context: The PRC has been wrestling with an imbalanced healthcare system: it is overly reliant on hospitals in affluent metropolises to provide even basic medical services while primary care facilities have been grossly underused. Beijing is determined to shore up the capacity of grassroots medical institutions, directing patients away from top-tier hospitals, only to find years of effort fruitless. Progress is hindered as hospitals across the country are crippled by financial woes amid tightened COVID-19 controls and declining revenues from drug sales. A sustainable profit-making mechanism, above all, is urgently needed.

Hainan announced on 30 August that the province will gradually abolish general outpatient departments in third-tier hospitals, reports Caijing Magazine. Following in the footstep of Shanghai, Guangdong and Qinghai, the island province is not the first to roll out the reform. National health authorities have in recent years envisioned a healthcare system that promotes lower-level hospitals and grassroots primary care providers to fill the gap in treating common and chronic diseases.

That vision seems nowhere in sight yet. An ever-increasing number of patients is opting for tertiary hospitals—one of those better-equipped medical facilities—even for minor conditions like fever and headache. Outpatient visits to third-tier hospitals made up 26 percent of total visits in 2021, climbing from 18 percent in 2014, the National Health Commission data show. However, the number of these top medical facilities only accounted for 0.3 percent of the total healthcare providers, leaving resources unreasonably distributed and hospitals in big cities overstretched.

The root cause of such preference for tertiary hospitals lies in the uneven qualifications of medical professionals across different levels of the healthcare system, notes Liang Wannian 梁万年 Tsinghua University Wanke School of Public Health professor. Highly skilled physicians are concentrated in top-tier hospitals in better-developed regions. With medical personnel inadequately trained, lower-level medical providers are simply not trusted by patients.

Meanwhile, a backlash against scrapping general outpatient services can be expected from public hospitals, says Cao Jian 曹健 Renmin University of China’s Institute of Hospital Management researcher. Explaining the context, he points out

  • hospital revenues have declined as patient visits shrink under strict COVID controls on mobility
  • general outpatient services contribute to 30 to 40 percent of the total income for tertiary hospitals

Cao argues that the success of directing patients to lower-level healthcare providers lies very much on reforms in other areas, including the

  • pricing mechanisms for medical services
  • public hospital system
  • medical insurance system