Theorizing "Over-Prescription": Healthcare Reform in China

Abstract

It is noted that China has been in transition to a market economy since the late 1970s. The changes under way are having a profound impact on almost every aspect of Chinab s healthcare sector, and there has been a growing recognition by policy-makers of the need for health care reform. However, studies in this field thus far have shown that Chinab s healthcare sector has encountered deep problems since these reforms were first initiated. With reduced government subsidies, it is very common to see state-owned hospitals establishing complex systems of b incentivesb to encourage b over-prescriptionb on the part of medical doctors and the use of costly diagnosis procedures beyond what is required. Besides, offering medical doctors drug commissions on each prescription motivates prescription and this has become one main strategy adopted by most pharmaceutical companies and manufacturers to motivate medical personnel, including doctors. In this thesis I provide a contextual analysis of Chinab s healthcare sector in the environment of political and economic transition, focusing on an important source of dysfunctionality in the system, i.e., over-prescription, and seek to explain its root causes, as well as to offer suggestions for addressing the problem through policy reforms.