Health minister Chen Zhuo sent the message that the rapid rise in medical bills will hopefully be checked when he declared 2015 is the deadline when all public hospitals will no longer be able to rely on sales from medicine for their income.

Chen said that further reform will be carried out on a trial basis in 300 county-level hospitals this year, and all county-level hospitals will hopefully adopt the diagnosis-related group (DRG) system by 2013. The practice will be adopted in all public hospitals by the year 2015.

Chen described hospitals' reliance on sales of medicine for revenue as one of the two tumors hampering reform of the healthcare system. The other is the way patients are charged according to the examinations undertaken and the amount of medicines prescribed.

Such a practice has long been accused of resulting in over-medication by hospitals, which not only wastes medical resources but also leads to prohibitively expensive medical bills.

Starting from last year, six hospitals in Beijing began to adopt the DRG system, according to which hospital cases are classified into 108 groups, and patients are charged in accordance with the ailment the hospital has treated rather than the amount of medicine prescribed or the number of medical examinations they have received.

Needless to say, this reform is progress. Rather than trying to prescribe patients as much medicine as possible or give them as many examinations as possible, hospitals will have to consider how to reduce the cost of treatment.

However, given that hospitals will seek to maximize their income, it is certainly not unreasonable to suspect they will try to reduce costs by providing an inferior service. But while the omission of some examination procedures or some medicines will save money for hospitals, patients will definitely suffer.

When the DRG system was adopted on trial basis in Beijing last year, healthcare authorities had already anticipated such a possibility and they emphasized that a supervision and performance assessment system must be implemented to prevent hospitals from providing an inferior healthcare service.

Despite the fact that the charges for each group of cases are decided according to the average level of payment for similar cases the previous year, most doctors' income will likely decrease if they fail to get kickbacks from medicine reps. And if that is the case, doctors' enthusiasm for the reform will be dampened.

Chen called on local governments to set up provincial level funds for healthcare security reimbursement for serious diseases. But increased reimbursement from healthcare insurance is only one way to increase the income of doctors and will be quite limited in giving substantial incentives to medical workers.

So the government should consider ways to increase the income of medical workers and at least guarantee that the reform will not reduce their income. That is as important as the adoption of the DRG system.

(China Daily 01/09/2012 page8)