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‘Very serious’: China ramps up efforts to cure medical sector corruption
Beijing has launched a crackdown on bribery and other forms of graft that have long plagued hospitals and driven up medical costs.
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- Beijing has launched a crackdown on bribery and other forms of graft that have long plagued hospitals and driven up medical costs
- The campaign is part of a broader push to tackle livelihood issues and boost the economy, an observer says
Illustration: Lau Ka-kuen
Surgeon James Wu said he was “shocked but happy” when colleagues told him that the head of their hospital in the southern Chinese province of Guangdong had surrendered to corruption investigators.
Wu’s boss turned himself in in late July, becoming one of more than 160 hospital chiefs around the country to be detained by anticorruption investigators since the start of the year.
Authorities had given senior medical staff until August to declare their illicit activities as part of a national campaign targeting a long-standing source of public grievance: soaring health costs fuelled by corruption.
In this vicious cycle, hospital chiefs take kickbacks to order expensive medical equipment and pass on the cost to patients by encouraging staff to order unnecessary tests.
For Wu, the pressure was intense.
“We have been instructed to prescribe many tests for the patients so that the hospital could recoup the investment faster,” he said.
Excessive testing is just one form of corruption in the health system that is inflating medical bills and fuelling public resentment – a discontent that has at times erupted into violence against doctors.
The threat is so great that now most hospitals in China require security checks to enter.
It also presents a risk to social stability, with affordable and equitable healthcare one of the pillars of President Xi Jinping’s vision of China’s development path.
Observers say the crackdown is unlikely to end any time soon and could usher in further changes to the health system.
Like many countries, China has been struggling to find a right formula for its national health system.
Hospitals are the front line in this battle and responsible for delivering the lion’s share of medical care to the country’s population.
In the 1990s, as health started to account for a bigger share of the national budget, the government started cutting back on funding while also insisting that hospitals limit prices and the mark-up on services.
That forced hospitals to make up the difference with equipment or service fees – an area ripe for graft.
With inadequate government funding, public hospitals were motivated to profit from charging patients for unnecessary prescriptions and services with inflated pricing, according to a report issued by China’s legislature in 2018.
The problem is exacerbated by the lack of general practitioners or family doctors operating practices outside the hospital system, pushing patients with simple ailments such as fever and headaches to hospitals, rather than community clinics where the cost of care is far lower.
As a result, hospitals are overcrowded and expensive. Even though more than 95 per cent of the population has access to some form of government-backed health insurance, many still battle to afford any kind of quality healthcare.
The resulting tension in the system has fostered distrust between patients and medical workers, giving rise to a phenomenon known as yinao, or hospital violence.
In one case in February, a disgruntled patient shot a doctor in the head in a clinic in Shenyang, in the northeastern province of Liaoning.
And the burden on the ailing system is only increasing – especially in rural areas – as Chinese society ages and people develop more serious or chronic diseases such as cancer and diabetes.
On average, healthcare accounted for 8.6 per cent of personal spending last year, up from 6.5 per cent in 2016, according to the National Bureau of Statistics.
At the same time, the proportion of people aged 65 and over climbed from 10.8 per cent to 14.9 per cent.
Scores of retirees took to the streets in the central city of Wuhan in February to protest against cuts to their medical services.
Beijing started to turn its attention to the problem in late 2013.
That December, the then National Health and Family Planning Commission issued three lists of activities that were off limits for health institutions and professionals.
These lists regulated the procurement of medicine, medical devices and medical supplies – big-budget areas that were fertile for graft.
But there were other opportunities for eye-watering corruption in the medical system.
In 2015, Wang Tianchao, the former president of Yunnan First People’s Hospital in Kunming, was ordered to spend 10 years in jail for accepting 35 million yuan in cash, 100 properties and a number of car parking spaces.
The Supreme People’s Procuratorate said Wang took the bribes from 2005 in return for awarding hospital construction projects, buying medical equipment and giving doctors promotions.
In the decade since those lists were issued, authorities have passed laws and amendments to try to stamp out corruption and rein in medical costs. These include bringing public hospital managers and businesses under “national supervision” and banning companies that engage in corruption from the industry.
But the government is still struggling to deliver affordable health services to its population.
Xi has made healthcare one of the livelihood issues at the centre of his “common prosperity” campaign to shore up the ruling Communist Party’s legitimacy as not only the pro-development force, but also a societal protector to keep social instability in check.
In his work report to the party’s decision-making Central Committee at the party congress in October last year, Xi listed medical care as one of many difficulties faced by the Chinese people.
It was the same message he delivered to the congress five years earlier when he named healthcare – along with education and housing – as the priorities for the new administration.
To that end, authorities have renewed attention on corrupt activities, giving people involved in medical industry graft until the end of July to turn themselves in.
After that, thousands of investigators from national anti-corruption agencies and healthcare authorities stormed the country’s hospitals, public health insurance administrations and medical suppliers.
Bribery is the major form of medical corruption in China’s health system, according to a paper published in February by a group of Chinese and American researchers.
In the paper published in Health Policy and Planning journal, the researchers said bribery accounted for 68.1 per cent of the cases of medical industry corruption listed on the China Judgments Online website between 2013 and 2019.
About 80 per cent of those taking bribes were healthcare providers, and most of those giving the kickbacks were suppliers of pharmaceuticals, medical equipment and consumables.
Beijing chose a massive anti-corruption campaign as the “breakthrough point” of its healthcare reform because graft is central to pushing up prices and inflating claims on the national insurance system, according to Xie Maosong, a senior fellow of the Taihe Institute and a senior researcher at the National Strategy Institute at Tsinghua University.
Xie said the crackdown was a long-term fight that served a number of elements of Xi’s economic and social agenda.
“It aims to bring down the cost of healthcare by squeezing out bribes, which inflates the medical bills,” he said.
“If successful, it can help ease the Chinese people’s worries about rising healthcare costs and give them more confidence to spend on other things.
“It is also a prelude to the push for a further revamp of the national healthcare system, which will cut away the middlemen between hospitals and medical suppliers.
“Beijing is very serious about these objectives and it wants to achieve them in the coming five years.”
The national crackdown on medical graft follows similar campaigns in the military, security and administrative systems.
Deng Yuwen, a former deputy editor of the Central Party School’s official newspaper Study Times, said Xi’s massive and tough anti-corruption apparatus had always moved in tandem with his policy objectives, because it has been “most potent tool” to spur the entire bureaucracy to achieve his political goals.
Deng said the initial focus of Xi’s anti-corruption campaign was to “get the key pillars of the house in order” before moving on to livelihood issues.
“You can see that Xi is very committed to fixing the problems in education, medical care and housing, because he wants to be remembered as the one who dares to deal with the most thorny problems,” he said.
“Beijing believes that fixing these issues is the prerequisite for its domestic consumption, which will drive its domestic circulation as its external trade is facing pressure from the US and its allies.
“Ultimately he wants to prove that China’s model is superior to the US, especially on healthcare.”
