China raises its target for private-sector hospitals

Amid the generally disappointing news on economic reform out of China, one signal I have been keeping an eye on is the government’s intentions on healthcare. A significant component of the previous five-year plan for healthcare, which ended in 2015, was a commitment to raise the private sector’s share of hospital beds to 20% of the national total. In the event they didn’t quite make the target–the final figure was 19.4% for 2015–but I still thought it was a promising way to use China’s planning system to drive liberalization and not just higher output. Healthcare is a fast-growing part of the economy and one where the private sector’s role is obviously increasing, so it is one of the more positive stories in China at the moment.

As many of the healthcare system’s problems, such as corruption and inequality, can arguably be traced to the overwhelming dominance of state-owned institutions, some within China have argued for targeting a much larger private-sector role. But there is an active debate: an authoritative report recently questioned the need to have a quantitative target for raising the private sector’s market share. A regulatory system designed for state institutions is arguably not able to ensure quality as private institutions rapidly proliferate, and scandals and public distrust of private hospitals are a clear issue. So it was not at all clear what would happen to this initiative.

Now the 13th five-year plan for healthcare has finally been published (full Chinese text here), and it does retain a target for raising the private sector’s market share. The new target is to raise private hospitals’ share of total hospital beds to above 30% by 2020 (the plan does not actually use the word “private,” which remains a loaded term in China, instead referring to hospitals “managed by society,” i.e. not the state). This is not a radically higher figure that would force drastic restructuring of the whole healthcare system, but it does maintain a clear, transparent and public commitment to a greater private-sector role. I would call this pretty good news, especially given that there has recently been some backward movement on state-owned enterprises and some other issues.

Public and private hospital beds

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