ArticleBizTime: Public Money, Private Care
In the most recent health care reform proposal, the government said again that it will try to introduce more private capital into the system to run not-for-profit hospital. Private and nonprofit might seem contradictory, so we decided to find out how these hospitals are supposed to work.
There are not a lot of them around, but they are indeed here... Hospitals founded on money out of private pockets. They are supposedly not designed to make a profit... Instead of charging higher prices like other private hospitals usually do... Nonprofits are required to be in line with the public system.
Prof. Ma Jin, Executive Dean of School of Public Health, Shanghai Jiaotong University
The prices nonprofit hospitals charge on services are set by the government, so they are more or less the same as those at public hospitals.
Experts say that pricing power was given up in exchange for a couple of benefits... Nonprofits register with the civil affairs bureau, while for-profit institutions have to register with the industrial and commercial bureau and receive stricter regulations. And more importantly, nonprofits don't pay taxes on their income, because that money is required to be reinvested for public good.
Prof. Ma Jin, Shanghai Jiaotong University
If a charity hospital makes money, it can't pay out dividends to investors. that money has to be reinvested in the hospital.
Private hospitals were first introduced back a decade ago. When the government ran short on money and decided to introduce profit incentives for hospitals, public or private, to offer more services.
Dr. Hans Troedsson, China Representative of World Health Organization
The health care system as I see in China is underfinanced, either services run privately or by the government, so more investment will be welcome.
10 years later, the wait did get a little shorter, but only for those who can afford to pay the extra, and now the government hopes by encouraging charity hospitals. It closes the gap between limited state resources and a vast population that needs cheap care.
Ying Xiaohua, Fudan Univeristy
One thing the government wants is for these hospitals to cover groups of patients and regions the public system does not have sufficient coverage.
That includes, experts say, remote areas that traditionally lacks health care access, where charity hospitals can provide basic care on the cheap just like their public counterparts, or they can focus on the types of illnesses that public hospitals are traditionally weak on. Doctor Guo Hui was a brain surgeon with a state hospital before. Now he runs a charity hospital that he says aims to pick up the lapse in the public system in treating epilepsy patients.
Dr. Guo Hui, Deputy Dean of Quyang Hospital
China has 9 million epilepsy patients, and half a million new cases each year, but 60 percent of these patients go untreated. // The public system moves too slowly, it'd take years before it gets the capacity to match the demand.
And business is good. Guo says his hospital made about 100 million in profits last year, money that was spent on hiring more experts and funding more research. But some experts say not all charity hospitals are here for the right reason, with the profit incentive so huge, and the regulation weak, money might be getting out through the backdoor. Professor Ying Xiaohua did a study on private hospitals, he says back door solutions include booking higher costs to hide profits, and getting kickbacks from suppliers, and he says there's evidence to what he says.
Ying Xiaohua, Fudan Univeristy
Our study shows the quality of care at private hospitals, nonprofit or not, simply can't match that of public ones. Other factors aside, at least part of that is because most of they are after money, and what they do might not be in the best interest of patients.
And he says, there is a way to fix the misplaced incentives.
Ying Xiaohua, Fudan Univeristy
The best approach is to separate the donor from hospital. Donors need to be hands off. They shouldn't get to sit on the board and make management decisions. And that's whow a lot of.
After getting the incentives right, experts say the government still has a lot to do to help those hospitals take flight. For one, some discriminations against the private sector need to be eliminated.
A reported issued by China's Ministry of Health indicates that currently nearly 80 percent of the country's population is covered by the basic medical insurance system. In some developed areas, the percentage is even higher.
Naturally, the destiny of private non-profit hospitals is closely related to whether they could become designated hospitals of basic medical insurance institutions. Theoretically speaking, all hospitals, no matter government or private, are all based on an equal footing in this issue. But in practice, it's a different picture.
Guo Hui, Quyang Hospital
For instance, for hospitals of the same scale, those funded by the government might be allowed with a maximum use of 100 million Yuan in medical insurance. But for private non-profit hospitals like us, the ceiling could be 40 million Yuan. There's no explanation for such policies.