China's ongoing public hospital reform: initiatives, constraints and prospect

The first phase of China's ambitious national health-care reform will be concluded in 2011. However, public hospital reform – its central component – has not been proceeding smoothly. Heavy vested interests, enormous budgetary demands and the congested policy gridlock have made it extremely difficult to succeed. Nevertheless, a number of promising initiatives are presently being undertaken and are expected to make substantive progress. This article reviews the process of this ongoing public hospital reform, examines three central initiatives and analyses major constraints. It argues that with the policy gridlock gradually relaxed, governments should embark on the ‘strategic purchasing’ of medical services and properly control hospital behaviours by revising the heavily distorted incentive structure.