Policy Forum Chinese-Style Decentralization and Health System 102439 Reform David Hipgrave1*, Sufang Guo2, Yan Mu2, Yan Guo3, Fei Yan4, Robert Scherpbier2, Hana Brixi5 1 Nossal Institute for Global Health, University of Melbourne, Melbourne, Australia, 2 UNICEF Office for China, Beijing, People’s Republic of China, 3 Department of Health Policy and Administration, School of Public Health, Peking University, Beijing, People’s Republic of China, 4 Department of Health Statistics and Social Medicine, Fudan University School of Public Health, Shanghai, People’s Republic of China, 5 The World Bank, Washington, D.C., United States of America A Milestone Is Reached initiatives were being announced with rotation and encouraging health profes- impressive scale and ambition. sionals to work in rural areas. April 2012 marked the end of the three In a July 2011 ‘‘Guidance,’’ the State These new initiatives anticipated and years China set for implementation of the Council announced new roles for the responded to the gaps highlighted in recent first phase of its health system reform grassroots providers originally called reviews and are welcome to those familiar (HSR), and several recent reports assessed ‘‘barefoot doctors,’’ committing them to with community health in rural China. In progress in this massive undertaking [1–3]. 2010, only 14.2% of China’s village doctors a wide range of tasks [6]. By 2020, China’s Two of them identify impressive achieve- were appropriately qualified [7]; although village doctors should be providing stan- ments in health insurance coverage, infra- training of government health staff is improv- dardised primary care (following new structure development, and uptake of clinical guidelines); implementing public ing [8], professional standard-setting in China services [1,3], but all three reports draw health programs; undertaking disease sur- is weak [9], particularly at the grassroots level attention to slow progress in several areas: veillance; conducting community educa- [5]. The official engagement and monitoring quality of services at the community level, tion; participating in health financing of village doctors in a national system is an persisting financial risk for individuals, and schemes; and maintaining individual e- optimistic but positive development, and the almost complete lack of independent health dossiers. A second, related initiative should improve public confidence in grass- tracking of progress in health outcomes. is a major new health management roots services. Despite their legendary role in The reports also recommend an increased information system (HMIS) to be intro- China’s long-established three-tier health focus on burgeoning rates of non-commu- duced over 2011–2015 and linked to network (village, township, and county), these nicable diseases [2–4]. Government-com- China’s civil registration MIS. Allocated cadres have never been formally co-funded by missioned external reviews also highlight- a budget of 22 billion renminbi (RMB) in the national government. ed these and other issues, underscoring related high-level awareness. However, 2011 (almost US$3.5 billion), this system none of the reports attempted to place will potentially feed real-time information National Commitment to HSR China’s HSR in the context of the nation’s upwards to decision makers and health Remains Strong evolving political economy, or to predict resource managers, and also enable top- Following these initiatives, in March its influence on achievement of the major down monitoring of health facilities and 2012, China’s State Council announced a HSR objective—equitable and affordable providers, theoretically even at the village new phase of HSR, underscoring the access to quality health services. level. Although the data will not be ongoing commitment of the highest eche- collected independently, this system may lons of government [10]. The new four-year Moving Forward without reduce the current information gap and plan (2012–2015) reiterates the goal of Looking Back also assist introduction of a third initiative, universal access to basic health services by a performance management and incentive 2020, and specifically refers to supply The rationale for, components of, and program intended to assess and potentially constraints amid growing and diversifying intrinsic challenges to HSR in China are summarised in Box 1. Strengthening grass- reward the activity of health workers and health needs. It focuses on many of the areas roots health care and ensuring universal facilities at all levels, facilitating staff recommended in the recent reviews, includ- access to basic primary and public health ing: expanding insurance benefits and services are among its five pillars, and echo the outgoing national leaders’ overarching Citation: Hipgrave D, Guo S, Mu Y, Guo Y, Yan F, et al. (2012) Chinese-Style Decentralization and Health System focus on social harmony through improv- Reform. PLoS Med 9(11): e1001337. doi:10.1371/journal.pmed.1001337 ing social services and poverty reduction Published November 6, 2012 [5]. Equity in access to health services is Copyright: ß 2012 Hipgrave et al. This is an open-access article distributed under the terms of the Creative indeed improving [1], and even before the Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. recent HSR reviews, related national Funding: No specific funding was received to write this article. Competing Interests: The authors have declared that no competing interests exist. The opinions expressed The Policy Forum allows health policy makers in this paper reflect the perspectives of the authors alone, and may not be inferred to represent the position of around the world to discuss challenges and their parent institutions. opportunities for improving health care in their societies. * E-mail: dhipgrave@gmail.com Provenance: Not commissioned; externally peer reviewed. PLOS Medicine | www.plosmedicine.org 1 November 2012 | Volume 9 | Issue 11 | e1001337 Summary Points required parallel reforms in sub-national financing and governance [14]. Multiple state-level agencies collectively developed N China’s health system reform (HSR) recently entered a second phase—the State the five HSR themes and providing partial Council and a multi-agency steering committee announced many important new initiatives funding, but its detailed design, majority funding, implementation, and monitoring N However, China’s social sectors are heavily decentralized—the Ministry of rely heavily on sub-national authorities Health has limited influence on the detailed design and implementation of the HSR at sub-national level [1,3,5,16–18]. Of the RMB850 billion three-year allocation to HSR in 2009, the N Sub-national leaders in China are mostly driven by economic progress and revenue central government only funded 331.8 billion generation; health is generally regarded as consuming, not generating revenue [19], and substantial input by local govern- N A new health management information system and performance-based ments is again expected for the initiatives management of health staff may enhance oversight announced in 2011 [20] and 2012 [10]. For N However, parallel reforms in governance, financing, and accountability are also example, payment for the planned elevation needed in China, to ensure achievement of the equity objective of its HSR of village doctors’ roles and responsibilities will derive from at least three funding streams unifying China’s several health insurance services in China involves centralised (nationally funded vertical programs; local schemes; encouraging the development of revenue collection and complex fiscal compensation for income lost with drug commercial insurance, the private sector transfers, but decentralized responsibility reforms; and payments from the rural (targeted to manage 20% of health services for the majority of sectoral allocations and cooperative medical [insurance] scheme by 2015), capitation and other payment expenditure [5]. As total revenue volumes [RCMS]) [6,7]. Oversight of these complex reforms to separate doctors from the financial strongly favour richer provinces and a large and fragmented payment arrangements and management of hospitals; health-worker proportion of local government revenue is provision of additional funding will rely on performance-based funding; family general off-budget (and able to be allocated at local county-level authorities [6] whose account- practice; expanding community and public authorities’ discretion), there is effectively a ability for this national initiative is to local health services; and consolidation and regu- nested financial hierarchy, with deeply government [5,11]. lation of drug production, prescription, and unequal, regressive capacity of local gov- However, many sub-national govern- pricing. The plan is encouragingly specific ernments to fund social services [5,13–15]. ments in China view health and other but not prescriptive on health sector strategy. While there are promising moves to make public goods as consuming resources rather However, it remains vague on accountability local government more accountable to the than as an investment in the future [2,21]. and local spending responsibilities, stipulating well-being of the public (such as introduction Moreover, while local government input to only that government health spending grad- of ‘‘green gross domestic product’’ measure- supply-side initiatives and the RCMS has ually increase as a proportion of total ment, and independent surveys of public been critical [3,8], broader local commit- recurrent government expenditure. This opinion on local government performance in ment to national health priorities requires vagueness hints at the major problem for some provinces), the main motivation for not only money but also stewardship of the equity objective of China’s HSR. sub-national authorities, including for their health providers and coordination of other career trajectory, remains economic develop- sectors not mentioned in the HSR. Again, Local Government Support for ment and revenue generation [11]. More- this oversight costs money and may be China’s HSR Is Imperative over, while some sectors of China’s economy viewed as impeding local economic devel- (banking, communications, etc.) are carefully opment. Many examples, especially per- China’s HSR is a national process but its regulated and monitored from above, the taining to food safety, drug production, and implementation, funding, and evaluation health sector is largely organised and mon- the health risks of local industries [22] exemplify the hazards of the nation’s style itored at the local level. Indeed there is no imply low levels of sub-national govern- of decentralization. Chinese federalism equivalent social sector governance hierarchy ment commitment to health, but apart involves three major principles: hierarchi- and it is too costly for China’s undermanned from isolated crises (tainted-milk, fake cal administrative sub-contracting (the de- central government to independently moni- vaccines, etc.), there remain few significant volution of responsibility for implementa- tor and evaluate sub-national health perfor- incentives for local government leaders to tion of national policy to progressively mance [5,11]. These circumstances explain prioritise the health sector. lower levels) and territory management; the limited ability of national health officials Moreover, recent analyses have char- inter-governmental financial transfers; and to ensure reforms are pursued at grassroots acterised public financing of the health vertical competition for promotion in the level, and underscore the potential impor- sector between and within China’s public sector [5,11]. In theory, decentraliz- tance of initiatives like the new HMIS and provinces as regressive [5,18,23], noting ing the financing and administration of the performance evaluation system. that insurance schemes [24,25] and health sector can enhance the quality, broader health resource allocation equity, and responsiveness of local services, Weak Incentives to Prioritise across urban-rural and regional bound- but this assumes prioritisation by local Health at the Sub-National aries ignore community needs [3]. authorities and adequate vertical and Level Despite increased national allocations horizontal accountability and governance to health (from RMB258 billion in 2007, [12]. In China, local government remains In recognition of the need for more to RMB569 billion in 2010), the sourc- largely accountable to higher-level author- support, over the last decade there were ing and detailed allocation of the ities, not the local population, and econom- serious attempts to increase national majority of public funding for the health ic, not social development is its primary funding for the health sector [3,8], but it sector occurs at sub-national level [3,5]. objective [11]. Moreover, since tax reforms was recognised long ago that effective, equity- In striving for economic development, in the mid-1990s, the funding of social enhancing reform of China’s health sector China’s poorer provinces and counties PLOS Medicine | www.plosmedicine.org 2 November 2012 | Volume 9 | Issue 11 | e1001337 Box 1. Health System Reform (HSR) in China relies on locally generated administrative data, the accountability of which is mostly horizontal (to local government), not N The rationale for HSR in China vertical (upwards within the sectors), with q Marketisation and poor funding of China’s health sector had made health care major implications. For example, the unaffordable for many. national annual birth cohort reported by county level authorities totals around 13 q Although the majority of health facilities are owned by government, in 2001 million (meeting local family planning around 60% of total health expenditure was out of pocket. Insurance coverage commitments), but national authorities was very low. responsible for communicable disease q Health care is mostly fee-for-service, but fees and salaries are set artificially low. control through vaccination report a Drug sales and tests provide alternative income for facilities and providers. cohort of .16 million. Despite recom- q Hospitals are managed as profit-making enterprises, rather than for the public mendations [28], engagement of the good. public in planning, monitoring, and q Public health and information systems were particularly weak, as seen during evaluation of the health sector is very the SARS crisis. limited in China. Monitoring the equity objective of China’s HSR thus relies on N China’s plans to achieve universal coverage by 2020 evidence of limited reliability; reporting of progress is largely output-based or de- q China’s HSR comprises five pillars developed by a national multi-agency scribes numeric improvements emanating committee: from specific, nationally designed initia- tives [1], often lacking denominators 1. Expanding the coverage of and benefit provided by subsidised health [2,3,29] or on which the majority of insurance; progress was made before 2009 [1,3]. 2. A drug reform scheme with zero mark-up on listed essential medicines; Locally representative, population-based 3. Improving access to and the quality of primary health care; surveys on health outcomes are uncom- 4. Basic public health screening and management at community level for all, and mon in China and almost never indepen- 5. Public hospital reform. dent, so the disaggregated impact of the HSR and local initiatives on health will q A number of targeted programs have also been developed by the Ministry of remain unknown except at relatively Health. crude (regional and urban-rural) levels q The target date for completing the reform is 2020. [1,30]. This lack of data increases the risk that new national allocations may not N Intrinsic challenges to China’s HSR substantively impact health challenges except on a few flagship indicators (such as insurance and service uptake and q A generation of health providers and local governments regard health care as hospital delivery [1]), and may even have essentially a private business, and will resist efforts to control fee and other income. major economic implications if predic- tions on the cost of China’s non-commu- q The majority of health providers are underqualified, especially in rural areas; nicable disease burden are correct [2,4]. training new providers and overcoming a heavy urban bias in their health- In this context, quality implementation of worker distribution will take years [31–33]. the new HMIS, albeit another national q With the exception of a radically improved notifiable disease reporting system initiative reliant on local funding, will be a [34], China’s HMIS remains weak. critical element of assessing future prog- q Although increasing, funding of the health sector is heavily decentralized and ress. This is mentioned in the new plan regressive [5,18]. [10], but in general the national focus on q Local health authorities are encouraged to further develop, fund, and pilot the monitoring and evaluation of the HSR HSR components, resulting in inconsistent progress and output. remains weak, reflecting the position of the health sector in China’s governance hierarchy. neglect co-funding of health despite health care payment, financing, and national priorities and earmarked allo- insurance across territorial boundaries. cations [15,17,18]. Furthermore, al- This harmonisation accrues importance Conclusion though clearer guidance from national as China’s population becomes increas- Pursuing HSR in China has the poten- level would probably improve the suc- ingly mobile and is a critical element of tial to improve equity by bringing stan- cess of certain reforms, it is not forth- the HSR equity objective. dardised primary care and public health to coming. For example, responsibility for those whose health status implies they protecting consumers from high health In Addition, More and need it most [18]. However, it will only costs through insurance and hospital Independent Information Is succeed if sub-national governments are management reform has also been Needed accountable for related public resource largely assigned to county-level author- allocation, and if vertical monitoring of the ities [8]. Many and varied payment Another characteristic of Chinese-style quality, equity, efficiency, and effectiveness schemes have arisen [26,27], threaten- federalism is that reporting of most areas of the health sector is improved. In ing the recommended harmonisation of of China’s social and economic progress addition to HSR, reforms are also needed PLOS Medicine | www.plosmedicine.org 3 November 2012 | Volume 9 | Issue 11 | e1001337 to align the responsibilities, capacity, and benefits to other sectors [4], and the DBH. Contributed to the writing of the monitoring of all sub-national authorities increasing focus of the state on evaluating manuscript: DBH SG YM YG FY RWS HB. with health-related national policies, stan- local government’s commitment to public ICMJE criteria for authorship read and met: DBH SG YM YG FY RWS HB. Agree with dards, and regulations, and to improve welfare [11]. manuscript results and conclusions: DBH SG their accountability to the population. YM YG FY RWS HB. These additions go beyond the influence Author Contributions of the Ministry of Health, but accord with Analyzed the data: DBH SG YM YG FY RS the evident priority assigned to HSR by HB. Wrote the first draft of the manuscript: multiple national authorities [21], the References 1. Meng Q, Xu L, Zhang Y, Qian J, Cai M, et al. 12. Uchimura H, Ju ¨ tting J (2006) Fiscal decentralisa- 23. Chou WL, Wang Z (2009) Regional inequality in (2012) Trends in access to health services and tion, Chinese style: good for health outcomes? China’s health care expenditures. Health Econ 18 financial protection in China between 2003 and Paris: OECD Development Centre. Suppl 2: S137–S146. 2011: a cross-sectional study. Lancet 379: 805– 13. The World Health Organization (2000) The 24. Yu B, Meng Q, Collins C, Tolhurst R, Tang S, et 814. World Health Report 2000: health systems: al. (2010) How does the New Cooperative 2. Huang YZ (2011) The sick man of Asia. Foreign improving performance. Geneva: World Health Medical Scheme influence health service utiliza- Affairs 90: 119–136. Organization. tion? A study in two provinces in rural China. 3. Yip WC-M, Hsiao WC, Chen W, Hu S, Ma J, et 14. The World Bank East Asia and Pacific Region (2002) BMC Health Serv Res 10: 116. al. (2012) Early appraisal of China’s huge and China national development and sub-national fi- 25. Chu JH, Yu BR, Meng QY, Fei Y, Tolhurst R complex health-care reforms. Lancet 379: 833– nance. Washington (D.C.): The World Bank. (2010) Analysis of the demand of medical service 842. 15. Zhang X (2006) Fiscal decentralization and for inpatients in Shandong and Ningxia. Chinese 4. The World Bank Human Development Unit political centralization in China: Implications Health Economics 29: 58–60. (2011) Toward a healthy and harmonious life in for growth and inequality. J Comp Econ 34: 26. Yip WC, Hsiao W, Meng Q, Chen W, Sun X China: stemming the rising tide of non-commu- 713–726. (2010) Realignment of incentives for health-care nicable diseases. Washington (D.C.): The World 16. Wagstaff A, Lindelow M, Wang S, Zhang S providers in China. Lancet 375: 1120–1130. Bank (2009) Reforming China’s rural health system. 27. Yang Z, Weng S, Wang K (2012) Healthcare 5. Wong C (2010) Public sector reforms toward Washington (D.C.): The World Bank. reform faces an uphill battle (in Chinese). Beijing: building the harmonious society in China. Paper 17. Bloom G (2011) Building institutions for an Caijing. prepared for the China Economic Research and 28. The World Bank East Asia and Pacific Region effective health system: lessons from China’s Advisory Programme: University of Oxford. experience with rural health reform. Soc Sci (2007) China: improving rural public finance for 6. Government of China State Council (2011) Med 72: 1302–1309. the harmonious society. Washington (D.C.): The Guidance on further strengthening the ranks of 18. Brixi H, Mu Y, Targa B, Hipgrave D (2010) World Bank. rural doctors. Available: http://www.gov.cn/ Equity and public governance in health system 29. Ministry of Health (2012) Three years of zwgk/2011-07/14/content_1906244.htm (in reform: challenges and opportunities for China. significant progress in health reform. Available: Chinese). Accessed 20 August 2012. World Bank Policy Research Working Paper http://www.moh.gov.cn/publicfiles/business/ 7. Ministry of Health (2011) China’s Minister of number 5530. Washington (D.C.): The World htmlfiles/mohbgt/s3582/201201/53883.htm (in Health: Rural doctors will continue to serve the masses indefinitely. Available: http://www.gov. Bank. Chinese). Accessed 20 August 2012. cn/gzdt/2011-02/18/content_1805889.htm (in 19. China’s State Council (2009) Implementation plan 30. Ministry of Health Centre for Health Statistics Chinese). Accessed 20 August 2012. for the recent priorities of the health care system and Information (2009) An analysis report of the 8. Ministry of Health (2012) Development of reform (2009–2011). Available: http://www.moh. fourth national health services survey in China in Chinese medical and health services. Available: gov.cn/publicfiles/business/htmlfiles/mohzcfgs/ 2008. Beijing: China Union Medical University http://www.moh.gov.cn/publicfiles/business/ s7846/200904/39876.htm (in Chinese). Accessed Press. htmlfiles/mohbgt/s3582/201208/55657.htm (in 20 August 2012. 31. Anand S, Fan VY, Zhang J, Zhang L, Ke Y, et al. Chinese). Accessed 19 August 2012. 20. Ministry of Finance (2011) The Central Government (2008) China’s human resources for health: 9. Li HF, Zhang HL (2012) Ways out of the crisis distributes the funding of the Health system Reform. quantity, quality, and distribution. Lancet 372: behind Bribegate for Chinese doctors. Lancet: e16. Available: http://www.mof.gov.cn/zhengwuxinxi/ 1774–1781. 10. Ministry of Health (2012) China’s State Council caizhengxinwen/201107/t20110712_574710.html 32. Meng Q, Yuan J, Jing L, Zhang J (2009) Mobility announcement on deepening medical and health (in Chinese). Accessed 20 August 2012. of primary health care workers in China. Human system planning and implementation of the 21. Yang DL (2011) The central-local relations Resour Health 7: 24. program during the 12th Five Year Plan. dimension. Freeman CW, Lu XQ, editors. 33. UNDP China and China Institute for Reform Available: http://www.moh.gov.cn/publicfiles/ Implementing health care reform policies in and Development (2008) China National Human business/htmlfiles/mohzcfgs/s9660/201203/ China. Washington (D.C.): Centre for Straegic Development Report 2007/2008: Access for all: 54386.htm (in Chinese). Accessed 20 August and International Studies. pp. 21–29. Basic public services to benefit 1.3 billion people. 2012. 22. Human Rights Watch (2011) ‘‘My Children Have Beijing: UNDP. 11. Zhou LA (2010) Incentives and governance: Been Poisoned’’: a public health crisis in four 34. Hipgrave D (2011) Communicable disease con- China’s local governments. Singapore: Cengage Chinese provinces. New York: Human Rights trol in China: from Mao to now. Journal of Learning Asia Pte. Ltd. Watch. Global Health 1: 223–237. PLOS Medicine | www.plosmedicine.org 4 November 2012 | Volume 9 | Issue 11 | e1001337