Research On Privatization Of China's Basic Medical Service

Since 1980s,the privatization has become an important part of governance reform in western countries.They take actions to improve the efficiency of the supply of public goods by taking advantage of the market mechanism and by mobilizing the whole society.This practice,widely promoted in western countries soon became popular in developing countries,China with no exception.Privatization of basic health service in China is on the one hand from the impact of the reform of market economy,as well as addressing the imbalance between demand and supply rising from inadequate investment in public finance.It also stems from the imitation and learning from the global market-oriented provision of medical service.Unfortunately,China's medical market is not mature because of insufficient medical security system and related facilities,relatively weak ability of government-led market,inadequate understanding and support for privatization in basic medical service,and relatively weak social forces in medical industry.Therefore,we failed to make significant achievements in improving the efficiency and equity during the healthcare privatization reform.On the contrary,in some degree,we strengthen the position of public medical institutions,especially the monopoly of urban public hospitals.Worse still,the medical industry is become more profit-oriented.To this end,criticism and questioning voice increases towards privatization in all circles of the society.The academia is divided over the issues such as whether the basis medical service has been privatized,is there any need to carry out privatization and whether the insufficient health care reform is due to privatization.At the same time,the central government introduced a new medical reform policy in a gesture to relieve the imbalance between supply and demand of basic medical service,putting forward the guiding principle that we should guarantee people the basic medical service,strengthen primary care system and establish a healthcare mechanism.Since 2009,the central government has invested a lot in ensuring people the basic health need and strengthening primary care system,but the construction of establishing a medical service supply system has become difficult.Although the central government has actively promoted market-oriented reforms of medical service,vigorously advocating and encouraging the social forces to invest in setting up medical institutions.But many local governments suspended the privatization of public hospitals in order to ensure the commonweal in basic medical service after the central government increased the financial input.People wonder whether the basic medical service only can maintain its commonweal by entirely relying on government supply,whether the government supply can definitely ensure its commonweal,whether the problems of medical service supply in privatization is resulted from the reform itself.Is there any irreconcilable contradiction between efficiency and fairness?Given dilemmas in practice,academic debate and social questions,we need to conduct a comprehensive and in-depth study,to make a detailed and rigorous analysis on privatization in basic medical service and on the basis of this,to carry out a research on the achievements and failures of privatization so as to find out the reasons and give objective observations on the status,role and influence of privatization in the supply of medical service.Only by this way can we validate the controversial views in academia and put forward the author's own opinions so that we can make some theoretical preparation for establishing a health care supply system which is suitable for China's national condition.Under the political,economic,administrative and social environment,in the paper,the author carried out the research on privatization reform from three aspects,namely,the governance structure adopted by medical institutions,behavior selection of the government and medical institutions as well as the effects on supply of basic medical service.This paper mainly uses the comparative study,systematic study and empirical research to conduct a comprehensive research on privatization of medical service and to make a micro-level analysis.In empirical research,based on Xinghua city as case study,this paper take anatomy of the case study way,and various methods are used such as interviews,participant observation,questionnaires and literature data access methods so as to make a qualitative and quantitative research on the results of privatization and its corresponding causes.Through research,the paper concluded the following main points:First,privatization reform of basic medical service is driven by local social and economic development,but also reflects the results of external institutional environment.In China's top-down political system,the county township governments are required to move quickly on health care reform in accordance with legitimacy.However,many local governments find it quite difficult to formulate a complete and thorough reform program when trying to adapt to the external system environment,and some reasonable designed schemes proved to be inefficient in practice.The mismatching between the external system and local social and economic development creates conditions for future difficulties in the reform.Second,Privatization reform of public medical organizations hasn't achieved expected results.since the basic medical service possesses commonweal nature,some local governments carry out reform in a progressive and integrating style in a gesture to reassure the public and reduce the risk brought by the reform,which allows the existence of a certain amount of private medical organizations and implement partial privatization of property rights reform on the basis of remaining the dominant position of public hospitals.Despite the reform mode,which advocates partial privatization,is a reflection of a good vision of government,that is,to improve efficiency through market-oriented operation mode and to safeguard public health service by retaining ownership of the public nature of medical institutions and the corresponding government intervention,but in fact,the reform did not achieve efficiency and the "advantage superposition"of public accountability.As a result,these reformed medical institutions do not try to pursue efficiency as the fully privatized ones do,but also are easily separated from charity goals.Third,the organization's interest incentive and restrain mechanisms are of great importance to behavior selection of medical institutions.And when they are balanced,we will achieve win-win results of increasing efficiency and safeguarding public accountability in basic medical service.Privatization does not necessarily lead to the loss of public accountability and the improvement of efficiency in medical institutions.The improved efficiency and social responsibility in private hospitals benefits from its rational governance structure,effective internal incentive mechanism and the more severe external constraints,but the public medical institutions weakness lies in its imbalance between incentive and restraint mechanisms.Therefore,in the privatization reform of basic medical service,compared with the property right,which is just the external of reform,the restructuring of governance being in line with the privatization reform and the corresponding design of system and change of ownership are more important.Fourth,the private hospitals do not necessarily go high-end and personalized development.The private hospitals of county have made great achievements in basic medical services,and they are useful complement to the public medical service supply.In order to reduce the government's financial burden,to cultivate people spirit of citizenship in the field of public service,to break the monopoly of public medical institutions,the basic medical service is necessary to take the path of diversification of supply.The key question is to keep incentive mechanism and constraint mechanism based public responsibility be balance whether in private hospitals or the public reformed medical institutions.In short,the paper contends that the problems in the privatization reform of basic medical service are not caused by the reform itself,but the reform not carried out thoroughly.In the reform of public medical institutions,we lay too much emphasis on the form of property rights and are too dependent on the existing institutional arrangements in medical industry.We neglected the restructuring of governance mode in organizations,which is in accordance with market-oriented reform and corresponding system constructions,thus,leading to the imbalance between incentive and restrain mechanisms,contributing to the negative behavior in medical institutions and affecting the effectiveness of privatization form.At the same time,the administration has not take any corresponding adjustments of regulation and operational guidance in medical industry for the emergence of private hospitals.Being unclear about the possible risks of the reform,the local governments exerted relatively more severe policies and regulations and punishments on violations.The ex-post constraints and competitive pressures in medical industry formed a constraint of profit motives and behaviors,which has played a positive role in regulating the business operations in private hospitals.As a result,the reform achieved a win-win result of increasing efficiency and safeguarding public accountability.Of course,this restraint mechanism,which is resulted from government's prejudice and the intention of "nip the evil in the bud",is not necessarily reasonable.In fact,the government has not carried out a thorough research on the serious information asymmetry in medical industry,thus,failing to formulate a scientific and reasonable restraint mechanism.Actually,under this mechanism,which proved to be costly in transaction,achievements are made at the cost of losing efficiency.Thus,there is no essential linkage between the improvement of efficiency and the safeguard of public accountability in basic medical service and the property rights of medical institutions.The key issue is to maintain the balance between the profit-oriented incentive and restraint mechanisms and to make reasonable arrangements and scientific designs about the governance structure and the supporting systems.