Government Funding, Physician Remuneration and Continuous Medical Cost Escalation in China: Implications for Health Administration and Hospital Reforms

The responsibility of the government in financing healthcare has been reinstated in China since 2003, with lessening attention to finance health facilities. This study investigated the relationship between the share of... [ view full abstract ]

The responsibility of the government in financing healthcare has been reinstated in China since 2003, with lessening attention to finance health facilities. This study investigated the relationship between the share of government health expenditure on health facilities, medical staff salary, and health service costs. Using a sequential mixed-method design, this study provided both a quantitative and a qualitative analysis. The quantitative study used a provincial-level panel data from 2006 to 2014 to analyze the mediating role medical staff salary played in the association between the share of government health expenditure on health facilities and health services cost. The qualitative study used semi-structured interview to investigate 40 doctors and managers in health facilities for the purpose of explaining the statistical relationship examined in the quantitative study. The quantitative study found that the share of government health expenditure on health facilities had significantly indirect negative association with health service costs through the mediation of medical staff salary. A qualitative thematic analysis found that doctors in both hospitals and grass-roots healthcare institutions had a prevalent dissatisfaction with their salary, especially the tiny contribution of government to their salary. Accordingly, doctors prescribed expensive medical tests and services to make up their income. Governments’ financial contribution to doctors’ salary in health facilities could affect doctors’ prescribing behaviors and led to change of health service costs.