Nation's health care reforms examined

Editor's Note: United Nations Health Partners Group in China, led by the World Health Organization (WHO), working closely with the Ministry of Health, recently released their China country health assessment report in July 2005. International experts at the said group agree China has made huge progress in its health situation during the past half century, but they also call for major efforts from the government and the society to co-operate to take China's healthcare reform to the next level.

At the 14th CEO roundtable on August 26, 2005, themed "Healthcare Reforms in China" and organized by China Daily, about 50 CEO and senior executives from multinational companies, hospitals, NGOs, drugs and insurance companies got together for a strategic dialogue chaired by Professor Liu Yuanli, director, China Initiative, Harvard School of Public Health and Dr Henk Bekedam, China representative, WHO.

Alexander Wan

What have we done right

Prof Liu said in his opening remarks:

You can easily tell a company's performance by looking at its balance sheet. But you cannot as easily say that a country's health sector has done extremely well or has totally failed, because one can use different performance criteria such as equity, efficiency, and quality, which can be defined and measured in different ways.

There is no doubt that the general population health status has continuously improved in China over the past 20 years or so. Life expectancy at birth increased from 67.9 years in 1981 to 71.4 years in 2000. From 1992 to 2002, infant mortality rate (IMR) decreased from 47 per 1,000 live births to 29 per 1,000, and maternal mortality ratio declined from 77 per 100,000 to 43 per 100,000. (full speech on next page).

Dr Henk Bekedam of the WHO said:

Healthcare reform has been firmly on the government's agenda for some time nowto defining more clearly the role of the government when it comes to reinvesting in health.

The question remains as to how to do this. Where should government funding be focused? What should the levels of expenditure be? What are the mechanisms that need to be created and strengthened? How can these best be implemented? (Please see full speech next page)

Premium for Health

Ron Kuang of insurance giant CIGNA: The commercial insurance sector does have a role to play in this reform process.

Liu: If you look around the world, the social security system usually consists of four layers:

The first layer is the minimum social welfare often provided by the government for the most vulnerable group of people.

Second, you should find a social insurance system which is compulsory system. Then on top of that you can find commercial insurance usually providing supplementary insurances for all surgeries which are not covered by social insurance system. Then on top of that we have other community mutual aids.

So what I am suggesting in expanding insurance coverage definitely including social insurance, government sponsored, commercial insurance because medical surgeries are very diverse and there is a diverse in need and demand for different levels of partners and makes no sense for government to cover all.

But it also includes other social community aids arrangement informal insurance.

Bekedam: I am looking for the need to improve medical framework. There should be stronger control in quality, cost control and safety. These things have to be ensured for private companies. There are few things which are important for private insurance companies to work out.

Universal Package for All?

Stanley Tam, an MD from the Harvard Medical School, asked why a universal package may not work in China.

Liu: Two things I think, one need to take into account is what's your value judgment and second what is the reality.

I think ultimately the decision on whether the government should finance and provide universal package of the essential health services is a judgment call. There is no scientific answer to that question. Some countries decided it's a way to go, some countries decided is not.

I cannot emphasize enough that China is not a simple country. China is a world of at least three worlds. You know we have the most developed coastal region, where I don't think many people really need or demand for government finance essential package of services. They can easily pay for themselves.

But on the other hand we have also the poorest region, mostly in the western frontier. I have been to many rural villages myself for the past 20 years or so and there, definitely not only essential services but also comprehensive package including coverage of catastrophic spending should be financed by the government.

So what I am aiming at is we should think about different policies by looking at the differential need of different regions and different people.

Bekedam: It's essential to know who is paying for it? Not necessarily the government but insurance should be part of it. I don't fully agree with Mr Liu that in China you cannot reform in one way, but it has to ensure it's the whole population that would have access to services.

For example, TB If I have TB, I will be treated but it's important for you to know that I am treated and it's not going to infect you anymore. Can we leave those things to the market? I don't think so. It's not easy for the government to pay everything, but the insurance can come in, the employer can come in. But (the government) has to ensure people get access to it.

Voices from the Private Sector

Roberta Lipson, who runs the Beijing United Family Hospital: We serve the needs of a very special niche of the population where government shouldn't be. I think it's important not just to focus on the fact of different needs in Beijing and Shanghai but the fact that different segments of the population.

Our experience in the private hospital is an excellent example that private healthcare can supplement where the government shouldn't be and needn't be. I encourage the government to continue to focus on public sectors that are not efficient from different perspective, immunization, public health, issues like TB, HIV/ AIDS and leave that kind of luxury services where I see many public hospitals wasting their time perhaps that could be covered by the market.

Vic Lazzaro of Capitis China: In the United States also, 25 per cent of the population is not covered, so even though we got a very prominent and settled country, we got significant problems in our healthcare too. One of the things we want to stress is the government's role is oversight, control, ministration but not delivery.

Comments from Fortune 500

Jeffery Li, country president of Novartis: We have a serious interest to see a long-term sustainable healthcare system. It is surely a very critical environment now for the industry to work towards long-term development. I think even if we do not yet have a well-developed world health system, it is an opportunity for China to develop a very good healthcare system? We can learn from other systems.

I feel it is very critical for the government to hear views from all the stakeholders, that would include from pharmaceutical industry, healthcare companies, insurance companies, etc. I think taking into consideration of all the critical issues that are relevant for decision making is important.

David Jin, Greater China president of Philips Medical: As a corperate citizen, we are always interested in sustainable growth.

Prof Liu's suggestion of the programme (is aimed) to improve the efficiency of the progress. As a responsible citizen, we would like to support the programme. I think the priority number one is on how we can solve the problem of insufficiency.

We should increase the investment in healthcare both from government sector and also the private sector. I was joking, for example, people in Shanghai who are willing to pay 20- 30 times of their annual income to buy a house but have a very low percentage of their income for their spending on healthcare. They go to the hospital and don't really want to have a check-up because they want to save money for an apartment.

It is important for the mentality through education that people more willing and more interested in their well being. I welcome those people from Harvard and Tsinghua to discuss about how to improve the investment in healthcare industry and create a sustainable environment.

Ideas from the NGOs

Christina Ho of the Clinton Foundation: One thing that had emerge in our work which is certainly not unique in China is that when you work at single disease effort, you run into comprehensive health system issues.

I remember in the US when I was working for Senator Clinton on viral terrorism issues It seems what's exciting about this conversation at this point is there's an opportunity for China as it's making a deliberation about what the next step to take. And an exciting opportunity for private sector, insurance products as they develop their market here.

Peter Liu of the non-public medical instition association of Chaoyang:

I represent over 300 private healthcare organization in Chaoyang District of Beijing. I think that most of our guests are professionals in healthcare matter.

Perhaps you've observed in the past few years that this healthcare market in China has all kinds of shivers and gains. So one thing that I think we have to consider in the healthcare reform plan is how to make this industry a more professional industry.

And we have a lot of new players who are previously not healthcare professional. So it is the major reason I'm glad to hear that Prof Liu is talking about the training of both policy makers and also executives, managers and this is one part of the thing that play a big role, especially in the city. And so this is something that I think to our interest.

From around the globe

Robert A. Go, global managing director of Deloitte's healthcare practice, who has worked with now over 500 different organizations, globally both private and public, on issues that cover healthcare management:

Two things come up. One is on one hand all problems are unique, and these problems are unique in China.

On the other hand no problems are new. The only point that really disturbs me is that some of the issues that we are talking about today are really quite impartial, unfortunately of a move for a transition to a more market based system.

We should learn from what we've learned from many other countries, and all the mistakes that we've made, the sort of things that work well. Whether it is in the systems in Europe, including certain aspect of social insurance, as well as the systems in the United States, including certain aspect of manage care.

So I think it is important that as we look for the uniquely Chinese solution to these issues, we do not forget all the learning that in fact we can benefit from. And these are all my points.

Zhongyuan Li, chairman of the Hong Kong listed China Healthcare Group: My feeling seems to be, in order for a sustainable growth, you also need to establish a viable benchmark. How do we benchmark in this market? And what is the proper approach? Is it cost versus delivery? And what sort of benchmark we could establish in order for the whole thing to be viable?

From what I've seen there seems to be a lot of complaints and all that regarding the market oriented reform. But nevertheless, I haven't seen much regarding what is the viable solution, especially quantitatively to establish those benchmarks. That's what I'd like to post. And I think that anyone and the stakeholders in the healthcare industry have to look at that very seriously. Otherwise we are just running at a dead spot.



We have to see China is special. China is special because it is big. China is special because it is very diverse. But China has gone very far, far much greater than any country.

Just give an example for why it is important to have a sense of where to go. I've worked in many countries, but they only have one ministry responsible for health. And they get the whole responsibility etc.

But in China it's all 11. Eleven ministry's responsibility. These ministries all need to have a sense of where to go. And I think these are some of the challenges of the China health reforms.

Prof Liu:

A critical question for health system reforms regards the proper role of the government and market in health sector.

It is a balancing act given the known market and government failures. The framework, which I like to offer for conducting more constructive policy discussions, would divide the health system into several functional sub-systems (resource supply, healthcare delivery, healthcare financing and payment, and regulation) and then analyze the different roles that the government and the market can and should play.

Development of sound health policies in China would certainly benefit from a more open and transparent process.

One of the hallmarks of China's development path is "gradualism" and conducting pilots before going to scale nationally. To find feasible and effective solutions to China's priority health and healthcare problems, different operational models should be encouraged through pilot projects in different regions.

The experiences from these pilots should be vigorously evaluated, and results from the evaluations should guide the process of further policy development and implementation nation-wide.

(August 31, 2005)

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