Will China’s healthcare crackdown be the magic pill for the medical system’s woes?

Beijing’s anti-corruption campaign has tried to bring in reforms similar to the Sanming model, targeting hospitals, drug companies and insurance funds

But many experts question whether the crackdown has gone far enough to fix the systemic problems

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Published: 6:00am, 17 Sep 2023Updated: 2:37pm, 17 Sep 2023

It was hailed as an elixir of China’s ailing medical care. It offered patients cheaper drugs and treatments, better pay for doctors and nurses, and great savings for the government.

The magical pill was called the “Sanming model” – a reformed approach to medical care pioneered about a decade ago in Sanming, Fujian province. It was so successful that it has since been trumpeted as a national best for the rest of the country to follow.

Sanming, a former industrial town in mountainous Fujian, had a high percentage of pensioners. Frequent hospital visits by the seniors created a heavy financial burden for the local government. In 2011, the government recorded a staggering fiscal deficit of 208 million yuan, forcing it to reform.

China used to provide cradle-to-grave medical care, with the state covering all of the costs. Then came the market reforms of the 1980s, granting hospitals a high degree of autonomy over charges and coverage in return for less funding from the state. The change saw healthcare shift from public welfare into more of a business model, drawing widespread complaints over unaffordable and sometimes inaccessible services for vulnerable people.

Rent-seeking became rampant, as pharmaceutical sales teams offered generous kickbacks to doctors and hospital administrators, who in turn spent lavishly on expensive drugs and equipment. Bribes – often in millions of yuan – were disguised as academic conference sponsorship or lecture fees, as well as extravagant junkets.

The Sanming model aimed to remove the cancers in the system. It implemented centralised procurement, set bulk purchases of drugs at fixed prices, introduced pay ceilings for doctors and linked the salaries of hospital management with how much they cut costs.