Both Phase I and Phase II of the Chinese
health reforms have stressed the development of China’s Community Health
Service Centers, 社区卫生服务中心, (CHSCs). It is tempting to see the
American Community Health Center (CHC) model as the closest analog to the CHSC,
but I believe that the better comparison can be found in the model of certain
American outpatient centers that function as components of larger care organizations.
In contrast to American community health
centers, which are part of the safety net system that caters to the uninsured
and the underserved and function primarily as non-governmental organizations,
CHSC’s are, in theory, (1) the primary and preventive care pillars of China’s
regionalized healthcare system and (2)
are increasingly recognized by various provinces as a niche in the health care
system that could greatly benefit from fully realized privatization incentives.
The reason I qualify the first of the above
two statements with “in theory” is that
China’s greatest reform issue continues to be its inability to shift the
primary patient access point from the largest urban hospitals to lower-level
access points like CHSCs. The reason I qualify the second statement with
“increasingly” and “fully realized” is that the push to privatization is not
the same in all areas and, more importantly, the way that CHSC privatization is
being encouraged is not the same everywhere.
I want to talk about the second of these
qualification, because the first of the two problems has been extensively covered
elsewhere by us and many others.
On this second point I want to use a 2009
paper by Yan Wang of the Shandong Provincial Health Department and Karen
Eggleston of the Asia Health Policy Program at Stanford. The paper,
“Contracting with providers for primary care services: evidence from urban
China,” is a case study of how contracting with private providers for urban
primary and preventive health services in Shandong Province, China, is affected
by different bundles of government incentives.
Two concurrent pilot program in the city of Weifang and in “City Y”
where privately-held CCHCs were allowed to contract with the government for a
certain package of incentives provided the authors (and one would assume, pilot
architects as well) with a natural experiment to measure the outcomes of
incentive bundles in two different cities.
What the study found is that one year after
the privately-held CHSCs entered into contracts with the two governments, in
Weifang city there was no great difference between the performance of
privately-held CHSCs and government-run CHSCs along certain performance
dimensions after size and other characteristics were controlled for. Meanwhile,
in City Y, privately-run CHSCs performed much worse than government-run CHSCs.
The question the authors sought to answer is, What does this tell us?
While the authors were careful to not jump to
any firm conclusions, they still draw a lot of insights from the outcome of the
natural experiment.
THE
EXPERIMENT
As mentioned, the most glaring difference
between Weifang and City Y is the bundle of benefits given to private CHSCs. In
Weifang 33 private CHSCs entered into a contract with the government that
stipulated the providers would receive the benefits of payment for public funds
for designated services (up to 10 RMB per patient), inclusion in the expanded
social insurance coverage system, the ability to receive professional training
from the larger hospitals in the area, and financial assistance for investment
in infrastructure.
In return the private providers had to agree
to two terms:
all buildings and medical equipment purchased
would resort to the government at the end of the Contract period, or sooner if
the CCHC pulled out of the program, and
they must adhere to the policies governing
service provision, quality of care and regulatory oversight.
In City Y, privately held CHSCs participating
in the program (there were around the same number of participants as in
Weifang), had to adhere to all of the same conditions as the providers in
Weifang, but in return the contract stipulated that the only benefit City Y
would provide would be the public fund reimbursement of 10 RMB per person.
In both cases, at the end of the program, the
per resident expenditure was still much higher in government run CHSCs than in
the privately-run CHSCs, a disparity best explained by the difference in the
mix of services available in government-run centers, which in turn impacts the
number of referrals that government-run centers can make to hospitals.
RESULTS
AND TAKEAWAYS
The differences in the two programs (Weifang
and City Y) can partly be explained by Weifang’s greater ability to reform the
problems that characterize the engagement (or lack thereof) between the private
sector and the government. By providing training, the opportunity to
participate in the social insurance system, and financial assistance in
addition to per-resident payment, the Weifang City government went a long way
towards addressing the opportunity cost of foregone curative care that CHSCs
face when agreeing to greater government oversight. This not only brought up
the level care of privately-held CHSCs, there is some evidence that it also
helped recuperate the image of privately-held CHSCs in the eyes of the patient
public.
Indeed, the benefits to private players were
substantial (huge! even, if I am allowed to step out of my policy-language
bubble). The private players were allowed to participate in the social
insurance system, a heretofore limiting step to the expansion of private care
in China. Moreover, they were given access to the best government health care
workers. If you’re a private investor of health care entrepreneur looking for
an entry point, just these two facts alone should make the CHSC an opportunity
worth pursuing.
The other really enticing aspect of CHSCs is
that they are not only a rural phenomenon, in fact they are a central component
of the urban health care system. Therefore, CHSCs are not just a door into the
Chinese health care system generally, they are a potential entry way into the
urban health care market.
At Rubicon Strategy Group we now look at the
CHSC opportunity whenever we work with clients.
Damjan Denoble
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