Year of Turmoil for China's Health Care
Corruption in China’s health care industry is believed to be fueled in part by the low base pay of doctors in not-for-profit public hospitals. While most Chinese hospitals are not-for-profit public hospitals, government funds provide only a small portion of a hospital’s needs. As a result, many hospitals rely on drug sales to make ends meet. It’s also typical for a doctor in larger state-run hospitals to see as many as 50 patients a day. Some of these doctors have also turned to other methods, such as collecting commissions from pharmaceutical companies whose drugs they promote, to supplement their income. Many patients are aware of this but feel they have little choice but to follow doctors’ orders.
In my view, unless public hospitals are allowed to increase their fees, and unless doctors at state-run facilities are paid as well as those from private hospitals, industry corruption seems likely to persist. The government seems aware of this. During its recent Third Plenary meeting, China’s leadership pledged to reform the performance evaluation and incentive system in hospitals, encourage the development of more private hospitals and allow doctors to practice at multiple sites. These measures are good news, although easier said than done. In my opinion, these reforms are necessary, especially as China continues to struggle with a rapidly aging population. The industry will need to adapt to tackle the country’s long-term health care challenges, however, it is demonstrating an encouraging willingness to do so.
The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.
© Matthews Asia