Establishing Appropriate Agency Relationships for Providers in China

Liu, Yu; Saltman, Richard B.

At the current health system reform stage in China, the physician agency issue has become a central operational factor, one that can systematically jeopardize other essential provider-side reform measures. Physicians are multitasking agents in health care services, and some outcomes of their tasks are more difficult to evaluate than others. 34 Even in the United States and other Western developed countries, establishing provider payment systems that create effective incentives for both cost control and quality improvement is difficult. 62 The Chinese health care system is moving toward case-based or diagnosis-related group-based reimbursement approach for hospitals. 66 Under such a prospective payment system, how physicians balance hospital interests, their own income, and patients' benefits is a crucial measure of the physicians' care decisions. 67 If physicians' personal income is still tied to their employer hospitals' profit and hospitaldesigned financial incentives, however, it may be more likely that physicians will continue to prioritize hospital's or their own profit rather than patients' interest. A study on the impact of reimbursement method change from fee-for-service to per-diem for a Chinese public psychiatric hospital illustrated that the payment policy had not achieved its anticipated goals because physicians' behaviors were still tied to the original financial incentives the hospital had designed. 68 Chinese health care professionals have demonstrated a strong commitment to society, especially during natural disasters. 69 However, providers' behaviors in terms of health care service quality and quantity are associated with physicians' remuneration approach. 70 In this commentary, we contend that a major barrier to achieving the government's prospective goals for its health care delivery reform in China is the lack of an appropriate physician-agency relationship. As a central strategy to overcome this barrier, we suggest reducing the direct financial tie between tertiary-level public hospitals and physicians, and establishing a comprehensive system of physician professionalism in China.