Curing China's Ailing Health Care System

Although SARS is finally on the retreat, it showed that China’s national health system needs a thorough "tune up" after 20 years of official neglect. A cartoon in China’s English language newspaper, the China Daily, captured prevailing attitudes about physicians’ roles. A frail old lady is lying in bed and she asks her sneering doctor, "Doctor, may I leave the hospital?" He responds, "How much money do you still have?" An accompanying editorial accused hospitals and doctors of prescribing unnecessary drugs to generate revenues and recommended that patients get daily hospital bills to prevent cheating. Graft and corruption in medical care are reported to be commonplace and to be particularly egregious in relation to the distribution and sale of drugs. The average stay in a hospital run by the Ministry of Health in Beijing, for instance, costs almost Y11,500 ($1,400), equivalent to six months’ salary for the typical city resident. There has been a colossal mismatch between the needs of many patients and the equipment found in urban hospitals, where staff fund running expenses and supplement their meager government pay by charging patients heavily for often unnecessary high-tech procedures.

At the end of 2002 Beijing, with a population of 13 million, had more CAT scanners than England, with a population of 49 million, according to Wang Jian, a researcher at the China Academy of Health Policy at Peking University. Yet hospitals with state-of-the-art equipment are so short-staffed that they often require relatives to bring patients their meals, and even to nurse them. The cost of delivering a baby in Beijing is three to four times the cost in the countryside, according to Wang. The big cities, where health care costs have escalated 15 percent a year, are consuming 80 percent of China’s medical resources. According to the World Bank, 75 percent of health spending goes to hospital-based care, with 60 percent of that going to pharmaceuticals.

China’s total medical spending was equivalent to a respectable 5.3 percent of GDP in 2000, but 63 percent came straight from people’s pockets, up from 53 percent in 1995, according to the World Health Organization’s (WHO’s) World Health Report 2002. In rural areas, where 700 million of China’s people live, most people have no insurance and medical costs have risen much faster than farmers’ incomes. The rural health service is comparable with that in India. In both countries, according to an influential WHO report in 2001, "the rural poor pay out of pocket for around 85 percent of the total health services that they receive," and much of that goes for "unnecessary or inappropriate drugs foisted on them by clinics that fund themselves through sales of pharmaceutical products, or to unlicensed and unqualified practitioners." Sixty-five percent of rural patients could not afford to go to a hospital for necessary treatment, and of those who went more than half left prematurely. In short, the rural population and the urban poor and unemployed increasingly cannot access the health care system.

The few hundred deaths from SARS are just a fraction of the 130,000 Chinese who die annually from tuberculosis, which is preventable. Also the UN forecasts that the number of people with HIV/AIDS in China will reach 10 million by 2010. "Right now 5 million people in China have tuberculosis, 10 percent of people have chronic hepatitis B," says Daniel Chin, a WHO official, who adds that because of both the lack of resources and attention, such silent epidemics are simply ignored.

Between 1949 and 1975 life expectancy doubled and more than 85 percent of the population had some form of health care coverage, but with the economic reforms that started in the late 1970s, that system deteriorated, especially in the countryside. In 1981, 71 percent of Chinese had access to state health facilities; 12 years later the figure was 21 percent. In 1999 China ranked 144th among 191 WHO member countries in per capita health expenditures. One reason for the decaying public health system has been that during the reform era the central government has had a decreasing amount of control over the disposition of financial resources and more tasks are being pushed upon often impoverished local governments.

China’s patients are also concerned about the quality of medical care. Medical errors are widely broadcast, and stories about substandard care, counterfeit medicines, inaccurate diagnostic and therapeutic equipment, inhumane treatment, and corruption are frequent. Patients who are financially able to do so choose high-tech, expensive, academic medical centers instead of adequate and less expensive local facilities. Others feel compelled to give physicians hong bao, red envelopes stuffed with cash, in the belief that the illegal payments will encourage better care. Apart from bad outcomes, patients also suffer from poor service. They endure long waits, inadequate facilities, rude personnel, lost records, and a lack of privacy.

China has many honorable, compassionate, skilled physicians, and they too are frustrated. Overworked, they see themselves falling behind economically. Industrious taxi drivers can make more money. Prices for health care services are set well below costs, requiring doctors to generate income from drug sales and high-tech diagnostic and therapeutic interventions to keep their hospitals solvent.

Nevertheless, there is hope. In the last five years the government has introduced social insurance reform and attempted to reverse the flagrant abuses in the provision of drugs. It has made medical records more transparent for patients and introduced a malpractice system. There is also growing awareness that health sector leaders must be trained in the business of medicine, because health care is also a competitive service industry. Beijing and local governments recently announced new funding of Y11 billion ($1.3 billion) for the beleaguered national health system.

Based on articles in the Washington Post by Gerald Lazarus and in the Far Eastern Economic Review by David Murphy and David Lampton. Gerald Lazarus is a professor of dermatology at the Johns Hopkins School of Medicine, Baltimore, Maryland, and was a visiting professor at Peking Union Medical College Hospital from 1999 to 2002. David Lampton is director of China Studies at Johns Hopkins-SAIS and the Nixon Center in Washington, D.C.