How hospital autonomy affects provider payment reform effectiveness.

BACKGROUND: Provider payment reforms (PPRs) have demonstrated mixed results for improving health system efficiency. Since PPRs require health care organisations to interpret and implement policies, the organizational characteristics of hospitals may affect the effectiveness of PPRs. Hospitals with more autonomy have the flexibility to respond to PPRs more efficiently, but they may not if the autonomy previously facilitated behaviours that counter the PPR's objective. This study examines whether hospitals with higher autonomy responds to PPRs more effectively. METHODS: We used data from a matched-pair, cluster randomized controlled PPR intervention in a resource-limited Chinese province between 2014 and 2018. The intervention reformed the reimbursement method from the publicly administered New Cooperative Medical Scheme (NCMS) from fee-for-service to global budget. We interacted measures of hospital autonomy over surplus, hiring, and procurement (drugs, consumables, equipment, and overall index) with the difference-in-difference estimator to examine how autonomy moderated the intervention's effect. RESULTS: Autonomy over surplus (p < 0.01) and procurement of equipment (p < 0.01) were associated with relatively faster NCMS expenditure growth, demonstrating worse PPR response. They were also associated with higher expenditure shifting to out-of-pocket expenditures (p > 0.05). Post hoc analysis suggests that hospitals with surplus autonomy had higher OOP per admission (p < 0.01), suggesting profiteering tendencies. Other dimensions of autonomy demonstrated imprecise association. DISCUSSION: Hospitals with more autonomy may not necessarily respond more effectively to PPRs that incentivise efficiency when they had previously been encouraged to maximise profit. Policymakers should assess the extent of perverse incentives before granting autonomy and adjust the incentives accordingly.

Realigning demand and supply side incentives to improve primary health care seeking in rural China.

China's recent and ambitious health care reform involves a shift from the reliance on markets to the reaffirmation of the central role of the state in the financing and provision of services. In collaboration with the Government of the Ningxia province, we examined the impact of two key features of the reform on health care utilisation using panel household data. The first policy change was a redesign of the rural insurance benefit package, with an emphasis on reorientating incentives away from inpatient towards outpatient care. The second policy change involved a shift from a fee-for-service payment method to a capitation budget with pay-for-performance amongst primary care providers. We find that the insurance intervention, in isolation, led to a 47% increase in the use of outpatient care at village clinics and greater intensity of treatment (e.g. injections). By contrast, the two interventions in combination showed no effect on health care use over and above that generated by the redesign of the insurance benefit package.

Early appraisal of China's huge and complex health-care reforms.

China's 3 year, CN¥850 billion (US$125 billion) reform plan, launched in 2009, marked the first phase towards achieving comprehensive universal health coverage by 2020. The government's undertaking of systemic reform and its affirmation of its role in financing health care together with priorities for prevention, primary care, and redistribution of finance and human resources to poor regions are positive developments. Accomplishing nearly universal insurance coverage in such a short time is commendable. However, transformation of money and insurance coverage into cost-effective services is difficult when delivery of health care is hindered by waste, inefficiencies, poor quality of services, and scarcity and maldistribution of the qualified workforce. China must reform its incentive structures for providers, improve governance of public hospitals, and institute a stronger regulatory system, but these changes have been slowed by opposition from stakeholders and lack of implementation capacity. The pace of reform should be moderated to allow service providers to develop absorptive capacity. Independent, outcome-based monitoring and evaluation by a third-party are essential for mid-course correction of the plans and to make officials and providers accountable.

Realignment of incentives for health-care providers in China.

Inappropriate incentives as part of China's fee-for-service payment system have resulted in rapid cost increase, inefficiencies, poor quality, unaffordable health care, and an erosion of medical ethics. To reverse these outcomes, a strategy of experimentation to realign incentives for providers with the social goals of improvement in quality and efficiency has been initiated in China. This Review shows how lessons that have been learned from international experiences have been improved further in China by realignment of the incentives for providers towards prevention and primary care, and incorporation of a treatment protocol for hospital services. Although many experiments are new, preliminary evidence suggests a potential to produce savings in costs. However, because these experiments have not been scientifically assessed in China, evidence of their effects on quality and health outcome is largely missing. Although a reform of the provider's payment can be an effective short-term strategy, professional ethics need to be re-established and incentives changed to alter the profit motives of Chinese hospitals and physicians alike. When hospitals are given incentives to achieve maximum profit, incentives for hospitals and physicians must be separated.