What is the major driver of China’s hospital medical expenditure growth? A decomposing analysis

Abstract

ObjectivesThis study aimed to quantify increases in the medical expenditures of public hospitals associated with changes in service use and prices, which could inform policy efforts to curb the future growth of hospital medical expenditures.DesignNationwide and provincial data regarding service volume, service price and intensity of public hospitals’ outpatient and inpatient care from 2008 to 2018 were extracted from the China Health Statistical Yearbooks, and population size data were obtained from the 2019 China Statistical Yearbook.MethodsA decomposition analysis was performed to measure the relative effects of changes in service use (volume or its subcomponent factors) and service price and intensity on the increase in the inpatient and outpatient total medical expenditures of public hospitals from 2008 to 2018.ResultsAfter adjusting for price inflation, the total medical expenditure of public hospitals increased by approximately threefold from 2008 to 2018. During this period, the increase in service volume was associated with 67.4% of the observed increase in the total medical expenditures in the inpatient sector and 57.2% of the observed increase in the total medical expenditures in the outpatient sector. Most of the service volume effect is due to an increase in the hospital utilisation rate. The growth in the utilisation rate was associated with 73.7% of the observed growth in the total medical expenditures in the inpatient sector and 60.3% of the observed growth in the total medical expenditures in the outpatient sector.ConclusionService use, rather than price, appears to be the major driver of increases in medical expenditures in Chinese hospitals. An important policy implication for China and other countries with similar drivers is that the effect of controlling price and intensity growth on containing medical costs could be limited and controlling service utilisation growth could be essential.

Assessing the price levels of medical service and influential factors: evidence from China

“…There is no consensus on whether the rise in health expenses in China is driven by utilization or prices [ 21 ], our research from a macroeconomic perspective complements the evidence that the rise in TMSE in China is associated with the increase in the price levels and inpatient utilization of medical service. Previous studies have confirmed the impact of quantity on medical expenditure [ 3 ]. The focus of this study is to analyze the role of medical service prices in this context.…”

“…The health expenditure is driven by volumes, price or their interplay [ 2 ]. While some studies suggested that utilization is the primary factor accounting for health expenditure [ 3 , 4 ], others contended that prices are the main contributing factor [ 5 , 6 ]. Developed and developing countries have implemented cost containment policies that target price as common strategies to control the rapid growth of health expenditures [ 7 – 9 ].…”

“…The Shi et al discussed the impact of changes in medical service price levels on total drug expenditure from 1990 to 2009 [ 22 ]. The Yan et al discussed the driving effect of changes in medical service prices on medical expenditures from 2008 to 2018 [ 3 ]. The Li et al compared the differences in price levels between different regions and their relationship with macroeconomic development [ 23 ].…”

Indirect comparison between powered and manual circular staplers for left-sided colorectal anastomoses: clinical and economic outcomes in China

“…It is commonly known that hospital stay is longer in China than in the US for the same procedures, partially due to fee-for-service payment schemes. The total hospital expenditure in China in the inpatient sector is also driven by the service volume effect [ 17 ]. Among the determinants of China’s health expenditure growth, technology was not found to have a significant influencing impact on health expenditure [ 18 ].…”

Rapid growth of private hospitals in China: emerging challenges and opportunities to health sector management

“…Across all of China, average public hospital expenditure per outpatient increased from USD$32 in 2011 to USD$41 in 2018. 17 Similarly, average public hospital expenditure per hospitalization increased from USD$1232 in 2011 to USD$1505 in 2018. 17 Average private hospital expenditure per outpatient and hospitalization is also expected to be lower at the national level relative to Shanghai given that Shanghai is one of China’s wealthiest municipalities.…”