Last summer, the British pharmaceutical giant GSK, and several other multi-national drug companies, came under investigation by the Chinese government for providing doctors with improper incentives –incentives coming in the form of all-expenses-paid holidays, as well as cash. Then, news of a price-fixing scandal broke out involving several leading international infant formula brands.
In response to these recent scandals, the National Health (and Family Planning) Commission has announced a number of upcoming policy changes, including one –no more "hongbao" from patients –which they plan to turn into regulation starting May 1st this year. This no more “hongbao” (or no more “red envelopes”) regulation will be designed to outlaw the common practice of patients making cash payments, or alternatively, giving expensive gifts to doctors – in hope of receiving more comprehensive medical care, or more favorable treatment as an in-patient.
So what’s caused all this? Let me present you some facts and figures as food for thought.
1. Doctors Are Overworked
According to 2010 World Bank statistics, China had roughly 1.5 physicians for every 1,000 people. How does this compare with the US? There were 2.4 doctors for every 1,000 Americans. And Switzerland? 4.1 doctors per thousand populations, almost 3 times as many as in China. And the shortage is even more pronounced when it comes to nurses.
2. Doctors Are Underpaid
What does a physicians’ paycheck look like in China? Well, let’s take a chief physician for example, someone with probably 20+ years of experience, and the head of their department in a leading hospital in Shanghai or Beijing. This doctor’s official salary is likely to be substantially less than – possibly as low as 50% of – what a typical manager in a private sector job would be earning.
3. Hospitals Are Inadequately Funded
Although hospitals in China are government funded, it is estimated that as much as 40% of a hospital’s operating costs need to be covered by the profits made from drug prescriptions and other medical procedures.
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