Study On Sustainable Development Of Rural Health Reform

With the development of rural health reform in our country,government has begun to invest more in the demand and supply side of rural health.From the perspective of demand side,government has re-built New Rural Cooperative Medical System and increased government financial input year by year。From the perspective of supply side,government has increased investment in rural public health service and community health service so as to change long-term low investment in rural health. However,increased government investment in rural health will not certainly improve rural health.It depends on reform on rural health system and institutional factors which contributed to inefficiency of rural medical organizations.We analyzed the institutional roots of rural health problems,explored critical path for rural health reform and figured out initiative of rural health reform so as to increase the efficiency of government investment.Health is a special community which is hugely important for every one.Once physical health was injured,every one would pay any price to seek for treatment. However,doctors' knowledge and technology was undervalued in our country. Doctors will necessarily increase their income by other economic behaviors to compensate their loss.Furthermore,insurmountable information asymmetry between doctor and patient make them possible to compensate their loss by supplier-induced demand(SID).High medical expenditure and low health service accessibility was serious in our country because of supplier-induced demand,whereas government had no incentive to supervise and punish inducement behaviors because of their double roles.So health reform should pay more attention on health service supplier.Ⅰ.Supplier inducement ability and rural health problemsBecause doctors have double roles as agency and consultant for patients,they are capable to change patient's preference so as to induce more medical expenditure using information asymmetry between doctors and patients.Moreover,health services provided by doctors are individualized and experience based services,which comprise monopolistic competition.Their abilities of inducement are hardly removed by institutional design and technology innovation.Furthermore,the price elasticity of health service is low and New Rural Cooperative Medical System make patients less care about health service prices.In conclusion,supplier-induced demand will always exist,and any plans which try to remove this ability will encounter higher cost or bring more side effects.Deficient government investment in rural health is one of main reasons which have caused supplier inducement behaviors.Since rural health services are defined as public welfare,the prices of rural health services have been suppressed.However, with the collapse of planning economics,rural health service organizations lost their main subsidies from government and ran under deficit.Health service organizations began to think much of profitable health services and ignore public health services. Supplier inducement behaviors were so frequent that those behaviors ultimately caused high rural medical burdens.Furthermore,inducement behaviors deteriorated the relationship between doctors and patients which in turn brought more inducement behaviors because of defensive medicine.The failure of government pharmaceutical price regulation has caused high price of pharmaceutical in rural medical market.Government pharmaceutical price regulations include government pricing,pharmaceutical centralized bidding and pharmaceutical prices reduction.Because health service supplier have the ability of inducement and sell more than 80 percent of all pharmaceutical,they possess monopolistic advantage in pharmaceutical market.For the same pharmaceutical price addition,high price pharmaceutical brings more net income for health service supplier, so rural medical organizations prefer high price pharmaceutical to low price one and their preferences are transferred to drug delivery and production.At last,"high price pharmaceuticals drive out low price pharmaceuticals".Pharmaceutical manufacturing enterprises all increased drug price in order to cater for hospitals' preferences.Those pharmaceuticals which were suffered from prince reduction by government were changed with new names and high prices.Thus the failure of price regulation made drug price higher than ever.The failure of government regulation for large medical equipment and supplier inducement behavior also has led to high medical expenditure for rural patients.Large medical equipment not only increases competitiveness of rural hospitals,but also their income because of high prices of examinations using large medical equipments. Although the price of large medical equipment examination had been reduced by government,incomes from large equipment examination still contributed to large parts of rural hospitals' income.So the number of large medical equipments in rural hospitals increased quickly.Furthermore,supplier inducement behaviors cannot be removed once large medical equipments were purchased because those equipments have a long operation period.During that period,decision-makers of hospitals will try their best to increase frequency and net income of large medical equipment.Once the number of large medical equipments in rural hospitals increased greatly,they will lead to irreversible medical expenditure increase in rural areas.Ⅱ.Inefficiency of government investment in rural healthWith the development of New Rural Cooperative Medical System(NRCMS)in Zhejiang since 2003,the coverage of NRCMS has been increasing year by year. While NRCMS is not a real modern health insurance plan because of its low financing, high co-payment,and small risk pooling fund limited to catastrophic disease. Moreover,NRCMS has no institutional designs to restrict supplier inducement behaviors.Although NRCMS sets deductible,co-payment and ceiling in order to prevent moral hazard of demand side,those designs cannot restrict overuse especially from supplier side when demand side is at information disadvantage.Our survey showed average inpatient expense increased 30 percent in a rural hospital since 2003, while government had reduced pharmaceuticals and examinations prices greatly during that period.Supplier inducement have almost eroded NRCMS fund which should benefit those rural patients.So lack of limitation to supplier inducement makes government investment in demand side inefficient. Similarly,government of Zhejiang Province has also increased health investment in supplier side recently.While rural organizations provided poor community health service and public health service because of failure of government regulation. Government both managing and running rural organizations made them have same benefits with health service suppliers,and make government fail to supervise and punish rural organizations inducement behaviors justly.In addition,region monopoly of rural organization also made rural community health and public health inefficient.In addition,even government increasing investment in town hospitals directly is also inefficient.On one hand,Town hospital was not permitted to expand out of its town because of regional health planning;one the other hand,village clinics were ran by rural doctors independently and had no financial relationship with town hospitals. So town hospitals in Zhejiang Province lagged behind the rural economic development.In recent thirty years,with the development of rural social and economic status, massive rural population has been flowing to cities.Secondly,the development of modern traffic made the peasants more easily access to high quality health services provided by county and city hospitals.Thirdly,the increase of peasants' income makes them prefer high quality health services to poor quality one provided by town hospitals.Fourthly,most of rural patients choose village clinics to treat common diseases because village clinics are more convenience than town hospitals.Fifthly, NRCMS makes more patient flow to county hospitals with the co-payment decreased year by year.Government investment was inefficient whether in supplier side or demand side. Government trying to reduce supplier inducement by increasing health investment necessarily makes a futile effort.Ⅲ.Proposal of rural health reform in Zhejiang ProvinceFirst of all,government should increase rural health investment.Supplier inducement is possibly reduced and relative improper health system is possibly changed only by increasing government investment.In addition,government should launch public health service cost accounting and benefit-cost analysis.Secondly,government should increase the efficiency of rural health service supplier before increasing government investment efficiency.From the perspective of supplier side,region expansion limitation should be broken so as to increase scale economy of town hospitals.And community health service "Center-Station Model" should initiate in rural health market.From the perspective of demand side, government should attract more patients to seek treatment in town hospitals and village clinics using New Rural Cooperative Medical System by decreasing co-payment of outpatient.Thirdly,government should enhance supervision on rural health service suppliers when increasing investment.1)NRCMS should reinforce its supervision function on health service suppliers and also can introduce prospective payments;2)government should restrict rural medical organization to purchase large medical equipment according to regional health planning;3)County Center of Disease Control and Prevention should take the responsibility of public health service supervision and the office of NRCMS supervises suppler inducement;4)government can introduce two or more rural health organizations in areas with dense population.