Where Is China's Healthcare Reform Heading Next? Insights from Three National Healthcare Reform Advisory Experts

Since the launch of the “New Healthcare Reform” in 2009, discussions on healthcare reform have never ceased. As the reform enters its “deep-water zone,” reflections on it have also ushered in the “2.0” era. Where will the next phase of healthcare reform head? In which areas will it continue to achieve breakthroughs, and which industries will be affected?

At the recently held “2017 Xipu Conference,” multiple healthcare reform experts and industry leaders engaged in a high-level dialogue on this topic. VCBeat (WeChat ID: vcbeat) has compiled their insightful viewpoints for your reference.

Fang Zhiwu, a former member of the Expert Advisory Committee on Healthcare Reform under the State Council, first raised a question: Is the scale of the broader health industry 3 trillion yuan or 20 trillion yuan? He noted that after more than a decade of rapid growth, the pharmaceutical industry has expanded to a scale exceeding 3 trillion yuan. However, in recent years, it has faced downward pressure due to factors such as the separation of prescribing from dispensing and cost-containment measures within medical insurance, leading to a slowdown in growth. Nevertheless, when viewed from the perspective of the entire broader health industry, if benchmarked against U.S. consumption levels and calculated based on China’s population size, the market scale is projected to grow to over 100 trillion yuan.

In response to this issue, Li Ling, a member of the State Council’s Expert Advisory Committee on Healthcare Reform and a professor at the National School of Development at Peking University, remarked that the recent blockbuster *Wolf Warrior 2* offers much food for thought. China’s industry has grown from scratch and evolved through phases of expansion and consolidation, establishing a solid foundation. After fully leveraging the demographic dividend, the country is fully capable of reaching a market size of RMB 100 trillion. Moreover, when overseas markets are included, the potential scale becomes virtually limitless. The industry requires capable and responsible enterprises and entrepreneurs to usher in an explosive growth phase for China’s big health sector.

Wang Hufeng, a member of the State Council’s Expert Advisory Committee on Healthcare Reform and Director of the Healthcare Reform Research Center at Renmin University of China, stated that “Big Health” is a multidimensional concept encompassing tourism, leisure, the internet, and food. If these sectors are included, the scale of the Big Health industry has long surpassed currently reported figures. The future direction involves deep engagement and service-oriented health solutions, integrating all compatible sectors, which will further expand the industry’s scale.

Shen Shuguang, a member of the Expert Advisory Committee on Healthcare Reform under the State Council, Director of the Social Security Research Center at Sun Yat-sen University, Deputy Dean of the National Governance Institute at Sun Yat-sen University, and doctoral supervisor, emphasized that the big health industry has received significant attention in recent years and is now entering a critical phase of transformation and upgrading. The key to this transformation lies in integrating with technologies such as Internet Plus, big data, and artificial intelligence to unlock market potential.

Li Ling stated that, building on years of pilot programs, healthcare reform is now gaining momentum and showing positive results. Healthcare reform is no longer limited to isolated changes in insurance or hospitals; instead, it is advancing comprehensively and systematically through the coordinated development of medical insurance, healthcare services, and pharmaceuticals. Consequently, the recent focus of healthcare reform has shifted toward transforming government governance and management systems. Previously, authority was overly fragmented, but integrated, comprehensive governance is now being actively promoted.

In addition to the integration of management systems, regions, and medical insurance, the healthcare sector is also undergoing consolidation through the promotion of Medical Alliances. The era of hospitals operating in isolation is changing. Our goal is not only to ensure that the public receives high-quality medical care but, more importantly, to reduce disease incidence and prevent illness altogether. In the future, these Medical Alliances will provide lifelong health maintenance for the public, from birth to death.

The integration of medical insurance is inevitable, as China’s current system is highly fragmented and organized at the county level. In the future, we will progressively consolidate it to higher levels of funding pools, which will not only enhance risk resilience but also strengthen purchasing power in the market.

Wang Hufeng stated that the iceberg of healthcare reform has melted, the momentum of reform is unstoppable, and a turning point is imminent. He predicted that once the statistical data for this year are released at the end of the year, it will be evident that the industry is ushering in a significant turning point. He noted that when he submitted a top-level healthcare reform proposal to the state in 2007, he argued that healthcare reform should be analyzed across four domains: first, public health; second, medical services; third, pharmaceutical production and distribution; and fourth, medical insurance. Progress in all these areas has been very promising.

He cited several key indicators: First, by September 30 of this year, all public hospitals across China will completely eliminate drug markups. Second, more than 2,000 county-level hospitals and over 300 urban hospitals will undergo comprehensive reforms this year; meanwhile, medical consortium reforms will be fully launched in all provinces and municipalities, with all tertiary hospitals, secondary hospitals, and community health centers joining by 2020. Third, the family doctor contract signing rate will reach 60% in key cities, covering 30% of the total population.

These changes mark a turning point for healthcare reform this year, as many policies are set to take effect and yield results. A new era has arrived.

In response to the ongoing deepening of healthcare reform, Shen Shuguang proposed reflections on four key areas: reform of health insurance payment methods, application of new tools, tiered diagnosis and treatment, and comprehensive reform of public hospitals.

He believes that reforming healthcare insurance payment methods is a crucial lever in healthcare reform, with far-reaching implications. It has directly influenced the behaviors of physicians, hospitals, and patients alike. However, every payment method has its advantages and drawbacks. We must not rely on any single payment model; instead, we should explore and pilot multiple approaches.

Another perspective is that refined management must be prioritized alongside payment method reforms.IfWithout effective management, any payment reform is destined to fail. The implementation path for refined management lies in leveraging big data and the internet. Big data and “Internet Plus” not only influence the efficiency of healthcare and medical insurance but also directly reflect equity. He hopes that the government will treat big data and “Internet Plus” as key strategic levers, rather than viewing them merely as technical issues.

Shen Shuguang’s third point is that the tiered diagnosis and treatment system must be advanced in an orderly manner. He believes that such a system cannot be realized overnight, nor within three years; instead, a timeframe of at least one to two decades should be considered. Therefore, regulatory authorities should avoid excessive urgency. As the tiered diagnosis and treatment system involves the entire healthcare infrastructure, many foundational conditions must be established beforehand. These include strengthening the capabilities of primary healthcare institutions, building teams of family physicians and general practitioners, securing support from the pharmaceutical distribution system, and developing the retail pharmacy network. All these factors determine the success or failure of implementing the tiered diagnosis and treatment system.

Shen Shuguang also highlighted the difficulties and pain points of public hospital reform. He believes that public hospitals should uphold their public-welfare nature, stating, “It is very dangerous for doctors to think about squeezing every extra penny from patients during medical consultations.”In addition, he addressed the issue of pharmacy trusteeship, expressing a negative stance. He argued that pharmacy trusteeship clearly fails to ensure transparent transactions, as it inevitably involves some degree of affiliation with hospitals, making it impossible to completely sever financial ties.

Wang Hufeng emphasized the implementation and execution of tiered diagnosis and treatment. He argued that tiered diagnosis and treatment does not mean forcing patients to seek care at primary-level facilities. The first priority is to establish continuity of care. If a patient requires referral from a primary care setting, they should be facilitated to see specialists at tertiary hospitals. Conversely, if a patient receives treatment or undergoes surgery at a tertiary hospital, they should be referred back to primary care facilities for rehabilitation once a treatment plan is established or post-operatively, thereby achieving effective two-way referrals.

Wang Hufeng recommends implementing managed continuous care, which includes establishing defined patient pathways for seeking medical attention. He noted that in all regions where tiered diagnosis and treatment have been successfully implemented, residents are not mandated to seek initial care at community health centers—a highly commendable approach that warrants broader adoption.

Another critical point is that the implementation of tiered diagnosis and treatment must be accelerated. Since 2009, the bed occupancy rate in tertiary hospitals has been severely excessive. By 2013–2014, the average bed occupancy rate in Grade A tertiary hospitals across China reached 103% to 104%. No hospital can maintain patient satisfaction with a bed occupancy rate exceeding 100%. To ensure the quality of medical care, it is imperative to reduce bed occupancy rates.

It is encouraging to note that the tiered diagnosis and treatment system has gained widespread acceptance. By decentralizing appointment scheduling authority from large hospitals to primary care institutions and reducing the volume of general patients at major medical centers, the initiative has achieved a high level of public acceptance.

He stated that the tiered diagnosis and treatment system must deliver tangible benefits to the public on a voluntary basis, while also ensuring gains for hospitals. In the future, the advancement of this system will continue, with increasingly clear and effective implementation pathways.

Taken together, three members of the State Council’s Expert Advisory Committee on Healthcare Reform provided a systematic overview of the achievements made and the challenges remaining in China’s healthcare reform efforts, clarifying the key directions for future breakthroughs. Given their direct involvement in policy formulation, their assessments are likely to serve as a bellwether for the advancement of healthcare reform in the coming period.