7. Pillars of the Health System

In China, village doctors play an essential role in patient diagnosis, treatment, and surveillance. In the 1980s, most practiced privately because commune-based insurance schemes had collapsed and local governments were not providing salaries. Their reliance on payments for drugs and services made the provision of free TB treatment problematic, even if they received free drugs. An incentive scheme was created, whereby village doctors received US$1 for each patient enrolled in the treatment program, an additional US$2 for each smear examination carried out in the county TB dispensary at 2 months, and a further US$4 for each patient completing treatment. A reporting system monitored performance, and quality of treatment and reported information were checked through random visits and examinations. The program was highly successful, achieving within 2 years a cure rate for new cases of 95 percent.

Incentive payments have also been very widely used in China in hospitals and even public health programs, and research suggests their deleterious effects when their ability to skew behavior is not controlled. In Shandong province, changes in bonus systems for hospital doctors, from a system tied to quantity of services provided to one tied to revenue generated, found that the switch to a revenue-related bonus was associated with a significant increase in hospital revenue, but a separate study found that around 20 percent of hospital revenue was generated by the provision of unnecessary care.

Source: DCP2, chapter 3, box 3.4.