Has the medical reform improved the cost efficiency of Chinese hospitals?

After three decades of reform, the medical care system in China has experienced significant changes. However, the present research has not made a tentative evaluation of it to justify further reform. This paper analyses the cost efficiency of Chinese hospitals in 31 provinces during the period from 2002 to 2011 and adopts a Bayesian stochastic frontier model taking account of the identified heterogeneity according to the background of Chinese medical system reform, including the coastal location, 3A class hospital proportion, public subsidies and medical insurance reforms. It finds that the public subsidies and medical insurance reforms have improved the cost efficiency of Chinese hospitals, while the coastal location and 3A class hospital proportion have decreased the cost efficiency of Chinese hospitals. Therefore, these results imply that it will be beneficial for Chinese medical system to optimize the fiscal subsidies of public hospitals, encourage the entrance of private hospitals, improve the medical insurance coverage and set up the pre-triage system.