China s Social Medical Insurance System Needs the Support of a Sound Medical Service System

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1 Network of Asia-Pacific Schools and Institutes of Public Administration and Governance (NAPSIPAG) Annual Conference 2005 BEIJING, PRC, 5-7 DECEMBER 2005 THEME: THE ROLE OF PUBLIC ADMINISTRATION IN BUILDING A HARMONIOUS SOCIETY Workshop on Health Care for the Poor in Asia China s Social Medical Insurance System Needs the Support of a Sound Medical Service System Mao Ying 1,Li Jiaofeng 2,Chen Gang 2,Du Yingdong 2 1. Associate Professor, Xi an Jiaotong University, Xi an, Graduate Student, Xi an Jiaotong University, Xi an,

2 Abstract : The medical care that the social medical insurance provides is realized through the medical service system. The consolidation and development of the social medical insurance system requires the sound support of the medical service system. The general purpose of the medical service system reform on the social medical insurance system is to obtain better medical care with improved efficiency and less cost. There are five aspects related. The medical service system needs to pay attention to three important problems to establish a sound medical care system: The government should play the leading role, and the social benefit should be prioritized in the medical system reform; The goal in structuring a rational medical service system is to establish a two-tiered structure of the medical service system; The sound medical service system must be operated by a mechanism that is responsible, encouraged, competitive and vigorous. Keywords: Social medical insurance; Medical service system; Market mechanism China carried out the profound reform of the worker's medical insurance system in the 1990s. After the Zhenjiang and Jiujiang experiments, the State Council issued The decision on setting up the urban worker's basic medical insurance system at the end of 1998(hereinafter the 1998 report ), and decided to pursue the urban worker's basic medical insurance system through the country. Through seven years of hard work, the urban workers basic medical insurance system has already been tentatively established nationwide. It now enters the stage of further improvement to the management mechanism, expansion of the social medical insurance coverage rate and consolidation and development of the basic medical insurance system. The establishment, consolidation and development of the social medical insurance system requires the country guide and society, combine the strength of various fields to reach the anticipated goal. Concrete operation of the social medical insurance system is realized through the coordination of the social medical insurance organization, the medical care providers and the insured. This text addresses improvements in the medical service system which need to be made is for the social medical insurance system to succeed. 1 The requirements of the social medical insurance system for reformation of the medical service system The purpose of the social medical insurance system is to promote the health of people. To achieve this purpose, the medical service system is indispensable because the medical service system provides medical service to prevent the occurrence of disease, alleviate the pain of sickness and help people recuperate from illness. The social medical insurance system needs the medical service system to reform. 1.1 Appoint special medical departments to provide medical service The 1998 report points out: the service of basic medical insurance should be provided by the fixed medical organization and drugs should be provided by appointed special drugstores The basic medical insurance department should appoint fixed medical organizations and drugstores with the principle of simultaneously developing traditional Chinese and Western medicine, which taking into consideration the basic clinic, professional hospital and general medical organization which help the worker to conveniently see a doctor. The workers who join the social medical insurance program see a doctor and buy drugs in the fixed medical organization and drugstores. 1.2 The effect of the social medical insurance system reform on the medical service system The 1998 report points out that the purpose of the medical service system reform is to help insured get better medical service with less capital offer. The basic requirement is the following: Create the medical service and drug distribution separating so as to manage the medical service and drug providers. Form competitive markets in the medical service and drug purchasing files. Make the medical services charges reasonable Strengthen the internal management of medical organizations and drugstores, standardize medical services, downsize for efficiency and reduce the medical costs. 2

3 1.2.3 Straighten of the medical service fees. With separate business accounting and management of medical services and medicine, and with the loss of the income from cheap drugs, the medicine service should raise the price of technical in medical treatment services Strengthen the technical training and moral education of the employees, so as to enhance the quality of the medical workers and their services Adjust the overall arrangement of medical organizations. Optimize the resource distribution of medical services. Actively develop community medical service and make the basic community medical service in the payable by medical insurance providers. 2 Three problems in establishing a sound medical service system The establishment of a sound medical service system is a complicated social issue. It involves a lot of important issues such as the management of medical care, the circulation of medicine, the pricing policy, the medical organization operating mechanism, etc. This text discusses several related questions regarding improvement of the medical insurance institution. mainly. 2.1 The direction of the medical system s reform The medical system reform should follow the Central Committee and State Council s 1997report entitled Decision about Hygiene Reform and Development (hereinafter the 1997 report ). This report points out: the principle that hygiene reform and development should: insist on serving the people, dealing with the relationship between social and economic benefits, and prioritizing the social benefit the medical system should regard improving the people's health as central, prioritize developing basic hygiene services, reflect a fair society, and meet the people s diversified demands progressively. These principles fully reflect a basic understanding that china s medical project is a social public service that the government implements pursuant to certain welfare policies. The hygiene reform and development must not deviate from these basic principles. China s medical system reform has developed over more than twenty years. At first, separated the daily affairs and administrative functions of government s hygiene department, and gave this authority to hospitals. Then practice economic contracting, in which the payment of hospital employees salaries became the responsibility of the hospital. The Presidents of hospital also had increased responsibility. Until recently, the low of reform has been in hospital management, including establishing and improving the corporate governance structure. These reform measures have had a certain effect, but do not achieve the anticipated goal. In fact, reform measures have created a conflict between the government s administrator of the hygiene administrative department and the administration of the hospital: On the one hand, the government regards the hospital as the public institution of the hygiene department, charged with the duty of enlarge of the berth counting and so on, so the government s hygiene department control the expenditure of funds; On the other hand, the government regards the hospital as an operating unit that can create income and develop itself, encourages the hospitals develop new technology and projects, in order to increase income and thereby reduce the government's input. These kinds of contradictory policies and measures make the medical system deviate from the hygiene trade and its basic principles of hygiene reform. Hospitals are making more money, but at the same time the hospitalization costs are increasing. More and more persons from various circles of society can not afford medical expenses. China is based on a socialist market economy system. The government implements powerful macro adjustments and controls, so the medical system reform must meet the needs of these economic developments by introducing market mechanisms into the management of medical organization, to enable hygiene resources to be of rationally dispose, and realize fairness medical service. Market mechanisms should be introduced, to the management of medical units, such as the law supply and demand, the competition law, and so on. What people need most is basic medical service; the medical organization should offer basic medical service that is affordable and excellent, quality for all. Competition in the management of the hospital, for example, could be introduced with the personnel employment, professional title evaluation, and salary assigning, in order to arouse the enthusiasm of the workers. Introduction of these market mechanisms will only improve the management mechanism of the hospital; it will not influence the basic attribute of the hospital as a social public service, with the basic goal of wholeheartedly serving for the people's health. 3

4 There is a difference between introducing the market mechanism into the medical organization management and marketization of the medical system reform. Medical system reform marketization pushes all hospitals into the medical market, transforms hospitals according to marketization, industrialization, and commercialization principles which cause the medical system reform to deviate from its correct direction. The marketization efforts vitalize limited hygiene resources outwardly, and have lightened the government's burden. But the marketization has caused the hospital to pursue profit maximization onesidedly, even at the risk of endangering the patient. Even some famous large public hospitals have combined with private capital to establish hospitals, where the most advanced equipment and highly skilled medical talent are used with the signaler goal of making profits. These acts have deviated from the basic principle that hospitals belong to society as a public service. China health care reform is at a crossroad. Maintaining the direction of reform is important. Not long ago, there were a lot of reports that China changed directions in health care reform, which influenced society. The Director of the Ministry of Public Health pointed clearly out: health care reform refuses marketization. Health care concerns life and death. Health care reform will follow the government s lead, not the market s. The government's leading role is reflected in two main aspects. On the one hand, it disposes health care resources rationally, has priority to invest in medical organizations at basic and sets up a rational health care system. On the other hand, the government strengthens the leadership levels and guides the medical unit's health care reform. Actions deviating from the basic attribute of the hospital and the basic goal of reform should be corrected, and health care reform should follow the correct road. 2.2 Make the framework of the Medical Service System rational The 1997 report points out that the hygiene department should: reform the urban hygiene service system, develop community hygiene service, and form the hygiene service network to serve the general public step by step. The health organization at the basic level should regard the community and the family as the service objects. The large hospital in the city is mainly engaged in the treatment of the critical and difficult disease, and combines the clinical practice to develop medical education and scientific research ". For a long time, in China, hospitals have been divided into three levels according to the management sizes: The hospital at the basic level and the commune hospital belong to the first grade hospital, the diagnosis and treatment of general common disease, frequently-occurring disease are its main task, undertake certain prevention and health care task at the same time; the hospital with larger scale in a region or the big city generally belong to the second grade hospital, undertake the work of making a diagnosis of serious disease in the areas under their jurisdiction; The large-scale hospital of the center city or the professional hospital with certain scale belong to the third grade hospital, undertake the task of making diagnosis and curing of the critical serious disease and the difficult disease mainly, and launch certain teaching and research work. Such medical service system structure presents the pagoda type seen from quantity, in fact, presents the upside down triangle type structure resource distribution. A large number of advanced medical equipment and highly-trained health care workers are in these few large third grade hospitals. As a result, people with serious diseases and minor illnesses alike pour into a few advanced hospitals. This causes some hospitals to have difficulty diagnosing illnesses and hospitalizing patients, because demand exceeds supply of the medical resources of the city. It is a great subject of deepening hygiene reform to reform the existing medical service system. Reform of the medical service system in the city is needed to establish a two-tiered structure. This structure would be a comprehensive medical hygiene service system that combines the community hygiene service station with the large and general hospital, and changes the place of examination for one patient. Thus, the two-tie structure of medical service system is based on the community hygiene service station and regards the large or middle-scale hospital or professional hospital as complementary in function. This would accomplish the new pattern of medical care, where "the serious disease is in the hospital, the slight disease is in the community ". Under the new medical service system, the problems of the common disease, the chronic disease and the recovering of the masses' are solved at the basic unit. At the same time, because of the two-tie system which changes the place of examination, the critical serious patient is assured to receive prompt treatment and cure. Such a new system not only alleviates 4

5 the pressure of the large hospital in the city, but also accords with the demands of the social medical insurance in that community hygiene services have low costs, wide cover age and high benefits. It plays an important support role to the favorable execution of the social medical insurance system. 2.3 Reform the operating mechanism of the medical organization The 1997report points out: the necessity of reforming the operating mechanism of the health organization, and setting up an operating mechanism which is responsible, invigorative, restrained, competitive and vigorous by the reform and the strict control of the health organization. The health care management system and its inner operating mechanism of China were established according to the Russian mode in the 1950 s. Decades of operation proves that there are many drawbacks in this management system and operating mechanism, and the medical health organization has become an accessory of the hygiene department and lacks of the autonomies of administration. Moreover, the inner management of the medical health organization becomes TieFanWan and DaGuoFan, causing low efficiency and a lack of vigor. Since the 1980 s, though it has explored the reforms of the operating mechanism of the medical organization in many aspects. The result has greater disparity with the 1997report s goal of setting up a operating mechanism which is responsible, invigorative, restrained, competitive and vigorous, so we should according to The Central Committee of the Communist Party of China and the other eight ministries instructions about the urban medical and health system reform and the gists of the other relevant document, deepen reform further and set up the operating mechanism which meets the requirements Improving the Management System of the Medical Organization (1) Expanding the medical organization s administrative autonomy, makes the medical organization really become an independent unit. According to national policy about hygiene work and statute about hospital management, the hospital administration s autonomy includes: the development of medical service item, all kinds of personnel engagement, the decision-making of fund revenues, and expenditures, the salary distribution and so on. The hospital can also make independent decision according to the relevant statutes of the country. However, the decision that the hospital makes must follow the relevant statutes of the country, and can not deviate from the policy of the hygiene work and the basic function of medical service of the hospital. As the public or other non-profit medical organization, its basic function is offering medical service of high quality and at a reasonable price to society, and if its function deviates from this path, such as transferring the high-tech-new equipment and senior talent to make extra income, the administration is autonomy would be used in error. In order to guarantee the administration is correct use autonomy, it must establish the sound inner incentive mechanism and the tied mechanism. For example, in order to prevent the abuse of the administration s autonomy, the important issue will not be determined unless it passes through discussion of the party committee conference or the congress of workers and staff. (2) Improving the director s responsibility system. The management system of the hospital is the director s responsibility system under the leadership of the Party Committee, so it should introduce the competition mechanism into the director s engagement. According to the standard of this position, the director should adopt the principle of open competition and qualified nary to appoint the hospital s director. It should implement the responsibility system of goals set for term of office to the appointed director, that is to say, according to the director s term of office, ascertaining the director s responsibility and goals which must be achieved during the term of office, and at the time of the expiration of the term, it should check and rate the director s achievements according to the responsibility goal, and audit the director s economic management. At last, it should implement the rewards or punishments to the director according to periodic audits. (3) Setting up the inner rules and regulations to make the hospitals inside management institutionalized, standardized, and a scientific process. Improving the efficiency of management and carrying out the medical technological service strictly are the rules of standardize medical behavior and guarantee improving the medical quality. A lot of accidents in medical treatment are caused by violating operation procedures and not carrying out the medical technological service standard. Thus, it should 5

6 place carrying out medical professional services in a very important position in the course of hospital management Strengthening the economic management of the medical organization (1) The medical organization should carry on cost accounting. By cost accounting, it can utilize medical resources effectively, such as manpower, material resources, financial resources etc, and give full play to the efficiency of limited medical resources, raise the efficiency and benefits, reduce the medical costs, and lighten the hospitalization cost to the people. (2) Implement checks and manage the medical treatment and the medicines separately. The income for medicine should implements two lines of management for revenue and expenditure. The revenue and expenditure balance of the medicine would then be turned over to the administrative hygiene department, and brought into the special finance account to manage, and can return properly. The balance part is mainly used for remedying the medical costs and other hygiene costs such as the community hygiene and health care service. The goal for implementing two lines of management for the medicine is solving the present problem of supporting hospitals with the sale of drugs, and cutting off the direct economic benefits contact between the medical organization and medicines distribution. Recently, the Ministry of Health has made a decision to cancel the 15% price differential between wholesale and retail of the hospital, thereby reducing the price of medicine and lightening the people s financial burden. (3) Adjusting the price of medical labor service. While solving the problem of supporting hospitals with drugs, medical service reform must adjust the standard price of the medical labor service, so as to allow the medical organization and its staff to obtain reasonable economic compensation. The price adjustment of the non-profit-making medical organization must follow the principle of overall control and structural adjustment. In the range of overall control, it should consider the factors synthetically as the medical cost; finance subsidizing and the income from medicines and so on, adjust the unreasonable medical service price, and reflect the medical workers technological labor service value Deepen the personnel system and the distribution system reform of the medical organization (1)The goals of the reform to the medical organization personnel system are to establish the management system according with the medical work characteristics. Namely," the government supervise according to law, while the unit independently chooses the right person, are the personnel choose a job, classify and manage scientifically "; and set up the managing and operating mechanism of the employee. In this mechanism, the personnel can come in as well as get out, and they are most willing to accept a higher or a lower post; the composition of the trained personnel is reasonable, and the mechanism is full of vitality and vigor" The employment system of the medical organization implements this system of appointment. The hygiene leader implements many ways of appointing according to different situations, such as engagement, selection process, appoint, entrance testing, and so on. The hygiene department administrative staff implements the system of the staff member's appointment. The professional and technical personnel of the hygiene department implement the appointment system of the professional post. The hardworking personnel of the hygiene department implement the contract system. (2)The reform of the salary distribution system of the medical organization must be based on the principles of distribution according to work, so as to further reform the distribution system with consideration for the knowledge-density of medical work, the combination of mental labor and manual labor, and high risk characteristics. Expanding the autonomy inside the medical organization, in accordance with the spirit of fixing rewards to the post, task, and achievement, set up the flexible distribution incentive mechanism that pays attention to achievements and contributions, will inspire outstanding talents to act on their own initiative. This kind of reform would be profound. The medical service organization could offer reasonable price and the best quality medical treatment for the people, thereby support the medical insurance system. List of references 6

7 [1] The Central Committee of the Communist Party of China and the State Council s Decision about the hygiene reform and development [J]. Soft science of the hygiene, February 1997 [2] The Central Committee of the Communist Party of China and the State Council s Decision to establish the urban worker's basic medical insurance system [J]. The hygiene policy of China. January RESUME Mao Ying is the associate professor of the School of Public Policy and Administration of Xi an Jiaotong University. She has got the master degree and specializes in the health economics and the health insurance. Li jiaofeng, Chen Gang and Du Yingdong are the graduate students of the School of Public Policy and Administration of Xi an Jiaotong University. They are studying for the master degree and specializes in the health insurance. 7

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