Hospital drama

Graft scandal shakes Shenzhen medical system

Hospital drama

Medics under fire in Shenzhen

Healthcare reform is in the headlines again courtesy of the American Supreme Court, which this week ruled on whether President Obama’s changes to the US medical system are constitutional (turns out, they are).

The scope of the American reforms are far-reaching (so much so that vice-president Joe Biden needed an expletive to describe how big a deal they were). This has led to extensive debate. But there has been less coverage of events in China, where the authorities are also undertaking an ambitious overhaul of the healthcare sector.

Cue an opportunity last week for the China Daily to cite some evidence of progress. Over the past three years the “healthcare security network” has expanded to cover all of the country’s 1.3 billion people, the newspaper reported. In practical terms that meant city dwellers had seen the proportion of their hospital expenses reimbursed by the government rise to 70%, with the rural population getting a 48% reimbursement.

Other evidence of success? The basic medicine scheme (a centralised procurement system) has seen the average cost of hospital treatments fall 9.46%; while $6.8 billion has been spent on building 2,233 new county-level hospitals.

The statistics might look promising but the China Daily also recognised that massive problems remain. As evidence it cited a huge new corruption scandal in Shenzhen.

This week nine senior executives and doctors at eight state-run hospitals in the southern Chinese city were arrested for allegedly taking millions of yuan in bribes. According to the Legal Daily this followed a widespread investigation of hospital personnel that began in February. It turns out the bribes were received in conjunction with the procurement of medical equipment and drugs.

WiC reported on a similar instance at Hunan’s Xiangya Hospital in issue 114, then described by the Nanfang Daily as a “whirlpool of corruption”. If anything, the scale of what has been uncovered in Shenzhen is more shocking. Sticking to similar analogies to the Nanfang Daily, the Yangcheng Evening News laments a “black hole” of graft, initially revealed when four doctors were found to be taking kickbacks from pharmaceutical firms for buying their drugs. On further investigation, the problem was found to be a lot more widespread.

For example, the head of one hospital pharmacy confessed that a kickback of Rmb3 was being taken on every box of the antiobotic azithromycin, amounting to hundreds of thousands of yuan per year. He admitted the conflict of interest: “It is very common for hospitals to abuse antibiotics, fuelled by the interest chain behind procuring drugs.”

Yangcheng Evening News says that anti-graft investigators traced the roots of the scheme back to senior hospital staff, and that a particularly lucrative area for bribery was medical equipment. While most types of state procurement are handled by municipal authorities and require competitive tenders, purchases of medical equipment are still something of an exception, with medical staff given more leeway to choose which devices to buy.

WiC has reported extensively on China’s healthcare reforms, highlighting both progress and failure in issue 128. We have also looked at public anger at the hospital system, and the alarming trend of patients attacking their doctors (see WiC145).

But the China Daily reckons this latest graft case in Shenzhen should trigger a further wave of reform. It suggests a blacklist be drawn up of firms found to have paid bribes to hospital procurement teams. But it also believes something more fundamental is required: a detailed study of the revenue shortfalls likely incurred at state hospitals if they behave more ethically. That is to say, if hospital administrators stop boosting the bottom line by overcharging for (and over-prescribing) medicines, as well as putting a stop to the practice of giving patients lucrative but unnecessary check-ups.

Only then, the newspaper concludes, can the government decide the exact level of subsidy a hospital needs to ensure they function in the public interest.

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