Going Forward

With the release of the health reform plan and the national program for basic healthcare insurance, more programs will be expected to further reduce the cost to patients. Given increased government investment into the healthcare system, there will be more government involvement in deciding what equipment a hospital can use or where to buy it. Indeed, such a heavily government-managed purchasing program will achieve the objective of reducing the healthcare cost to average patients for the time being.

The negative impact of such programs also is inevitable. The program increases the concentration of technologies and production advantage for a few large suppliers, while discouraging new companies and new advanced technology, reducing competition in the industry. There are 17,000 government-owned healthcare institutions in China, and it is questionable if all their needs can be served by the products contained on one list. Centralized purchasing also can be seen as a step back to the old “government-controlled” economy, where centralized decision and authorities tend to breed poor judgment and corruption.

But the process has just started. And many adjustments will be needed. The question of how these policies will affect the purchase behaviors remains.