Daily newspapers carry horrifying stories about the treatment of patients in hospitals - a sure sign the Government is getting serious about medical reforms. One of the stories involved a three-year-old boy, Liu Guangxiang, who died of burns after being refused treatment by four hospitals in Urumqi, Xinjiang province. The China Youth Daily said that in July his parents took him to the No 1 People's Hospital where the duty doctor refused to treat him unless they paid 20,000 yuan (HK$18,600) in advance. 'How can there be so many cold-hearted people?' the paper asked, describing how the parents knelt to beg the doctor to relent. During the next four hours, three other hospitals were just as heartless, although the paper explained that many urban hospitals were bankrupt because of unpaid fees. In contrast, the Beijing Youth Daily ran a story about the Beijing Children's Hospital which was too charitable. It treated a diabetic boy, Xiao Lu, even though his parents did not put down the required deposit for residential care. Although his treatment finished after two weeks, the boy stayed there for 80 days until his parents secretly collected him, leaving the hospital with unpaid bills of 3,000 yuan. Altogether, the hospital has been unable to collect 2.95 million yuan. When he took office, Premier Zhu Rongji promised to make reform of the urban health-care system a top priority, but a conference on the issue was delayed for nearly three years. Most state health spending is devoted to the 25 million officials and 75 million workers in state enterprises. As more and more people function outside the work units and the number of bankrupt state enterprises grows, the crisis has worsened. An increasing number of elderly and retired staff are unable to pay medical costs from their pensions. The new unified medical insurance system would deduct six per cent of workers' wages. Beijing has issued new regulations requiring hospitals to establish separate accounts for treatments and another for drug sales. The reforms are aimed at allowing hospital to adjust treatment fees. Hospitals in the capital are now offering an out-patient service, but for an extra charge. Also, the reforms deprive them of income from dispensing and selling medicines. The Economic Daily said many administrators were concerned hospitals would not survive if they could not profit from prescription sales. During the next three years, the Government will phase out direct subsidies but allow hospitals to fix their own fees so charges for operations and nursing will soar. As each hospital sets its own charges, it will prompt competition between hospitals and doctors. Hospitals will also be offered tax-free status and in areas of the country where there is a shortage of beds, the medical system will benefit from extra government funding. The Government has pledged to check that prescriptions are necessary and prices fair.