Health System Efficiency in China: A Comparative Analysis of Pre- and Post- 2009 Healthcare Reform

Abstract

The pursuit of efficiency has become a core preoccupation of health policy makers in China where health expenditure has been growing at a double-digit rate since 2008 due to increasing health demands. The latest round of China’s health system reform launched in 2009 accorded special focus on tackling rising medical costs and improving the efficiency of resource use and health care access issues, with the goal of eventually building a universal healthcare system by 2020. Further emphasis on health system efficiency and equity as a tool for achieving a range of ambitious health targets is evident in the Healthy China 2030 Plan. However, despite the focus and priority given to achieving value for money in the country’s health sector reform agenda, to-date there is limited evidence on health system efficiency assessment in China. The available literatures are largely focused on institutional level technical efficiency; based on activities rather than outcomes, and even those that are outcome based ignore other roles that the health system plays, such as in the prevention and control of non-communicable diseases (NCDs), as they are largely focused on a single outcome (such as maternal or child health). The thesis adopts a holistic approach and focuses on outcomes related to child health, maternal health and NCDs as opposed to activities in measuring technical efficiency (TE). The concept of potentially avoidable hospitalisation (PAH) has also been borrowed to examine allocative efficiency (AE) in the health system. The data envelopment analysis (DEA) study suggests that due to wide-spread scale inefficiency in the country, the average bias-corrected overall technical efficiency (OTE) was around 0.80. Nearly 60% of the provinces operated at a decreasing return to scale (DRS), signifying a gain in efficiency could be achieved through downsizing the scale of operation. The average Malmquist Productivity Index (MPI) suggests deterioration in productivity over the study period, particularly after the implementation of the new healthcare system reform in 2009. Health resource allocation patterns and level of economic status of a province had great positive impact on OTE and scale efficiency (SE), while skill-mix, degree of urbanisation, ageing and the percentage of out-of-pocket (OOP) in total health expenditure (THE) were inversely associated with OTE and SE, as suggested by a Tobit regression analysis. PAH is highly prevalent and has increased faster in recent years, reaching 1.62 million episodes (8.6% of all hospitalisations) in 2017, a 4-fold increase over 2004. The incidence of PAH was positively associated with age, consumption expenditure per capita, and hospital bed density in local areas, while negatively associated with education attainment, self-reported health score, and physician density in the local area etc. At last, the main findings from all aspects of the research have been brought together to illustrate the original contributions this work makes to knowledge in the area of health system efficiency and productivity assessment in China. It also outlines the policy implications of the research findings, and future research directions.

Date of Award	2020
Original language	English
Supervisor	Yohannes Kinfu (Supervisor), Jinjing Li (Supervisor) & Itismita Mohanty (Supervisor)