Public Management Research Of The Introduction Of Social Capital In Public Hospitals’ Construction

BackgroundPublic hospital is the principal part of the health service system in our country, shouldering the responsibility of providing basic medical and health services for citizens. At present there exist many problems in the development of public hospitals. It is the most serious contradiction that the development of public hospital and the lack of government investment, as well as the diversity of medical service and insufficient public hospitals. Financing for development comes to be most urgent problem for the public hospital.China’s government financial assistance in the public hospital income accounts for a little, and fiscal subsidies itself cannot meet the needs of the development of hospital. Moreover, it is unrealistic to rely on financial investment in the underdeveloped areas. Besides, the untimely pay of the medical insurance fund also occupies large liquidity of the hospitals. The newly increased government health input will mainly used in the support of public health, rural sanitation, urban community health and basic medical security. It indicates that the focal point of investment in medical and health field has shifted, and the public hospital is not the key investment point any more.Apart from the external financial allocations, the hospital’s internal capital accumulation has been also affected. According to the new medical reform, "separation between medical and pharmaceutical services", "to gradually reform or abolish drugs addition policy", sources of hospital income compensation will turn from government financial assistance, drug additional income and medical service charges into financial assistance and medical service charges. Because the government subsidies accounted for the proportion of hospital revenue lowly, while the drug income is large, gradual cancellation of drug addition will reduce the income of the hospitals. And the measures that raising the price of medical services and the establishment of "pharmaceutical service fee" will play a role in how much on compensation for the reduced drug income needs further observation. It will lead to a less hospital profit and a stressful finance.The lack of financial subsidies and limited accumulation of funds of the hospitals, result in the funds shortage during the construction process for Chinese public hospitals, and increase the needs for the external financing. In general, the hospital will seek loans from banks and other financial institutions, there followed by a series of problems such as the increase of the total hospital debt and asset-liability ratio. Besides, bank loans are more vulnerable to the impact of the economic situation at home and abroad. At present, with downward pressure on China’s economy and rising non-performing loan ratio of bank, loan project audit becomes more stringent, and it is more difficult to obtain bank loans.Currently, the state issued the policy to encourage the use of social capital in the construction of public hospitals, mainly refers to the consortium, the company’s funds, in order to make up for the lack of construction funds for public hospitals. This approach has been implemented in many countries of the introduction of private capital in the construction of public hospitals. In 1992, the United Kingdom proposed private financing to encourage private capital investment in public hospital construction. The research of introducing social capital into the construction of public hospitals in our country is helpful to solve the problem of the liability of the hospital, to reduce the financial pressure, to supply the hospital construction funds, and to improve the environment of the hospital facilities as well.ObjectivesThis paper analyzes the background of the introduction of social capital in the construction of public hospitals in our country, debts of public hospitals resulted from the large use of bank loans for hospitals construction, and the resulting problems. Moreover, it is compared with the British in the background, implementation method, government responsibilities and so on when public hospital construction introduces private financing. This paper puts forward relevant suggestions about the way and government responsibilities for China’s social capital to participate in the construction of public hospitals by drawing lessons from British experience, so as to provide decision-making reference for the reform of public hospitals in China.MethodsAccording to the new theory of public management, public goods theory and the financial management theory, based on numerous literatures, this paper analyzes the background of the introduction of social capital in the construction of public hospitals, and elaborates the spirit of the new policies. With the use of relevant data in China Health Statistical Yearbook and financial data provided by Health Department of Shandong Province, the financial index is calculated. A quantitative analysis of the debt problem in public hospitals has been finished in the method of comparative analysis, trend analysis and ratio analysis. As a control, this paper introduces the specific circumstances of the construction of the private financing plan for public hospitals in England. It also compares the similarities between the UK and China in the comparative analysis method, and provides reference for the reform of public hospitals in China.ResultsBecause of the government’s public management functions does not reach the designated position, the previous stage of the construction of public hospitals have borrowed from banks heavily. There has been a massive sprawl and serious debt problems, so the government introduced regulatory measures, but did not achieve the desired effect. Under the lack of government financial assistance, hospital compensation mode change, health insurance is not timely paid and large-scale expansion of hospitals, to compensate for the lack of funds for construction of public hospitals and avoid more serious debt problems, the government has introduced measures to encourage the social capital to the construction of public hospitals.By carding policy can sum the process of social capital into the construction of public hospitals. The financial sector chooses a good reputation private sector through the tender and the private sector can through wholly-owned, joint venture, cooperation, joint venture, leasing and other means to the franchise, public buildings private, public office to help, etc. involved in medical facilities construction. As the return of investment, the private sector can obtain long-term stable income through franchises, financial subsidies and other means. The private sector can set up a special purpose company, to provide construction services on the one hand, on the other hand through bank loans, issue bonds, investment funds, asset securitization, the introduction of strategic investors and other means to raise funds. The financial sector gives differentiated credit policies and preferential interest rates, up to 30 years. Meanwhile the financial sector participates in project planning, financing, risk control and financial job referral and other comprehensive financial services. In the assessment process, the financial department uses the principles of value for money.In practice, the introduction social capital into public hospitals encountered some problems. Firstly, the present policies remain fuzzy, lack the necessary implementing rules. Secondly, government regulation on public hospitals with the introduction and use of social capital is weak. Thirdly, hospitals bear the cost of financing alone. Fourth, hospitals lack the planning of the use of social capital.The introduction of social capital into the public hospital construction first proposed and developed in the UK. In the absence of funds for construction and inefficient operation background, British government raised private financing policy. The private sectors use the building plus operational approach to build public hospitals. Government plays of public administration in the policy development, financial support, advices and project supervision. Through the implementation of private financing policy supplemented funds, eased the financial pressure, improved hospital facilities environment and the operational efficiency. But it also brings high financing cost, high risk projects, some public hospitals unable to repay the loans and other risks.SuggestionsChange the view that the introduction of social capital will affect the public hospital public welfare. Public hospitals in our country have the dual characteristics of public welfare and profit-making in the actual operation. Public hospitals bear the pressure of asset appreciation and continuous operation, pursuing economic output. Social capital of the private sector has time value, calling for a certain return on investment. And public hospital enjoys steady revenues, attracting social capital for the fund safety.Play the role of government planning and supervision of public hospitals, to avoid blind expansion of public hospitals. Give full play to the government’s macro planning functions, and the standard size of the hospital should be set up according to the economic level and medical conditions. Only the qualified hospital can expand the size according to the standard, and it cannot be out of control.Perfect laws and regulations. Improve the operation of the existing policy, and clear the government’s responsibilities. Most of the current files are the guidance of the opinion, still need to introduce operational guidelines.Clear the leading position of the government in public hospital financing, and introduce the advantageous social capital. Government departments need to keep the function of regulator, exerting the effect of promoting social capital, and play the role of coordination between the public hospitals private sectors. Only high-quality social capital can provide a stable cash flow, so we should standardize the access qualifications of social capital.Clear the costs and reimbursement of using social capital investment by abundant investigations. Cost of investment and the mode of repayment are issues of concern to investors, while we only have the macro guidance now. Clear the cost of financing and reimbursement ways in the design phase of the contract, and combine the interests of the public hospitals and social capital closely.Establish the third party organizations to strengthen the link between public hospitals and social capital. Company established for special purpose in the United Kingdom played a key role in the private financing plan, China can set up a similar agency, raising funds, and providing construction services. Set up a risk compensation fund to compensate for the loss of part of the investor in case hospital can not repay the funds.