GSK case reveals bribery as a lifeline for Chinese hospitals

Bribery is the lubricant that helps keep China’s public hospitals running, and the health system would struggle to function without illegal payments to poorly paid doctors and administrators, say medical practitioners and industry experts.

They say government policies are partly to blame for a system in which doctors and other staff expect to be paid extra fees to perform operations and take kickbacks from pharmaceutical firms and medical-equipment suppliers.

The profession’s ugly underbelly was exposed last week when police accused British drugmaker GlaxoSmithKline of bribing officials and doctors for six years to boost sales and the price of its medicines. GSK has called the developments “shameful” and on Monday said some of its Chinese executives appeared to have broken the law.

China is an appealing market for pharmaceutical firms and medical-equipment makers, with spending in the industry expected to nearly triple to US$1 trillion by 2020, from US$357 billion in 2011, according to consulting firm McKinsey.

The corruption stems largely from doctors’ low base salaries, which are set in line with a pay scale for government workers. Hospitals can pay bonuses but, given public hospitals are strapped for cash, compensation is usually low, say doctors and industry experts.

A doctor fresh out of medical school in Beijing earns about 3,000 yuan (HK$3,800) a month including bonuses – roughly the same as a taxi driver. A doctor with 10 years of experience earns about 10,000 yuan a month, according to Peter Chen, chief executive of privately run Oasis International Hospital in Beijing.