Reform and Innovation for Better Rural Health Services in China

April 2, 2015

Launched in 2008, the China Rural Health Project, supported by the World Bank and the Department for International Development (DfID) of the United Kingdom, was implemented in 40 counties in eight provinces, focusing on development of the rural health insurance system, improvement of the rural health service delivery, provision of core public health services, reform of the county-level public hospitals, and capacity strengthening. The project conducted a series of comprehensive reform pilot projects over six years, providing replicable experiences and solutions for China in its efforts to ensure equal access to affordable and high quality health services for the rural population.


In 2008, China’s health sector faced four key challenges:

  •  Significant health inequalities: Since the mid-1990s infant and maternal mortality rates in rural China had consistently been two to three times higher than those in urban areas. In the poorest fifth of the population covered by China’s maternal and child health observation system, the maternal mortality rate was 73 per 100,000 live births; in the richest fifth, the rate was 17 per 100,000.
  • Decreasing affordability of health care: out-of-pocket expenses constituted a barrier to obtaining care and a cause of poverty. Not only did the cost of care increase disproportionately to per capita income growth over recent years, but patients also paid a larger share of the cost out of their own pockets.
  • Poor quality of care and low efficiency in health service delivery: The qualification and skill of providers was low, especially at the village level. Studies confirmed widespread perception of unnecessary care, particularly when it came to excessive drug prescriptions and hospital lengths of stay. In addition, the efficiency of health care providers was also a matter of concern.
  • Weak public health functions: Decentralized and partially funded by government general revenue, public health institutions tended to focus on non-primary, non-preventative care in order to generate revenue. The dual challenge of communicable disease and non-communicable disease posed additional burdens on the monitoring and prevention function of the public health system.

In recent years, the government of China has made great efforts to address these concerns, by rolling out of the New Rural Cooperative Medical Scheme, urban resident health insurance and Medical Assistance Program. It has also actively engaged in reforming public health institutions and policies, and substantially increased government spending on public health. Efforts are also underway to improve the performance of health care providers, such as through essential drug lists, competitive selection of managers, increased reliance on contracting staff, contracting out of support services, and vertical and horizontal integration.


The China Rural Health Project was designed to support key innovations and generate knowledge useful to the government for its ongoing health reform program, with an objective to achieve increased and more equitable access to quality health services, improved financial protection, and better management of public health threats in pilot provinces and counties, with lessons to support reforms in non-project areas.

The project focused on three reform areas:

  • improving rural health financing;
  • improving quality, efficiency and cost control in service delivery; and
  • financing and organization of core public health functions.

" In the project areas, the rural health service system is more solid, and rural residents have better access to basic healthcare services. The project has achieved all its goals.  "

Chen Xiaohong

Vice Minister, National Health and Family Planning Commission of the People’s Republic of China


Between 2008 and 2014, the project was implemented in 40 counties in eight provinces (Shaanxi, Chongqing, Qinghai and Gansu in west China, Henan, Shanxi and Heilongjiang in central China, and Jiangsu in east China) covering regions at different development levels in the east, central and west of he country. Sixty percent of the project counties were considered national poverty counties. 

Among many, the project achieved the following key outcomes and results:

Health financing:

  • Sustainable financing for rural health insurance scheme: The project explored various innovative approaches for rural health insurance scheme premium collection, many of which have become the provincial policy in the project areas.
  • Integrated management of rural health insurance and medical assistance schemes: The project explored ways to integrate the rural health insurance scheme with a medical assistance program. Real-time settlement of medical expenses was put into operation through upgraded information system so that the patients only need to pay out-of-pocket expenses.
  • Catastrophic illness expenses fund: As a supplement scheme, the project established the catastrophic funds for medical expenses of catastrophic illness that would result in high out-of-pocket spending for beneficiaries.
  • Provider payment reform: Reform was carried out in the provider payment system for the New Rural Cooperative Medical Scheme, covering all health facilities and diseases in the project counties.  Experiments were conducted in alternative payment methods, including case based payment for inpatient stay on the basis of clinical pathways, per diem payment, and capitation for outpatient service.  The project also piloted ways to link the payment reform with public health service, including outpatient services for non-communicable diseases.  Guidelines and case studies on payment system reform were prepared and published to disseminate knowledge and good practices.

Service Delivery:

  • Strengthening the rural service delivery system: About 2,300 village clinics were built, expanded or rehabilitated, with improved medical equipment and office supplies.  A rural health human resources development plan was formulated, and 180,728 health workers were trained. 
  • Comprehensive county public hospital reform: Comprehensive public hospital reform was implemented in some project counties with a focus on remodeling the payment system from fee-for-service to case-based payment, implementing an IT based clinical pathways to standardize the quality of service and control costs, and introducing a performance-based payment system for internal income distribution among physicians and departments. This has led to better care, shorter length of hospital stay and lower costs for rural patients.
  • Quality assessment and performance evaluation: A performance based management system was established in the primary health care facilities in the project areas.  The key elements of the system include competitive recruitment of the facility directors, post responsibility definition and service quality indicators, and a set of performance criteria that include the quality of service, quantity, (quality and quantity of service?) efficiency and patient satisfaction. Government subsidy to the facilities and income of the staff are directly linked to the performance evaluation results. As a result, the quality, efficiency and cost control in rural health service delivery has been improved.
  • Reduction of the Cesarean rate: As China has one of the highest cesarean delivery rates in the world, interventions targeting maternal and child hospitals, physicians and parents were introduced with the goal to promote natural delivery. As a result, the C-section rate decreased in the project counties compared with the baseline of 2008.
  • Coordinated care model: The rapid aging population and the epidemic of non-communicable diseases calls on a new service model which provides continuum of care and coordinated services among different providers to address the needs of citizens. The new service model was piloted in Henan province, which has integrated the services among county hospital, township health center and village clinics for patients of non-communicable diseases.

Public Health:

  • Essential public health services (EPHS) package: 35 Yuan per capita is provided by the Chinese Government to finance the basic public health service packages, which covers 42 services. Different approaches were designed and implemented in the project to turn the equal financing to equal services for the citizens.
  • Non-communicable disease risk factor monitoring and management: A multi-discipline and multi-sectoral Non-communicable disease management platform and service model was developed to align the key elements of NCD disease management including prevention, financing of the services and medical treatment.
  • Public health scorecard Tools were developed for rural public health service performance measurement. The performance indicators cover both inputs such as human resources, budgets, equipment, policies and systems, and outcomes such as population’s health status, lab testing, disease prevention and control, response to public health emergencies, occupational safety, food safety, maternal and child health, health promotion, sanitation and vulnerable groups.

Building Healthy Villages: A “Healthy Village” program was carried out to promote health awareness, good hygiene, and clean environment. As a result, villagers became more proactive in protecting their personal health – “I am responsible for my own health”. 

Learning platform

  • The project served as a shared learning and knowledge exchange platform among participating counties and provinces. Knowledge was captured, documented and shared through project briefings, expert panels, site visits and semi-annual dissemination workshops.
  • Experience and lessons from the project were also shared with other countries through south-south knowledge exchange program, including project visits by delegations from the WHO, Mekong river countries, and central Asian countries. In addition project teams were invited to make presentations in international conferences


The World Bank provided a loan of $50 million. It was the 11th health-lending project that the World Bank has supported in China since 1984. These projects, with total World Bank financing of $973 million, as well as policy studies, have contributed significantly to China’s health service delivery capacity development, major diseases control as well as the health system reforms.


The Department for International Development (DfID) of the United Kingdom provided a grant of £5 million.  The total investment, including the World Bank loan, DfID grant and Chinese Government’s own funding, amounted to RMB420 million, equivalent to about $70 million.


In July 2014, China and the World Bank agreed to launch a study on rebalancing China’s health service delivery system to face the challenges of a rapidly aging population and eruption of non-communicable disease epidemic as well as rapid urbanization. The study conducted in collaboration with the Chinese Ministry of Finance, the National Health and Family Planning Commission, the Ministry of Human Resources and Social Security and the World Health Organization (WHO) will search for practical and sustainable options for health sector reforms, including in the private sector.  It aims to help China build a people-centered health service delivery system and accelerate its efforts to provide affordable, quality health service, especially for its aging population and rising middle class facing non-communicable diseases.

The World Bank is also working closely with the government in preparing a new lending operation on health reform with the focus being to pilot and establish a people-centered health care delivery system in China.  Built on the experiences and lessons of the Rural Health project, the new project will adopt the World Bank’s innovative lending approach, the so-called “Program for Results” instrument.


Chen Xiaohong, Vice Minister, National Health and Family Planning Commission of the People’s Republic of China

Through nearly six years of project implementation, equity in financing and access of healthcare has been improved, and the rural healthcare safety net has been strengthened with reduced burden of disease on the rural population. In the project areas, the rural health service system is more solid, and rural residents have better access to basic healthcare services. The project has achieved all its goals. Guided by the strategy to deepen health system reform, and learning from international best practice, the project provinces experimented with various new approaches in the areas of payment system reform, provider performance management, public health service delivery and management, county-level public hospital reform, and healthy village development. Experience and lessons learned from the project have been disseminated and replicated in other parts of the country, and paved the way for the next phase of health reform in China. 

health workers were trained.