title: Impact of China's Public Hospital Reform on Healthcare Expenditures and Utilization: A Case Study in ZJ Province.
abstract: BACKGROUND
  High drug costs due to supplier-induced demand (SID) obstruct healthcare accessibility in China. Drug prescriptions can generate markup-related profits, and the low prices of other medical services can lead to labor-force underestimations; therefore, physicians are keen to prescribe drugs rather than services. Thus, in China, a public hospital reform has been instituted to cancel markups and increase service prices.
  
  
  METHODS
  A retrospective pre/post-reform study was conducted in ZJ province to assess the impact of the reform on healthcare expenditures and utilization, ultimately to inform policy development and decision-making. The main indicators are healthcare expenditures and utilization.
  
  
  RESULTS
  Post-reform, drug expenditures per visit decreased by 8.2% and 15.36% in outpatient and inpatient care, respectively; service expenditures per visit increased by 23.03% and 27.69% in outpatient and inpatient care, respectively. Drug utilization per visit increased by 5.58% in outpatient care and underwent no significant change in inpatient care. Both were lower than the theoretical drug-utilization level, which may move along the demand curve because of patient-initiated demand (PID); this indicates that SID-promoted drug utilization may decrease. Finally, service utilization per visit increased by 6% in outpatient care and by 13.10% in inpatient care; both were higher than the theoretical level moving along the demand curve, and this indicates that SID-promoted service utilization may increase.
  
  
  CONCLUSIONS
  The reform reduces drug-prescription profits by eliminating drug markups; additionally, it compensates for service costs by increasing service prices. Post-reform, the SID of drug prescriptions decreased, which may reduce drug-resource waste. The SID of services increased, with potentially positive and negative effects: accessibility to services may be promoted when physicians provide more services, but the risk of resource waste may also increase. This warrants further research. It is recommended that comprehensive measures that control SID and promote physician enthusiasm be carried out concurrently.
authors.affiliation: Center for Health Policy Studies, Zhejiang University School of Medicine, Hangzhou, China.
authors.forename: Hao
authors.initials: H
authors.lastname: Zhang
authors.affiliation: Department of Health Information Management, School of Public Health, Hangzhou Medical College, Hangzhou, China.
authors.forename: Huimei
authors.initials: H
authors.lastname: Hu
authors.affiliation: Center for Health Policy Studies, Zhejiang University School of Medicine, Hangzhou, China.
authors.forename: Christina
authors.initials: C
authors.lastname: Wu
authors.affiliation: School of Public Health, Zhejiang University School of Medicine, Hangzhou, China.
authors.forename: Hai
authors.initials: H
authors.lastname: Yu
authors.affiliation: Center for Health Policy Studies, Zhejiang University School of Medicine, Hangzhou, China.
authors.forename: Hengjin
authors.initials: H
authors.lastname: Dong
mesh_terms: D000553:Ambulatory Care / Q000191:economics; D002681:China; D003657:Decision Making; D016527:Drug Costs; D011307:Drug Prescriptions / Q000191:economics; D018166:Health Care Reform; D005102:Health Expenditures; D006291:Health Policy; D006295:Health Resources / Q000191:economics; D006297:Health Services Accessibility / Q000191:economics; D006761:Hospitals; D006779:Hospitals, Public / Q000191:economics / Q000458:organization & administration*; D012189:Retrospective Studies; D016896:Treatment Outcome