Although China has experienced tremendous economic growth in the past twenty-five years, this growth has not created a corresponding improvement of health and healthcare.

A recent report by IBM titled Healthcare in China: Toward greater access, efficiency and quality, outlines three major problems in the Chinese healthcare system: a lack of access to affordable healthcare, inefficient use of healthcare resources, and a lack of high-quality patient care. These challenges are compounded by the immense size of China’s population.

China’s population of 1.3 billion people represents 20% of the world. This population figure has instigated the infamous One Child Policy in China, a policy China intends to continue at least through the 2006-2010 five year planning period. This policy, despite reducing population growth by 300 million, has resulted in a troubling imbalance between younger adults and the elderly. There are much fewer young adults. Cities are currently heavily populated by older, retired, and disabled people who are more prone to sickness and unable to support themselves. The implications on China’s healthcare system are tremendous.

Although China has experienced tremendous economic growth in the past twenty-five years, this growth has not created a corresponding improvement of health and healthcare. While China’s healthcare expenditures have been increasing, they remain low when compared to other countries. The report by IBM on health care in China states that China spent only 5.8% of its GDP on healthcare in 2002, while comparable developing countries such as South Africa, Brazil and India managed more; 8.7%, 7.9%, and 6.1% of GDP, respectively. In comparison to countries experiencing the same rapid increase of GDP, China commits the least to its healthcare system. Medical expenses are far too costly for a significant portion of China’s urban and rural population and a majority is already uninsured. While healthcare expenditures and actual government funding have been steadily increasing over the past twenty years, according to the IBM report, as a percentage of GDP, these expenditures have actually been decreasing.

Furthermore, healthcare funding, limited as it is, is allocated disproportionately, which exacerbates the disparity between urban and rural healthcare. For example, in 2003, while 45% of the urban population self-financed medical services, an even higher percentage of the rural population—79%—fell victim to uninsured services. This disparity is evident in the rapid expansion of larger urban hospitals, which leaves smaller rural community hospitals and health centers with open beds and superfluous personnel. Furthermore, these personnel are, in fact, not always capable, as there are no standard definitions to document the required qualifications of healthcare personnel. These three challenges must be taken into consideration in the coming years as the byproducts of the one child policy begin to take form.

While there is no simple solution to narrowing the gap between China’s economic development and its healthcare development, the comprehensive study of China’s healthcare system provided by the IBM has highlighted some key factors that have the potential to produce the first steps toward reform.

According to IBM, by 2020, 11.8% of China’s population will be over the age of 65, placing significant social and economic pressure on healthcare services. As a result of the one-child policy, an older population is bound to incite an increased demand for medical services, especially for treatment of chronic illnesses. By the same year, the rapid urbanization of China is expected to reach 55%-60% urbanization. This shift in lifestyle will no doubt contribute to an increase in non-communicable diseases, which as of 2003 already account for 75% of all deaths in China. Therefore, it is imperative that patients begin to take more interest in their health, become more knowledgeable of their conditions, and responsibly demand and seek out higher quality health services.

The government has already begun to provide more funds and employ new initiatives to improve public health, evaluate hospitals through the solicitation of patient feedback, and begin the development of a national health infrastructure. The future of the healthcare system will reap the benefits of government-funded initiatives to funnel medical graduates to rural hospitals, performance-based salaries, and clear guidelines for the implementation of up-to-date techniques including referral systems, electronic records, etc. Furthermore, the government’s support of the growth of the private health sector will surely increase the quality of care by introducing new ideas and competition.

The IBM report suggests that the role of the service providers will be to adopt a three-tier system. At the primary level of this system, patients would visit a community hospital for minor illnesses, and be referred up to the secondary level if the condition worsens. Similarly, at the tertiary level, major hospitals would be reserved for treating difficult cases, referring the patient down as they recover. This proposition would more effectively distribute resources and patients and ameliorate the current situation in which tertiary establishments are overcrowded and primary services are underutilized. In addition to the redistribution mentioned before, hospitals will need to increase their quality of care. IBM proposes that this would be possible through the introduction of governance. The report claims that a Board of Directors, adept managerial efforts and government transparency are all necessary to produce higher-quality care at lower costs.

However, the government’s role must not stop here. It must provide basic medical services that are universally affordable and available in addition to blurring the currently well-defined lines between rural and urban insurance.