Public hospital reform in China since the mid 1980s has had detrimental effects on hospitals' social functions, especially the provision of care for poor people. This study of hospitals in Northern China, using a range of economic measurements, indicated that there has been an overall decline in social functions since 1985, especially in secondary and tertiary level hospitals. Reason for this include the increasingly competitive medical market in China and, under the decentralisation reforms, the imperative for hospitals to generate revenue. We put forward policies to strengthen hospital social functions, including funding for essential packages of services to specifically benefit the poor and vulnerable, and increased government subsidies to support social functions in primary level hospitals where care can be more easily accessed.