British NHS and Its Enlightenment to Healthcare System Reform in China

LIU Xiao-xi, BI Kai-shun

(School of Business Administration, Shenyang Pharmaceutical University, Shenyang 110016, China)

British NHS and Its Enlightenment to Healthcare System Reform in China

LIU Xiao-xi, BI Kai-shun

(School of Business Administration, Shenyang Pharmaceutical University, Shenyang 110016, China)

Objective To accelerate healthcare system reform in China by borrowing ideas from British National Health Service (NHS). Methods Healthcare systems of both British and China were explored and significant enlightenment was gained. Results and Conclusion Healthcare system reform in China can be promoted on the basis of national conditions and by borrowing ideas from British NHS. Therefore, measures such as raising medical insurance funds through diversified resources, developing community healthcare services, separating drug prescribing and dispensing should be taken to accelerate the reform.

British NHS; healthcare system in China; enlightenment;fund-raising mode; community healthcare service; separation of drug prescribing and dispensing

China’s medical security system was founded in 1950s and with the deepening of reform and development, it is necessary for our government to focus on major issues of promoting efficient medical security system operation, improving national physical quality, sharing achievements of reform in the aspect of medical care among citizens. China has her complicated conditions, such as the largest population but meager resources. China managed to become the world’s second-largest economy from its weak economic foundation, and strode the large span in such a short duration. In order to sustain the growth, we need to consult the successful experiences and draw lessons from the developed countries so that we can solve the national healthcare problem as well as establishing a sound social medical insurance system. Although the national condition of China is different from Britain, the basic rules and principles in the field of healthcare do have something in common. Therefore, to study British NHS and draw enlightenment from it would contribute to deepening the reform of healthcare system in China.

1 The development of China’s medical insurance system

In general, the development of social medical insurance system in China can be divided into three stages. The first stage is the free medical care with strong welfare state formed during planned economy era. The second stage is the social medical insurance formed after China’s reform and opening, in the 1980s. The third stage is the new health insurance established gradually after the new medical reform was released in 2009.

1.1 The overview of China’s urban medical insurance system

After 1949, China’s government and institutions practiced free health care system while enterprises practiced labor medical insurance system. Both types of free medical care were fully paid by government and enterprise budget. Since the patients did not need to pay any bill for their healthcare, some doctors wanted to make money by prescribing expensive and excessive drugs that led to increasingly serious waste of medical resources. The state council issued “the Decision on Setting up Medical Insurance System for Urban Employees” in 1998. After 15 years of development, it now covers almost all units of employers and employees, achieving combination of mutual assistance programs with personal accounts. The enterprises contribute % of the annual total payroll while employees contribute 2% of their salaries. The basic medical insurance premium paid by work units would inject into pooling funds and personal accounts, the premium paid by individuals goes entirely to their personal accounts[1]. Medical expensesfor outpatient treatment below the pay-line are paid by personal accounts, only if the charges of hospitalization reach the pay-line, it could be paid by social collective funds, while the payment drew from pooling funds still has the specified cap.

1.2 The development of China’s rural medical insurance system

The rural medical insurance system in China has experienced five stages of development: the infancy of late 1940s; the newly established phase in 1950s; the developing and prosperous period from 19 0 to 19 0; the collapse in 1980s and the recovery and developing stage since 1990s. Neither set up by national constitution, nor supported by national funding, was the medical expenditure in rural areas raised by groups and individuals[1]. In the late 19 0s, the family united contract responsibility system was implemented the rural areas, thus made the rural cooperative medical system lost its former economic basis, leading the system withering away of the country. “The Decision of the State Council on Further Strengthen Rural Health Work”, issued in 2002, marked the establishment of the new rural cooperative healthcare System (NRCHS). It was organized and supported by the government, advocating the peasants to participate voluntarily. NRCHS raised money by individual contribution, collective support and government funding, and its main purpose was to cover the serious illness for peasants by mutual assistance. In recent years, the government increases subsidies constantly for rural residents to participate in the insurance: the subside has been raised from 80 RMB per capita in 2009 to 280 RMB per capita in 2013[2], the hospitalized reimbursement for rural patient has reached approximately 0%, and the outpatient coordination has been widely established.

1.3 The overview of China’s basic medical insurance system for urban residents

The major objects of the insurance are unemployed residents, retired citizens, students and children. China started to establish basic medical insurance for urban employees in 1998. In order to cover all the citizens, the state council decided to launch the pilot program of basic medical insurance for urban residents in 200 . This system has been implemented nationwide by the year of 2010 and all urban non-employed residents would be gradually covered. Individuals pay 120 RMB per year (2013) and the insurance would have effect from the next year. Although the individuals need to pay for medical expenses below the pay-line by themselves, they could apply for reimbursement which could cover up to 80% of the expenses exceeding the pay-line[3]. The medical subsides is fully funded by government revenue, which could release residents’financial burden from serious diseases, to a great extent.

2 The evolution of British medical security system

In 194 , Britain passed “the National Health Service Act”, for the very first time it tabled the bill of “Public hospitals should provide free medical care for all citizens, regardless of the patients’ financial capacity”. British National Health Service system (NHS), established in 1948, formed a huge medical security network. It issued UK department of health as the manager of NHS, all the British citizens and legal foreign residents are its beneficiaries. The system is primarily funded through central taxation, which would cover almost all outpatient and hospitalization fees, with the exception of dental treatments, eye tests and spectacles. Finance ministry allocates the fund directly to health-care provider or General Practitioner (GP), which means there would be no financial relations between the insured patients and the doctors. The operation of British NHS has basically solved the problem of national healthcare insurance.

In 1988, the British Prime Minister Margaret Thatcher introduced the “internal market” for the first time in the NHS reform white paper. “NHS and Community Care Act”in 1990，proposed the separation of the service purchaser (local health ministry and GPs) and suppliers (hospitals etc)[4]. British government rolled out the scheme of “The NHS Plan: a plan for investment, a plan for reform”, granting the permission to those who manage first-class hospitals to raise private funds[4]. The report named “Health Reform in England--Update and Next Steps” was published in 2005, made the point of “Payment by Results, PbR”[4], which assigned the fund to individual patient and would reward providers based on best quality and efficient services, so that hospitals and primary care settings have the incentive to cut costs and improve their performances. Public health White Paper 2010 “Equity and Excellence, liberating the NHS” stated they would put patients at the heart of the NHS through greater choice and control: “patients will have choice of any provider, GP practice and treatment; patients will be able to rate hospitals and clinical departments”[5]. The highlight of the medical reform released in 2011, was that the PCTs (Primary Care Trust) would be replaced by GP consortia, in order to cut administrative costs andenhance GP accountabilities, thereby helping to develop a more responsive and higher quality NHS.

3 The enlightenment to China

3.1 Fund raising via diversified resources

There are similarities between medical insurance system of UK and China’s free medical care in 1950s. The national health insurance system is a massive system engineering, which requires enormous fund flow to ensure its smooth running. NHS is prominent in terms of fairness; however, it did bring a heavy burden for the government, since its fundraising is mainly from central taxation. The emphasizing of extensive coverage and healthcare fairness results in the lack of patient restriction followed by risk of moral hazard and other issues. Hence, the excessive demand of medical care exacerbates fiscal burden, and the unsustainable treasury has to tighten the belt, which leads to decline in medical service quality and doctors’ negative working attitude. Besides, the waiting list of public hospitals is comparatively long that patients who need surgery usually have to wait for at least one year.

In March 2013, the Health Care Commission published a shocking report into Mid Staffordshire Hospital scandal, more than 1000 patients died due to delay in tackling fatal failures of medical care. Although the British government carried out NHS reform constantly, the contradictory between the growing medical demands and the rigidity of budget constraints results in low efficiency of medical service, which directly lead to public dissatisfaction. All these show that free but inefficient healthcare is not good enough, while single fundraising channel must be the crux.

Diversified financing channels, is an important way to establish medical security system in China swiftly to adapt our national conditions. As the most populous country in the world, even huge fortunes can be averaged to a skinny amount. Therefore, our ability to resist the risk is not that strong, the government should not subsidizes most of the funding. Diversity is not liberalization, but under the guidance of the government, by strengthening supervision, a highly efficient and reliable source of funding diversification can be achieved.

3.2 Developing community medical service

NHS is a hierarchical healthcare system: primary healthcare is provided by community clinics, with GP or family doctor as the core, which forms the largest component of NHS. British citizens and foreigners need to register at the community clinic nearby, and the clinic would appoint a GP (General Practitioner) to take care of the resident. Patients could make an appointment with their own GP at the front desk, and go to see the doctor according to the appointment time without registering and waiting. GPs offer treatments for common diseases, only when the patients’ conditions cannot be treated by GPs, they could be transferred to the secondary hospitals where they can be treated with more appropriate medical care. Patients who suffered from severe illness can be sent to the third leveled hospitals, and treated by specialists and highly trained nurses.

The cause of “having difficulty in seeing a doctor”is that patients pour into comprehensive hospitals despite their illness condition. In this case, the registry and waiting time in hospitals could be considerably long; however, the diagnosis and the prescription from the doctor are both in a rush. Poor quality of medical services can easily lead to conflicts between doctors and patients. More than 0% of the patients in comprehensive hospitals in China are people who suffered from “common diseases, general diseases and chronic diseases”. Using precision and advanced devices to treat common diseases sharply increase the medical care expenditure. Therefore, we should vigorously promote community-based healthcare, coordination and distribution of primary clinic and major hospitals.

3.3 Accelerating the establishment of healthcare achieves

British community clinics have established the database of health archives for each citizen “from cradle to grave”. If the resident moved to other places in UK and changed the healthcare centre, the latter GP could easily download the patient’s health archive from the database, avoiding the repeat of the personal medical history. Therefore, the community clinics in China shall establish a national electronic database for health records, manage the residents’ health conditions in files, and gradually achieve interconnectivity, information sharing and collaboration.

3.4 Strengthening the building of GP team

GPs’ annual income after tax in UK is approximately 0 thousand pounds, or even higher than some specialists working in major hospitals. In order to stabilize GP teams, our government may provide better subsidies for communitymedical staff, making their salary higher than working in secondary hospitals, moreover, offering the doctors superior opportunities to get promotion. Since we do not have enough GPs in China, allowing doctors from hospitals to do part-time job in community clinics, could be a good way to solve the problem.

3.5 Separating drug dispensing from medical service

There are no financial relations between hospitals and drug suppliers in UK; medicine revenue does not count in hospital profit. After the diagnosis and treatment in healthcare clinics, patients could purchase medicine at any pharmacies with the prescription from the doctor. On the contrary, hospitals in China still rely on drug sales,“medicine supporting medical” might be the major source of “high cost of healthcare”. Apparently, patients have little capabilities to restrain irregularities of doctors or hospitals. When the doctors prescribed expensive drugs or excessive medical services, the patients do not dare to question the doctor’s advice, because patients are not professional in drugs and medicine, moreover, they need the doctor’s advice and treatment. Therefore, carrying out the “national basic medicine catalogue”, canceling hospital drug price addition, and increasing medical service payment by government subsidies, are imperative measures to restrict hospitals’reliance on medicine sales.

[1] 2002 White Paper on “Labor and Social Security”.

[2] 2013 “Chinese Government Work Report” [EB/OL]. http://www. chinadaily.com.cn/hqgj/jryw/2013-03-05/content_841418 .html .

[3] XIA Chun-yan, HU Shan-lian,. (2010). Explore on the Reform of Medical Insurance Payment in China [J]. Chinese Health Economics, 2005 (8): - 1.

[4] National Health Service History [EB/OL]. http://www.nhshistory. net/chapter_5.htm.

[5] Equity and Excellence: Liberating the NHS, 2011-05.

Author’s information: BI Kai-shun, Professor. Major research areas: Pharmaceutical analysis and pharmaceutical administration. Tel: 024-2398 012, E-mail: kaishunbi.syphu@gmail.com