activities: (i) specify- internally by the Board and externally by the
ing the rules, reporting requirements and Dongyang Audit Bureau. The board assesses
other mechanisms to foster strong hospital the hospitals performance on a series of indi-
accountability to government, including con- cators reflecting cost containment, quality
tracts, nancial management, audits; patient and efciency. Internationally, these checks
safety processes, performance requirements, and balances are increasingly embodied in
etc.; (ii) setting up institutional arrangement contracts between the board (as owner) and
to support monitoring and oversight; and (iii) government (as the service purchaser). For
determining the information to be publicly example, contracts often are the instrument
disclosed. used to allocate resources, set performance
Arms length accountability mecha- requirements, assess compliance with govern-
nisms applied to autonomous public hospi- ment regulations and mandate care integra-
tals usually include rules and compliance tion with lower level providers. Finally, some
monitoring for: board appointments and systems, such as in the state government of
operation; accounting and nancial report- Sao Paulo, Brazil, have set up information
ing, including internal and external audits; systems in autonomous public hospitals to
safety processes; and participation in qual- enable validated reporting of performance
ity assurance programs. For example, in and costs. Finally, the effectiveness of
the English Foundation Trusts (FTs) citizen accountability mechanisms depends on the
and government oversight focuses on Board provisions made for their enforcement.
performance and accountability is conveyed
through three mechanisms. First, the Council
Core Action Area 2: Align Incentives
of Governors (CoG) holds the board mem-
with public objectives and
bers both individually and collectively to
account for performance, financial report-
ing, quality and other items. Second, govern- The behavior of any hospital is very much
ment created two oversight agencies. One driven by incentives, whether monetary or
was a regulator, known as Monitor, which non-monetary. Incentives are usually embed-
was given responsibility for licensing FTs, ded in how hospitals and staff are paid,11 but
monitoring nancial performance, assessing also may respond to incentives that relate to
achievement of national targets (e.g., waiting the culture and behaviors of medical care
times), complying with FT laws and gauging organizations and broader delivery system.
the quality of governance. Government also For example, some incentives are ingrained
created the Care Quality Commission which in the system culture such as the centrality of
is responsible for ensuring compliance with dedication to public service observed in the
regulatory standards for quality and safety Englands general tax funded National Health
72 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Service (NHS). The NHS attaches consider- services, analyze efciency and productivity
able weight to the use of Codes of Behav- and negotiate global budgets. Availability of
ior which in appearance are voluntary and cost data shifted the nature (and transpar-
self-policed. However, these are laid on top ency) of annual budget formulation away
of many mandatory rulesfor example on from more or less arbitrary setting of ceilings
care qualitywhich do have the force of law. to a calculus based on volume and costs.
Clinical regulations are strong and enforced.
Specific strategies to support this core
Core Action Area 3: Develop sound
action entail: (i) gradually place hospitals at
organizational arrangements for public
financial risk for budgetary overruns and
hospital governance
low performance (e.g., quality, efciency and
patient satisfaction); (ii) install standardized Strategic activities to support this core action
cost accounting systems in hospitals and use include: (i) developing the organizational
the results in budget setting; and (iii) create model or models for public hospital gover-
the institutional capacity in government to nance and corresponding legal framework;
monitor performance and enforce sanctions. and (ii) setting the forms, roles and composi-
The following are brief examples of these tion of governance entities such as boards.
strategies drawing on Brazils experience. Internationally, nearly all public hospi-
Sao Paulos Social Health Organizations tal reforms are based on legislation. In some
(OSSs) hospitals face powerful incentives to countries, such as Brazil (Sao Paulo) and
meet performance (and productivity) targets, England, framework laws were issued sup-
improve quality, and align behaviors with the porting a single governance modality which
public priorities. Importantly, the OSSs are was applied to all hospitals participating in
at nancial risk for budgetary overruns and the reform. In other countries, such as Spain,
poor performance.12 The state government different laws were enacted for different gov-
established a global budget which is perfor- ernance modalities. Still in others, such as
mance driven and sets targets in terms of vol- Panama and India, facility-specic legislation
ume, quality and efciency. Hospitals have no was enacted. Governance models come with
incentive to over- or under-supply services. a variety of legal forms and corresponding
For example, if hospitals skimp on produc- nomenclatures (see Table 5.1). They vary con-
tion they are nancially sanctioned. If they siderably in terms of organizational structures
exceed production targets, they are not nan- (as well as the degree of independence granted
cially compensated except under extenuating to hospitals) established to replace hierarchi-
circumstances, such as in an epidemic. They cal government administration. Most coun-
are also not permitted to charge public tries legislated some form of independent
patients. Ten percent of the budget is placed board that serves as the unit of responsi-
in a retention fund and paid in quarterly allot- bility between hospital management and gov-
ments against meeting efciency and quality ernment owners. In most cases, boards have
benchmarks (such as infection control, mor- members from government as well as non-
tality rates, length of stay, readmissions, etc.). government entities. In general, boards are
These measures are strictly enforced. expected to set overall policies and strategies,
Oversight was facilitated by the installa- approve and oversee business plans and nan-
tion of standardized cost accounting systems cial matters, monitor performance against
in each OSS hospital with a virtual link to objectives targets, appoint managers and safe-
the purchasing and contract management guard the public interest of the hospitals.
unit in the Secretariat of Health of the State However, boards can take on many roles,
Government of Sao Paulo, Brazil (SES). In forms and compositions, and can be respon-
addition to serving as a management tool sible for a single hospital, groups of hospitals
for hospital managers to monitor costs of all and even regional networks of facilities. In
inputs in each department, the SESs purchas- England, the Board of Governors (BoG) for
ing and contract management unit uses the Foundation Trusts (FTs) consist of elected
data to compares cost across all facilities and members and appointed ofcials. In Brazil,

TABLE 5.1 Hospital Governance Models in (i) identifying the functions currently man-
Selected Countries aged by government bureaus that are to be
Country Hospital governance model shifted to the hospitals; and (ii) setting a time
Czech y
Limited liability companies
table for their transferal.
Republic y
Joint-stock companies While the new governance modalities for
public hospitals have granted considerable
Brazil y
Social Health Organizations (OSSs)
decision rights to managers when compared
Estonia y
Joint-stock companies to traditional, directly managed hospitals,
few hospitals can be considered fully autono-
Norway y
State enterprises mous and comparable to independent private
Portugal y
Public enterprise entity hospitals entities. Experience has shown that decision-
(PEEHs) making boundaries are a moving target and
Spain y
Public healthcare companies depend on shifting political and nancial con-
Foundations ditions. FTs in England and social organiza-
Consortia tions (OSSs) in Brazil are hospital governance
Administrative concessions (to a models that enjoy considerable autonomy in
private rm)
hiring, ring and compensating staff, input
Sweden y
Public-stock corporations management, opening and closing services,
United y
Self-governing trusts procurement and financial management.
Kingdom y
Foundation trusts They can retain and invest surpluses and
Source: Saltman et al., 2011, La Forgia and Couttolenc, 2008. borrow commercially. However, OSSs are
not permitted to sell shares, seek investors or
charge fees to patients. Infrastructure expan-
sion and purchases of expensive equipment
the Secretariat of Health of the State Gov- requires government approval. FTs can set up
ernment of Sao Paulo (SES) contracts non- joint ventures and subsidiary businesses but
prot organizations (NFOs) to manage pub- cant sell land and buildings since assets are
lic hospitals. Each NFO is required to have locked to prevent privatization and cannot be
a board as the entity legally accountable to sued to guarantee debt or sold to pay credi-
government. Board members can be public tors. FTs have the right to vary nationally
officials, representatives of private entities determined labor contracts and pay scales for
and private citizens selected by the NFO. medical professionals and unionized staff.
A similar mixed membership approach has None have done so. For service price-setting,
been applied in China in Dongyang hospi- FTs supposedly have more freedom, but in
tal board. However, most hospital boards practice both groups are price-takers of the
established to date in China (such those for centrally determined tariffs and the other
HMCs) consist exclusively of public ofcials. price structures used to reimburse care or
However, recent State Council policy direc- ancillary services such as medical education.
tives (Guo Ban Fa, no. 38, 2015) require that In Spain, an administrative concessiona
governance boards or councils should con- private joint venture companyprobably
sist of broader range of participants includ- has more autonomy than any other model in
ing representatives of government agencies, Europe with decision rights over all inputs
delegates of the Peoples Congress, members including capital investments and expand-
of the CPC and representatives of relevant ing services but prot margins are capped at
stakeholders. 7.5 percent by government. Staff were given
to right to remain civil servants or become
non-statutory staff. All new staff are non-
Core Action Area 4: Gradually increase
statutory in which compensation and benets
the delegation of decision rights to
are set by the private company awarded the
concession. However, other public hospital
Key strategic activities to implement governance modalities that emerged in Spain
greater decision making autonomy entail: enjoy less autonomy. In all international
74 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

cases, managers appointment is merit based, ii. Study and adapt managerial practices
but sometimes subject to a consultative pro- implemented in leading public and pri-
cess with government. Chinas Dongyang vate facilities. For example, case work
Hospital manifests many of aforementioned commissioned for this study examined
features and holds full decision-making managerial practices in high-end private
authority human resources and assets. Other hospitals which introduced a variety
and less autonomous hospital governance of managerial practices to deliver high
models have emerged in Zhenjiang, Shanghai quality and efcient care.14 Much can be
and other cities. learned from these innovations. Many
of the same skills and practices used in
private hospitals are appropriate for their
Core Action Area 5: Strengthen and
public counterparts.
professionalize managerial capacity
iii. Establish an executive management pro-
Hospitals in China face challenges to improve gram for upgrading skills along several
efciency and quality`. At the time, China is dimensions: (i) standardizing care (e.g.,
moving forward with reforming hospital gov- using checklists, handoff protocols, dis-
ernance and separating hospital operations charge protocols, etc.); (ii) rening target
from governments administrative apparatus. setting (e.g., scope of targets, linkages
It is unlikely that efciency and quality gains among targets, difcultly of achievement,
or reforms will be successful without high etc.); (iii) measuring performance (e.g.,
quality hospital management (and leader- monitoring of errors and adverse events,
ship). Managers require strong skills in plan- continuous performance improvement
ning, setting organizational goals and annual processes, etc.); and (iv) improving talent
and multi-year plans, allocating resources management (assessment of senior man-
efciently, monitoring performance, setting a agers, internal recruitment, retention,
functional command chain with correspond- dismissal and promotion policies, etc.).
ing accountabilities and ensuring effective The development of capabilities applies
systems for managerial functions related to to both clinical and non-clinical execu-
nancing, human resources, information and tive managers, both of whom need rst-
data flows, logistics and material manage- rate managerial and leadership skills.
ment and quality assurance. Such a system iv. Support demonstration projects that
needs well-prepared and professional man- address specific managerial challenges
agers. Professionalizing management can be such as care standardization, infection
achieved through a variety of short- and long- control and materials management.
term measures, many of which can be imple- Pilots can borrow industry tools such as
mented in parallel fashion.13 The following Plan-Do-Study-Act cycle (PDSA), total
are specic actions to professionalize manage- quality management (TQM) and lean
ment and improve managerial practices: management to improve efciency, raise
quality and better patient satisfaction.
i. Assess the skills of hospital managers Long-term
and the quality of managerial practices v. Develop a career path for professional
and their impact on the quality and ef- hospital managers and integrate mana-
ciency of hospital operations and ser- gerial and leadership competencies into
vices. The aforementioned WMS survey recruitment and promotion practices.
as well as other available instruments vi. Create a hospital management bench-
can be applied for this purpose. These marking system that periodically tracks
surveys will provide valuable informa- indicators of management dimensions
tion to shape government commitment and links them to important performance
to managerial improvement and set the indicators. The benchmarking systems
stage for corresponding strategies and should be used not to evaluate manage-
actions. ment but to proactively find problems,

improve management practices as means 8. The survey was commissioned by the World
to improve hospital performance. Bank and the preliminary findings are
vii. Work with academic institutions to reported here. Researchers applied a meth-
strengthen and expand degree programs odology, known as the World Management
Survey (WMS), originally developed to mea-
in hospital management and ultimately
sure managerial and organizational practices
establish centers of excellence in man-
in manufacturing, but subsequently applied to
agement and leadership development. and validated in hospitals in several countries
This may entail revising and updating (Bloom and Van Reenen, 2010, 2007; Bloom
curricula, introducing internships and et al., 2010; McConnell, et al., 2013). The
in-service training for recent graduates research team interviewed 291 department
and developing competencies across directors and head nurses.
recognized management and leadership 9. Country comparisons should be taken with
domains. caution. 79% of the hospitals originally con-
tacted in China refused to participate. This
may have contributed to a sampling bias in
Notes which the surveyed hospitals were those with
1. Other aspects of public hospital reform best management practices. The research-
related to payment systems, human resources ers did not examine the association between
and capital planning are the subjects of Chap- management scores and hospital performance
ters 6, 7 and 9 respectively. indicators because validation of the latter was
2. These draw on cases commissioned for this impossible.
report: Shanghai-Shenkang, Zhenjiang- 10. Case studies on Spain and England were
Kanfu and Dongyang. Sanming is based on commissioned for this report. The Bra-
Ying, 2014; Ma, 2014; and Sanming Prefec- zil case draws from La Forgia and Hard-
ture, 2014. ing (2009) and La Forgia and Couttolenc
3. Adapted from La Forgia, Harding and (2008).
Hawkins (2013). 11. The Department of Health (and its Secretary
4. Given this situation, some local government of State) has overall and political responsibil-
officials consider that granting public hos- ity for strategic direction. The FTs are also
pitals more autonomy, or similarly, freeing answerable to other regulatory bodies for
them from the vestiges of hierarchical gov- nancial management, medical education,
ernment control, will result in chaos (WHO/ fertility treatment, etc.
World Bank, 2015 Technical Roundtable 12. Payment systems is the subject of Chapter 6.
discussions). 13. Similar to the OSSs, in Spain nancial risk is
5. The incentive structure facing providers is the also transferred to providers in the Conces-
subject of Chapter 6. sions and Consortia models in part because
6. This arrangement was part of a special agree- of the participation of private partners.
ment made between city leaders and a Tai- 14. Based on MSH, 2013, 2005; McConnell,
wanese businessman who made a substantial et al, 2013; Lega et al., 2013; Frenk, et al.,
donation to rebuild the hospital in 1993. 2010 and case studies commissioned for this
7. A prefecture is an administrative unit com- report.
mon to all Chinas provinces and usually con- 15. The nal report will contain an assessment
sisting of both urban and rural areas. of effective managerial practices in a subset
of private hospitals in China.
Part II

Institutional and
Financial Environment
Realigning Incentives
in Purchasing and Provider
Payment (Lever 5)

Introduction uncoordinated. The state-run system could

no longer protect the population from health
Chinas healthcare system has witnessed two shocks, and unable to adequately nance the
profoundly dramatic inexion points in the production of healthcare, the government
last three-and-a-half decades, both closely financing arrangements left hospitals with
related to structural changes in the economy no options but to rely on user fees for sur-
and both with huge implications for levels of vival. So profound was the shift from govern-
health financing. In the decades following ment subsidies to out-of-pocket payments by
the establishment of the Peoples Republic patients that the share of public funds in total
of China in 1949, the healthcare system in hospital revenues fell quickly from around 60
China was built within the socialist planned percent in late 1970s to less than 10 percent
economy structure and its main task was to in 1990s (Yip and Hsiao, 2008).
address shortage of doctors and medicines. Two other policies, undoubtedly intro-
Public production and financing domi- duced with good intentions, met with unfor-
nated the tightly controlled health sector, tunate consequences. First, in order to moti-
which succeeded in achieving extraordinary vate high performance levels, bonus schemes
improvements in population health in a low were introduced that linked physician incomes
budget environment. Following structural with generated revenues. And second, in order
changes in the economy in the 1970s, which to improve access, basic medical services and
saw the transition from a planned to a mar- pharmaceuticals were priced articially low
ket economy system, the health sector wit- while expensive procedures and drugs were
nessed rapid decentralization and transfer of marked up with high profit margins. The
decision-making authority on nancial mat- consequences of these inappropriate pric-
ters to newly-autonomous public hospitals. ing schemes and incentives are by now well-
Public funding for health declined rapidly known: seeking to maximize incomes, phy-
during this phase, and internal competition sicians resorted to demand inducement to
for scarce resources left the sector nancially generate higher levels of revenue; and in order
weak. In the absence of government regula- to maximize prots, hospitals began encour-
tion and strict supervision, the transition to aging over-prescription of drugs and expensive
a market-based system was disorderly and diagnostic tests. These reinforcing actions led

80 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

to massive inefciencies and further increased Insurance payments now make up larger
the nancial burden on patients. These and share in hospital revenues and the share of
related misaligned incentives became embed- OOPs has declined that is in principle good
ded in the health system, contributing to news. But like many other countries, China
escalating costs, medical impoverishment and also faces the issue of health expenditure
large-scale public discontent. escalation, including preventable increase as
Responding to the rapidly rising costs a result of overprovision of services. Moving
and demand for quality affordable health- forward, China needs to adopt comprehen-
care from an increasingly conscious middle sive reform policies to effectively constrain
class, the Government of China launched the unnecessary increase.
one of the biggest health policy interven- This chapter examines issues related to
tions in recent times in terms of size and these system-wide incentives and the adverse
scope. Targeted to reach 1.3 billion people, impact they continue to have on many
the reform invested over three trillion RMB aspects of healthcare production, delivery,
into the health system between 2009 and quality, utilization, and affordability. Follow-
2014 to expand coverage of social insur- ing a brief examination of the ongoing chal-
ance schemes, establish a national essential lenges posed by the underlying distortions in
medicines system, advance public hospital the incentive structure, it then draws upon
reforms, improve the primary care system experiences from China and other countries
and increase the equality and availability to propose actionable recommendations for
of public health services. As highlighted in realigning and correcting incentives in pur-
Chapter 1, the progress has been remarkable chasing and provider payments in the health
in many ways, especially in terms of rais- sector.
ing insurance coverage and utilization and
bringing down the share of out-of-pocket
spending in total spending on health. Key Challenges in Purchasing
However, several challenges remain, and Health Services and Paying
steps need to be taken to ensure that benets Providers
of reforms are shared more equally. Over-
all utilization of health services has grown Despite impressive gains in achieving near
annually, but with lower rate for outpatient universal coverage in a very short time
service than inpatient services. The average period, China still needs to do more correc-
growth rate per annum of the total number tions in the underlying incentive system gov-
of outpatient visits from 2009 to 2014 was erning provider behavior and inuencing the
6.7 percent compared to 8.9 percent for inpa- nature and scope of health goods and ser-
tient admissions (NHFPC, 2014).1 One con- vices purchased. The emphasis in the 2009
tributing factor to this trend is the fact that (State Council, 2009) and 2012 (Ministry of
the urban health insurance schemes and the Human Resources and Social Security, 2012)
NCMS only recently started to cover out- reform guidelines on the importance of lever-
patient services in addition to inpatient care aging strategic health purchasing and stim-
reimbursement. International evidence shows ulating changes in provider behavior not-
that benet incidence of public expenditures withstanding, fundamental issues with the
in hospitals benet disproportionately more incentive structure are yet to be addressed
the better-off whereas primary health care at the system level. Insurance agencies have
and outpatient services are more accessed built their capacity and efficiency to man-
by the less well off. Study in Ningxia and age transactions but can and need to do
Shandong had reported similar ndings (Yu more to use their purchasing power to pur-, 2010a). Therefore China should expand chase strategically on behalf of the consumer
and deepen its health insurance coverage to and monitor the mix and quality of ser-
primary health care and outpatient services, vices delivered. This is needed to transform
so as to ensure more equitable utilization of scarce inputs optimally into affordable and
both outpatient and inpatient services. effective health services, containing costs
R E A L I G N I N G I N C E N T I V E S I N P U R C H A S I N G A N D P R O V I D E R PAYM E N T ( L E V E R 5) 81

and ensuring nancial protectionall to be The fee-pricing structure widely used by

afforded by universal health coverage. We purchasing agencies prices some services,
discuss these issues in turn. such as health promotion, prevention and
consultations, below cost, and some ser-
Perverse supply-side incentives: The large-scale vices, such as expensive diagnostics, above
reforms initiated in 2009 have not aggres- costs. This motivates over-supply of services
sively attempted to correct the misaligned with higher price margins and steers pub-
supply side incentives that have carried over lic providers away from prioritizing public
from the last three decades. Public hospitals interest, pursuit of which would direct them
in China have access to three main sources of to conserve public resources and focus on
nancing: direct government subsidies, social improving the health of patients with mini-
insurance payments, and service fees including mum use of resources. However, since the
mark-ups on drug prices charged to patients. fee structure set by NDRC and used by pur-
Direct government subsidies are small in chasing agencies yields the lowest prot for
volume (accounting for 14.6 percent of total providers of health prevention and promo-
hospital revenues in 2013, as reported in the tion services, these services get neglected and
China Health Statistics Yearbook, 2014) and physicians favor over-prescription of anti-
earnings from social insurers and service fees biotics and intravenous injections even for
constitute the lions share of revenues. The simple health problems, for which scientic
China Government has subsidized heavily two evidence of effectiveness is totally lacking.
of the three social insurance schemes (NCMS Unsurprisingly, before the 2009 reforms, 75
and URBMI), and out of pocket spending on percent of patients suffering from a common
aggregate has declined signicantly but it is cold and 79 percent of all hospital patients
still high compared to OECD and many mid- in China are prescribed antibiotics, num-
dle income countries, raising concerns about bers that are more than twice the interna-
overall affordability and contributing to citi- tional average and which have contributed to
zen discontent. Hospital behaviors responding growth in spending on health (Zhou, 2008).
to distorted incentives are a main driver of this How the reforms affected this rates requires
situation. Given the lack of hard budget con- evaluation.
straint on total (hospital) spending, absence
of price controls on high tech and expensive Perverse incentives among public hospitals
procedures, and the dominant fee-for-service for capital-intensive investments: In order
payment mechanism (which incentivizes more to make and sustain prots from services,
volume and supply of expensive procedures), including tests and procedures, hospitals
hospitals seek to maximize revenues derived need to invest heavily in new technologies
from insurers and patients which in turn moti- and medical devices and get a high initial
vates hospitals to over-supply services and stock of patients to defray the xed costs
extend their business into expensive inten- before they can start making money (Sun,
sive procedures (Li et al, 2012). Such proce- Yang, and Barnes, 2015). Public hospitals,
dures may be an important source of revenue as centers of considerable power and inu-
but contribute little to patient outcomes. In ence in their own right as well as emblem-
doing so, hospitals seek help from physicians atic of the position of the state, have always
by offering them bonus schemes linking their had strong incentives for capital-intensive
performance with hospital revenues. The net investment (Yip et al., 2010). Reinforced by
result is that public hospitals focus on prot- the prot motivation, higher level hospitals,
making, which detracts them from pursuit which are at an advantage for capital invest-
of social welfare. Health sector resources get ment, keep expanding and drawing in more
reallocated to prot centers for hospitals and and more physical, financial and human
away from patient-centered provision. Physi- resources. Lower level hospitals are unable
cians get preoccupied with revenue generation, to compete at that level of technology base
which becomes an important factor inuenc- (He and Meng, 2015). The net result is a
ing their treatment choices. resource-rich tertiary hospital base that
82 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 6.1 Composition of Total Health Expenditure in China, by facility or provider (percent)

1990 1995 2000 2005 2010 2012
City hospitals County hospitals Township health centers Community and other hospitals
Ambulatory facilities Pharmacies Public health, admin and others

Source: Ministry of Health, 2013.

stands together with poorly-resourced lower level facilities typically attract more spe-
level facilities, a situation that adversely cialists and are better equipped with high-
affects the ability of lower level hospitals to technology devices, patients show a stron-
provide quality medical services and moti- ger preference for seeking even basic care at
vates doctors to seek employment in tertiary these high-level facilities. The net result of
facilities where their income prospects are this choice process is congestion, long wait-
brighter. Patients get directed to higher level ing times, higher marginal cost of produc-
facilities, resulting in an inefficient situa- tion, shorter physician time, more high-tech
tion in which congested higher level facili- diagnostics, and related inefficiency- and
ties co-exist with idle resources in lower- cost-enhancing outcomes.
level hospitals. Unsurprisingly, while the
share of hospitals in total health spending
in China went up from 56 percent in 1990 Recommendations for Realigning
to 63 percent in 2012, the share of township Incentives in the Health System
hospitals fell from 11 percent to 6 percent in China
and the share of ambulatory health facilities
fell from 21 percent to 9 percent during this Financial incentives offered by payers to
period (Figure 6.1). health care providers are a key mechanism
of lowering costs, improving quality of care
Perverse demand-side incentives: In the and directing the production and delivery of
absence of a strong primary care system health services to priority areas determined
and an effective referral system, patients by the principals taking such decisions.
themselves choose the level of hospital from Designing effective incentive programs that
which to seek treatment. Reimbursement can align the varying objectives of the dif-
rates are differentiated across levels with ferent stakeholders in health as well as pre-
lower reimbursement at lower levels (i.e., dict performance of the health system as
secondary lower than tertiary for the same a whole, however, poses a complex chal-
procedure), but the difference is not suf- lenge. It is not surprising, therefore, that
cient to deter patients from bypassing to ter- even though the fundamental issues with
tiary levels, which are perceived to provide the underlying incentives in the healthcare
higher quality care. And nally, since higher system in China are well recognized and
R E A L I G N I N G I N C E N T I V E S I N P U R C H A S I N G A N D P R O V I D E R PAYM E N T ( L E V E R 5) 83

documented, policy makers and adminis- application, Consumer Price Index and price
trators have struggled with making the nec- change of medical materials. The regula-
essary corrections. At the same time, there tions also suggested a global cap on all pay-
have been many local experiments in dif- ment arrangements for different providers. In
ferent parts of China in recent years, which 2012, MOHRSS, NHFPC and MOF issued
merit study and evaluation for possible a policy on global cap of the providers by the
replication. A selection of these is collected basic medical insurances, determined on the
and presented in the recommendations sug- basis of a number of factors, including pre-
gested below. mium collection, fund risk considerations,
price level, and historical utilization of health
care (MOHRSS, 2012). In that same year,
Core Action Area 1: Switch from fee-for-
State Council policy directives mandated that
service as a dominant method of paying
facilities implement payment reforms involv-
providers to capitation, case-mix,
ing global budgets, case-based payments or
including DRGs, and global budgets
per diem payments (NHFPC, Wei Nong Wei
Provider payment reforms in China started Fa no.28, 2012).
over 15 years ago when, in a policy issued Issued over the years, these directives
in 1999, the former Ministry of Labor and have spawned a number of local experi-
Social Security (MOLSS) promoted global ments involving a switch from fee-for-service
budgets, fee-for-service and per diem pay- to global budgeting, capitation, case-based
ment methods for EBMI (MOLSS, 1999). A payment, per diem payment or pay for per-
few years later, the Ministry of Health intro- formance (Box 6.1). The impact of these
duced case-based payment in 7 pilot prov- experiments has been variable, but needs to
inces in 2004 (Ministry of Health, 2004). be systematically evaluated. According to the
But it was only in 2009 when the Communist Ministry of Human Resources and Social
Party of China Central Committee issued Security, the overall direction in China is
an opinion on deepening health reforms and towards Prospective Payment Systems (PPS).2
encouraged payment mechanisms reform Health providers in China receive payments
started in earnest (State Council, 2009). In from three sources: out-of-pocket payments
2011, MOHRSS issued specic policy guide- by patients, who pay on a fee-for-service
lines on provider payment reform, clarifying basis; health insurance payments, gradually
the roadmap for achieving a series of national moving to PPS; and, direct government fund-
requirements: (a) expenditure control, based ing linked to public health goods and input-
on revenue and expenditure projection of the based subsidies. Having a common provider
fund; (b) global budget prepayment for spe- payment mechanism determining the vol-
cic providers, considering institutional char- ume of the rst two of these revenue streams
acteristics and service volume; (c) capitation would give much more power to the positive
for outpatient services; (d) case-based pay- incentivizing effect of prospective payment
ment for inpatient and catastrophic outpatient methods. Further, prospective payments will
services, or per diem payments for inpatient incentivize providers to save and be efcient,
bed-days in areas where case-based payment especially if they are allowed to retain the
or capitation for outpatient care could not be savings. According to government policies,
implemented; and (e) negotiation mechanism providers are allowed to keep the balance,
between insurance funds and providers to especially for NCMS and URBMI schemes,
decide the payment rate (MOHRSS, 2011a, for which it pays the premiums, provided
2011b). The regulations encouraged estab- they can establish reasonable and proper
lishment of reference payment rates for new mechanisms for future expenditures from
payment mechanisms, based on historical these savings (Ren She Bu, No. 70, 2015).
fees, fund affordability and current payment Key actions to scale up prospective payments
policies, and suggested adjustment of the rate to the country level include: (i) evaluate ongo-
based on social economic development, pro- ing reform experiments with prospective pay-
vider service capacity, suitable technology ments and replicate successful efforts in all
84 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

provinces and cities in a systematic manner; dened and applied consistently across the
(ii) switch from fee-for-service to prospec- full continuum of health care production
tive payments for the portion of expenditure and delivery, from primary care to tertiary
that is borne directly by patients; (iii) allow interventions, and are compatible in the sense
providers to retain savings resulting from the that all providers, including hospitals, phy-
switch to prospective payment mechanisms; sicians, and town, community and village
and (iv)put in place mechanisms for concur- health centers face similar types of incentives.
rent evaluation of ongoing and new provider There are different strategies for reorienting
payment reforms. One should note that the incentives, some of which are being tested in
switch from fee-for-service to prospective China (Box 6.1). Key action points required
and more comprehensive provider payment to achieve this vision are: (i) analyze incen-
system would also provide an opportunity to tive mechanisms across different insurance
solve the problem of pricing distortions from schemes within each province to under-
under and over-priced services as economic stand areas of consonance and dissonance;
incentives shift from losing or proting from (ii) based on the results of the analysis,
production of individual service items to ef- develop a strategy for vertical and horizontal
cient resource use to deliver a patient treat- consolidation as necessary; and (iii) establish
ment outcome. a designated unit at central and provincial
Several issues need to be considered when levels to oversee implementation and concur-
pricing the new provider payment methods. rent evaluation.
These often are based on average cost, actual Within the proposed organized networks
costs of individual cases or people may be or alliances for PCIC implementation at the
lower or higher but according to the laws of county and district levels, for example, net-
big numbers should average out. Often the works can receive a prospective global bud-
pricing is relative to a standard unit cost and get based on capitation and involve all rev-
relative weights could be drawn on actual enues, including copayments. The global
cost-accounting in sentinel sites, or using at budget will necessarily entail a hard budget
least initially weights from similar provider constraint along with measures to avoid cost
payment systems from other countries with shifting by providers to patients. The global
overall similar disease burden and socio-eco- budget may be set initially on the basis of
nomic status. Particular challenge in China current spending levels, but have a focus on
is about how to count for continuing partial controlling future spending growth across
supply side subsidies and how to level the the entire network. The global budget can
playing eld between public and non-govern- include a withhold of a predened percent
ment health service providers. Choosing most of funding, which can be paid upon compli-
context appropriate approaches to pricing ance with indicators related to PCIC such as
would require the following systematically quality improvement, integrated care, reduc-
through decision trees and examples will be ing unnecessary care and shifting inappro-
provided in the main report. priate care out of the hospital. This would
require that the network redefine hospital
and primary provider roles and establish for-
Core Action Area 2: Correct and realign
mal linkages. Network management would
incentives within a single, uniform
need to channel incentives to hospitals and
and network-wide design in support
primary care providers through, for example,
of population health, quality and cost
risk-adjusted facility-specic global budgets.
A certain percent of these global budget
Horizontal and vertical consistency and can be withheld and paid upon compliance
coherence, within and across a facility alli- with quality and integration indicators. This
ance or network, increase the likelihood of would be especially important to align incen-
payment mechanisms achieving the desired tives of hospitals with primary care providers
changes in provider behavior. Provider pay- to work together to implement patient cen-
ment mechanisms work best when they are tered integrated care.
R E A L I G N I N G I N C E N T I V E S I N P U R C H A S I N G A N D P R O V I D E R PAYM E N T ( L E V E R 5) 85

BOX 6.1 Examples of provider payment reforms in China

Global Caps Beijing UEBMI pioneered the rst DRG system

Shanghai EBMI switched from fee-for-service to in China in 6 hospitals in 2011, covering 108
global caps in 2003, and introduced mixed meth- groups. An evaluation using hospital discharge
ods, including fee for service, per day payment data from the 6 pilot hospitals and 8 other hos-
for mental diseases and case-based payment for pitals, which continued to use fee-for-service and
diseases or treatment procedures, to make settle- served as controls, found that DRG payment led
ments. Global budget prepayment was adopted to reductions of 6.2 percent and 10.5 percent,
for all providers in 2009. respectively, in health expenditures and out-of-
Hangzhou determines the global budget of single pocket payments by patients per hospital admis-
hospital based on its historical fee claim data, sion. However, hospitals continued to use FFS
institutional level and service characteristic with payments for patients who were older and had
adjustment by ination and policy consideration. more complications.
The profit and loss of the prepaid budget are
shared between EBMI and providers. Per diem payment
Shenzhen (Guangdong Province) pays for inpa-
Capitation tient services by per diem payment. The total
In Zhenjiang (Jiangsu province), capitation is payment is determined by rate per inpatient day
set under the budget cap, and is based on yearly and adjusted inpatient volume calculated as real
treatment costs, including medicines and tests. inpatient volume multiplied by inpatient-outpa-
An incentive rule is set up for primary care pro- tient ratio. The gap between payment rate and
viders and full payment is made only when the real fee (based on fee schedule) is shared.
fee for chronic treatment reaches 70 percent of In Changshu (Jiangsu Province), URBMI has set
the chronic capitation. up specic per diem rate based on disease sever-
Changde city in the Hunan province uses capita- ity, treatment period and institutional level. In
tion for inpatient services even in tertiary hospi- the case of surgeries, the rate varies among pre-
tals. URBMI uses 87 percent of the fund as the surgical hospitalization, surgical procedure and
capitation to providers, and the balance is kept post-surgical care, and decreases when inpatient
as reserve and risk adjustment fund. An evalu- day increases.
ation carried out between 2008 and 2010 nds
that this payment reform reduced inpatient out- Pay for Performance
of-pocket cost by 19.7 percent, out-of-pocket Guizhou Province introduced a salary-plus-bonus
ratio by 9.5 percent, and length of stay by 17.7 payment method for village doctors in lieu of fee
percent. However, total inpatient cost, drug cost for service and removed the incentives for over-
ratio, treatment effect, and patient satisfaction prescribing medications. An evaluation showed
showed little difference between fee-for-service that both outpatient costs and drug spending
and capitation models. fell, but doctors increased non-drug services such
as injections and gained more incentives to refer
Case-based payment patients to hospital care, which in turn increased
In Shanghai, the insurance agency pays the total health care costs.
provider a fixed case rate regardless of actual In Ningxia Province, an intervention targeted at
expenses. An evaluation of the Shanghai experi- primary care providers combined capitation with
ment shows that in order to safeguard prots, pay-for-performance incentives. An evaluation
hospitals engaged in several opportunistic behav- showed that both antibiotic prescriptions and
iors, including reducing length of stay of patients. total outpatient spending declined without major
Hospitals also engaged in cost-shifting tactics by adverse effects on other aspects of care.
raising outlays on uninsured patients to compen-
sate for reduced revenues from insured patients.
Source: Liang Hong et al, 2013; Xiang, 2011; Feng et al, 2014; Liu et al, 2012; Zhang et al, 2014; Gao et al, 2014; Hong, 2011; Zhang, 2010; Jiang et al, 2011;
Zhen Jie, 2009; Yip et al. 2015; Wang et al, 2013; Zhang et al, 2013; Wang et al, 2011; Yip et al. 2014; Jian et al, 2014.
86 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

Another option could be to consider incen- Core Action Area 3: Correct and realign
tive payments outside of the global budget incentives to reverse the current
(e.g., additional funding) that would need to irrational distribution of service by level
be earned. Hospital performance indicators of facilities
can focus on patient safety, quality and ef-
For services that are covered by the social
ciency improvements. Measures of this sort
health insurance system, China may like to
would promote the integration of services
consider setting up reimbursement rates for
across the health system, and would also
specic services according to the cost of pro-
incentivize the network to direct the ow of
ducing and delivering those services at the
patients to the appropriate levels of care. Any
agreed and designated level of care. In other
savings generated by the network could be
words, if a certain service is deemed best
shared by hospitals and primary care provid-
delivered at the district hospital level, and the
ers within that network.
district hospitals have the capacity to deliver,
The Alternative Quality Care Contract in
case-mix adjusted per case rates estimated for
Massachusetts, USA and CareFirst Patient
that level could be applied universally across
Centered Medical Home program in Mary-
the hospital system. If, however, only the
land, USA have successfully implemented
highest tertiary level hospital has the capac-
payment schemes among networks of pro-
ity to deliver that service, then a prospectively
viders to improve quality, reduce waste and
determined case-mix adjusted rate is set and
unnecessary utilization. In January 2009
paid to that hospital but under an agreed
Blue Cross Blue Shield of Massachusetts
ceiling determined by the global budget. For
launched a new payment arrangement called
services not covered by health insurance, the
the Alternative Quality Contract.
payment methods would need to be revised
The contract stipulates a modied global
to have a much closer relationship with costs.
payment (fixed payments for the care of
This is consistent with the policy directive
a patient during a specified time period)
of the government issued in May 2015 that
arrangement. The model differs from past
requires health insurance to cover most of the
models of fixed payments or capitation
medical expenditure, and sets the target for
because it explicitly connects payments to
out-of-pocket payments paid by each patient
achieving quality goals and denes the rate
at below 30 percent by 2017.
of increase for each contract groups bud-
Key actions required to achieve this vision
get over a five-year period, unlike typical
are: (i) determine, standardize and list pro-
annual contracts. All groups participating
cedures at their commensurate level of care
in the Alternative Quality Contract earned
(community, township, county and level 2
signicant quality bonuses in the rst year.
and 3 city hospitals); (ii) reassess copayments
CareFirsts Patient-Centered Medical Home
across different levels and set significantly
Program (PCMH) began in 2011, and
higher deductibles and out-of-pocket pay-
within three years over 80 percent of all pri-
ments for basic procedures that are being
mary care providers in the CareFirst service
demanded at the tertiary level; (iii) strengthen
areaincluding parts of Northern Virginia,
capacity at identied levels; and (iv) develop a
the District of Columbia and Maryland
communication strategy to inform patients of
began to participate in the program. Since
the new pricing mechanism
the program began, CareFirst has seen the
overall rate of increase in medical care spend-
ing for its members slow from an average of Core Action Area 4: Consolidate and
7.5 percent per year, in the ve years preced- strengthen the capacity of insurance
ing the programs launch, to 3.5 percent in agencies so as to equip them to become
2013. In addition, CareFirst members under strategic purchasers
the care of participating PCMH physicians
Integration of the fragmented insurance sys-
fare well when measured on key quality indi-
tem of China could equalize entitlements
cators. Both these programs offer useful les-
for all citizens and allow a powerful single
sons for China.
R E A L I G N I N G I N C E N T I V E S I N P U R C H A S I N G A N D P R O V I D E R PAYM E N T ( L E V E R 5) 87

purchaser to control the behavior of provid- agency conducts performance assessment and
ers. While the pursuit of this vision will at annual settlement within the rst quarter of
some stage require bold decisions about the the following year based on the performance
overall organizational design of the BMI, indicators constructed for the previous year.
local pilots suggests that much progress can These pilots, which suggest the possibility of
be made immediately. Several provinces have de-facto merging of insurance schemes and
successfully merged two or more schemes, provide a possible pathway for bottom-up
most importantly, the URBMI and NCMS. reforms, warrant further review.
Some localities have implemented integra- Further, strengthening managerial capac-
tion of insurance fund services. For example, ity of insurance funds would help them
in Jiulongpo District, a single entity man- become more strategic purchasers of health
ages both EBMI and NCMS (urban-rural services. Strengthening standardized cost
resident BMI), with harmonized benefits accounting systems will help insurance funds
and using the same provider monitoring sys- collect accurate cost information which will
tem. Inpatient services are reimbursed on the facilitate budget planning, benchmarking
basis of a global budget, which accounts for within and across health care institutions,
70 percent of total expenditure of the fund. and monitoring the delivery of services.
Case-based payment and fee-for-service pay-
ments are used for outpatient services, and
account for 10 percent and 20 percent of Notes
total expenditure of the fund respectively.
1. Preliminary data from NHFPC.
At the beginning of each year, the insurance 2. PPS is a term used to refer to several payment
fund signs a contract with each health insti- methodologies for which means of determining
tution, with details related to the settlement insurance reimbursement is based on a prede-
method and standard of performance indica- termined payment regardless of the intensity
tors. The global budget of each health facility of the actual service provided. Common PPS
is settled and paid monthly. The insurance methods include: capitation and DRG.
Strengthening Health Workforce
for People-Centered Integrated
Care (Lever 6)

Introduction income from the sale of prescription drugs

and diagnostic tests are limited. This is fur-
The labor market for health workers in China ther compounded by the headcount quota
has changed profoundly in recent years.1 system that is widely used in the country to
The supply of health workers has increased manage public employees, including health
dramatically in the last 15 years, crossing workers in public institutions. By introduc-
the 7 million mark in 2013. That was due ing rigidities and inefciencies in the recruit-
to a drastic reform in the health-care pro- ment and management of health workers and
fessional education system, with a massive limiting the mobility of health professionals,
expansion of training slots. For example, the such a system distorts the labor market and
number of medical school graduates doubled compromises its ability to deliver quality
between 2003 and 2013, with huge increases healthcare services.
especially in nursing staff (108 percent) and An adequate and well-functioning health
licensed physicians (41 percent). workforce is critical for the implementation
Recent progress in the expansion of medi- and operation of the People-Centered Inte-
cal and nurse workforce notwithstanding, grated Care (PCIC) model. As described in
China faces a host of human resources issues Chapter 2, most of the common features of
related to shortage of qualied staff, unequal this modelsuch as the central role of pri-
distribution between urban and rural areas mary care, focus on continuum of care, risk
as well as between primary health care and stratication and prioritization of population
hospitals, unbalanced skill mix, low com- needs, emphasis on prevention and health
pensation, perverse financial incentives, management, use of multidisciplinary teams
high workload, and a persistent mismatch and the link to community-based and social
between educational investments and labor carerequire rethinking the traditional ways
market demand. At the root of many of these of producing, deploying and managing the
problems is perhaps the level and manner in health workforce. International experiences
which health workers are paid. Additionally, suggest that such a transformation encom-
low salaries discourage doctors from prac- passes a redenition of the scope of practice
ticing at the primary care level and in rural and functions of different categories of health
areas, where the possibilities of augmenting workers, new team compositions, balanced

90 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

distribution of workforce between differ- ratio in China is 1:1. Third, there is a criti-
ent levels of care, improved performance cal shortage in several key specialties, espe-
management system, appropriated incentive cially general practitioners (5.2 percent of
structures and transformation of pre-service all physicians), pediatricians (3.9 percent),
and in-service training. and psychiatrists (0.9 percent). And fourth,
This chapter examines issues related to despite an increase in recent years in the
human resource management in China and number of health workers practicing in rural
proposes a way forward to align the human areas, health professionals are still heavily
resource system to the needs of PCIC. It rst located in cities, the urban-rural doctor ratio
examines the challenges in human resource has widened from 2.05:1 in 2003 to 2:29:1
management in China. Drawing upon expe- in 2013 (3.18:1 to 3.3:1 for nurses) per thou-
riences from within China and OECD coun- sand population. 2 Higher quality health
tries, it then offers a series of actionable workers are still concentrated in urban areas.
recommendations for strengthening human For example, only 6 percent of health work-
resources for a patient centered integrated ers in rural areas have a bachelors degree.3
care delivery model. These imbalances adversely affect the pri-
mary health care workforce, especially since
primary care facilities and poor rural areas
Key Challenges in the Human have difculties in recruiting and retaining
Resource Management in China qualied health professionals. The propor-
tion of primary health workers has declined
Health workforce challenges are a major from more than 40 percent of the total work-
obstacle in Chinas bid to strengthen its pub- force in 2009 to 36 percent in 2013. In addi-
lic and primary health care services (Yip et tion, the majority of primary health workers
al., 2012). Specialists outnumber general in CHC and THC have received only post-
practitioners, and there are very few doc- high school and secondary school train-
tors at the primary health care level. Com- ing, respectively. Lack of qualified health
pensation levels are unattractive, and the professionals at the level of primary health
underlying incentives in physician contracts care, especially in the rural areas, is a major
with hospitals are perverse. The governance reason why patients bypass primary health
structure of the health workforce is charac- services and seek care directly at higher level
terized by the headcount quota system, and facilities.
physician licensing is linked with facilities,
introducing rigidities and limiting mobility. Unattractive compensation levels and per-
Managerial autonomy in hiring health work- verse nancial incentives: A possible expla-
ers at the facility level is low, resulting in a nation for the persistent shortcomings in the
mismatch between stafng needs and avail- primary health workforce in China is that
able skills. We discuss these issues in detail. compensation is not very attractive. Earnings
in the health sectorwhich typically include
Imbalances in workforce composition: a basic salary, performance bonus and hard-
Despite the remarkable increase in the total ship allowance show significant variation
supply of health workers, many challenges with primary health care workers earning
remain in the composition of the health least (Figure 7.1). According to China Labor
workforce. First, less than 36 percent of all Statistics Yearbooks, the average yearly earn-
health professionals in 2013 (only 21 percent ings of urban health professionals were RMB
of nurses) work in primary health, including 63,757 and the earnings of health profession-
township health centers in rural areas and als in other types of organizations (outside
community health centers in urban areas. of SOE and collective economy) were RMB
Second, despite the doubling in total num- 55,138 in year 2014.4 As discussed in Chap-
bers, there is a huge shortage of nursing staff ter 6, health care workers, especially doctors,
across the country. Compared to the OECD then seek additional income from other activ-
average of 2.8 nurses per one physician, the ities, including bonuses based on hospitals
S T R E N G T H E N I N G H E A LT H W O R K F O R C E F O R P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 6 ) 91

FIGURE 7.1 Health Workers Compensation AcrossLevels of Care and Providers, China 2013


61,779 62,330 58,334
47,555 44,657


1. Public 1.1 Urban 1.2 County 2. Primary health 2.1 Urban 2.2 Township health 3. Public health
hospitals hospitals hospitals institutions communities centers institutions

Source: Zhang, 2015.

Blue line: sector average.

overall revenue from services provided al., 2010) and a shortage in the number of
(medical procedures, admissions, etc.); com- clinical internship positions (Daermmich,
missions for prescribing drugs and ordering 2013). Additionally, medical training has
tests; informal payments from patients (red come under criticism due to its focus on clini-
envelops); and private practice (moonlight- cal biomedicine and hospital practice, with
ing) (Yip et al., 2010; Woodhead, 2014). In little exposure to community care or rural
responding to these perverse incentives, phy- practice.
sicians generate demand for their services and There are large variations in compensa-
over-prescribe diagnostic tests and expensive tion levels across levels of care and type of
branded drugs. providers (Fig 7.1). The compensation struc-
This system of incentives, which is a sig- ture favors those working in public hospitals,
nicant source of cost escalation and poor more specifically those in urban, tertiary-
quality of care, has profound implications level public hospitals, as opposed to those in
for the health workforce. Poor public per- primary care settings and in rural areas. The
ception (a third of doctors have experienced average compensation for urban public hos-
conicts), 5 high workload, professional risk pitals is 1.6 times the sector average, while
and low salaries may have taken away the those working in primary health care insti-
attraction of the medical profession. Perverse tutions and township health centers earn 76
payment incentives also discourage doctors and 72 percent respectively of average health
from practicing in primary health care and in workers compensation (Zhang, 2015).
rural areas, where the possibilities of increas- Restrictive headcount quota system: The
ing earnings through prescribing drugs and health workforce management policy frame-
diagnostic tests are limited.6 work in China follows the governance struc-
Quality of medical education has also ture for all public service units, and is cen-
been affected. Medical schools face difcul- tered on the headcount quota system.7 The
ties in attracting students with high scores in headcount quota system, which denes the
the national university entrance exam (gao- total number of personnel assigned for a cer-
kao) and often attract those who did not tain public service unit, is a special human
choose medicine as rst career choice. The resources management arrangement for civil
massive increase in the number of admis- servants and public institutions. Formulated
sions has resulted in a considerably high by the governments Post Establishment
student-teacher ratio (20 to 1 in 2008, Xu et Office, the quota is an important element
92 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

dening budgeting and allocations to public Limited mobility, especially of medical prac-
sector units, including to healthcare provid- titioners: According to Chinese Law for
ers (e.g., hospitals). Only units with quotas Licensed Medical Practitioners, the practice
approved by the Post Establishment Ofce license explicitly specifies the name of the
receive funding from the Finance Bureau. medical facility, category of practice (such as
The headcount quota system also serves as clinical medicine, traditional Chinese medi-
the basis for the Bureau of Human Resources cine, dentist, and public health) and specialty,
and Social Security to allocate employment and health professionals are only allowed
social security benets, such as pensions. to practice according to details specified
The headcount quota system has become in the license. This regulation places strict
an important factor that restricts the efcient restrictions on the mobility of the doctors.
allocation of the health workforce in China. To address this constraint, the government
First, quotas create rigidities in the recruit- launched a pilot multi-practice program in
ment and management of health workers and 2009, which allows physicians to register for
leaves little autonomy to the health facility practice in up to three hospitals/clinics on
managers to manage their own workforce. conditions that none of the facilities has any
The quota system denes the composition of objections, the local health administration
the workforce in a facility in terms of posts, authority approves and the physician enters
grades and professional titles. All posts are into a legal agreement with all health facili-
defined by BHRSS, and the health facility ties with regard to malpractice disputes and
manager has no inuence on the recruitment litigation.8 The main reasons for low partici-
and deployment of the new staff. Second, the pation in this multi-practice program are that
quota system restrains the mobility of the physicians do not have time to spare for addi-
health workforce. It entitles permanent staff tional practices; physicians themselves bear
with afliated social security benets (such the risk in the event of a medical accident
as housing funds, mal-practice insurance, and disputes; and physicians feel constrained
and pensions), which are not transferable. by the current quota based HR management
It, therefore, establishes a tight employment system
relationship between the health facilities
and the health workers. Third, budgeting Lack of managerial and decision-making
and allocation of government subsidy to the autonomy in hiring health workers: All tech-
health facility is based on the quota system nical professionals, managerial staff and
and is not linked to results or performance of logistic supporting staff in health facilities
the facility. are recruited at the government level (local
Health facilities needing to hire workers and provincial) and managed by the local
beyond the quota system do so under their Bureau of Human Resources and Social
own responsibility, which creates additional Security (BHRSS), after which the receiving
incentives for the facilities to generate revenue health institutions establish the employment
to meet the additional labor costs. A recent relationship through a contract that speci-
survey of health facilities in 10 provinces, es the responsibilities, rights and benet of
conducted by the Health Human Resources both parties. The majority of health work-
Development Center and the Shandong Uni- ers in China are employed in public hospi-
versity, found that 15 percent of employees tals, where contracts are strictly regulated by
in community health centers institutions, 11 the government. The management of health
percent in MCH institutions and 8 percent in facilities has little or no input into this pro-
THCs are not quota based. In Yunnan prov- cess, and is unable to denitively match job
ince, for example, the PHC facilities have requirements with candidate skills.9 Further,
employed a large number of temporary health the recruitment thresholds set by BHRSS are
workers due outside of the quota system. In often unrealisticrequiring, for instance,
2013, out of the total of 43,595 health work- at least three qualied applicants, or three
ers in primary health facilities, 13,502 (31 years of college for rural facilities and many
percent) were not quota based. recruitments end up aborted.
S T R E N G T H E N I N G H E A LT H W O R K F O R C E F O R P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 6 ) 93

Recommendations for Moving medical providers. This will require build-

Forward with Human Resources ing a consensus and shared understanding
among government, health providers and
Reform: Lessons from Chinese general public of the centrally important role
and International Experience of primary care, together with hospitals, in
providing continuum of care to the citizens.
Human resources for health are a key compo- Many countries have adapted their health
nent of health systems and play a central role workforce in an effort to strengthen primary
in delivering quality care at affordable prices health care, and offer useful lessons that can
to the population. Issues related to availabil- be applied in the Chinese context.
ity, distribution and performance of health Efforts commonly observed across coun-
workers pose big challenges, and the extant tries that have taken steps to strengthen pri-
literature is rich in country experiences with mary care include expansion of production
different ways of addressing these concerns. capacity (more schools) and improvements in
Several OECD and middle income countries the skill-mix and implementation of multidis-
have made signicant progress in this regard, ciplinary teams.10 In England, for instance,
and their experiences offer important lessons primary care is provided by general practi-
for China. tioners, who work in multi-partner practice
teams typically consisting of 5 or more physi-
Core Action Area 1: Build a strong enabling cians, nurses and administrative staff. Some
environment for the development of primary teams also include district nurses, health
health care workforce to implement Peo- visitors, midwives, community psychiatric
ple-Centered Integrated Care. Key actions nurses, and allied health professionals and
required to achieve this vision include: social workers. All people are required to
(i) establish general practice as a specialty register with a general practitioner, which
(such as Family Medicine), with equivalent offers them the rst point of care. This sys-
status to other medical specialties so as to tem accords a primacy to the general practi-
improve the status of primary health care tioners, who direct patients to specialists and
workforce; (ii) introduce a gate-keeping hospitals. In addition, general practitioners
mechanism to direct patients to primary care get nancial incentives for continuous moni-
providers as rst point of contact, and man- toring of patients with chronic conditions
date this arrangement once the PCIC system (Roland et al, 2012).
is well established; (iii) introduce career devel- In 2003, Canada also adopted measures to
opment prospects to develop and incentivize constitute multidisciplinary primary health
primary health workforce, including separate care teams, and signicantly increased fed-
career pathways for GPs, nurses, mid-level eral and provincial public investments in
workers and community health workers so primary care. Each province designed its
as to enable career progression within pri- own model, in all cases targeting access to
mary health care; and (iv) raise compensa- primary care for at least 50 percent of its
tion of primary health care workers to levels population 24 hours 7 days a week by 2011
commensurate to other prestige specialties in (Marchildon, 2013). In Brazil, expansion of
order to increase recruitment, retention and primary care has been driven by the rapid
motivation of primary health care workers. deployment of the Estrategia de Saude da
PCIC service delivery requires a work- Familia (ESF), which typically has a multi-
force of individual practitioners and teams professional health team and is organized by
that share its values and have the appropri- geographic region to provide primary care
ate competencies, which raises the question to about 1,000 families, which includes full
of the desirable composition of the health time employed community health workers,
workforce to deliver PCIC in China. At the and which are responsible for a range of pri-
center of this effort is the importance of rais- mary health care services (including chronic
ing the status of primary care and according disease management, triage, and child devel-
general practice status equivalent to other opment) and public health efforts (including
94 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

screenings and immunizations). As a result South Africahave been successful in the

of these efforts, the number of family health production and integration of new and alter-
teams multiplied seven-fold, reaching out to native cadres of health workers, especially
more than 60 percent of the countrys popu- non-clinicians physicians, clinical assis-
lation (Gragnolati et al., 2013). tants, assistant doctors, clinical ofcers, and
community health workers. International
Core Action Area 2: Improve workforce experiences demonstrate these cadres can
composition and competency for PHC ser- be as efcient as traditional cadres. China
vice delivery. Key actions required to achieve may like to accelerate the ongoing efforts
this vision include: (i) scale up the standard- to recruit nurses, as the current shortage is
ized training for resident doctors and GPs; signicant. In addition, China may like to
(ii) accelerate ongoing successful efforts to explore the possibility of producing and inte-
increase supply of general practitioners and grating alternative cadres of health workers,
nurses; (iii) reform the curriculum reform especially community health workers.
to upgrade medical training and build new
skills and competencies required for PCIC; Core Action Area 3: Reform the compen-
(iv) improve on-the-job training programs sation system to provide strong incentives
to support competency improvement in cur- for good performance. In general, the of-
rent workforce and build new PHC compe- cial pay of health workers in China is not
tences; and (v) set up alternative cadres of very attractive, in particular at the grass-
health workers (such clinical assistants, assis- roots level and in the rural areas. The health
tant doctors, clinical ofcers and community workers income relies heavily on the rev-
health workers) to strengthen primary health enues they can generate for the hospital as
care delivery. reflected in their salary structure. Accord-
One trend that is seen across several high- ing to the National Annual Financial Report
income countries (England, Australia, U.S., of the Health Sector 2012, the basic salary
Netherlands, Canada and Germany) is that accounted on average for 22.9% of the total
of delivering team-based primary health care compensation, while allowances and per-
through the inclusion of more nurse practi- formance accounted for 20.5% and 56.6%
tioners, registered nurses and other health respectively. The structure is more skewed
staff to work alongside physicians (Freund et when it comes to urban hospitals. A national
al., 2015). In England, strategies to improve salary survey done by NHFPC on the salary
accessibility and quality of primary health of secondary and tertiary urban hospitals
services have included the expansion of the reveals that the basic salary accounts for only
scope of practice of nurses and in the year 1314% of the total salary of health workers
2000, NHS introduced the concept of new in public hospitals. Allowances and subsidies
working practices, a major step towards account for 14 percent and performance-
advanced level of nursing practices. The based pay and bonuses, which are linked to
debate on the expansion of the functions hospital service income, account for a whop-
of nurses went on for more than a decade, ping 74 percent. Although a combination of
and in April 2012 a new legislation came fixed payment with variable performance-
into effect allowing over 20,000 nurses, based payments is desirable, China may like
who have undertaken a specialist degree to revise its compensation system to reduce
level course and hold a separate registered reliance on service revenue-based bonuses
qualification, to prescribe from the same and increase base salary and hardship allow-
list of medicines as doctors within their spe- ances. Key action steps necessary to realize
cialty and competence. The NHS Health and this objective include: (i) increase basic wage
Social Care Act 2012 promotes integrated, level of health workers and the denition of
personalized and proactive care by coordi- the exact level of increase needs to be linked
nating better hospital and community-based to general labor market trends in China
health services, including primary and social to keep the health profession attractive;
care. Several countriesnotably Brazil and (ii) increase the percentage of basic salary
S T R E N G T H E N I N G H E A LT H W O R K F O R C E F O R P E O P L E - C E N T E R E D I N T E G R AT E D C A R E ( L E V E R 6 ) 95

vis--vis performance bonuses in the total Fee-for-service has traditionally been the
income package of the physician; (iii) increase predominant mode of remuneration for most
subsidy for rural and remote health workers; physicians in Canada, but alternate remu-
(iv)introduce/increase non-financial incen- neration methods have been introduced over
tives to attract and retain health workers to the last 10 years. In 2013, the largest cate-
rural and remote areas; and (v) revise the sys- gory of physician remuneration was a mixed
tem of incentives through linking the income method of payment, and the proportion of
with performance assessment which built on physicians being paid predominantly fee-for-
comprehensive performance indicators rather service has fallen from 51 percent in 2004 to
than revenue generation. 38 percent in 2013. Family physicians have a
Recent years have seen remuneration sys- higher rate of blended payments (46 percent)
tems becoming very complex globally, espe- than specialists (37 percent) (National Physi-
cially as countries experiment with innova- cian Survey, 2013). Wranik and Durier-Copp
tive payment methods to find new ways of (2010) reports that blended payments in Can-
incentivizing health workers. As a result of ada have been associated with some positive
this continuous trial process, countries typi- effects on preventive care, collaboration and
cally adopt a combination of payment meth- recruitment and retention in provinces with
ods, including salary, fee-for-service, capita- low population density. At the same time,
tion, performance bonuses and so on. For the new payment methods are raising costs
example, in countries where the compensa- and putting pressures on the nancial capac-
tion method was primarily fee-for-service, ity of the countrys health system. Physician
elements such as salaries (Canada), capitation incomes in Canada have increased substan-
fee (Belgium, France), performance (France) tially in the last decade (to four and a half
and integrated fees (Belgium and Denmark) times that of an average salary in Canada),
are being introduced as additional payments. aided by the collective bargaining model that
In countries where general practitioners were has put pressure on provinces to continually
traditionally salaried, capitation and fee-for- increase compensation. Public support has
service are being added (Sweden, Finland). guided the relative strength of the different
Countries like Australia, Canada and the parties in the collective bargaining process in
UK are including incentives within reim- Canada over the years (Ontario, for example,
bursement schemes for general practices to has been able to freeze remuneration for doc-
encourage them to employ nurses to deliver tors due to the shift in public support), but
primary care. Another trend seen in many doctors have generally been able to success-
countries in Europe is that of contracting fully negotiate higher wages at times when
general practitioners as entrepreneurs, with the public felt that doctor shortages created
remuneration topped up through various pay- long waiting times.
for-performance incentives (Kringos et al.,
2013). This has resulted in a surge of prac- Core Action Area 4: Reform the headcount
tices run as partnerships of several physicians quota system so as to enable a more flex-
or by private companies. Similar experiments ible health labor market and efcient health
are being carried out in Australia where, due workforce management. The headcount
to inherent weaknesses in the fee-for-service quota system leads to inefficiencies in the
payment scheme for general practice, the management of the Chinese health work-
government introduced a Practice Incen- force, and should be replaced with different
tives Payment program in 1998. This pay- HR management policies that are consis-
for-performance scheme provides incentives tent with broad health sector reform trends
around three areas: quality of care, capacity including increasing hospital autonomy,
strengthening, and support in rural areas. increasing health labor market mobility and
The quality of care component provides performance/results based nancing policy.
incentive payments for diabetes care, cervical Chinese government is aware of this issue
screening, asthma care, and for indigenous and is taking action to reform the system.
health (Cashin et al, 2014). The reform would require at least four sets
96 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

of related actions. First, health facility man- Notes

agers would need to be given the necessary
autonomy on human resources issues and 1. Following WHO (2006), the category of health
be left to manage their staff on the basis workers, or health human resources, include
of the post rather than quota. The distinc- physicians, nurses, midwives, dentists, allied
tion between staff occupying a quota or a health professions, community health work-
ers, social health workers and other health care
non-quota position would need to be done
providers, as well as health management and
away with. Every staff could be dened by a
support personnel who may not deliver services
standardized labor contract with the health directly but are essential to effective health sys-
facility, which describes the responsibility, tem functioning, including health services man-
the scope and the accountability of the post. agers, medical records and health information
China may consider giving facility manag- technicians, health economists, health supply
ers greater authority and responsibility for chain managers, medical secretaries, and others.
post-based recruitment, post-based deploy- 2. China Health Statistics Yearbook 2004 and
ment, post-based evaluation, post-based sal- 2014.
ary setting and post-based training. Second, 3. Overall, only 28.6 percent of all health pro-
in order to increase the mobility of health fessionals in China have university or higher
degree (more than 5 years medical education).
workers, China may like to consider delink-
The largest share (38.8 percent) has only three
ing licenses from health facilities. The dual
years junior college education.
practice policy has already paved the way for 4. Table 3-1 employment and income of urban sec-
this transition. In Guangdong province, for tors, and Table 6-1 employment and income of
instance, the dual practice policy does not other types of organizations, 2015, China Labor
restrain the number of many facilities with Statistics Yearbook, China Statistics Press.
which physicians can work, as long as they 5. There were 17,243 incidents of violence against
can reach agreements with different facili- medical staff in 2010.
ties. However, this is not the practice for the 6. In addition, based on China Health Work-
whole country, and is only applied to phy- force Development Report, from year 2006
sicians at middle level and beyond. Third, to 2010, there are totally 3.9 million medical
graduates, and the total recruitment in health
China may like to delink employment ben-
sector is 2.3 million, roughly 60%.
ets of health workers from the quota as well
7. The headcount quota system was created in
as from health facilities, a process that has 1956, when the working committee of head-
already started with the delinking of pen- count of the State Council and the Ministry of
sions as part of recent reforms. Likewise, Health jointly issued a policy directive Prin-
China may like to consider offering hous- ciples of Headcount management for Hospitals
ing funds and mal-practice insurance to all and Outpatient clinics.
contracted health workers. Finally, the gov- 8. Notication on Pilot of Physicians Dual Prac-
ernment should adopt different approaches tice. MoH 2009 (No. 86).
to providing subsidies to health facilities, 9. Hospital autonomy is taken up in more detail
moving away from quota based budgeting to in Chapter 5.
10. As mentioned in Chapter 2, functioning mul-
output or outcome based budgeting, linking
tidisciplinary teams is a core design element
government financial subsidy with perfor-
of PCIC.
mance targets and priority activities set by
the government for the health facilities. Only
to take a series of reforms mentioned above,
can the healthcare system to ensure stable
development, and then cancel of the obstacle
quota system in the end.
Strengthening Private
Sector Engagement in
Production and Delivery of
Health Services (Lever 7)

Introduction position of private participation in health-

care, following which the pace and scope of
The healthcare system in China has moved private investment in the health sector began
from an exclusively state-run system to one increasing dramatically. State Council policy
that is decentralized and open to private sec-
directives issued in 2015 (Guo Ban Fa, Nos.
tor investment and service provision. While
14, 33, 45) further encourages private partici-
the foundations for private participation in
pation in the health sector in terms of provid-
the production, financing and delivery of
ing diagnostic, general and specialized health
health goods and services were undoubtedly
services, fostering fair competition with
laid during the early days of liberalization of
public facilities such as relaxing entry barri-
the economy in the 1970s, it was not until
1990s, following an explicit statement from ers, and facilitating investments in hospitals
the Ministry of Health relaxing the rules for and other facilities. Directives also encour-
investment in healthcare industry, that pri- aged investment in and formation of non-
vate players began looking at the health sec- prot health care organizations.
tor seriously. What followed was a period of Today there are over ten thousand private
restrained experimentation, as both the pri- hospitals in China, which together account
vate sector as well as the government began for 42 percent of all hospitals in the country,
exploring the evolving landscape, including up from 17 percent in 2005 and 3 percent in
ways of nudging it closer to their interpreta- 1990s (Figure 8.1). Signicantly, private pri-
tion of the future of healthcare in China. The mary care facilities have grown considerably
year 2000 marked another step in this direc- in recent years and represent nearly half of
tion, with the government allowing up to all such unit in 2012 (Figure 8.2). However,
70 percent foreign holding in private health- most private hospitals are small (96 percent
care investments in the country. Since the have less than 100 beds) and in 2012 pri-
onset of the 2009 reforms, policy directives vate beds accounted for about 14 percent
afrming the role of private capital in devel- of total beds. While admissions are increas-
oping healthcare rmly sealed the place and ing, they represented only 11 percent of total

98 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 8.1 Growth in Hospitals by Ownership

16000 15483
14309 13850
14000 13384
6000 5096
4000 2971 3383
1341 1972
2005 2008 2010 2012
Public Private not-for-profit (PNFP) Private for-profit (PFP)

FIGURE 8.2 Growth in PHC Facilities by Ownership (20052012)


500000 485113 475544


225949 220462
214833 216614

2005 2008 2010 2012
Public Private not-for-profit (PNFP) Private for-profit (PFP)

FIGURE 8.3 Growth of Hospital Admissions by Ownership, 20052012 (in 10,000)

12000 11331

10000 9708
8000 7810
6000 5270

222294 315361 358441 499549 666730
30 170 80 206 129259
2005 2006 2007 2008 2009 2010 2011 2012
Public Private not-for-profit (PNFP) Private for-profit (PFP)
S T R E N G T H E N I N G P R I VAT E S E C TO R E N G AG E M E N T ( L E V E R 7) 99

FIGURE 8.4 Growth of Outpatients Visits by Ownership, 20052012 (in 10,000)















2005 2006 2007 2008 2009 2010 2011 2012
Public Private not-for-profit (PNFP) Private for-profit (PFP)

admissions in 2012 (Figure 8.3) and 10 per- This chapter examines issues related
cent of outpatient visits (Figure 8.4). to private investment in the health sector
The rapid rise of the private sector in in China, and proposes a way forward to
healthcare poses many opportunities and strengthen private engagement in healthcare
challenges for the government, investors and production and delivery. It rst assesses the
the people of China. Limited in size but rap- challenges that the country faces in dealing
idly growing in market share, private invest- with private enterprise in healthcare. Draw-
ment is set to transform the health market ing upon experiences from within China and
in China. Occupying a space created by OECD countries, it then offers a series of
the over-worked and crowded public sys- actionable recommendations for strengthen-
tem, the private sector offers alternatives ing private sector participation and engage-
to those seeking more and better medical ment in healthcare.
products and services. However, despite
central policies encouraging greater collabo-
ration between public and private sectors, Key Challenges
many local governments continue to focus Even though laws and regulations in China
their service planning and public nancing encourage private capital investment in the
on public service providers, effectively seg- health sector, private providers still face many
menting the market for the private sector for challenges entering the health market at the
services targeting the wealthy and specialty local level. Despite the acceleration in recent
facilities mostly offering elective services. At years in the pace and scope of policies promot-
the same time, the development of a health- ing private healthcare production and deliv-
care delivery system linked to prot-making ery, there continues to be no unied vision for
enterprises is raising ethical, legal, economic, the role of private providers in improving ser-
and political issues. Whether guided by con- vice delivery or contributing to national health
cerns about restraining unorthodox prac- objectives, and consensus has yet to be formed
titioners or inuenced by debates appropri- across government agencies on whether the
ate nancial arrangements, the continuing private sector should be complementary,
development of private healthcare enterprise supplementary or integral to the public deliv-
in China is being watched very closely by all ery system. Given the decentralized nature of
stakeholders. regulation, licensing a private facility varies
100 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

signicantly, and in many localities remains Similar varied interpretations have been made
cumbersome, unpredictable and costly, and in public purchasing of health services from
criteria governing eligibility for social health private providers, where reimbursement rates
insurance are vague. Quantity targets have are selectively tied to the class of the medical
spurred private sector growth in ways not institution (as in Yunnan) and budget caps
consistent with national health objectives. are adopted, implicitly favoring incumbent
Using private sector expansion to address key market participants, usually public hospitals,
health sector priorities needs to be strength- over newer entrants. Another area where dif-
ened, such as greater access to healthcare in ferences are observed across regions relates
poorer regions, or complement government to tax obligations of not-for-prot healthcare
efforts in priority areas like rehabilitation, providers. Despite a spate of preferential poli-
elderly care, and integrated management of cies encouraging the development of the pri-
non-communicable diseases. Provinces seek to vate sector, both Yunnan and Hunan collect
attract private capital to remote rural areas or enterprise income taxes from non-prot medi-
new peri-urban areas not already well-served cal institutions, while the local governments
by government providers, whereas private cap- of Beijing, Shanghai and Guangdong do not.
ital demonstrates an inclination to stay in cit-
ies where medical resources are already plenti- Shortcomings in the regulatory framework
ful. We discuss these issues in detail. overseeing private sector development: The
private sector requires a well-functioning
Developing a shared vision of the private sec- governmental stewardship mechanism in
tor role: The central government has enacted order to grow, one that has the capacity of
a rich set of national policies regarding pri- monitoring (and shutting down, as neces-
vate sector engagement, yet there are differ- sary) facilities seen to be endangering patient
ing interpretations of these policies by pro- safety or defrauding social health insurance.
vincial and municipal governments, among Regulatory frameworks for accountability
government agencies and between the pub- and quality assurance, however, exhibit wide
lic and private health sectors on the role of local variations and are not uniformly strong.
the private sector in contributing to national It is widely believed that private providers are
health objectives. From an implementation more likely than their public counterparts to
perspective the policy direction is unclear. engage in false advertising, over-treatment,
The focus of the private sectors contribu- or fraudulent billing practices, and unsur-
tion to health has multiple interpretations; it prisingly, the private health sector in China
is unclear whether the private sector should does not have a good reputation with health
be an integral part of the health sector, offer- consumers. Even though some private sec-
ing primary and secondary services alike, or tor providers have overcome this perception
conned only to high-end hospital services. and have established a reputation of higher
Another area of ambiguity relates to target quality than public hospitals (such as UFH
areas that could be best served by the private in Beijing and Shanghai), and some have
sector, which favors urban settings over the achieved high operational efciency (such as
under-served rural and remote areas to which Aier Eye and Wuhan Asia Heart hospitals),
they are directed by provincial governments. this impression is not likely to change very
As suggested above, provinces exercise a soon, given the limited capacity within the
very broad and flexible range of options to government of monitoring and sanctioning
promote (or constrain) private investment. low-quality or unqualied providers.
Regulations and guidelines are in place at the Further, there is limited capacity in China
national level, but implementation varies from to engage the private sector in policy discus-
one health authority to the next (Brixi, H et sions and there are almost no direct interac-
al., 2013). For example, some places such as tions between policy makers and private pro-
Kunming encourage ownership conversion viders. It is not in the NHFPCs experience
without necessarily having strong mecha- and training to involve the private sector to
nisms in place to prevent loss of state assets. design policies that will directly influence
S T R E N G T H E N I N G P R I VAT E S E C TO R E N G AG E M E N T ( L E V E R 7) 101

them or to design regulations and procedures for consolidation of nances across afliates,
that will facilitate the private sector (Brixi, allowing the private business to offset tax
H et al, 2013). Relationships between pub- liability.
lic and private providers are still marked by
legacies of the old regime, with vestiges of Uneven implementation of latest reforms
mistrust of the private sector (Gu, 2006). aimed at allowing doctors to practice at
multiple facilities: Government policies and
Difcult market entry: Private sector growth practices tend to put the private healthcare
in health sector still faces constraints in industry at a disadvantage relative to the pub-
China, in particular compared to other sec- lic sector and affect their ability to compete
tors. It is difcult to recruit qualied health- fairly in the marketplace. One huge problem
care professionals (Gu and Zhang, 2006) until recently was access to human resources,
because implicit public sector monopoly on with physicians responding to the require-
health professionals. It is not an easy task ment of registering and working in only one
in many localities to open up a private facil- facility by opting to work in public hospi-
ity. Private providers have to deal with mul- tals, which offered them a known and stable
tiple agencies, le several reports and make career track. Professional recognition, career
multiple payments in order to become fully development, salary compensation and pen-
licensed with all the different authorities. sion benets were all linked to the physicians
Opening a new facility, especially if foreign employment contract with a specic (usually
investors are involved, requires approval from public) health facility. Out-of-date profes-
local health authority and NHFPC for facil- sional and malpractice liability is another
ity license; from the Ministry of Commerce, factor constraining labor movement between
the National Development and Reform Com- the sectors. Few private insurance companies
mission, the State General Bureau of Indus- offer limited liability insurance. Physicians
try and Commerce for business license, and and other health workers are therefore reluc-
registration with the State General Bureau of tant to move the private sector where there is
Tax (Glucksman and Lipson, 2010). There no safety net against malpractice (Table 8.1).
are few incentives for health entrepreneurs But the latest reforms allowing doctors to
to expand their operations, whether in the practice at multiple facilities, including private
same city or in a different geographic loca- hospitals, are making the best doctors more
tion (Ramesh, Wu et al., 2014). Focus groups mobile and easier to recruit. Provincial gov-
with private owners conducted by the joint ernments have already begun to experiment
study suggested these situations. with multi-site license policies, but imple-
mentation varies. Guangdong and Fujian, for
Inconsistent tax policies. Policy objective of example, have adopted a pioneering set of
increased private health sector participation reforms, while Qinghai, a poorer province in
requires consistent and transparent tax poli- Western Chinawith low population density,
cies. It would be important to clarify whether has yet to implement the new multi-site prac-
the private health sector should enjoy the tice policy and its private healthcare industry
same preferential tax treatment as other continues to face human resource shortages.
industrial sectors; whether there is a contra-
diction between health listed as an essential Uneven implementation of latest reforms
service and tax policies similar to other com- lifting restrictions on reimbursements of
mercial industries; how to tax not-for-prot social health insurance to private hospitals:
and for-prot private health sector providers; Private hospitals face reimbursement restric-
be clear whether to tax service inputs or out- tions from social health insurance, which
puts to avoid duplication (e.g. private has to gives preferential treatment to public facili-
pay 17 percent VAT on importation of health ties. In many cities, private enterprises are
equipment and may be taxed the second just not eligible to join the hospital networks
time for the serviced provided with the same covered by public health insurance, and in
equipment as well. There is also prohibition cities where it can, the reimbursement rates
102 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

TABLE 8.1 Percent of Health Workers in Private Facilities by Type

Total Number
Health Cadre % Private
(Unit 10,000)

Physician 261.6 18.5

Nurse 249.7 13.7

Pharmacist 37.7 13.6

Technician 36.4 11.8

Other 81.5 12.0

Village Physician 109.4 37.3

Other Technicians 31.9 11.7

Administrative 37.3 15.0

Logistics 65.4 15.4

Total 910.9 17.8

are below what is awarded to public hospi- Core Action Area 1: Develop a clear and
tals. The limited insurance funds are first shared vision on the private sectors
directed toward public facilities, and private potential contribution to health
enterprises are included only if there is money system goals
left over. The latest reforms are also changing
this practice, as more and more private hos- Specific strategies to secure this vision
pitals are now being considered for inclusion include: (i) identify areas where the private
in public health insurance networks on the sector can contribute most effectively; (ii) in
same terms as public hospitals. keeping with the focus on quality develop-
ment as against quantity growth, move away
from quantity targets for private sector mar-
Recommendations for ket share and instead employ a combination
Strengthening Private Sector of supportive policies and regulatory struc-
Engagement in Production and tures that level the playing eld with govern-
Delivery of Health Services: ment-owned providers and assure alignment
Lessons from Chinese and with health system goals; (iii) endorse the
shared vision and articulation publicly and
International Experience communicate widely; and (iv) formalize the
Chinas healthcare sector is moving rap- engagement process by drafting guidelines
idly to keep pace with increasing demand for Provincial Leadership Groups to imple-
for health goods and services spurred on by ment according to local conditions.
rising incomes and population aging. Non- A clear articulation of the role and posi-
public healthcare is being encouraged and tion of private enterprise in the health care
conditions for private capital investments are system in China is critical, both to send an
being eased. Reforms started in 1997 have unambiguous message to the industry as well
been accorded an urgency in the 12th Five as to allay any ethical or ideological concerns
Year Plan, which in 2012 proposed a sig- that may be lingering in any section of the
nicant role for the private sector in health- government or society. This vision should be
care. China can draw many lessons during widely communicated to all stakeholders and
this process of reform from the experience publicly endorsed. Central to this articulation
of OECD countries that have gone through are clear enunciations of preferred forms of
similar phases of reconciling expectations, commercial organization (for-profit versus
policies, ideologies and actions. not-for-profit) and the areas where private
S T R E N G T H E N I N G P R I VAT E S E C TO R E N G AG E M E N T ( L E V E R 7) 103

participation is most sought (outpatient ver- services, etc.) is characterized by well-estab-

sus inpatient care). lished quality criteria, which makes it readily
In most OECD countries, the government contractible and open to competition. These
plays a larger role in health care financing characteristics do not apply to all inpatient
(averaging 75 percent) than in service delivery services and accordingly the share of private
(averaging 35 percent as measured by share provision is comparatively lower in this sub-
of inpatient beds and licensed medical pro- sector in OECD countries. Outpatient spe-
fessionals). Yet, these countries offer a rich cialist services tend to fall in-between, with
tapestry of examples of different commercial more public ownership compared to primary
organizational forms of private enterprise care services, and with policies deployed
in the health sector. In many countries with which constrain operation more than pri-
relatively large private hospital sectors (Bel- mary care, but less than hospitals.
gium, France, Germany, Netherlands and the It is important that China decides and
United States), private-not-for-prot hospi- states its preferences for select forms and sub-
tals dominate. In Germany, for example, 48 sectors in the health sector where it would
percent of inpatient beds in 2013 were pub- like private enterprise to focus. This clarity
lic, 34 percent private not-for-prot and 18 will help the capital markets as well as subna-
private for prot (OECD Health Statistics, tional governments, both of which can then
2014). Some countries, such as Canada and develop appropriate supervisory and regu-
the Netherlands, only permit not-for-prot latory mechanisms to guide the private sec-
hospitals in the private sector. These different tor in ways that best complement the exist-
proportions of not-for-prot and for-prot ing public system of health production and
hospitals arise in part from differing histori- delivery.
cal trajectories and in part from a perceived
policy trade-off between capital mobiliza-
Core Action Area 2: Strengthen key
tion (easiest with corporate for-prot entry)
regulations and enforcement capacity
and incentive alignment (since corporate
to steer the production and delivery of
for-prot entities incentives may predispose
health services toward social goals
them to more frequent opportunistic behav-
ior unless a rigorous regulation framework While private provision is widespread in
is in place and enforced). It is worth noting OECD health systems, providers do not
that no OECD country has used quantitative operate in totally free markets. Instead, gov-
targets to expand the private sector, but has ernments use a range of policy tools to cre-
rather employed a combination of supportive ate governance regimes to inuence service
policies and regulatory structures that level providers to achieve critical goals related to
the playing field with government-owned health care delivery, such as access, finan-
providers and assure alignment with health cial protection, efciency, and cost contain-
system goals. ment. China may also consider introducing
Likewise, OECD countries also offer a lot strong and effective regulatory mechanisms
of examples that can be used to inform the to oversee the provision of health services in
preferred sub-sector concentration of private the country, whether delivered by the public
providers in health. In most OECD countries, sector or by private enterprises.
private service provision plays a strong role in Strategies to strengthen key regulations
healthcare deliverymore so in certain sub- and enforcement capacity include: (i) conduct
sectors, such as primary care, than in other a systematic review of existing regulations
sub-sectors, such as hospital services. Private to harmonize and eliminate out of date and
providers deliver a large share of services in inconsistent regulations; (ii) review the cur-
outpatient care, where services are delivered rent institutional framework and empower
by independently licensed physicians who with skills and resources needed to govern a
contract with the government or the social mixed health system with both public and pri-
insurance system. This sub-sector (and oth- vate participants; (iii) based on these reviews,
ers such as retail pharmacies, laboratory adopt policies and regulatory measures to
104 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

guide private sector engagement and minimize behavior of non-profit organizations (both
risks associated with growth of poor quality public and private); this is sometimes referred
private providers; (iii) implement guidelines for to as a form of trust-based governance. For-
key regulatory functions; and (iv) strengthen prot hospital services are only lightly regu-
regulatory capacity at different levels of the lated, since they do not have contractual
government through training provincial and relationships with funding bodies and are
municipal governments in indirect manage- therefore exempt from the regulatory provi-
ment of mixed (public and private) health sys- sions ensuring equal distribution, access and
tems, tools of government, and the new regu- nancial sustainability (Busse et al. 2004).
lations and implementation guidelines; and In France, Germany and Switzerland, on
allocate sufcient resources for enforcement. the other hand, the core provider network
Regulating hospital services poses a set consists of public, non-prot, and for-prot
of challenges quite different from regulating hospitals, all of which operate under the
outpatient services. In contrast with primary same governance regime. Hospitals are rela-
care, where the entrepreneurial element of tively independent, and corporate (for prot)
primary care provision is well-accepted across hospitals may deliver a substantial share of
many countries, profit-orientation among services. The governance regime reects the
hospitals remains the subject of considerable need to guide and constrain entrepreneurial
analysis and debate because hospital services behavior, and uses a mechanism for man-
are inherently harder to measure, and there- aging capacity development (services and
fore harder to purchase wisely and regulate infrastructure) that works with providers of
(Preker et al, 2000). Moreover, corporate all ownership types (Ettelt et al. 2008). This
ownership, which is much more common allows health agencies to ensure equitable
among hospitals than primary care practices, access, and gives private hospitals a degree of
intensifies the profit-focus. Undoubtedly, certainty over expected volume of demand.
these concerns contribute to the relatively lim- Such systems also have well-established insti-
ited private ownership in hospitals in OECD tutional contracting processes that provide
countries relative to primary care. In addition, the core platform for specifying providers
in countries with signicant private hospital obligations and resolving compliance issues.
activity, non-prot organizations dominate. In New South Wales in Australia, the
Nevertheless, only a relatively small number Ministry of Health is the regulatory author-
of countries (e.g., Iceland, New Zealand and ity for privately owned and operated private
Denmark) limit the core hospital network to health facilities across the state. Guided by
government-owned hospitals (OECD, 2014). the Private Health Facilities Act of 2007, the
OECD countries offer examples of differ- regulation focuses on maintaining appropri-
ent kinds of diverse ownerships and organiza- ate and consistent standards of health care
tional structures, which offer useful illustra- and professional practice in private health
tions for China. In Canada and Netherlands, facilities, and planning for and providing
for example, the core hospital network con- comprehensive, balanced and coordinated
sists of non-prot and public hospitals, and health services throughout the state. The
any for-prot hospital activity is outside that legislation also sets requirements for licens-
network and subject to a distinct governance ing including the minimum standards for
regime. This arrangement uses ownership the provision of safe, appropriate and qual-
restrictions to constrain the intensity of hos- ity health care for patients in private health
pitals focus on generating revenue, implicitly facilities. Standards are also prescribed with
relying on a degree of alignment between respect to safety, care or quality of life of
hospital managements objectives and those patients at private health facilities.
of public ofcials. For-prot private hospitals Outpatient care in countries such as Chile,
that operate in these countries are excluded Finland, Hungary, Iceland, Israel, Mexico,
from social insurance reimbursement. The Portugal, Slovenia, Spain, and Turkey, is pro-
policy tools used to guide the core network vided mainly through public clinics. In these
are designed and implemented to guide the countries, salaried health personnel work
S T R E N G T H E N I N G P R I VAT E S E C TO R E N G AG E M E N T ( L E V E R 7) 105

in public clinics organized as multispecialty the following specic action items: (i) issue
polyclinics that typically deliver primary care clear guidance on private sector planning,
services. Health care policy goals in such set- entry requirements, justification for tax
tings are pursued through the management exempt status, surplus use, and other com-
of the public networkalso referred to as the munity service requirements; (ii) identify
direct delivery policy tool. and remove access barriers related to health
In Denmark, primary care practitioners professionals, land use, equipment purchas-
must obtain a license to practice from the ing and professional title appraisal; and (iii)
Health and Medicines Authority, which is introduce equal contracting standards and
part of the MOH. There are also a number payment principles for both public and pri-
of social regulations at play that inuence the vate providers.
how professionals practice care. All practi- Licensing a private health facility in
tioners belong to the General Practitioners China remains variable and costly compared
Association, which along with the College of with public facilities, and to a large extent
General Practice continuously develops and depends on the whims and will of local gov-
updates guidelines and distributes them to all ernment ofcials. China may consider pro-
primary care practitioners. The Quality Unit viding clearer guidance to provincial gov-
of General Practice, a joint body between the ernments on private sector planning, entry
Association of Regions and the General Prac- requirements, justification for tax exempt
titioners Association, coordinates quality status, surplus use, and other community
development activities and establish practice service requirements should be provided,
quality standards, which members must fol- and strictly monitoring its enforcement.
low. Members, in turn, must submit quality Additionally, China may like to continuously
data to the Quality Unit of General Practice, reform policies and regulations to ensure the
as well as conduct standardized user surveys private sector of treatment similar to pub-
and submit the resulting data. lic institutions in such aspects as land use,
OECD countries have encountered chal- equipment purchasing, and professional title
lenges in constructing an effective policy appraisal.
and regulatory structure governing a mixed- Further, China may consider lifting the
ownership health service delivery system. remaining restrictions, in policy and practice,
Early initiatives experimenting with own- on allowing doctors to practice at multiple
ership conversions sometimes led to less- facilities so that they are mobile and the labor
than-satisfactory results. The establishment market works. There are many examples
of an effective governance regime for a par- from within China that could be elaborated,
ticular sub-sector is a long-term process that especially from provinces such as Guangdong
requires constant monitoring and tinkering of and Fujian, which have been pioneers in this
reforms. Policy initiatives that expand private eld.
activity in OECD countries invariably involve And nally, China may wish to ensure fair
considerable effort to build and strengthen and even implementation across all regions of
policies and processes for indirectly gov- the recent reforms lifting restrictions on reim-
erning health care service provision. bursing private facilities from social health
insurance, so that they can participate in the
same space as public facilities and provide
Core Action Area 3: Establish a level
health services to the same clientele. Equal
playing field across public and private
contracting standards and payment prin-
providers so as to promote active
ciples for both public and private providers
private sector engagement
are necessary to establish a level playing eld,
Leveling the playing eld across public and one in which both public and private sector
private providers of health services entails health providers can grow.
Modernizing Health
Service Planning to Guide
Investment (Lever 8)

Introduction 23.6 percent in 20112013, and is expected

to exceed RMB 4 trillion in 2017. Fueling
The health sector in China is growing rap- this growth are the huge capital investments
idly. Industry analysts predict it will exceed in the hospital sector, which have made
US$ 1 trillion and constitute over 7 per- the system increasingly top heavy and have
cent of the countrys GDP by 2020, which contributed to further escalating costs. As
would triple 2010 levels and make it the sec- mentioned in Chapter 1, patients tend to go
ond largest healthcare market in the world, directly to hospitals even for outpatient care
behind the United States (Le Deu Franck et (around 53 percent of patients have their
al., 2012; EIU, 2015). Annual capital invest- rst contact with the system at a hospital),
ment in the health sector will potentially and there is no gatekeeping at lower levels.
reach $50 billion within the same time frame. Since 2005, bed-per-population ratios have
The question of value-for-money with these increased by 56 percent and admission rates
resourcesimportant even at existing lev- have more than doubled, to levels that are
elswill become fundamental, especially as higher than most middle-income countries
the country progresses towards its commit- and approaching OECD averages. This trend
ment of affordable, equitable and effective toward more hospital beds and admissions in
health care for all by 2020. China is exactly opposite to global directions,
Within the health sector in China, over which are stimulating greater outpatient care
half of the first contacts with the health delivered at the primary health care level. A
care delivery system for an illness occur in key aim of service delivery reform will be to
hospitals, which consume over 70 percent ensure that capital investments reinforce the
of the countrys health spending according development of PCIC and that the population
to the China Health Statistical Yearbook, can obtain access to affordable health care at
2013. Unsurprisingly, the hospital industry the right place and at the right time.
has developed rapidly in recent years, with This chapter examines capital planning
the number of inpatient discharges grow- strategies in China and in selected OECD
ing 12 percent per annum (Guo Ban Fa, No. countries, and proposes a framework to
14, 2015). In keeping with this trend, hospi- introduce modern service planning tech-
tal revenue has grown at an annual rate of niques in the capital investment planning

108 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

BOX 9.1 Distinguishing Features of an Effective Service Planning Approach

Needs based planning linked to specific health Increased proportion of outpatient care, including
challenges PHC, day surgeries and day hospitals
Long-term perspective by using demographic, epi- Increase in general hospitals with fewer mono-pro-
demiological and urban development plans le facilities
Balance in real demand and supply Use of spatial analysis with GIS to ensure access;
Integrated networks delivering services required by Integrated perspectives in terms of buildings, people
catchment populations and technology
Capital Expenditure (CAPEX) allocations to prov- Use of private sector as partner in reaching health
inces correct for equity and level of deprivation goals
Source: Authors own elaborations.

process. It rst examines the challenges in unfavorably with the OECD average of 7
the current capital investment planning prac- percent (OECD 2015) but is higher than the
tice in China. Drawing upon experiences European average of 26 percent (Rechel
from within China and OECD countries, it et al, 2010). However, each yuan invested
then offers a series of actionable recommen- in capital also determines future recurrent
dations for moving toward an investment expenditure allocations, which further exac-
model that is more closely aligned with the erbates the fact that already more than 65
service needs of the population served by the percent of total public spending is directed
health system. to hospitals. In comparison, OECD levels
are predominantly below 50 percent. Fur-
thermore, the ratio of beds to population
Key Capital Investment has already exceeded the OECD rate in most
Challenges in the Health Sector provinces. In the last decade, the number of
in China hospitals increased by 50 percent and the
number of beds nationwide doubled. While
Two key problems that characterize Chinas these levels of investments in hospitals may
current capital investment planning (CIP) have been necessary to meet unmet demand
model are: rst, lack of investment planning, and growing population needs, continued
which contributes to super scaling of invest- expansion can have serioius fiscal implca-
ments particularly at the hospital level; and tions for the health sector in the near furure.
second, within this expenditure, the focus on Addressing these problems calls for a shift
construction related to the expansion of the in ways in which capital investment is planned
capacity in the network rather than deepen- in the health sector in China. The traditional
ing the capacity of the existing infrastructure input-based planning system, in which deci-
to better meet the populations health needs. sions are not based on actual demand but are
With disproportionate expansion of hospital driven by high-level macro standards, has to
infrastructure in urban areas, the net result give way to an approach that considers the
is a hospital-centric system characterized by changing epidemiological and demographic
large, well-endowed urban hospitals and rela- proles and emphasizes effective regionaliza-
tively few or poorly endowed rural ambula- tion and integration of care with new technol-
tory facilities. ogies (Box 9.1). In this people-centered service
Capital expenditures in the health sec- planning approach, in which production and
tor in different provinces in China account delivery of services are based on population
for between 5 and 10 percent of total public needs, public investments are prioritized
spending on health, which does not compare according to the burden of disease, where
M O D E R N I Z I N G H E A LT H S E R V I C E P L A N N I N G TO G U I D E I N V E S T M E N T ( L E V E R 8 ) 109

people live, the kind of care people need on extent, therefore, public subsidies for capi-
a daily basis, wellness, etc. Capital invest- tal investments are not being fully used as a
ment planning in this approach identies and top-down mechanism to develop a rational,
exploits all funding opportunities (including patient-centered network capable of respond-
insurance and direct public budgetary fund- ing to the populations changing health needs
ing) to guide the development of facilities of while delivering value-for-money.
the future and ensure that excess capacity is A key challenge, therefore, relates to coor-
not created to further exacerbate inefciency dination and compliance with the national
and capital misallocation. It offers the oppor- guidelines and standards at the provincial
tunity to remake the health provider net- level to ensure that capital investments are
workits design, culture and practicesto used to shape a people-centered provider net-
better meet the needs of patients and families work that delivers the right care, at the right
and the aspirations of those that provide them place, and at the right time. While NHFPC
health care. The consideration of the role of leads on setting broad planning goals and
the private sector in meeting the populations NDRC examines and approves the project,
service needs is also critical to reducing the as suggested above, much of the investment
capital requirements for the public sector and is made based on bottom-up goals from the
optimizing utilization of existing capacity. provinces and cities and do not consider the
The need to develop a capital investment service needs or the existing installed (pub-
planning model driven by service planning lic and private) capacity before approvals are
based on population needs is well under- issued. An initial step in right direction was
stood in China, and several efforts have been the issuing of policy guidelines in 2015 which
undertaken to improve resource allocation aim to rationalize capital investments, speci-
and investment planning. Since the 1990s, fying functions and roles of health facilities,
regional health planning has been conducted stafng standards, vertical integration across
as part of health policy reforms to improve tiers and horizontal integration across types
performance of the health sector. In 1997, of care (Guo Ban Fa, 2015, no. 14). However
the National Development and Reform Com- capital investment needs to be further inte-
mission, Ministry of Health and Ministry of grated into regional service planning and
Finance jointly issued Guidance of Imple- ensure that private sector capacity is consid-
mentation of Regional Health Planning, ered within the targets for 2020.
which provides details on the concepts, con- An analysis of capital investment decisions
tents, methods, procedures and implementa- in three provincial administrative regions
tion of regional health planning, and dem- Sichuan province, Hubei province, and the
onstrates recognition of the need for capital Tianjin Municipality, which vary across
planning to be driven by population health demographic, economic development, public
needs. Local governments were expected to resources and health indicators, reveal many
plan and project health care delivery accord- fundamental challenges in the investment
ing to these guidelines. However, despite the models being employed in the health sector
efforts of the national government agencies, in China. The remainder of this section sum-
regional and local level health planning has marizes the challenges emerging from these
still not adopted an efcient and integrated three cases.
service approach, and capital planning strate-
gies continue to favor larger hospitals. A sig- Limited knowledge of capital investment
nicant share of all hospital investments is planning techniques: Having a sound and
funded from debt nancing, off-balance sheet in-depth understanding of service-based
operations or land-swaps, which also com- health planning is an essential pre-requisite
promise the governments efforts to reduce for those tasked with making investment
the pressure on prices. Further, the high level decisions. While ofcials in the three prov-
of fragmentation and lack of transparency inces studied understood the importance
and accountability limit the effectiveness of and necessity of needs-driven investment
these subsidies as policy instruments. To this planning, the measures they use do not fully
110 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

reect population health needs. For example, management is employed in the planning
in Sichuan province, population size and pro- process, and hospitals (including provin-
viders service radius are the primary mea- cial-, city-, community-, and county-level)
sures to dene health care needs. In the Tian- are administratively linked with their cor-
jin municipality, on the other hand, disease responding level of government. Each level
pattern and incidence and services utiliza- of the government develops its own capital
tion (e.g., number of visits, types of services, investment plan, while the provincial govern-
medical expenses, etc.) are used as the main ment makes the nal decision in the overall
measures of health care needs. In either case, planning. For example, Tianjin Medical Uni-
however, only population density is docu- versity General Hospital is directly afliated
mented as the key factor of consideration for to the Ministry of Education, as opposed to
capital investments, and beds per population the Tianjin municipal government; however,
are used as the key indicator for conguring this level 3 hospital develops its capital invest-
health sources. Both these are the traditional ment plan under the administration of the
standards for capital investment planning, Finance Department of Tianjin. This creates
and bear little or no relation to service needs. confusion, especially as common information
Further, facility planning standards in these is not shared across different types and levels
three provinces are not compliant with of governments involved, and project identi-
national standards. Thus, while medical cation and evaluation suffer in this process.
facilities with over 1,000 beds are not encour- Excessive capital investment in hospi-
aged in national guidelines, provinces are still tals, particularly in urban areas, continues
planning for facilities with over 1,000 beds. in Sichuan, Hubei and Tianjin. Unless there
This seems to be a country-wide problem in are principles to guide the development of
China, and regional and local facilities often facilities of the future, there is a real dan-
deviate from national level standards and ger that capital investment planning will
capital investment decisions. Use of specic simply perpetuate the status quo of today,
local data should be incorporated into the or worse yet, create excess capacity that will
regional and city planning framework. exacerbate the existing inefficiencies and
capital misallocations. Planning clearances
Absence of clear procedures to assess value- should consider the private sector capacity
for-money of investments: Financing is a and planned investments in each province to
crucial part of capital investment planning. ensure that the overall targets are achieved
Without proper nancial management and based on service planning needs and popula-
planning, capital investment projects tend to tion based needs.
lack direction and have a high probability of
failure. All three provinces studied demon-
strated an absence of clear management and Recommendations for Moving
economic principles to assess the potential Forward with Service Planning
protability and sustainability of long-term Reform: Lessons from Chinese
investments or to determine the value-for- and International Experience
money of competing investment projects.
While the government is moving to establish China is not alone in its efforts to modify
three year budgeting, the NDRC investment its capital investment strategy from one that
approval process does not yet evaluate the is driven by macro standards to one that is
sustainability of the investments based on determined by service planning based on real
projected cash ow and operating expendi- population needs. OECD countries, although
ture or value-for-money in terms of efciency diverse, face a number of common chal-
and affordability. lenges when it comes to capital investment
for health: demographic and epidemiological
Mismatch in procedures for administrative transitions associated with an ageing popu-
reporting and planning clearances: In China, lation, advances in medical technologies and
the principle of administrative-affiliated pharmaceuticals, rising public expectations,
M O D E R N I Z I N G H E A LT H S E R V I C E P L A N N I N G TO G U I D E I N V E S T M E N T ( L E V E R 8 ) 111

persistent health inequalities, etc. The chal- for the countrys hospital system by prov-
lenge for these countries, as well as for China, ince, medical specialty, and level; (iv) prepare
is to reconcile health needs and expectations provincial level Strategic Plans that include
with available resources. Several OECD 510 year perspectives on investment needs
countries have made or are making this tran- for infrastructure, equipment, technology
sition, and their experiences offer important and human resource development; (v) inte-
lessons for China. grate capital planning into a medium-term
expenditure framework and bring together
planning and budgeting including consider-
Core Action Area 1: Move away from
ation of private sector capacity (existing and
the traditional input-based planning
planned); and (vi) create an enabling legal
towards capital investments based
framework to support the new planning
upon region-specific epidemiological
and governance arrangements and support
and demographic profiles
enforcement and compliance arrangements
China is a very large country and has a to ensure execution. These actions will help
diverse demographic prole. An investment reverse the current planning logic and will
planning method that is based on specific allow population needs to determine service
population needs at the regional level instead planning.
of country-level averages will better meet The Horizon method employed in Nether-
the health objectives of the population. Spe- lands uses this approach for elderly care, and
cific actions to secure this vision include: is worth exploring (Box 9.2). Capital invest-
(i) develop a regulatory framework in which ment planning for elderly care in the Nether-
capital investment in health is focused on lands has traditionally used a demand-based
improvement and value; (ii) adopt the service method, which calculates demand using the
planning approach to capital investments percentage of citizens above the age of 75.
and require all future investments to be By 1998, it had become obvious that the
guided by an assessment of population needs; approach was proving to be insufficient,
(iii) develop a capacity planning tool that esti- and Netherlands moved to a needs-based
mates nancial and physical resource needs approach. Called Horizon, this approach

BOX 9.2 Horizons Three Step Model

In step one, questionnaires and surveys are issued in The second step in the process is to determine the
order to capture personal health status, physical abili- care needed for each prole, as each care prole states
ties, well-being and ability to cope with daily rou- a general condition of a surveyed group. This step is
tines. Information about care issues is gathered from relatively short, as the proles are broken down and
multiple sources, and patterns are distinguished using pre-categorized.
latent class analysis. Care proles developed from the The third step involves ascertaining the most
analyses indicate prevalent health concerns for the appropriate setting of care, given the type of care
elderly. A random population survey is then carried needed. This step assesses the needs of each prole
out to check if the prole is reective of the entire and examines the best option for the setting of care.
population. This survey is carried out yearly, ensuring The analysis conducted in this step is crucial for capi-
that the data is updated and reects the most current tal investment planning (CIP), as it informs the plan
health needs of the elderly population. The number of the care needs of the elderly population.
of persons belonging to a certain prole for a set geo-
graphical area is predicted using demographics and
predictions about future demographic trends.
Source: Nauta, J., Perenboom, R. & Garre Galindo, F. (2009) Conference.
112 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

uses measures of actual physical and mental that each community has unique health
disabilities to help plan capital investment needs, and that capital investments cannot be
projects (Nauta et al, 2009). Following this made in a one size ts all manner if all the
approach, Dutch health ofcials transitioned disparate health needs have to be met.
from linear, demand-based estimations to This approach allows for open dialogue
the Horizon method, and the resulting more among all different levels of planning. Robust
accurate estimations of population needs are research and strong community involvement
allowing for more efcient investments. allow for investment plans to incorporate
Horizon has proven to be a good model in projects that best t the health needs of any
the Netherlands for long-term, needs-based given population. Further, it helps tailor
capital investments for elderly care. China is capital investments to the unique needs of
faced with an aging population as well, and individual communities, contributing to the
may like to explore using a similar model to development of service-based investment
make its investment process more efcient. decisions. NSW has recognized that this
method of planning is not limited to capital
planning for the disabled population only; it
Core Action Area 2: Engage with
is an approach that can be modied for any
all relevant stakeholders and local
given population.
communities in the planning process
NSWs Sector Planning Framework offers
Involving all relevant stakeholders, espe- many attractive options for China. It offers a
cially the target population and the private way for China to incorporate each planning
sector, in the planning process allows for level into the investment planning process,
capital investment decisions to be made in allowing for capital investment decisions that
ways that simultaneously meet health needs meet health needs and policy requirements.
as well as policy requirements. Key action The Sector Planning Framework is designed
steps include: (i) identify different stakeholder to achieve coordination and alignment in the
groups and prominent community and pri- priorities among governments, agencies, pro-
vate sector leaders and formulate an engage- vider providers and communities, and builds
ment strategy for each stakeholder type; (ii) cross-agency and public-private partnerships
conduct consultation sessions as per strategy; to enable easy integration into future sys-
(iii) require rigorous evaluation and public tems. China may like to employ the exibility
disclosure of all capital projects, including of this approach to address a variety of dif-
self-funded capital projects, nanced through ferent health concerns, while not having to
philanthropy or other in-kind contributions; reinvent the process every time.
and (iv) publish benchmark spending per bed
by level of care and average bed size across
Core Action Area 3: Empower and
provinces to ensure that standards are met.
enable regions and provinces to
New South Wales (NSW), a state on the
develop their own capital investment
east coast of Australia, has begun to imple-
ment a new capital investment method in
order to better meet the needs of its disabled Empowering subnational levels in China to
population. Known as the Sector Planning develop their own capital investment plans
Framework, it offers a exible approach that require the following key actions: (i) estab-
can be modified to fit any population sub- lish provincial commissions on health invest-
group. One of the key features of NSWs new ment and capital development; (ii) prepare
approach is that it places local communities, provincial level Strategic Plans (Master Plan)
including people with disabilities, their fami- that include 510 year perspectives on invest-
lies and caretakers at the center of the plan- ment needs for infrastructure, equipment,
ning process, and as joint parties in the plan- technology and human resource development
ning process. It helps the state deliver on its to ensure consistency with the populations
commitments to local communities in ways evolving health needs; and (iii) include pri-
that best suit the community. It recognizes vate capital investment in the establishment
M O D E R N I Z I N G H E A LT H S E R V I C E P L A N N I N G TO G U I D E I N V E S T M E N T ( L E V E R 8 ) 113

of regional health accounts that include total based on epidemiological data and trends
capital expenditures public and private. The observed in other countries (mainly the United
Planning Layout of National Medical and States)are taken into consideration for these
Health Services System (20152020) (Guo assessments (Ettelt et al, 2008).
Ban Fa [2015] No.14) provides an incipient The SROS is the most important tool in
framework for this planning and ensuring regional capital investment and health care
implementation will be a step in the right delivery planning. It focuses on hospital plan-
direction. China may like to further study ning and on expensive treatment and technol-
successful global examples as it modies its ogy provided in hospital settings. Since its
own capital investment process. implementation in 2003, in each region the
One such example is the capital investment SROS has taken the place of the national
framework in France, where the health sec- medical map, which was the quantitative
tor investment planning is based on popula- planning tool used by the Ministry of Health
tion needs and is executed through Regional to divide each region into health care sectors
Strategic Health Plans (Schma Rgional and dened norms for bed/population ratios
dOrganisation Sanitaire, or SROS). SROSs for major disciplines within a geographical
set the overall strategic goals for health care area (European Observatory on Health Sys-
delivery, define priorities, objectives and tems and Policies, n.d.; Ettelt et al, 2008). In
targets and determine quantitative targets contrast to previous national planning prac-
and the distribution of health care facili- tices, the purpose of the SROS is to better
ties within a region. SROS are developed by tailor health care delivery to the needs of the
regional health agencies (ARS) in consulta- local population.
tion with stakeholders, including the Minis- Related to capital investment planning,
try of Health, health insurance funds, hos- SROS determine capacity by specifying the
pital federations, health care professionals, number of facilities in each region and sub-
and patient representatives (European Obser- region for each area of care (including general
vatory on Health Systems and Policies, n.d.; medicine, surgery, maternity care, accident
Ettelt et al, 2008). The Ministry of Health and emergency care, neonatal care, radio-
plays a coordinating role, and generates a therapy, cardiologic intensive care and psy-
catalogue of health services, based on an chiatric care, as well as expensive technical
assessment of needs at national level and on equipment such as magnetic resonance imag-
national priorities, which the regions incor- ing scanners). They also dene the volumes
porate in their own plans (Ettelt et al, 2008). for certain types of service, and benchmark
The regional health agencies are gener- them for purposes of comparison. Service
ally responsible for planning services and for volumes refer to units such as numbers of
authorizing hospitals to deliver services within patients, sites, days (length of stay), proce-
the social health insurance system. They also dures performed and admissions, and are
oversee changes to the existing hospital infra- expressed in numbers of services or rates and
structure, including restructuring and merg- show changes relative to previous volumes.
ers. The only exceptions are new hospital The objective of planning on the basis of
developments (both private and public) and service volumes rather than on bed/popula-
comprehensive emergency centers, which have tion ratios is to limit oversupply, which is a
to be authorized by the Ministry of Health. persistent problem in some cities (Paris) and
Strategic planning requires regional agen- regions (south of France) (Ettelt et al, 2008).
cies to assess population health care needs on
the basis of regional health care utilization
Core Action Area 4: Introduce a
data and relevant demographic data (such as
Certificate of Need program to evaluate
on mortality and morbidity). Data for each
and approve new capital investments in
region are analyzed and compared with those
the health sector
for other regions in order to identify demand
and supply. Expert estimates of future trends China already has a system of requiring fea-
in demand and technological changelargely sibility reports for all capital investments.
114 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

However, these feasibility reports use norms on actual population health data to make
set according to macro standards governing informed decisions on capital investment.
the size and scope of the intended service. Another example from the United States
The key transition step in this context is to that may be relevant for China is from Michi-
require the feasibility studies to be based on gan, which realized early on that an invest-
population health needs and to demonstrate ment program based solely on costs could
that the proposed capital investment is neces- have a distorting effect on health care and
sary to meet the identied and targeted need, adversely affect both quality and access. The
considering the public and private supply in CON program in the health sector in Michi-
each region. gan has evolved over the years to include
The Certicate of Need (CON) program more services and move away from a hospi-
is used extensively in the US to evaluate and tal-centric system. Michigan also introduced
approve new capital investment projects. In requirements to ensure compliance of capital
1974, the federal Health Planning Resources projects with standards, which has proved to
Development Act mandated that all 50 states be a challenge in China.
evaluate Certicates of Need before allow- The Certicate of Need program as prac-
ing the continuation of any health capital ticed in the US holds a lot of promise for
investment projects, such as building expan- China, where facility needs are often para-
sions, and ordering new high-technology mount in determining hospital expansion. A
devices. The goal was to restrain facility costs close look at the feasibility study of possible
and allow for a more coordinated planning relocation and expansion of the County Hos-
of health services and construction. Many pital in Renshou County in Meishan City,
states established CON programs in order Sichuan Province, for instance, reveals that
to receive federal funding. Even though the construction planning and selection of loca-
Health Planning Resources Development tion for the Renshou Hospital were deter-
Act, along with its funding, was cut in 1987, mined according to facility needs rather than
36 states still maintain some form of a CON population needs. A program akin to the
program, while the remaining 14 states, that Certicate of Need program presents a pos-
do not have CON programs, have mecha- sible solution to this.
nisms in place to regulate costs and duplica-
tion of services.
Core Action Area 5: Prioritize
Each state in the US has developed its own
community health projects
unique approach to the program. Many states
have recognized the importance of popula- Key actions to realize this vision include:
tion health needs in capital investment plan- (i) earmark a percentage of provincial and
ning and rely on the analysis of population city capital budget for community proj-
health needs to implement capital investment ects; and (ii) identify priority communities
projects. In the state of Maine, for instance, and formulate multiyear community capital
applicants for CON must prove that their investment plans within the context of the
proposed capital investment is geared toward new three budgetary frameworks.
meeting a defined public need. This helps As in China, capital investment in North-
reduce duplication of services, and helps ern Ireland was once hospital-centric and was
direct capital investment to areas that need largely focused on the acute sector. Beginning
it most. Public hearings are an important 2007, Northern Ireland started to redirect its
feature of this process, and give the citizens capital investments toward community level
the ability to voice their needs and opinions facilities. The new model sought to create an
regarding potential capital investments. It integrated continuum of facilities, from home
also increases communication between health care through to primary, community, sub-
ofcials and the public, further strengthen- acute/step-down and acute facilities, all sup-
ing the people-centered aspect of this invest- ported by structured networks. The under-
ment planning. Like Maine, China may like lying strategy had two main components:
to consider developing a process that relies enhanced services within the community,
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and concentration of complex services. With times and reduced hospital admissions, and
regards to the rst component, Northern Ire- affordability.
land carried out a comprehensive region-wide Additionally, Northern Ireland has
planning exercise and decided to develop attempted to incorporate flexible design
42 new community health centers located principles into its new configuration. This
at population centers throughout the coun- included phased construction to transition
try (Box 9.3). Meeting the second compo- from existing to new facilities; insertion of
nent required greater centralizationfrom soft spaces (for example, office space or
local general hospitals to acute centers or to educational accommodation that can be rela-
regional centers of excellenceof those ser- tively easily relocated) beside complex areas,
vices that, due to their complexity, required such as those for critical care or imaging, that
specialized skills and expertise that could not are likely to expand in the future and would
easily or affordably be replicated in local hos- be very expensive to move; and standardiza-
pitals. A key criterion in the process of deter- tion (Rechel et al, 2009b).
mining the nal locations of those hospitals The example of Northern Ireland shows
to be designated as acute was that patients that it is possible for a health system to
should have a maximum travel time of one undergo such a physical transition and move
hour from anywhere in Northern Ireland to away from a hospital-centric system. Citi-
an acute facility, with full accident and emer- zens of Northern Ireland now have greater
gency services. access to both community facilities and acute
A primary objective of this new model facilities, both of which have been designed
of care is to improve accessibility of the to improve population health. The focus on
public to high-quality and timely services. specic geographic needs offers an important
The specic location of individual facilities lesson for China, which could greatly benet
was determined by a number of key fac- from investing more in community health
tors, including the core principles within the capital projects and increasing access to
Regional Health Strategy, urban or rural set- quality care. Further, Northern Ireland has
ting, size of the local population, epidemiol- dedicated some capital investment towards
ogy, travel times and distances, critical mass creating flexible facilities, which increases
for staff, critical mass for specialist equip- efciency in the long-term and enables the
ment, state and location of current facili- health system to better respond to future
ties, improved accessibility, reduced waiting population health needs without needing to

BOX 9.3 Physical Redesign of Northern Irelands Health System Model

Five elements defined the physical redesign of the 3. Reduction in the number of general hospitals
health system in Northern Ireland: providing the full range of acute services from 18
to 10
1. Reduction of Health and Social Care Trusts 4. Redevelopment of seven of the remaining nine
(service provider organizations) from 17 to 5, hospitals as new non-acute step-down facilities
according to geographic need, each providing a with a focus on their local communities and the
full continuum of health and social care services ability to provide a wider range of intermediate
to their local population care services
2. Designation or development of regional centers 5. Creation of 42 new one-stop community health
as the sole providers of a range of tertiary ser- centers (without bed accommodation) with
vices that will benet from centralization the key objective of preventing unnecessary
Source: Rechel, B., Erskine, J., Dowdeswell, B., Wright, S. & McKee, M. (2009).
116 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

invest in new capital or completely redesign care facilities) and spending on equipment
facilities to meet unforeseen needs. China (medical machinery, ambulances, as well as
may like to explore this exible design. ICT equipment). Together they account for
85% of capital expenditure. The remaining
15% is accounted for by intellectual prop-
Notes erty products the result of research, devel-
opment or innovation. Capital investment
1. Data from National Accounts provides an refers to the acquisition of capital assets or
idea of the type of assets and capital spend- fixed assets such as land, clinics, hospitals
ing. While capital spending can uctuate from or equipment that is expected to be produc-
year to year, overall OECD countries there is tive over many years. (http://www.investo-
an even split between spending on construc- pedi a .com /te r m s /c /c apit al- investme nt .
tion (i.e. building of hospitals and other health asp#ixzz3yIZ8rrWm).
Part 3

Moving Forward with

Strengthening Implementation of
Service Delivery Reform

Introduction (iv) monitoring and evaluation. Specic and

China relevant strategies for each of these
The next phase of development of the Chinese systems are then reviewed. The organiza-
health care system will center on comprehen- tional platforms for front line service delivery
sive improvement in the value of care across improvement and learning are particularly
all levels of the system. Previous chapters have important. For example, it is unlikely that
detailed the core actions regarding what must low performing organizations can transform
be changed for each of the eight reform levers. themselves solely given changes in payment
Drawing on lessons from national and interna- incentives (Cutler, 2014). Improvement will
tional cases, specic strategies were also pro- also require a support system that builds
vided to guide implementation for a number capacity and creates a facilitative climate
of design elements. This chapter addresses the to foster organizational (and individual)
central challenge of how to implement these change.1 The chapter concludes with recom-
important changes with the focus on creat- mendations on sequencing and reaching full
ing an enabling organizational environment to scale. With an ambitious vision, unied lead-
operationalize and sustain the core actions and ership, and implementation knowhow, China
strategies specied in the previous chapters. can build on its impressive progress. It can
Putting in place this environment is a key pre- reach a new stage in which care is reliable,
condition for effective implementation and rep- scientifically appropriate, person-centered,
resent the critical rst steps in the sequencing and effective while restoring public trust.
of reforms. Without it, progress may be elusive.
This chapter first reviews barriers to
implementation in the institutional and Implementation Challenges
organizational environment in China. The
main body of the chapter centers on the While there is consensus that China has suf-
specifics of the implementation model for ciently robust health sector reform policies,
spreading and scaling up the recommended most observers acknowledge that the coun-
reforms described in earlier chapters. First, try has had difculty translating these policies
an operational implementation framework into scalable and sustained actions required
is presented that focuses on four implemen- to further improve service delivery. Typical
tation systems: (i) macro implementation of the development strategy in other sectors,
and influence, (ii) coordination and sup- China has promoted reform implementa-
port, (iii) service delivery and learning, and tion mainly through pilot projects. Although

120 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

experimentalism through small-scale pilots oversight, various central government agen-

operated by local governments has been effec- cies monitor how these policies are imple-
tive in promoting and expanding economic mented with each agency focusing on specic
reforms (Heilman, 2008), it has been less suc- aspects of reform (e.g., pricing, insurance,
cessful in expanding reforms (Guo Ban fa, 2015, drug standards, human resources, medi-
No 70; State Council, 2015 a). This has become cal services, etc.) aligned with their respec-
particularly evident in efforts to address deep- tive mandates. Supervisory reports tend to
rooted and complex issues related to provider be based on short fact gathering site visits
incentives, private sector engagement, public often conducted separately by representatives
hospital reform and rebalancing service deliv- of different agencies. Furthermore, fact gath-
ery. Part of the problem rests in the difculty ering are sometimes used to seek out under-
of shifting from a command-and-control gov- performers for discipline and punishment
ernance approach to an arms length approach, rather than identifying the high performers
typical of mixed delivery systems, in which the for celebration and reward. In addition, the
health system is steered or indirectly managed independence of any assessment can be ques-
through incentives, regulation and other checks tioned since central level departments are
and balances (Meessen and Bloom, 2007). not totally separate from their decentralized
However, institutional fragmentation, diffuse counterparts at provincial and local govern-
leadership and vested interests make this transi- ments. China has yet to systematically put in
tion even more challenging. Under these condi- place independent mechanisms for gathering
tions, even effective pilots cannot be maintained information and assessing reforms. These
or scaled-up. Moving forward with implement- conditions suggest that central government
ing the recommendations related to the eight may consider providing implementationori-
reform levers will depend on careful manage- ented guidance, consolidating and strengthen-
ment of implementation impediments at three ing implementation oversight and introducing
system levels: central government, provincial/ systems to aggressively monitor and validate
local government and front line service provid- progress and assess implementation from a
ers. Each is taken up in turn. more big picture and system perspective.

Central government: Dispersed oversight and Provincial and local governments: Fragmented
monitoring of reform implementation. Typi- coordination and leadership. Given the disper-
cal of Chinas governance style, central gov- sion of roles over a large array of institutions
ernment policy directives consist of principles and low priority attributed to health reform at
and general guidelines in part to stimulate the local level, reform ownership and leader-
local innovation and to allow for exibility ship is diffuse. Resilient mechanisms for hold-
in applying them to local conditions. Inno- ing local government leaders accountable for
vations are usually supported through pilot health reform implementation have yet to be
activities which tend to be sanctioned by the put in place. Incentives faced by local ofcials
central government. As observed in a num- to plan and implement health reforms are gen-
ber of cases studies reviewed in this report, erally weak when compared, for example, to
successful innovations have indeed occurred. incentives to promote economic growth and
However, scaling up these initiatives has been development (Ramesh, Wu and He, 2013;
challenging. Some policy makers suggest that Ratigan, 2015). Local leaders performance is
innovations and reform implementation tend generally not judged by, and their career paths
to be personalized, responding to the pref- are generally not dependent on, how well they
erences of local leaders, and therefore difcult progress on health reform. Under these condi-
to replicate. This may relate to the lack of evi- tions, for example, local ofcials are justiably
dence-based analysis and feedback on reform reluctant to take on complex issues, such as
progress and problems. Few innovations have the prot-making interests of public hospitals.
been evaluated using rigorous methods. Putting in place new models of service deliv-
While the State Councils Health Reform ery will require strengthening and stabilizing
Ofce is responsible for policy formation and broader system coordination particularly in

terms of overcoming institutional fragmenta- and blaming to motivate changes in provider

tionboth horizontal (across many govern- service practices is insufcient to encourage
ment departments) and vertical (across mul- creation of value-oriented delivery system. The
tiple governmental levels: municipal, county, evidence supports the application of health sys-
and district). Sustainable and scalable reform tems improvement methods, including the use
implementation is compromised under the of performance reporting, data transparency,
current situation in which each department and systematic application of specic learning
and agency has the tendency to act to defend models that allow institutions to make changes
its own interest. Decisions on complex issues and learn from their impact (Greene, Ried and
are often made through interagency bargain- Larson, 2012; Schouten, et al., 2008; Garside,
ing, which in turn weakens accountability 1998). Facilitated collaboration approaches
for reform implementation (Qian, 2015). that allow peer institutions to learn from one
Patchwork administrative actions negotiated anothers successes and failures in a fear-free
among diverse government departments (with environment can rapidly accelerate implemen-
divergent interests) to address elements of the tation of policy reforms.
reform may be effective in the short-term but
are not sustainable unless government builds An Actionable Implementation
and institutionalizes its coordination capacity
and creates the organizational arrangements Framework
to make them operational (He, 2011). In sum, Implementation consists of the set of activi-
effective, scalable and sustainable implementa- ties, processes and interventions used to put
tion will require putting in place the incentives policies, ideas, and reforms into practice.
and accountability mechanisms that will drive There is growing evidence that implemen-
local leaders and government departments to tation influences outcomes (Meyers, et al.,
coordinate and enforce health reforms. 2012b; Dulak and Dupre, 2008; Aarons et
al., 2009; Wilson, et al., 2003). High quality
Front line service delivery: Lack of organiza- implementation is associated with obtaining
tional mechanisms for leadership and shared desired impacts. Drawing on a large body of
learning about healthcare system reform literature, the science supporting implemen-
and improvement by health care providers. tation has advanced considerably during the
Healthcare improvement occurs on the front last two decades to the extent that a number
lines, whether in households, village clin- of actionable frameworks have emerged to
ics, community or townships health centers assist planners, implementers and communi-
or hospital wards. Transformational value is ties in their implementation efforts (Meyers
seldom created by a single clinician or facil- et al., 2012, a, b; Wandersman, Chien and
ity; it is more often generated by a group of Katz, 2012; Wandersman et al.; 2000; Dur-
providers cooperating with each other and col- lak and Dupre, 2008; Damschroder, et al.,
lectively responsible for patient care. Reliable 2009; Fixsen, et al., 2005). These frame-
implementation of policy reform, at the facil- works provide evidence-based guidance on
ity-level, does not happen by accident or by the critical phases, steps, and components
chance. Deliberate and focused plans to ensure that contribute to effective implementation,
implementation must be created and then and ultimately, sustained institutionalization
executed. This has been amply demonstrated of successful practices. Despite the strong
internationally such as the UKs Primary evidence base supporting these frameworks,
Care Collaborative, the US Veterans Health some caution is warranted. For example, the
Administration, and Centers for Medicare and frameworks are not roadmaps to be simply
Medicaids recent Partnership for Patients and followed. Some components benefit from
many others. International experience dem- stronger empirical support than others. Also,
onstrates that the proposed shift in organiza- implementation is inherently intertwined
tional goals from treatment delivery to out- with the contexts where it occurs. One size
comes improvement will require fundamental ts all solutions dont exist. Invariably, adap-
changes in organizational culture. Naming tations tailored to local contexts will take
122 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

place. The proposed implementation steps takes place since it interacts closely with the
and organizational platforms (see below) main implementation location, the delivery
along with their sequencing and timing will and learning system (see below). While also
vary by local capacity, the supporting envi- linked to the macro implementation climate,
ronment and other starting conditions. key functions for the support system include:
Bridging the gap between policies and coordinating and ensuring buy in of key stake-
practice requires capacit y, resources, holders, arranging to training and technical
accountability and a commitment to collabo- assistance, developing and adapting imple-
ration, evaluation and learning. Drawing on mentation plans and timelines, communicat-
the above-mentioned implementation guide- ing reform activities and expectations to com-
lines, the chapter follows a simplified but munities, health care organizations and health
actionable implementation framework con- workers, making front line providers account-
sisting of four systems adapted broadly to the able for implementation progress and results,
Chinese context. However, further adapta- ensuring that reform has adequate adminis-
tions will be probably be required for specic trative support, and conducting on-site moni-
situations. Finally, it is important to note that toring of implementation activities, including
overlap exists among these systems. documenting adaptations to original plans and
designs. The coordination and support system
1. Macro implementation and inuence sys- requires an organizational structure proximate
tem: This system involves establishing the to front line implementation to carry out these
external inuence factors that would cre- functions and oversee the implementation
ate a facilitative climate for effective and process. As described below, China may con-
sustained implementation (Fixsen, et al., sider establishing a leading group or steering
2005:59). Greater attention to implementa- committee at the provincial or local govern-
tion practices by senior policy makers and mental levels to perform the above functions.
leaders is critical to the process of service
delivery reform. Research shows that a facili- 3. Delivery and learning system: This is where
tating macro climate is associated with bet- the rubber hits the roadthe main location
ter outcomes and the fidelity of implementa- of implementation and where many service
tionthe degree to which implementation is delivery reforms and care improvement solu-
aligned with intended expectations, design tions are designed and executed. It occurs on
and plans (Myers, et al., 2012a, b; Fixsen, et the front lines of service delivery: health care
al., 2005). Specic considerations include: cre- organizations (for example, hospitals, THCs,
ating clear accountabilities for implementation CHCs), networked groups of health care orga-
performance, demonstrating leaders commit- nizations, and communities. It involves indi-
ment to the implementation process, specify- vidual behavioral and broader organizational
ing expected implementation milestones and change but also making the culture of the
outcomes, building a monitoring and feed- organization open to change. (Garside, 1998;
back system to learn from implementation S8). Ostensibly, this system is about putting
experiences to adjust policies and guidelines, evidence into practice but also entails learn-
mobilizing resources to support implementa- ing from experience. Operationally, it involves
tion processes, and arranging for independent creating an organizational arrangement for
evaluations. One strategy to foster an enabling problem solving, practitioner-to-practitioner
macro context (described below) is strength- coaching and collaboration, and shared and
ening the central governments oversight and continuous learning. As described below,
monitoring role in reform implementation. Technical Learning Collaboratives (TLCs) are
proposed as the organizational building block
2. Coordination and support system: The for a delivery and learning system in China.
coordination and support system aims to cre- 4. Monitoring and Evaluation system: Moni-
ate capacity and an enabling environment for toring and evaluating the effectiveness of
effective reform implementation. This system is implementation and reform impact is a criti-
considered one location where implementation cal but often overlooked component of the

implementation process. Evidence needs to and monitoring guidelines: (b) coordination

be gathered to learn from implementation and support system: instituting coordination
and contribute to evidence-based adjust- and leadership mechanisms that at the provin-
ments and future policy making. Careful cial and local governments that build capacity
monitoring can detect whether implemen- and foster accountability for effective reform
tation is aligned with stated objectives, on implementation; (c) delivery and learning sys-
track (or going off track) or the implemented tem: developing local Transformation Learn-
reforms match the intended reforms. But ing Collaborative (TLC) models to foster front
careful monitoring requires careful mea- line reform implementation and care improve-
surement which in turn responds to the ment; and (d) monitoring and evaluation sys-
information needs of the various stakehold- tem: ensuring strong and independent moni-
ers. In addition, it is highly recommended toring and impact evaluation. These strategies
that implementation is accompanied by represent the critical elements for planning,
impact evaluations. Impact evaluation mea- prioritizing and sequencing interventions nec-
sures intended and unintended effects and essary to build a modern 21st-century health
outcomes. Though more methodologically system. All will need strong and persistent cen-
demanding than monitoring, impact evalu- tral government support to make them work.
ations can provide valuable information on The proposed oversight, coordination
attributing causation between the reform and management arrangements related to
and its effects. One additional focus which the four strategies is illustrated in Figure
combines both monitoring and impact evalu- 10.1. In this model, which is described in
ation is understanding why implementation detail below, central authorities develop a
was successful or not (Berwick, 2008). In policy implementation monitoring frame-
China, putting in place a robust monitoring work to guide implementation (such as
and evaluation system to accompany reform specifying aims for better care and lower
implementation will require the close atten- cost, key implementation benchmarks, and
tion of central government in coordination uniform outcome metrics) together with
with provincial and local governments. accountability mechanisms and indepen-
dent evaluation of progress and results.
National and provincial ofcials establish
Moving Forward: Spreading the coordination and support arrangements
Effective and Sustainable at the provincial and local government lev-
Implementation at the Local Level els to manage decision-making, provide
technical assistance and training, oversee
Numerous health reforms experiments are implementation (in line with central govern-
under way in China to operationalize the ments policy implementation framework)
reform policies, but for the reforms to be and make providers accountable for imple-
successful and brought to scale, they need mentation progress. Provincial and local
to be deep, comprehensive, and implemented authorities can consider organizing learning
in a coordinated and deliberate manner. In collaboratives consisting of groups of front-
building a better health care delivery system line service delivery units that will imple-
for China, a major challenge is reaching full ment reform actions, but customize them to
scale: to test and spread reforms to health the specic context of the locale.
care delivery systems in every municipality,
county, township, and village.
Following the framework presented in the A. Macro implementation and influence
previous section, this section describes four system: Establishing strong central
strategies that China can consider to facili- government oversight linked to
tate robust reform implementation: (a) macro national policy implementation and
implementation and inuence system: estab- monitoring guidelines
lishing strong central government oversight The central government may consider taking
linked to a national policy implementation on a more hands-on lead in guiding and
124 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

FIGURE 10.1 Proposed Oversight, Coordination and Management for Service delivery Reform
Implementation and Scale-Up

Level Organizational Arrangements Tasks and Responsibilities

Policy implementation framework
Task agreements
Central State Council Health Reform Office
Monitoring system
Promotion system

Sequenced master implementation plan

Provincial/ Provincial Leading Groups TLC selection and oversight
Local Local Government Leading Groups Task agreements
Support for institutional and financial reforms

TLC Leaders
Front line Implementation of service delivery
Service Delivery Technical Learing reforms and care improvement
collaboratives (TLCs)

monitoring implementation of the reforms, Finally, given the large number of govern-
including the eight levers. China can consider ment institutions involved in the health sector,
assigning this mandate to the State Council, the decentralized nature of implementation
which would mean expanding the roles and and the well-known difficulties in aligning
functions of the State Council Health Reform institutional positions, China may want to con-
Office (SCHRO) currently responsible for sider assigning an ofcial with a rank higher
health reform policy making. One instru- than Minister to head the SCHRO. The higher
ment would be preparing policy implemen- rank than Minister level is necessary to inu-
tation and monitoring guidelines to orient ence institutional stakeholders as well as pro-
reform planning and execution by provincial vincial governors. While controversial, China
and local governments. These guidelines can may also consider granting SCHRO sufcient
provide verifiable (and measureable) tasks authority and institutional independence to
or intermediate outcomes relate to reform inuence how resources allocated and provin-
implementation, which would foster greater cial and local leaders are assessed in terms of
reform implementation integrity at local lev- reform implementation. Given the proposed
els. They are not an implementation plan or expanded role of the SCHRO, staffing will
one-size-ts all blueprint. But the guidelines need to be strengthened.
will need to be operational in nature, speci-
fying categorically what to do. In turn, B. Coordination and Support System:
provincial and local governments should Establishing coordination and
have full authority to decide on how to do organizational mechanisms that make
itdeveloping, executing and sequencing provincial and local governments
implementation plans based on local con- accountable for results and support
ditions. Drawing on the core action areas front line reform implementation
presented in Chapters 2 to 9, Table 10.1 pro-
vides examples of the activities that can be Strengthening accountability arrangements,
included in the guidelines. SCHRO should particularly at the provincial and local lev-
also consider establishing strong account- els, is another essential ingredient to facilitate
ability mechanisms to enforce reform imple- effective implementation. Any accountability
mentation at provincial and local levels. For arrangement should be sufciently powerful
example, the aforementioned activities can to align institutional standpoints and to lever-
be placed in task agreements with provin- age government interests when dealing with
cial and local governments (Figure 10.1). providers and vested interests. One option is

TABLE 10.1 Examples of Policy Implementation Monitoring Guidelines for Chinas Value-Driven Future
Component Description of Key Elements

Service Delivery System

Shaping a tiered y
Strengthened primary care is rst point of contact and gatekeeper for patient navigation of
delivery system delivery system and responsible for providing continuous and comprehensive care;
based on PCIC y
Involves mHealth outreach to communities, social services and homes through use of
(Lever 1) community health workers virtually connected to GPs and specialists;
Networks are formed and operated by a TLC leadership team that is separate from hospital
Within the network, well-organized multi-disciplinary teams, consisting of clinical and non-
clinical personnel provide full cycle of care to patients;
yPeople enroll with care teams and stratied for risks and conditions;
yTeams assume joint accountability for treatment, prevention and patient engagement;
Horizontal integration of individual preventive and curative care services at primary care level
CDC units emphasize public health; individual preventive care transferred to primary care;
Vertical integration of care provided at hospitals, primary care and communities through
establishing multi-disciplinary teams, evidence-based integrated clinical pathways and
referral systems (e.g., post discharge care), individualized care plans for patients with chronic
Use of information and communication technologies to support provider-to-provider
integration and empower front-line health workers.
Quality of care y
National authority assesses, regulates and oversees quality of care in all institutions
and patient y
Patient self-management of chronic conditions is part of care plans
engagement y
Quality information on providers publicly disclosed
(Levers 2, 3) y
Evidence-based health literacy campaigns encouraging healthy behaviors is underway
Hospital reform y
Public hospitals granted more independence in management, but within a strong regulatory
and service and accountability framework that ensures accountability for supporting care integration,
integration reducing costs and unnecessary care and shifting low complexity care to lower levels.
(Levers 1, 4) y
Tertiary hospitals focus on providing highly complex care while supporting secondary
hospitals and primary care with technical assistance, research and workforce development;
Secondary hospitals provide essential specialty care and are closely linked to primary care,
providing technical support, supervision and training. Professional medical sta shared with
primary care through formation of multidisciplinary care teams;
Hospital management professionalization plan in place;
Financial and Institutional Environment
Purchasing and y
Strategic purchasing of health services based on quality and eciency criteria
Provider y
Health providers income delinked from service volume;
payments y
Provide payment systems gradually shift from paying individual facilities to paying integrated
(Lever 5) care networks (e.g., capitation) and paying for a package of services (e.g., bundled payments)
for treating groups of patients with certain conditions;
Human resources y
Standardized scientic professional development and education for all healthcare
(Lever 6) professionals including physicians, nurses and pharmacists.
Professional standing and sucient income for primary health care providers ensured;
Physician compensation and hospital-based quota systems reformed;
Production and integration of new and alternative cadres of workers in health workforce;
Private sector y
Regulations in support of high quality private providers delivering cost-eective services who
engagement compete on a level playing eld with the public sector,
(Lever 7) y
Public purchasing by social insurers of health services from private providers for services for
which they are licensed and meet quality standards
Service/capital y
New planning model based on population health needs and demographic prole;
planning y
Integration of all public nancial resources in capital investment planning
(Lever 8) y
Planning process incorporate private providers
126 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

to scale up the use of empowered leading in place an institutionalized platform for

groups or steering committees at the provin- coordination among stakeholders that would
cial level led by government leaders (i.e., gov- formalize accountability mechanisms and
ernors or party chiefs). Such groups already incentives for sustained reform implementa-
exist in China and can be enabled to over- tion. International (and Chinese) experience
see reform implementation and support front suggests that implementing health reform
line execution. Leading groups can also be is a long-term endeavor, is technically and
formed at local governmental levels (county, politically complex, and requires numerous
municipality, and prefecture) depending on inight adjustments. Desired outcomes may
the context. The leading groups will require take time to materialize due to many inter-
strong, active leadership by high level of- vening factors, and unintended negative con-
cials and broad political support, and be fully sequences can occur. In a country as large as
empowered (and accountable) to implement China, exibility is also required to allow for
reform within their jurisdictions. The pro- the wide variation in starting conditions and
posed leading groups can consist of represen- local contexts.
tatives from the various government agencies How can the leading group arrangement
involved in the health sector, but should also be strengthened to support longer term
have representatives from the private sector implementation? First, the proposed provin-
and community leaders. cial leading groups, can stand accountable
An advantage of the proposed leading to central government through inter-gov-
group arrangement is that it is a well-known ernment performance or task agreements
inter-agency coordination mechanism, and signed with the State Council Health Reform
has been applied successfully within the cur- Ofce (see above) that specify implementa-
rent institutional framework. Nevertheless, tion benchmarks, and anticipated results
the leading group scheme can be consid- of the reforms, and ultimately, population
ered an interim organizational arrangement health indicators. These can be assessed and
in part to mitigate the potential adverse revised on an annual or biannual basis. The
effects of institutional fragmentation on SCHRO can consider rewards and sanctions
reform implementation. It does not institu- related to performance. Second, a subset of
tionalize inter-agency coordination. A lon- these implementation performance measures
ger term solution would involve institutional should also be incorporated into the career
consolidation which would be part of a much promotion system for provincial and local
broader reform to streamline the govern- leaders. Third, and as suggested above, per-
ments administration systems and organiza- formance on agreed reforms should be vig-
tional structures (see Box 10.1). orously monitored by the SCHRO and inde-
Sanmings experience is instructive. As pendently veried by the same in partnership
mentioned in Chapter 5, concerted and coor- with academic institutions. National and
dinated actions led by a Leading Group at regional workshops can be held to review and
the Prefecture level and buttressed by excep- compare performance across provinces. This
tionally strong political support enabled a will result in some higher performers, whose
successful series of deep reforms. However, efforts could be more carefully examined to
the leading group arrangement, as currently learn the contextually relevant ingredients for
practiced in China, may be too single-task success that may be replicable by others.
oriented, short-term, and unstable (i.e., per-
sonnel turnover) to sustain implementation
C. Create Transformation Learning
of health reform over the long term (Qian,
Collaboratives (TLCs) at the network
2015). While the Sanming experience sug-
and facility levels as the fundamental
gests that the leading group arrangement
building block to implement, sustain
can effectively coordinate decision making
and scale up reforms on the front line.2
across multiple government departments to
plan and implement complex reforms at least The shift to focus on improving outcomes,
in the short term, reformers have yet to put rather than just delivering treatmentsthat

BOX 10.1 Government Administrative Reforms and International Experience

Organizational restructuring has been a major fea- public (and increasingly) private providers. China
ture of Chinas administrative reforms for several may want to explore the institutional governance
decades (Xue and Liou, 2012). Policies have called for arrangements of health systems based on social
streamlining administrative functions in order to pro- insurance nancing such as Germany, Austria, Neth-
mote coordination and reduce overlapping authorities erlands and Korea.
and responsibilities. More recently, these reforms are In the OECD all agencies involved in health sys-
seen as part of a broader process to transform gov- tem governance are generally under the jurisdiction
ernment functions to enable deepening of economic, of a single governing institution responsible for pol-
social and other sectoral reforms, strengthening regu- icy making, strategies and regulations. Over the last
lations, and delegating government power (Li Keq- two decades, OECD countries have enacted gover-
iang, May 12, 2015). Making government agencies nance reforms which have added national agencies
more effective through streamlining functions and (i.e., for quality oversight, assessment and improve-
building a unied supervision platform (p. 9) is also ment; for performance and regulatory monitoring)
considered critical to improving reform oversight and while at the same time consolidating overlapping
implementation. Whether these reforms will lead to functions and responsibilities across different lev-
institutional consolidation or creation of an institu- els of government, including the consolidation of
tionalized platform for inter-agency coordination in social insurance funds (Jabukowski, Saltman and
the health sector remains an open question. Duran, 2013). These reforms aimed to exert greater
China may consider examining organizational central inuence. Similarly, in part to address coor-
structures, distribution of responsibilities, and coor- dination, cost containment and equity concerns
dination of functions across agencies in the OECD national governments have strengthened the deci-
for health system governance. Most countries have sion making power of the national government and
an array of agencies, including central line ministries, corresponding lead health organization, including
self-governing bodies and professional associations, the recentralization of functions. The centralizing
afliated institutes, independent commissions and trends have been noted in different systems including
regional health authorities, which constitute the gov- those based n taxed funded National Health Service
ernance conguration of the health sector.a Institu- (i.e., England) and social insurance (i.e., Germany).
tional congurations depend on: (i) type of system However, in countries with strongly decentralized
(i.e., tax-nanced national health system or social systems, greater central level authority does not
insurance systems): (ii) the extent of decentralization; always result in greater policy or policy implemen-
and (iii) degree of state involvement in three core tation integrity. Moreover, international experience
health system functions: regulation, nancing and suggests that stronger government authority should
service delivery (Bohm et al., 2013; Jabukowski, Salt- not mean, for example, government interference in
man and Duran, 2013; Mossialos and Wenzl, 2015). operating social insurance systems. Clear division
Over the last two decades, China is migrating from of roles and authorities between government health
a tax-funded national health service with a dominant institutions and social insurance agencies combined
role of the state in regulation, nancing and service with well-dened accountabilities to align the lat-
delivery to a social insurance system in which state ter with government health policies and priorities
retains regulatory functions but delegates nancing are critical to coherent decision making structures
to social insurance agencies and service delivery to (Savedoff and Gottret, 2008).
aInstitutional congurations of the health sectors in OECD countries are detailed in the WHO/Europes Health in Transition Series: http://www.euro.; and Mossialos and Wenzl, 2015. For Asian countries see: http://

is, on value rather than procedureswill adopting continuous learning and problem-
require fundamental changes in organi- solving approaches to hasten the success-
zational culture. Health care organiza- ful implementation of reforms. To do this
tionswhether networks, hospitals, CHCs will require local customization of policy
or T HCswould greatly benefit from implementation guidance from national and
128 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

provincial ofcials to meet specic needs at primary care facilities to participate in TLCs.
the front-lines of service delivery. The ser- This approach for sharing learning amongst
vice delivery reforms recommended in ear- all parties in a geographic area has been tried
lier chapters include a number of important and tested all over the world including Swe-
changes at sites of care throughout China: den, Scotland, England, the US, Chile, Bra-
using evidence-based care protocols, extend- zil, Portugal, Germany, and Singapore. The
ing eHealth innovations, integrating care, reminder of this subsection details how to
following clear guidelines for referral to spe- structure and operationalize TLCs, including:
cialists and hospitals, measuring and tracking (i) basic principles, structure, and managerial
outcomes, and more. Although these changes philosophy underlying TLCs; (ii) tiered man-
can and should be driven from national and agement system to support TLCs; (iii) pro-
provincial leadership, implementing them at cesses that TLCs use to help their members
local sites will require assistance for local make improvements; and (iv) proposed
learning, problem solving, and adaptation. sequencing of interventions within a TLC.
To achieve better outcomes at lower costs,
providers in China need to learn new ways (i) Principles, Structures, and Managerial
to deliver care. To support this learning pro- Philosophy of Transformation Learning
cess, public and private providers can come Collaboratives
together to form associations committed to A Transformation Learning Collaborative
implementing the PCIC approach and corre- is a program that supports shared learning
sponding reforms in the nancial and insti- and rapid change among a group of pro-
tutional environment. If these associations viders or organizations. Instead of trying
are properly organized and led, participat- to achieve results alone and separately, the
ing providers will benet from not having to participants in a TLC have the opportunity
reinvent their care alone and separately; they to try together, to exchange ideas and les-
can learn together. Associations or groups of sons learned, and to share information on
providers can be organized in either urban or measurements and results to encourage that
rural settings and be made accountable for on- exchange. A TLC capitalizes on the idea not
the-ground implementation of reforms under only that two heads are better than one,
the oversight of the provincial leading group but that many heads are better than a few.
and aligned with the policy implementation The approach moves away from routine solic-
framework developed by the SCHRO. These itation of performance indicators, identica-
associations would help move the care systems tion of underperformers, and public naming
more quickly toward that new culture of coor- and shaming. This latter approach gener-
dinated, cooperative, outcome-oriented care. ates a culture of fear of reprisala situation
What model, drawing from international that leads to incomplete and distorted data,
experience, might be available for struc- corrodes the spirit of innovation, and under-
turing the activities of these associations mines the will to improve. In the TLC model,
to support rapid change? We propose that continuous improvement for everyone is the
Transformation Learning Collaboratives goal, and everyone is recognized as having
(TLCs)partnerships of groups of facili- the capacity to improve (even the best per-
ties within a county, district, or municipality formers). Facility-level teams are encouraged
(CDM)should be established to implement, to test and improve new systems without
manage, and sustain reforms on the front fear of failure. Data is scrutinized, but not
lines. The driving vision behind the TLC con- so much to identify the underperformers, but
cept is to assist and guide local care sites (e.g., rather to highlight, celebrate, and learn from
village clinics, THCS, CHCs, county and dis- those that have outperformed the rest. Rec-
trict hospitals) to implement and scale-up the ognition and celebration of performance, not
reformed service delivery model and close the fear, is the currency of the TLCs and drives
gap between knowing and doing. Provin- all parties to higher levels of performance.
cial (and local) leading groups can select the Who will participate in TLCs in China?
facility alliances or networks, hospitals and The TLC model is a structure for rapidly

disseminating better practices to all facili- most provinces, some combination of TLC-
ties in a geographic region, whether in a types will be needed. For example, in a
rural county or urban municipality. At the rural setting a TLC can consist of a county
outset of service delivery reform imple- hospital, THCs, VCs, and private provid-
mentation, each participating province ers. Urban TLCs can consist of tertiary hos-
will select the most natural administra- pitals, district hospitals, CHCs, commu-
tive level for the TLCcounty, district, nity health stations, and private providers.
municipal, or prefecture. While TLCs will Other combination of facilities are also pos-
be formed and rolled out over time, all sible. Figure 10.2 displays three examples of
health care organizations within the prov- TLC partnering arrangements: county rural
incewhether public or privatewill be level, municipal urban level and prefecture
expected to join a TLC at some point. In rural and urban level.

FIGURE 10.2 The Transformation Learning Collaborative (TLC) model in three different arrangements

County (Rural) TLC Municipal (Urban) TLC

County Hospital Tertiary Hospital

District Hospitals



Communities Communities

Prefecture (Rural & Urban) TLC

Prefecture Hospital

County Hospital County Hospital



Local Local Local Local Local

Communities Communities Communities Communities Communities
130 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

(ii) TLC management system technical knowhow and confer some of their
Depending on local conditions, THCs can reputational strength to the TLC. Interna-
be formed and overseen by provincial lead- tional partners and technical assistance may
ing groups (PLGs) or by local leading groups be conveyed through the Chinese academic
(LLGs). PLGs/LLGs will dene the number institutions as needed as well.
of participating facilities and geographical
scope of the TLCs, appoint leaders, invite (iii) How does a TLC Work?
facilities and teams to participate, and host its Each TLC is organized as a short-term (18-
activities. TLC leaders can comprise trusted to 24-month) learning system. Prior to the
local hospital and clinic leaders, assisted by launch of the TLC, PLGs/LLGs agree to the
a systems improvement advisor and program specic set of reform initiatives that will be
management staff from the participating hos- implemented as well as a set of measures to
pitals. Given the operational nature of TLCs, track implementation progress of all partici-
PLGs should consider that TLC management pating facilities (and institutions). For exam-
be separate from government administrative ple, one reform initiative could involve the
leadership. PLGs should also ensure active transition to team-based care, which would
participation of multiple providers and avoid facilitate care for chronic diseases such as dia-
hospital capture of TLC leadership. PLGs/ betes. All participating facilities could track
LLGs can sign task agreements with TLC their progress in terms of process measures
leadership. (proportion of front-line staff that are part
It is important to note that PLGs work on of clinical care teams; proportion of patients
macro-level changes and improvements (i.e. who are assigned to a clinical care team;
those at provincial level) across the multiple numbers of annual visits by patients assigned
TLCs to remove specic barriers that impede to a care team; and numbers of medicines
progress within the TLCs. For example, as TLC prescribed) as well as outcome measures
participants seek to spread the changes needed (e.g. percentage of diabetic patients with gly-
to produce better care at lower cost, they will cosylated hemoglobin of less than 8).
encounter barriers that make such reforms dif- Organizations participating in the TLC
cult. Removing those barriers requires actions would send facility-level teams to the TLC
on the part of senior leaders and groups above meetings. Such facility-level teams would
the level of the TLC participants. Examples consist of three to ve people from each facil-
of issues that may not sort out within the ity, including operational leadership and key
TLC itself can include, for example, adjusting clinical staff. TLC teams from all participat-
human resources policies, supply chain prob- ing facilities will meet face-to-face in learn-
lems, reorienting incentives, capital planning ing sessions every four to six months to dis-
and investment, and promotion of engagement cuss successes, barriers, and challenges, share
with the private sector. International experi- better practices, and describe lessons learned.
ence demonstrates that a critical function of In between these face-to-face TLC meetings
senior leadership (in this case provincial leader- are action periods, when facility-based
ship) is to remain in touch with the TLC mem- teams will test and implement interventions
bers and focus on solving upstream problems in their local settingsand collect and report
to allow the TLCs to progress. data to measure the impact. Teams will use
Critical to the success of any individual a methodology known as the Plan-Do-Study-
TLC is establishing the appropriate mana- Act (PDSA) cycles to iteratively test ideas for
gerial capacities to guide, support, and improving how the system performs over
operate TLC activities. These will include time.2 During an action period, for example,
building the capability and technical skills teams would test different ways of imple-
of TLC members in how to manage scien- menting team-based care. Teams might try
tific improvement of systems. To acquire different approaches to structuring their
these skills, TLCs should consider forming teams or different communication strategies
technical partnerships with leading Chinese including a daily morning huddle to review
academic institutions that will contribute all assigned patients; scheduling might take

TABLE 10.2 Examples of monitoring indicators by reform goal

Action area Indicator

Goal 1: y
Admission rates for complications for diabetes, hypertension and chronic lung disease in
Achieve secondary and tertiary hospitals and aim for 20% reduction in 2 years;
better y
Number of patients whose rst contact for an illness episode occurs in primary care and aim for a
care for 20% increase in 2 years; and
Individuals y
Antibiotics prescriptions at primary care facilities and outpatient clinics and aim for a 25%
reduction in 2 years.
Goal 2: y
% of population 1875 with hypertension and whose blood pressure was adequately controlled
Achieve (<140/90) and aim for 20% improvement in 2 years;
better y
% patients with diabetes with Hemoglobin A1c <8% with aim of 20% improvement in 2 years;
Health for y
(% of women ages 1664 who received one more Pap tests to screen for cervical cancer with aim
Populations of 20% improvement in 2 years).
Goal 3: y
Inpatient admissions per/1000 population with aim of 15% reduction in two years;
Achieve y
Length of stay with aim of 20% reduction in secondary and tertiary hospitals in two years;
affordable y
Quarterly reports on total spending per insured issued by social insurance agencies indicate that
costs health cost ination similar to consumer price ination.

various forms; others might test an innova- D. Monitoring and evaluation system:
tive technology for grouping patients accord- Ensuring strong and independent
ing to various characteristics and conditions monitoring and impact evaluation
in order to perceive revealing patterns. Teams
will submit monthly progress reports on the The State Council may consider establishing
agreed upon measures to a web-based data a strong monitoring and evaluation system
collection portal. For example, as mentioned capable of independently assessing and veri-
earlier, examples of measures might include fying implementation progress and reform
the percentage of diabetic patients with gly- impacts. This can be achieved in partnership
cosylated hemoglobin <8 or with blood pres- with academic institutions. Based on the pro-
sure under control. These data will be avail- posed implementation guidelines and exist-
able to the entire TLC community for all to ing monitoring systems, SCHRO can develop
see and review. implementation benchmarks and other met-
rics to track reform implementation. Table
(iv) Reform sequencing and measurement 10.2 contains examples of value-oriented
within a TLC indicators categorized by the three overarch-
As the roll-out of TLCs begins in the selected ing goals of the reform effort (better care,
reform provinces, it will be important to better health and lower cost).
think about the sequence of implementation. Regardless of the specific path taken
Implementation pathways or guidelines for through the available reform priorities, each
each of the key technical reform levers will be reform ought to have a clear, universal mea-
included in the nal report. TLCs may elect surement framework to help guide TLC lead-
to focus on one or more of the eight reform ers and the provincial leadership groups to
areas. It is difcult to predict a priori which understand the progress on the front lines. As
reforms each TLC will select as the details a particular reform matures within facilities,
of their circumstances will likely determine this progress should be measured and under-
which reforms are most important to TLC stood so that TLC leaders and provincial
leaders. A full menu of the reforms should leadership groups can encourage the TLCs to
be made available to the TLC leaders at the move on to new areas of reform. More oper-
outset, and the leaders should devise a master ationally, the provincial leadership groups
Reform Pathway in consultation with repre- could track progress of learning collabora-
sentatives from the participating health care tives (see Table 10.3) and together with the
facilities as a rst order of business. central government monitor data on selected
132 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

TABLE 10.3 Scoring System for Transformation Learning Collaboratives

1 Forming TLC has been formed
Aim for implementation has been set and baseline measurement begun.
2 Activity TLC is meeting regularly
Participating teams are beginning local implementation activities

3 Testing Changes are being tested, but no improvements seen yet.

Data on measures is being consistently reported
4 Process Improvements recorded in processes identied as critical to achieving
Improvement Collaborative aim
5 Outcome Improvements recorded in outcomes related to the Collaborative aim
Legend: Each TLC is graded 15 on this scale based on how the TLC is progressing. These data can be averaged at whatever level of
aggregation is desired for performance review by provincial and national authorities.

utilization, cost, quality and outcome indica- Full Scale, which unfolds rapidly to enable a
tors. However, tracking progress should be larger number of sites or divisions to adopt
complemented impact evaluations that use and/or replicate the intervention. Table 10.4
methodologies to measure impact and allow displays the sequencing of TLC rollout across
comparison across sites implementing similar CDMs in a hypothetical province with about
reforms. 60 counties and districts.

Toward a sequential reform Set-up: In the set-up period, provincial lead-

implementation plan for ers will begin to build the how of imple-
mentation starting rst with examining the
reaching full scale in China administrative structures of the provinces to
Over the next five to seven years, the rec- identify where the TLCs ought to be created.
ommended unit of focus for spread will be Decisions will need to be made on how many
the province. A well-designed and detailed urban and rural TLCs will be needed, which
plan is needed for scaling-up across a prov- specic facilities will join specic TLCs, and
incethat is, ensuring that all facilities in a which TLCs will launch rst and which in
province participate in a TLC and implement subsequent years.
the reforms. This section presents description Provincial leaders will also examine the full
of the waved sequence that can achieve menu of reforms and the implementation to
province-wide spread of the eight reforms. derive a master Reform Pathway particu-
TLCs can be rolled out gradually in phases lar to their local circumstances. The specic
to all counties and districts. Depending on implementation pathways provide detailed
local context and starting conditions, there specications for what needs to be done in the
may be more than one TLC per jurisdic- corresponding thematic area (patient centered/
tion (such as a large municipality or county). integrated care model implementation, private
Four phases are required to spread TLCs sector regulation, service and capital planning,
throughout a province:3 1) Set-up, including human resource reform, realigning incen-
the provincial and local preparatory steps for tives, quality improvement). They provide
implementation of reforms, 2) Develop the clear objectives, overall milestones, measur-
Scalable Unit, which is a prototyping phase, able outputs and specic activities to achieve
3) Test of Scale-up, which expands the core them. Based on contextual requirement, each
knowledge in a variety of settings that are province would choose its own path through
likely to represent different contexts that will these activities. A master Pathway would
be encountered at full scale; and 4) Go to be carefully sequenced, taking into account

TABLE 10.4 TLC Provincial Roll Out by Phase, Time Interval and Jurisdiction

Phase Time Interval TLC roll out in counties/districts (C&Ds)

1. Set up Month 0 0 counties

2. Developing scalable unit Month 3 12 initial C&Ds

3. Testing of scale-up Month 12 Wave 1: 10 C&Ds

4. Full scale roll-out Month 24 Wave 2: 10 additional C&Ds
Month 36 Wave 3: 10 additional C&Ds
Month 48 Wave 4: 10 additional C&Ds
Month 60 Wave 5: 10 additional C&Ds
Month 72 Wave 6: 10 additional C&Ds

workforce development and infrastructural innovators who have the will and motiva-
changes to payment and information systems tion to make a change. Further, experience
and team configuration that would need to in China and internationally has shown that
precede certain clinical process changes. No strong political commitment is needed to
master Pathway will be perfect and there- overcome entrenched interests in the health
fore this process should be exible and itera- sector, make the difcult choices involved,
tive, allowing provincial leaders to work with and bring about the relentless focus on execu-
TLC leaders to amend the master reform path- tion that is needed for results. This phase will
way over time. This phase could be accom- last approximately nine months.
plished quickly, within 3 months.
Test of Scale-up: This phase involves testing
Develop the Scalable Unit: In the initial the set of interventions to be taken to scale.
phase, the scalable unit is the smallest rep- The successful strategies that aided imple-
resentative facsimile of the system targeted mentation in the initial TLCs need to be
for full-scale implementation. Within the tested in a broader range of settings before
province, the county, district or municipality going to full scale. International experience
would be the ideal scalable unit. This is where suggests that testing should take place in
the action happens for implementation and 10 additional TLCs in each of the selected
this is where the TLC will be operationalized. reform provinces starting in year 2 of the
In each target geographical area in a prov- reform period. During this phase, all neces-
ince at least one and preferably more than sary infrastructure required to support full-
one initial TLCs will be set up in the rst scale implementation will be documented,
year. The purpose of these initial TLCs is to understood and adjusted as needed, includ-
intensively test local ideas for best practice ing workforce development (e.g., leader-
implementation. An important outcome of ship, managerial, and front-line capacity),
this work will be a set of well-documented information systems management, and the
context-sensitive strategies to aid implemen- supply chain. This phase is an important
tation of specic reforms that can be further opportunity to build the condence and will
tested and rened.4 of leaders and front-line staff to support the
The choice of facility participants for changes. As the work proceeds, new insights
this initial phase of implementation is of from the reform implementation will lead to
the utmost importance. Research on change a more nuanced and mature set of context-
management and the diffusion of innova- specic strategies and ideas for change that
tion suggests identifying the front-runner can be used for full-scale implementation
134 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

throughout the province. This phase would Notes

last one year.
1. Such an environment will also be needed to
execute the implementation pathways which
Go to Full Scale: This is a rapid deployment
will be included in the nal report.
phase in which a tested set of reforms within 2. This subsection draws on the following evi-
each province, now supported by a reliable dence: Institute for Health Care Improvement,
data feedback system, can be rapidly adopted 2003; Hulscher and Schouten, 2009; Schouten,
by front-line staff throughout the province. and Grol, 2009; Jones and Piterman, 2008;
While some adaptation of the intervention Franco and Marquez, 2011; Kritchevsky et al.,
to local environments may still be required, 2008; Brush et al., 2009.
there is less emphasis on contextual adap- 3. The Plan-Do-Study-Act (PDSA) cycle guides
tation during this phase. Significant will, individuals and organizations to systemati-
knowledge, experience, and infrastructural cally test ideas for change to determine if the
change can generate a viable improvement.
support and capacity need to be in place
PDSA cycles have emerged from a long tradi-
before moving to this phase of scale-up. At
tion of hypothesis testing and change manage-
this point, a series of waves of TLCs will be ment in both science and industry. Briey, the
launched within each of the selected reform cycle works as follows. Teams thoroughly plan
provinces. Each wave of scale-up will be to test the change, taking into account cultural
informed by the knowledge gained from the and organizational characteristics. They do the
previous wave. Best performer TLC partici- work to make the change in their standard pro-
pants from early waves may coach new TLC cedures, tracking their progress using quanti-
teams in subsequent waves. This developmen- tative measures. They closely study the results
tal step will need to be explicitly described of their work for insight on how to do better.
in early stages so that TLCs can be prepared They then act to make the successful changes
permanent or to adjust the changes that need
to take on these new mentoring roles to sub-
more work. This process continues serially
sequent TLC participants. In this way, suc- over time and renement is added with each
cesses are multiplied across the province and cycle.
transformation is greatly accelerated. 4. Similar efforts to scale reforms using the same
As shown in Table 10.4 above, the sug- approach have been executed in England, for
gested plan for achieving province-wide example, with great success, leading to major
implementation is to spread the reforms in improvements in waiting times, cardiovascular
successive annual waves of 10 counties and care, and patient satisfaction.
districts until the full province is covered. 5. For example, in a project seeking to reduce
After the rst year in which 12 initial TLCs cesarean sections in Brazil, teams tested vari-
are established in each province, the second ous approaches to reduce nancial incentives
to perform C-sections. Ultimately, one of the
year would see TLCs launched in the next
most successful practices was to salary physi-
wave of jurisdictions (counties, districts and
cians rather than pay based on the volume of
municipalities) test of scale-up. A year after procedures performed. This had an immedi-
that, the next round of 10 counties and dis- ate impact on C-section rates and became a
tricts would be launched and so on until the key strategy that other organizations sought to
full province is covered. implement.
136 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

ANNEX 1 Levers and Recommended Core Actions

NO. Levers (strategic directions) Core Action Areas

1 Shaping Tiered Health 1: Primary health care is the rst point of contact;
Care Delivery System in
2: Functioning multidisciplinary teams;
Accordance with People-
Centered Integrated Care 3: Vertical Integration including new roles for hospitals;
4: Horizontal Integration;
5: Advanced information and communication technology (eHealth)
6: Integrated clinical pathways and functional dual referral systems;
7: Measurement, standards and feedback;
8: Certication.
2 Improving Quality of Care 1: Promote an organizational structure that can lead creation of an information
in Support of People- base and development of strategies for quality improvement;
Centered Integrated Care
2: Systematically measure data on quality of care, and use it continuously to
support quality improvements;
3: Transform management practice to improve quality of care in health facilities.
3 Engaging Citizens in 1: Building Health literacy;
Support of the People-
2: Strengthening self-management practices to help patients manage their
Centered Integrated Care
3: Improving shared Decision-making.
4 Reforming Public 1: Develop sound organizational arrangements for public hospital governance;
Hospitals and Improving
2: Gradually increase the delegation of decision rights to hospitals;
their Performance
3: Establish strong accountability mechanisms for autonomous public hospitals
to strengthen performance ;
4: Align Incentives with public objectives and accountabilities;
5: Strengthen and professionalize managerial capacity.
5 Realigning Incentives in 1: Switch from fee-for-service as a dominant method of paying providers to
Purchasing and Provider capitation, case-mix, and global budgets
2: Correct and realign incentives within a single, uniform and network-wide
design in support of population health, quality and cost containment;
3: Correct and realign incentives to reverse the current irrational distribution of
service by level of facilities;
4: Consolidate and strengthen the capacity of insurance agencies so as to equip
them to become strategic purchasers
6 Strengthening Health 1: Build a strong enabling environment for the development of primary health
Workforce for PCIC care workforce to implement the PCIC mode;
2: Reform the compensation system to provide strong incentives for good
3: Reform the headcount quota system so as to enable a vibrant labor market
and ecient health workforce management.
7 Strengthening Private 1: Develop a clear and shared vision on the private sectors potential contribution
Sector Engagement in to health system goals;
Production and Delivery
2: Strengthen key regulations and enforcement capacity to steer the production
of Health Services
and delivery of health services toward social goals;
3: Establish a level playing eld across public and private providers so as to
promote active private sector.
(continued on next page)

ANNEX 1 Levers and Recommended Core Actions (continued)

NO. Levers (strategic directions) Core Action Areas

8 Modernizing Health 1: Move away from the traditional input-based planning towards capital
Service Planning to Guide investments based upon region-specic epidemiological and demographic
Investment proles
2: Engage with all relevant stakeholders and local communities in the planning
3: Empower and enable regions and provinces to develop their own capital
investment plans;
4: Introduce a Certicate of Need program to evaluate and approve new capital
investments in the health sector;
5: Prioritize community health projects.

ANNEX 2 Government Policies In Support of the Eight Levers

Levers Inventory of Government policy statement in support of each lever Reference

1. Shaping a tiered health Adhere to the people-rst principle and attach primary importance to safeguarding
y Opinions of the CPC Central Committee and the State
care delivery system in the rights and interests of the peoples health. Council on Deepening the Health Care System Reform(
accordance with the People- Adhere to the tenet of serving the peoples health with health care undertakings;
y ZHONG FA[2009] No.6)
Centered Integrated Care regard safeguarding the peoples health as the center, and take the entitlement of The Notication on Health Sector Twelfth Five-Year
Model basic health care services to everyone as the fundamental aim and outcome. Plan( GUO FA[2012] NO.57)
Emphasize the combination of prevention, treatment and rehabilitation. Strengthen
y Suggestions of the CPC Committee on the 13th Five-Year
the prevention of chronic diseases. Plan for National Economic and Social Development
Make the community health to be the gate-keeper. Strengthen the three tiered
y Guidance of the General Oce of the State Council on
health service net in rural area. Improve the health service system based on the TCH. Overall Pilot Reform of Urban Public Hospitals( Guo Ban
Promote the construction of health care information system. Take advantage of
y Fa[2015] No.38)
the network information technology to promote the cooperation between urban The state council general oce opinions on the fully
hospitals and community health service institutions. implementation of comprehensive reform in the county
Establish a coordinated service system, and on the basis of enhancing grassroots
y level public hospital (Guo Ban Fa[2015] No.33)
service, optimize allocation of resources with the application of legal, social, Planning Layout of National Medical and Health Services

administrative and market tools to improve the quality of medical care and guide System (20152020) (Guo Ban Fa [2015] No.14)
reasonable medical treatment. Construction planning of grassroots health professionals
Establish the multi-level diagnosis and treatment model characterized by initial
y focusing on the general practitioners( FA GAI SHE
diagnosis by grassroots institutions, two-way referral system, separate treatments HUI[2010]NO.561)
for urgent and chronic disease and close cooperation between hospitals at dierent Guidance of the General Oce of the State Council on
levels. promoting multi-level diagnosis and treatment system
Focusing on the cultivation of general practitioners, establish the system of basic
y (Guo Ban Fa [2015] No. 70)
medical and health personnel training. The Guiding Opinions on Further Regulating Community
Health Service Management and Improving Health
Service Quality(GUO WEI JI CENG FA[2015] NO.93)
2. Improving technical quality Strengthen the regulation on health care service behavior and quality, improve
y ZHONG FA[2009] No.6
and personal experience the health care service standards and quality evaluation system, regulate the GUO FA[2012] NO.57
of care management system and work ows, quicken the formulation of the treatment Guo Ban Fa[2015] No.38
protocols, and complete the health care service quality surveillance networks. Guo Ban Fa[2015] No.33
Enhance the management and control of medical quality. Clinical examination,
y Suggestions of the CPC Committee on the 13th Five-Year
diagnosis, treatment, drug use and the use of implant medical apparatus should be Plan for National Economic and Social Development
(continued on next page)
ANNEX 2 Government Policies In Support of the Eight Levers (continued)
Levers Inventory of Government policy statement in support of each lever Reference

3. Engaging citizens in Strengthen health promotion and education. Carry out health education,
y ZHONG FA[2009] No.6
support of PCIC strengthen the dissemination of medical and health knowledge, advocate healthy GUO FA[2012] NO.57
and civilized lifestyle, promote rational nutrition among the public, and enhance the Guo Ban Fa[2015] No.38
health awareness and self-care ability of the people. Guo Ban Fa[2015] No.33
Build sound and harmonious relations between health care workers and patients.
y Guo Ban Fa [2015] No.14
Investigate timely to irrational use of drugs, material, examination, and repetitive
y Suggestions of the CPC Committee on the 13th Five-Year
examinations for economic benet. Plan for National Economic and Social Development
Promote the transparency of hospital information and establish a regular display
y GUO WEI JI CENG FA[2015] NO.93
system, including nancial situation, performance assessment, quality safety, price
and inpatient cost and etc.
4. Reforming public hospitals Transform government functions, promote separation of functions of government
y ZHONG FA[2009] No.6
and improving their agencies and public institutions, and separation of administration and business GUO FA[2012] NO.57
performance operations. Guo Ban Fa[2015] No.38
Perfect the management mechanism of public hospitals, and complete corporate
y Suggestions of the CPC Committee on the 13th Five-Year
legal person management system. Plan for National Economic and Social Development
Promote the innovation in modern hospital management, and promote the
professional specialization of dean team, improve the level of public hospital
management. Implement the autonomous right of the public hospitals, such as
personnel management, internal distribution and operations management.
5. Realigning incentives in Along with economic and social development, eorts should be made to uplift
y ZHONG FA[2009] No.6
purchasing and provider the fund raising and pooling levels step by step, narrow the gap between dierent GUO FA[2012] NO.57
payment insurance schemes, and eventually achieve the fundamental unity of those Guo Ban Fa[2015] No.38
schemes. Guo Ban Fa[2015] No.33
Explore the establishment of an integrated urban and rural health insurance scheme.
y Opinions on implementing the control of total medical
Implement the reform of the mode of health insurance payment.
y insurance payment (REN SHE BU FA[2012]No.70)
Utilize the fundamental function of health insurance, strengthen the budget
y Notication of pilot of DRGs reform ( FA GAI JIA GE[2011]
for revenues and expenditures of medical insurance fund, and establish various No.674)
payment methods, in which payment according to the type of disease is the major Opinions on further improving the reform of health
form and other forms like payment by person, payment by service unit may also be insurance payment( REN SHE BU FA[2011]No.63)
used. Promote the diagnosis related group system (DRGS). Guo Ban Fa [2015] No. 70
Establish eective, open and fair negotiation mechanism and risk sharing
y Suggestions of the CPC Committee on the 13th Five-Year
mechanism between the insurance agencies and designated medical institutions. Plan for National Economic and Social Development
Establish the restriction mechanism of medial expense growth, control the
unreasonable growth.
Implement the basic health insurance settlement directly, and cost accounting and
control. The various health insurances should regulate, control, supervise and restrict

the behavior of medical service and medical price, eectively control medical cost,
and regulate the medical service behavior of the working sta.
(continued on next page)

ANNEX 2 Government Policies In Support of the Eight Levers (continued)

Levers Inventory of Government policy statement in support of each lever Reference

6. Developing a qualified and Promote the medical talent system and innovation of mechanism.
y ZHONG FA[2009] No.6
motivated health workforce Establish the reasonable incentives of income distributions, and improve the
y GUO FA[2012] NO.57
at all levels of care treatment of medical sta. Establish a personnel system and salary system suitable Guo Ban Fa[2015] No.38
for the medical industry. The salary of the medical sta should not be linked with Guo Ban Fa[2015] No.33
the prot. Guo Ban Fa [2015] No.14
Implement the system of comprehensive performance evaluation and post-
y Several opinions on promoting and regulating doctors
performance based salary in line with service quality and workload, and eectively multi-sited practice(GUO WEI YI FA[2014]No.86)
mobilize the initiatives of health care workers. Guo Ban Fa [2015] No. 70
Deepen the reform of headcount quota system. In terms of headcount setting,
y Suggestions of the CPC Committee on the 13th Five-Year
income distribution, professional title evaluation, management and deployment, Plan for National Economic and Social Development
personnel inside or outside the authorized size should be considered as a whole, GUO WEI JI CENG FA[2015] NO.93
and the reform of endowment insurance system should be carried out according to
national regulation.
Adopt the employment system and post management system, establish a exible

employment mechanism. Ensure the autonomous right of the public hospitals in

recruiting people.
Promote registered physicians multi-sited practice.
7. Strengthening private Encourage and guide social capital to sponsor health care undertakings.
y ZHONG FA[2009] No.6
sector engagement in Promote the development of non-public health care institutions, and form a
y GUO FA[2012] NO.57
production and delivery of health care system with multiple categories of investors and diversied investment Guo Ban Fa[2015] No.38
health services modes. Encourage social forces to invest in medical industry through funding new Guo Ban Fa[2015] No.33
construction or participating restructuring. Guo Ban Fa [2015] No.14
Encourage and promote the incentives of non-public hospitals.
y Several policy measures to accelerate the development
Further easing entry requirements.
y of medical institutions sponsored by social force .(Guo
Carry out the tax policy of non-public hospitals.
y Ban Fa[2015]No.45)
Carry out the same policies with the public hospitals when the non-public hospitals
y Notication on launching the pilot of establishing wholly
is a designated medical institution. foreign-owned hospitals( GUO WEI YI HAN[2014] No.244)
Improve classication management of medical institutions, introduce the regulation
y The state council general oce opinions on further
of nonprot hospitals, such as the nature of business, the usage of surplus. encourage and guide the social capital to hold a medical
institution ( Guo Ban Fa[2010] No.58)
Suggestions of the CPC Committee on the 13th Five-Year
Plan for National Economic and Social Development
(continued on next page)
ANNEX 2 Government Policies In Support of the Eight Levers (continued)
Levers Inventory of Government policy statement in support of each lever Reference

8. Modernizing health Strengthen regional health planning

y ZHONG FA[2009] No.6
service planning to guide Optimize medical resources allocation.
y GUO FA[2012] NO.57
investment Plan resources in a dierentiated manner at dierent levels. At city level and below,
y Guo Ban Fa[2015] No.38
basic medical services and public health resources will be planned according to Guo Ban Fa[2015] No.33
size of population and service radius; at provincial level and above, resources will be Guo Ban Fa[2015]No.45
planned according to needs and priorities in dierent regions. Guo Ban Fa [2015] No.14
Instruct the health facilities to procure equipment in a rational manner according to
y Guo Ban Fa [2015] No. 70
their functions, skill competency, disciplinary development and health needs of the Suggestions of the CPC Committee on the 13th Five-Year
general public and in the spirit of resource sharing. Plan for National Economic and Social Development
The plannings implementation condition should be taken as the basis of the
hospital construction, nancial investment, performance assessment, medical
insurance payment, personnel allocation and beds arrangement. The constraint of
planning should be enhanced and the execution condition of the planning should
be made public regularly.
142 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

ANNEX 3 New Policy Guidelines on Tiered Service Delivery (Guo Ban Fa [2015] NO.70) and
Recommended Core Actions
NO. Policy Guideline Levers Supporting the Policy Guideline Specific Core Actions Supporting Policy Guideline

1 First diagnosis at the Shaping health care delivery in Primary health care is the rst point of
grassroots accordance with the People- contact;
Centered Integrated Care Model
2 Dual referral Shaping health care delivery in Integrated clinical pathways and
accordance with the People- functional dual referral systems;
Centered Integrated Care Model
3 Interaction between the Shaping health care delivery in Vertical Integration, including new roles
upper and grassroots accordance with the People- for hospitals;
Centered Integrated Care Model
4 Specify diagnosis and Shaping health care delivery in Vertical Integration, including new roles
treatment functions of accordance with the People- for hospitals;
medical institutions of Centered Integrated Care Model
dierent grades and (Lever1)
5 Enhance capability building Strengthening Health Workforce for Build a strong enabling environment for
of the grassroots health care PCIC (Lever 6) the development;
Reform the compensation system to
provide strong;
6 Enhance grassroots Shaping health care delivery in Vertical Integration, including new roles
capability in health care accordance with the People- for hospitals;
Centered Integrated Care Model
Correct and realign incentives to reverse
the current irrational distribution of
Realigning Incentives in Purchasing
service by level of facilities;
and Provider Payment (Lever 5);
Strengthening Private Sector Develop a clear and shared vision on the
Engagement in Production and private sectors potential contribution to
Delivery of Health Services(Lever 7); health system goals;
7 Consolidate sharing of Realigning Incentives in Purchasing Correct and realign incentives to reverse
regional medical resources and Provider Payment the current irrational distribution of
service by level of facilities;
8 Speed up health care Shaping health care delivery in Advanced information and
informationization accordance with the People- communication technology (eHealth);
Centered Integrated Care Model
9 Improve medical resources Shaping health care delivery in Vertical Integration, including new roles
reasonable allocation accordance with the People- for hospitals;
mechanism Centered Integrated Care Model
Realigning Incentives in Purchasing Correct and realign incentives to reverse
and Provider Payment(Lever 5) the current irrational distribution of
service by level of facilities;
10 Improve medical insurance Realigning Incentives in Purchasing Correct and realign incentives within a
payment system reform and Provider Payment(Lever 5) single, uniform and network-wide design
in support of population health, quality
and cost containment;
Correct and realign incentives to reverse
the current irrational distribution of
service by level of facilities;
(continued on next page)

ANNEX 3 New Policy Guidelines on Tiered Service Delivery (Guo Ban Fa [2015] NO.70) and
Recommended Core Actions (continued)
NO. Policy Guideline Levers Supporting the Policy Guideline Specific Core Actions Supporting Policy Guideline

11 Establish and improve prot Realigning Incentives in Purchasing Consolidate and strengthen the capacity
distribution mechanism and Provider Payment(Lever 5) of insurance agencies so as to equip them
to become strategic purchasers;
12 Structure a division of Shaping health care delivery in Vertical Integration, including new roles
labor and coordination accordance with the People- for hospitals;
mechanism for medical Centered Integrated Care Model
institutions (Lever1)
Note: New policy refers to the Guidance of the General Oce of the State Council on Promoting Multi-level Diagnosis and Treatment System (
Guo Ban Fa [2015]NO.70).
144 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

ANNEX 4 Nomenclature and Summaries of 22 PCIC Performance Improvement Initiatives

PCIC Performance Improvement Initiative Description
Chinese Case Studies

Jiangsu, Zhenjiang Great Health Zhenjiang city, situated on the Yangtze River in eastern China, implemented
(GH) the Great Health initiative in 2011 to service its two main districts. Through
In text reference: this initiative, two healthcare groups, Rehabilitation Healthcare Group and
Zhenjiang, GH Jiangbin Healthcare Group, were created that focused on vertical and horizontal
integration with new 3+X family health teams managing the care of all
contracted residents.
Shanghai Family Doctor System Huangpu and Pudong, two neighboring districts within coastal Shanghai, China,
(FDS) implemented the family doctor system (FDS) in April 2011; this case study focused
In text reference: on ve community health centers within these districts. The FDS centered on
Shanghai, FDS strengthening the relationship between the general practitioner and contracted
resident by using empanelment and improved frontline service delivery to
establish a continuous healthcare relationship with a particular focus on the
management of chronic diseases.
Qinghai, Huangzhong Health Located in the northwest part of China, Huangzhong County of Qinghai
Care Alliance (HCA) Province implemented a health care alliance (HCA) system in 2013 with the plan
In text reference: to vertically integrate county, township, and village health centers. By focusing
Huangzhong, HCA on creating a unied administration, integration of human resources, tight dual
referral arrangement, interconnection health information systems (HIS), and
shared medical resources, an integrated county-township-village health system
Zhejiang, Hangzhou Twelfth Five Hangzhou, the capital of Zhejiang province in China, is home to over eight
Year (TFY) million individuals, and has traditionally struggled with providing equal and
In text reference: sucient health care to its citizens. In an eort to curb such obstacles, the 12th
Hangzhou, TFY Five Year Plan was implemented in 2011, and key aspects included integrated
e-consultation services, non-communicable disease joint centers, and
collaborative services for medical and living support and nursing care.
Anhui, Feixi Strengthening the Feixi County of Anhui Province is located in the eastern part of China with a
Capacity of Primary Health Care population of roughly 850,000 citizens. In 2009, Feixi became the pilot site for
(SCPHC) the initiative, Strengthening the Primary Health Care Capacity as set forth
In text reference: by the government, which focused on strengthening four sectors: 1) human
Feixi, SCPHC resources, 2) network building, 3) organization and management, and 4) working
Henan, Xi Integrated Care (IC) The Integrated Care (IC) Reform in Xi, China addressed low quality of care for
In text reference: non-communicable diseases and disjointed health systems by implementing
Xi, IC contracts between county hospitals, township health centers, and village clinics
in 2012. The initiative focused on building a strong referral mechanism, providing
technical assistance to lower-level facilities, and altering the payment system to
support cost sharing, all of which has had considerable success even in its early
Beijing Beijing Chaoyang Hospital The Beijing Chaoyang Hospital Alliance, started in late 2012, aimed to attract
Alliance (CHA), Four Cases patients to utilize community health centers more frequently for minor ailments
In text reference: and strengthen the collaboration between upper- and lower-level facilities. The
Beijing, CHA CHA was composed of a core hospital, a second tertiary hospital, a secondary
hospital, and a number of community health centers, which coordinated care for
patients; as a result of this structure, the growth rate of participating facilities rose
from 2012 to 2013.
(continued on next page)

ANNEX 4 Nomenclature and Summaries of 22 PCIC Performance Improvement Initiatives (continued)

PCIC Performance Improvement Initiative Description

Beijing Peking University-Renmin Started in 2007, the PKU-Renmin Hospital IDS in Beijing targeted increased
Hospital Integrated Delivery technical assistance between health facilities and improved communication
System (PKU IDS), Four cases between providers through an information technology system. Through
In text reference: this system, providers were able to engage in tele-discussions and specialist
Beijing, PKU IDS education and training thus supplementing available advanced studies for all
providers in the IDS.
Shanghai Shanghai Ruijin-Luwan In 2011, the Shanghai Reuijin-Luwan Groups was established, consisting of
Hospital Groups (RLG), Four Cases Shanghai Jiaotong University as its core hospital, two secondary hospitals, and
In text reference: four community health centers, which serviced people in the immediate area.
Shanghai, RLG This healthcare group created a shared imaging and testing center that increased
access for residents, provided specialist-GP joint outpatient visits for patients in
community health centers, and strengthened its previously-existing primary care
provider training base.
Jiangsu, Zhenjiang Jiangsu Jiangsu Zhenjiang Kangfu Hospital Groups began in late 2009 in Zhenjiang,
Zhenjiang Kangfu Hospital Groups China. This initiative integrated imaging, chemical laboratory, and pathological
(ZKG), Four cases test departments and required primary health care facilities to take more
In text reference: responsibility for chronic disease outpatient services. Additionally, the hospital
Zhenjiang, ZKG group established 3+X health teams and supported more frequent information
International Case Studies

Denmark The integrated eort for Denmark piloted its chronic disease rehabilitation programs in Copenhagen with
people living with chronic diseases four centers, called SIKS rehabilitation centers. Due to the success of the SIKS
(SIKS) centers, Denmark embarked on a national Disease Management Program, which
In text reference: provides integrated comprehensive chronic disease care.
Denmark, SIKS
England, James Cook University The James Cook University Hospital is located in northern England. Hospitals are
Hospital (JCUH) Ambulatory public, but semi-autonomous. In the early 2000s, it developed an Ambulatory
Emergency Care (AEC) Emergency Care Center where patients could receive same-day care using
In text reference: pre-determined clinical guidelines for certain conditions instead of being
JCUH, AEC hospitalized. Simultaneously, they developed patient care pathways and explicitly
strengthened the interface between primary care physicians and the hospitals.
Germany, Kinzigtal Gesundes Gesundes Kinzigtal, located in the Black Forest area, of Germany, launched
Kinzigtal (GK) in 2005 a unication of a non-prot, physician-run organization, MQNK, and
In text reference: OptiMedis, a health science management and investment company. The
Kinzigtal, GK integrated organizational model focused on improving the health of the
population as well as patient experience while considering a fair business plan
that appropriately incentivized patients and providers to join.
Netherlands Maastricht Diabetes The Maastricht region in the south of the Netherlands developed an integrated
Care (DTC) framework for diabetes care where the insurers negotiate with the primary care
In text reference: physicians a price for a complete package of care for a specic disease. Based on
Netherlands, DTC its success, the Netherlands expanded this program nationwide in 2010.
New Zealand, Canterbury Health Canterbury, a district in the central part of New Zealand developed its Health
Services Plan (HSP) Services Plan in 2007. The plan included initiatives like the Acute Demand
In text reference: Management Services, HealthPathways standardizing care for hundreds of
Canterbury, HSP conditions, and the Community Rehabilitation and Enablement Support Team.
Concurrent enabling initiatives including electronic medical record system,
electronic referral system, clinical continuing education programs, and formal
alliance between healthcare facilities supported their mission of developing
people-centered, coordinated, and integrated healthcare.
(continued on next page)
146 D E E P E N I N G H E A LT H R E F O R M I N C H I N A

ANNEX 4 Nomenclature and Summaries of 22 PCIC Performance Improvement Initiatives (continued)

PCIC Performance Improvement Initiative Description

Norway, Fosen District Medical Fosen, Norway, a municipality in fjords of Northern Norway, developed a
Center (DMC) comprehensive District Medical Center model. The DMC provides integrated,
In text reference: coordinated, acute medical care to people in their community in order to avoid
Fosen, DMC hospital stays. In 2012, Norway modeled its national health care initiative o of
Fosens successful DMC model.
Portugal Local Health Unit (ULS) In 1999, a small province in the Northwest of Portugal created a Local Health
In text reference: Unit (ULS) that provides integrated primary and secondary care to a dened
Portugal, ULS geographic area (Matosinhos) with centralized management and coordinated
services. 2007 onwards, 7 more ULS have been established and now serve 10
percent of the Portuguese population.
Singapore Regional Health Singapore reorganized its health care system by developing six Regional Health
Systems (RHS) Systems, which aim to provide horizontally and vertically integrated healthcare
In text reference: ecosystems. RHSs each innovated and developed interventions to provide
Singapore, RHS integrated coordinated care. Some examples of these interventions include Aged
Care Transition, Ageing in Place, Post-Acute Care at Home, Community Health
Assist Schemes, Family Medicine Centers, and Integrated Care Pathways.
Turkey Health Transition Plan Turkeys 2003 National Health Transformation Program focused on the
(HTP) establishment of high quality, family medicine centers accountable for individual
In text reference: and population health in every district of the country. Restructuring of hospitals,
Turkey, HTP physician payment, data management and national health insurance facilitated
this transformation.
United States, Maryland CareFirst This case study describes the Patient-Centered Medical Home payment model
Patient Centered Medical Home created by the health insurance company CareFirst of Maryland. Support from
In text reference: the insurance company and a new nancial incentive structure supported
Maryland, CareFirst improvement of frontline delivery services across the state, resulting in improved
quality and lower utilization of hospital and specialty care services.
United States Program for All- PACE Centers across the country provide coordinated, integrated, holistic care
Inclusive Care for the Elderly (PACE) for frail nursing home eligible patients in their own homes. Funded by capitation
In text reference: payments from Medicare and Medicaid, PACE centers each care for around 300
US, PACE patients. The PACE model originated in California and has now spread to 30 states
in the US.
United States, Veterans Health Across the United States the Patient Centered Medical Home (PCMH) model
Administration Patient-Aligned has been used to integrate and improve primary care. The Veterans Health
Care Teams (PACT) Administration drew on the PCMH model and created the Patient-Aligned
In text reference: Care Team (PACT) model to reorganize the way they provide primary care and
VHA, PACT integrate vertically with the rest of the system. VHA primary care is now based
entirely on multidisciplinary team-based model, with early evidence of success.
ANNEX 5 Impact Frequency of Studies on PCIC Initiatives (no. of studies)
Hospitalizations Intermediate health
Processes of Patient
Model Impact and Emergency outcomes and Costs Citation
care experience
Department (ED) use mortality

General PCIC Improvement 17 7 21 9 22 Nolte and Pitchforth (2014); Hildebrandt et al,

(52 studies) (2015); Schulte et al. (2014); World Bank (2015);
No change or worsened 5 4 10 1 2
Guanais & Macinko (2009); Macinko et al (2011)
Insucient/Inconclusive evidence, 30 41 21 42 28
or not measured
PCMH Improvement 12 7 4 2 6 Reid et al (2010); Reid et al (2013); Gilllan et al
(14 interventions) (2010); van Hasselt et al (2015); Rosenthal et al
No change or worsened 2 1 1 0 2
(2013); Nelson et al (2014); Werner et al (2014);
Insucient/Inconclusive evidence, 0 6 9 12 Hebert et al (2014); Bitton (2015); DeVries et al
or not measured (2012); Field et al (2013); Friedberg et al (2014);
Wang et al (2014); Friedberg et al (2015); World
Bank (2015)
PACE Improvement 9 0 7 1 0 Beauchamp et al. (2008); Chatterji et al. (1998);
(16 studies) Weaver et al. (2008); Mukamel, Bajorska, & Temkin-
No change or worsened 1 0 1 3 0
Greener (2002); Temkin-Greener, Bajorska, &
Insucient/Inconclusive evidence, 6 16 8 12 16 Mukamel (2008); Kane et al. (2006b); Kane et al.
or not measured (2006a); Meret-Hanke (2011); Wieland et al. (2000);
Division of Health Care Finance & Policy (2005);
Kane, Homyak, & Bershadsky (2002); Mukamel et al.
(2006); Mukamel et al. (2007); Wieland et al. (2010);
Mancuso, Yamashiro, & Felver (2005); Mukamel,
Temkin-Greener, & Clark (1998)
Disease/Case Improvement 82 22 64 28 34 Nolte and Pitchforth (2014); Runz-Jrgensen and
management Frlich (2015), Frlich et al (2015); Vadstrup et al
No change or worsened 29 6 25 8 37
(257 studies) (2011); Elissen et al (2012); Elissen et al (2015); Struijs
Insucient/Inconclusive evidence 17 0 14 10 9 et al (2012); Struijs et al (2012b)
Not measured 129 229 154 211 178
China Improvement 1 6 1 1 2 World Bank (2015)
(6 case studies)
No change or worsened 0 0 0 0 0
Insucient/Inconclusive evidence 5 0 5 5 4

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