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Effect of healthcare system reforms on public hospitals' revenue structures: Evidence from Beijing, China
Lu Gao1, Leiyu Shi2, Qingyue Meng3
1Beijing Municipal Health Commission, Beijing, China; Bloomberg School of Public Health, Johns Hopkins University, Baltimore, USA.
Insights
Beijing
Area of Science:
- Health Economics
- Public Health Policy
- Hospital Management
Background:
- Public hospitals in Beijing faced financial pressures from reliance on drug sales and escalating medical costs.
- Two comprehensive reforms were implemented in 2017 (reform1) and 2019 (reform2) to address these challenges.
Purpose of the Study:
- To analyze the impact of Beijing's two-round public hospital reforms on hospital revenue structures.
- To assess the effectiveness of these reforms in controlling medical expenditures.
Main Methods:
- Utilized observational data from 354 healthcare facilities covering medical revenues from 2016 to 2019.
- Employed a Panel-interrupted time-series (PITS) model to analyze the effects of the reforms.
Main Results:
- Drug sales proportion decreased from 43.96% (2016) to 34.08% (2019).
- Medical consumables proportion decreased by 0.73% after reform 2.
- Medical consultation service fees increased from 15.16% (2016) to 24.51% (2019).
- PITS analysis confirmed significant drops in drug sales and increases in consultation fees post-reforms.
Conclusions:
- Beijing's public hospital reforms successfully optimized revenue structures and contained rising medical expenditures.
- The reforms demonstrate a viable model for public hospital financial management and can inform future healthcare policy in China and globally.
Abstract:
To reduce the heavy reliance of public hospitals on drug sales and use of advanced technologies and to contain the escalating medical expenditures, Beijing implemented two rounds of comprehensive public hospital reform in 2017 and 2019, respectively. The first round focused on separating drug sales from hospital revenue (reform1), and the second round extended to include zero markup on medical consumables and price adjustments for medical services (reform2). To estimate how these two rounds of reform have affected public hospitals' revenue structures, we used observational data of medical revenues from 2016 to 2019 covering 354 healthcare facilities. A Panel-interrupted time-series (PITS) model was used to analyze the effects. The results suggest that the reforms have changed the structure of public hospitals' revenues. The proportion of drug sales in hospital revenues fell from 43.96% in 2016 (pre-reform) to 34.08% in 2019 (post-reform); the proportions of medical consumables decreased by 0.73% after reform 2; and the proportion of medical consultation service fees increased from 15.16% in 2016 to 24.51% in 2019. PITS analysis showed that the proportion of drug sales dropped by 5.46% in the month of reform 1, and it dropped by 0.20% per month on average after reform 2(p < 0.001). The proportion of medical consumables decreased by 0.04% per month on average after reform 2 (p < 0.001). The proportion of medical consultation service increased by 7.13% in the month of reform 1, and it increased by 0.14% per month on average after reform 2(p < 0.001). Similar trends were seen in hospital revenue structures from both inpatient services and from outpatient and accident and emergency services. Thus, Beijing's reforms successfully contained rising medical expenditures and optimized hospitals' revenue structures. These reforms can provide a reference for further public hospital reforms in China and other countries with similar systems.
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