The effects of increased market competition on hospital services in Shandong and Henan Provinces

Abstract

The Chinese government began a major reform of the hospital sector in the early 1980s. The main aim was to increase productivity by phasing out prospective global budgets from the government, and encouraging between-hospital competition for the business of user-pay and insured patients. This goal was to be achieved without unreasonable prejudice to the financial sustainability of hospitals or to the fairness of access and service provision. We explored the effects of these changes by analysing data for four levels of hospital in two of the most populous provinces between 1985 and 1999. We used data envelope analysis, and found that the majority of hospitals experienced a decline in productivity. Social efficiency (measured by the level of provision of unnecessary services) also declined, especially in the largest hospitals that could easily increase the use of expensive technologies. Most hospitals increased their economic sustainability, measured as the ratio between revenue and expenditures. However, the lowest-level hospitals experienced stable or reduced sustainability due to their inability to compete with marketing by higher-level hospitals. We conclude that, although there were many benefits, the overall impact of the introduction of market forces may have been negative. An important factor was that not all aspects (such as supplier-induced demand) were adequately controlled by government agencies. We suggest ways of alleviating the most problematic elements of current arrangements.

Does Autonomization of Public Hospitals and Exposure to Market Pressure Complement or Debilitate Social Health Insurance Systems? Evidence from a Low-Income Country

“…Finally, hospital autonomy may run the risk of fragmenting the health system into independent units and displacing essential activities such as basic curative care, public health programs, and other services that are unable to attract private fee-paying patients as more successful autonomous hospitals reallocate resources to high-revenue clinical services (6). Hospitals in more prosperous regions are also in a better position than hospitals in less prosperous regions to take advantage of greater operational and financial autonomy to access private financial resources and to provide "elective" services either through private wards/clinics or within public wards for fee-paying patients (8,34). As such, financial autonomy may indeed undermine the delivery of core services, diminishing integration of the hierarchy of care and breaking up the coherence of the delivery system.…”

Does competition affect the clinical decision‐making of dentists? A geospatial analysis

“…3,5,6 Others suggest that it incents the delivery of unnecessary treatments. [7][8][9] The impact of increased competition on various patient outcomes has been explored in the literature. A systematic review conducted by Léonard et al 10 found that physician density, measured by the physician-to-population ratio, was positively associated with healthcare consumption.…”

“…Some believe that it improves performance by enhancing the quality of care delivered, while at the same time, reducing cost . Others suggest that it incents the delivery of unnecessary treatments . The impact of increased competition on various patient outcomes has been explored in the literature.…”