OBJECTIVES

Since December 10th 2015, Shanghai has reduced the medicine markups rates in public hospitals three times, from 15% to 10%, 5%, and 0%, respectively. This study aims to analysis the impact of medicine markups policy change, corresponding medical service items prices adjustment and government financial investment on public hospitals economic operation in one district of Shanghai between 2013 and 2017.

METHODS

The annual financial reports of all 17 public hospitals from 2013 to 2017 were obtained from district government, including “Balance Sheet” and “Income and Expenditure Sheet”. Surveys and interviews were conducted for quantitative and qualitative data.

We described the medicine incomes and profits and backwards calculated medicine profit loss comparing the reality with the scenario where the medicine markups remain 15%.

RESULTS

Since 2015, the medicine profit in all hospitals have changed from steady growth to tending to zero, with a decline rate of over 65%. It has been estimated that there was a profit loss of 663.58 million yuan last three years.

Between 2013 and 2017, prices of medical services were adjusted seven times, involving 1,631 service items, with a total compensation to zero-markup policy of 615.38 million yuan and a compensation ratio of 92.74%. Besides, the government financial compensation during the same period was 137.36 million yuan. The total compensation ratio was 113.44%.

While in 2017, zero-markup policy led to a loss of 495.54 million yuan in medicine profits. With 350.21 million yuan compensation in service price adjustment, compensation ratio was 71.02%. Considering 97.10 million yuan from government, total compensation ratio was only 90.27%.

CONCLUSIONS

The medicine markups policy reform has a great impact on medicine profit and overall net profit of public hospitals. Medical service items prices adjustment and financial assistance still cannot fully compensate for the profit reduction in 2017 and the effect is unevenly distributed among hospitals.