Hospital charge exemptions for the poor in Shandong, China

Rapid economic changes in China have produced soaring hospital charges, a breakdown of the old social health insurance system, a resulting crisis in hospital affordability and renewed interest in mechanisms for discounts or exemptions from hospital charges for the poor. Little is known, however, about how effective such systems are in practice. We studied nine public hospitals in Shandong Province that offer discount or exemption mechanisms for the poor. Methods included document review, key informant interviews, detailed review of financial records and focus group discussions. These hospitals receive little government subsidy and must support themselves almost entirely through user fees. Hospital managers saw discount mechanisms primarily as marketing tools and designed them to limit their cost. Only a small fraction of hospital services were eligible for discount, and these were usually low cost or low utilization items. Discounts were generally 10-50% for selected items with very few services exempted from charge. The total value of discounts granted was 1% or less of total hospital operating budgets. Correct identification of indigents was a major difficulty for hospitals. Only a minority of indigents received discounts, the process was sometimes arbitrary and some who received discounts were not really poor. Government policies requiring discounts for the poor were vague and not enforced. The exemption programmes studied do not provide effective protection from hospital charges for the poor. To be effective, exemption mechanisms would likely require both financing and regulation by the government as well as an accurate way to identify the poor.