The Role of Health Care Transformation for the Chinese Dream

Powering Economic Growth, Promoting a Harmonious Society

by Soeren Mattke, Hangsheng Liu, Lauren E. Hunter, Kun Gu, Sydne Newberry

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Research Questions

  1. What are China's health care needs?
  2. How should China construct its health care system to meet these needs?

Abstract

After having successfully expanded health insurance coverage, China now faces the challenge of building an effective and efficient delivery system to serve its large and aging population. The country finds itself at a crossroads — it can emulate the models of Western countries with their well-known limitations, or embark on an ambitious endeavor to create an innovative and sustainable model. RAND researchers recommend that China choose the second option and design and implement a health care system based on population health management principles and sophisticated health information technology. Taking this path could yield a triple dividend for China: Health care will contribute to the growth of service sector employment, stimulate domestic demand by unlocking savings, and enable China to export its health system development capabilities to other countries, mirroring its success in building other critical infrastructure. These forces can help turn the Chinese Dream into a reality.

Key Findings

China's Economic and Social Progress over the Past 50 Years Has Outpaced Its Health Care System

  • The health of China's population is being influenced simultaneously by its rapid rate of aging, growing wealth, and migration from rural to urban living, as well as by greater reliance on food of low nutritional value and decreased physical activity.
  • The result is an expanding burden of chronic disease and disability, even as mortality due to acute illness wanes.

The Current System Has Several Handicaps

  • China faces a severe workforce shortage, especially of nurses.
  • There is overreliance on hospital-based care.
  • Health information technology is not up to date.
  • While the central government is investing substantial resources, the limited absorptive capacity of the current system makes it difficult to expand capacity fast enough to meet expected demand, at least with traditional delivery models.

This Challenge Can Be Made into an Opportunity

  • Health care can be restructured as a cornerstone of a knowledge-based economy.
  • Access to high-quality and affordable health care can stimulate domestic consumption by unlocking household savings set aside for health care expenditures.
  • Successful adoption of an innovative and sustainable system will enable China to export health system development capabilities.
  • China does not face the same entrenched interests and obstacles that other nations do in creating an innovative health care system.

Western Models Offer Cautionary Lessons for China

  • Western countries do not invest sufficiently in interoperable information technology.
  • Countries do not engage in significant performance monitoring and improvement.
  • Incentives for physicians are not aligned with desired outcomes, resulting in ineffective and inefficient health care delivery systems.
  • Consumers are not sufficiently engaged in their own care.

Recommendations

China should adopt a population health management model, which unites the public health perspective of improving health at the population level and the medical care perspective of individual care delivery:

  • Invest in sophisticated information technology.
  • Optimize care delivery based on clinical evidence and best practices.
  • Monitor performance monitoring at all levels of accountability.
  • Better deploy health professionals through use of information technology and shifting certain tasks to lower-wage, less-skilled workers.
  • Align incentives with policy goals.
  • Inform consumers and patients of their choices in medical care and lifestyle and the consequences of those choices.

Table of Contents

  • Chapter One

    The Policy Argument for Rethinking Health Care in China

  • Chapter Two

    Designing and Implementing an Innovative Model for Organizing and Delivering Health Care Can Turn This Challenge into an Opportunity

  • Chapter Three

    The "Western-Style" Health Care Model Offers Cautionary Lessons for China

  • Chapter Four

    Fast-Growing Economies Like China's Have a Unique Opportunity to Implement Innovative Health Care Systems

  • Chapter Five

    Adopting Population Health Management Can Propel China to World-Class Health Care

  • Chapter Six

    Conclusions

Research conducted by

The research in this report was produced within RAND Health, a unit of the RAND Corporation. The research was funded by Aetna, Inc.

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