The Impact Of Capitation Payment On The Governance Of The Integrated Township-village Organization

BackgroundHealth is the basis for human’s survival and development. Since medical services are directly related to the individuals health, and then affect the family happiness and social well-being, China have an increasing emphasis on health care reforms, especially for the rural health care reforms. One of them was the Integration of Township-village Reform. Objectives of this reform were to optimize the order between the Township Health Center (THC) and Villages Doctors (VDs), then to promote them to provide better health services.However, the effect of this reform was poor. Plenty of evidences proved that there was only formal integration between THC and VDs, meaning that it was still lack of appropriate internal operate mechanism for integration.It would be necessary to develop the theoretical and empirical analysis to achieve the ’real’ integration and to establish internal management mechanism between THC and VDs. New Institutional Economics (NIE) was widely used in various fields, which focus not only on the internal governance structure of an organization, but also on external institutional environments. So this research focused on the establishment of internal management mechanism of the Integrated Township-village Organization under the theory of NIE.The Payment Method was an effective tool to regular the Integrated Township-village Organization, and was also one of the important external institutional environments in this research.ObjectivesTo achieve the ’real’ integration and to establish internal management mechanism between THC and VDs, this research launched two detail objectives under the theory of NIE.The first object was to choosing the most suitable governance structure based on the characteristics of transactions among the Integrated Township-village Organizations.The second objective was to analyze the operating between THC and VDs under the external institutional environments. As the external institutional environments were complex and unpredictable. This research considered the Payment Methods as the specific external institutional environment based on Case Study. A comparative study of different Payment Methods, the Capitation payment and the Fee for Services payment, was also conducted.Based on the above research and results, feasible suggestions would be put forward.MethodsSome investigation methods was used. Literature review was applied to collect and summary theories includes NIE and the Payment Methods Theory. It also used to realize the current situation of The Integration of Township-village Reform. To attain the information about health care demand and utilization of the population as well as of the Integrated Township-village Organizations, household surveys were conducted in 2009,2011 and 2012. Qualitative interviews were intended to understand problems and reasons and stakeholders’views after reforms.Case study was conducted to make application of theories and rationales. Rural area in the Ningxia Hui Autonomous Region was selected as a case. Its county Haiyuan was investigated in detail.A difference in difference (D-in-D) analysis is applied to evaluate net intervention effect.Results1. In the Integrated township-village organization, the characteristics of transactions included high uncertainty, high asset specificity and high frequency trading. The most suitable governance structure based on these characteristics of transactions was the hierarchical governance structure.2. As THC did not play well in the management of the Integrated township-village organization, especially of Village Doctors, the hierarchical governance structure of the Integrated township-village organization was not stable.3. Under different payment methods, the transaction costs of the Integrated Township-village Organizations was different.4. Under different payment methods, the internal operation of the Integrated Township-village Organizations was different.5. Under different payment methods, the Integrated Township-village Organizations achieved different results, and the capitation payment method was better than the FFS method in Haiyuan County.Discussions1. It was the first time to combine the governance theory and The Integration of Township-village Reform, which had widely used in other health care research fields.2. The combined study of payment and The Integration of To wnship-village Reform was urgently needed.3. The capitation payment method in Haiyuan had obvious effects on the Integrated To wnship-village Organizations and little effects on residents. There are two possible reasons. Firstly, residents were mostly effected by benefits package, and all the residents in Haiyuan were under the same benefits package. Secondly, the indicators of residents were about health status and satisfaction, which were hard to be observed in short terms. However, the payment reform was only operated for two years in this part of analysis.Suggestions1.’Service integration’ should be promoted to consolidate the hierarchical governance structure of the Integrated Township-village Organizations.2. Authority of THC should be strengthened and targets between THC and VDs should be unified to consolidate the hierarchical governance structure of the Integrated Township-village Organizations.3. Attentions should be paid to the external institutional environments of the Integrated Township-village Organizations during the regulation of the Integrated Township-village Organizations.4. The two reforms, the Integration of Township-village Reform and the Payment Reform, could be promoted simultaneously based on the results under capitation payment reforms in Haryuan County.5. Theoretical study of the Integration of To wnship-village Reform should be advanced.6. The evaluation of the Integration of Township-village Reform should be based on the Integrated Township-village Organizations which had established internal mechanisms, rather than the Integrated Township-village Organizations which just stopped over formal integrations.Innovations and shortagesInnovationsThis research had introduced theoretical analysis, NIE and payment theory, into the Integration of Township-village Reform, which might provide a new idea for further study.ShortagesThis research considered payment as the most important external institutional environment, ignoring other factors which might also have impacts on the Integrated Township-village Organizations.