HR Healthcare comparisons between China and UK

Chapter 1:HR Healthcare comparisons between China and UK - An Overview

1.1 Introduction

Health care refers to the treatment and management of illness, and the pres-ervation of health through services offered by the medical, dental, pharmaceutical, clinical laboratory sciences (in vitro diagnostics), nursing, and allied health professions. Health care embraces all the goods and services designed to promote health, including "preventive, curative and palliative interventions, whether directed to individuals or to populations". A health care provider is a person or organization that provides facilities, services and/or health care personnel to deliver proper health care in a systematic way to any individual in need of health care services. A health care provider could be a government, the health care industry, a health care equipment company, an institution such as a hospital or medical laboratory. Health care professionals may include physicians, dentists, support staff, nurses, therapists, psychologists, pharmacists, chiropractors, and optometrists. The Healthcare industry incorporates several sectors that are dedicated to providing services and products dedicated to improving the health of individuals. The healthcare industry includes health care equipment & services and pharmaceuticals, biotechnology & life sciences. The particular sectors associated with these groups are: biotechnology, diagnostic substances, drug delivery, drug manufacturers, hospitals, medical equipment and instruments, diagnostic laboratories, nursing homes, providers of health care plans and home health care.

Health care systems are designed to meet the health care needs of target populations. There are a wide variety of health care systems around the world. In some countries, the health care system has evolved and has not been planned, whereas in others a concerted effort has been made by gov-ernments, trade unions, charities, religious, or other co-ordinated bodies to deliver planned health care services targeted to the populations they serve.

Health care systems vary according to the extent of government involvement in providing care, ranging from nationalized health care systems (such as the U.K. and Sweden) to decentralized private or non-profit institutions (as in Germany and France). Universal health care is implemented in all industrial-ized countries, with the exception of the United States. It is also provided in many developing countries. Universal health care is health care coverage for all eligible residents of a political region and often covers medical, dental and mental health care. Typically, costs are borne in the majority by government-funded programs.

Five common shortcomings of health-care systems as per the WHO World Health Report 2008 Primary Health Care - Now More Than Ever, are as follows:

Inverse care: People with the most means - whose needs for health care are often less - consume the most care, whereas those with the least means and greatest health problems consume the least. Public spending on health services most often benefits the rich more than the poor in high- and low income countries alike.
Impoverishing care: Wherever people lack social protection and pay-ment for care is largely out-of-pocket at the point of service, they can be confronted with catastrophic expenses. Over 100 million people an-nually fall into poverty because they have to pay for health care.
Fragmented and fragmenting care: The excessive specialization of health-care providers and the narrow focus of many disease control programmes discourage a holistic approach to the individuals and the families they deal with and do not appreciate the need for continuity in care. Health services for poor and marginalized groups are often highly fragmented and severely under-resourced, while development aid often adds to the fragmentation.
Unsafe care: Poor system design that is unable to ensure safety and hygiene standards leads to high rates of hospital-acquired infections, along with medication errors and other avoidable adverse effects that are an underestimated cause of death and ill-health.
Misdirected care: Resource allocation clusters around curative services at great cost, neglecting the potential of primary prevention and health promotion to prevent up to 70% of the disease burden. At the same time, the health sector lacks the expertise to mitigate the adverse effects on health from other sectors and make the most of what these other sectors can contribute to health.

Health systems are developing in directions that contribute little to equity and social justice and fail to get the best health outcomes for their money. Three particularly worrisome trends can be characterized as follows:

health systems that focus disproportionately on a narrow offer of specialized curative care;
health systems where a command-and-control approach to disease control, focused on short-term results, is fragmenting service delivery;
health systems where a hands-off or laissez-faire approach to governance has allowed unregulated commercialization of health to flourish.

These trends fly in the face of a comprehensive and balanced response to health needs. In a number of countries, the resulting inequitable access, impoverishing costs, and erosion of trust in health care constitute a threat to social stability. It is now widely recognised that providing a sense of direction to health systems requires a set of specific and context-sensitive reforms that respond to the health challenges of today and prepare for those of tomorrow. The focus of these reforms goes well beyond "basic" service delivery and cuts across the established boundaries of the building blocks of national health systems. For example, aligning health systems based on the values that drive PHC will require ambitious human resources policies. However, it would be an illusion to think that these can be developed in isolation from financing or service delivery policies, civil service reform and arrangements dealing with the cross-border migration of health professionals. the PHC reforms in four groups that reflect the convergence between the evidence on what is needed for an effective response to the health challenges of today's world, the values of equity, solidarity and social justice that drive the PHC movement, and the growing expectations of the population in modernizing societies:

reforms that ensure that health systems contribute to health equity, social justice and the end of exclusion, primarily by moving towards universal access and social health protection - universal coverage reforms;
reforms that reorganize health services as primary care, i.e. around people's needs and expectations, so as to make them more socially relevant and more responsive to the changing world while producing better outcomes - service delivery reforms;
reforms that secure healthier communities, by integrating public health ac-tions with primary care and by pursuing healthy public policies across sectors - public policy reforms;
reforms that replace disproportionate reliance on command and control on one hand, and laissez-faire disengagement of the state on the other, by the inclusive, participatory, negotiation-based leadership required by the complexity of contemporary health systems - leadership reforms.

Since the founding of the People's Republic of China, the goal of healthcare pro-grams has been to provide care to every member of the population and to make maximum use of limited health-care personnel, equipment, and financial resources. The emphasis has been on preventive rather than curative medicine on the premise that preventive medicine is "active" while curative medicine is "passive". The public health system is overseen by the Ministry of Health and the modernization of the system is studied internationally. Certain political policies led to the starvation of mil-lions during the Great Leap Forward; epidemic disease rebounded during the dislo-cations of the Cultural Revolution, which seriously harmed public health in China. The effective public health work in controlling epidemic disease during the early years of the PRC and, after reform began in 1978; the dramatic improvements in nu-trition greatly improved the health and life expectancy of the Chinese people. The 2000 WHO World Health Report - Health systems: improving performance found that China's health care system before 1980 performed far better than countries at a comparable level of development, since 1980 ranks much lower than comparable countries. The end of the famed "barefoot doctor" system based in the people's communes was abolished in 1981. The increasing privatization of medicine (private healthcare), often poorly regulated, have made corruption and inefficiency in the delivery of health services serious problems.

China is undertaking a reform on its health care system. The New Rural Co-operative Medical Care System (NRCMCS) is a new 2005 initiative to overhaul the healthcare system, particularly intended to make it more affordable for the rural poor. Under the NRCMCS, the annual cost of medical cover is 50 Yuan (US$7) per per-son. Of that, 20 Yuan is paid in by the central government, 20 Yuan by the provincial government and a contribution of 10 Yuan is made by the patient. As of September 2007, around 80% of the whole rural population of China had signed up (about 685 million people). The system is tiered, depending on the location. If patients go to a small hospital or clinic in their local town, the scheme will cover from 70-80% of their bill. If they go to a county one, the percentage of the cost being covered falls to about 60%. And if they need specialist help in a large modern city hospital, they have to bear most of the cost themselves; the scheme would cover about 30% of the bill.

Healthcare in the United Kingdom is a devolved matter, meaning England, Northern Ireland, Scotland and Wales each has its own system of private and publicly-funded healthcare, together with alternative, holistic and complementary treatments. Public healthcare is provided to all UK permanent residents and is free at the point of need being paid for from general taxation. Taken together, the World Health Organisation, in 2000, ranked the provision of healthcare in the United Kingdom as fifteenth best in Europe and eighteenth in the world.

The responsibility of healthcare in the United Kingdom lies with four executives; healthcare in England is the responsibility of Her Majesty's Government; healthcare in Northern Ireland is the responsibility of the Northern Ireland Executive; healthcare in Scotland is the responsibility of the Scottish Government; and healthcare in Wales is the responsibility of the Welsh Assembly Government. Each asserts governmental influence upon a National Health Service; due to each of these health systems having different policies and priorities, a variety of differences exist between the systems. Since 1979, expenditure on healthcare has been increased significantly to bring it closer to the European average. The UK spends around 8.4 per cent of its gross domestic product on healthcare, which is 0.5% below the Organisation for Economic Co-operation and Development average and about one per cent below the average of the European Union.

1.2 Background to the research: Need for employer sponsored healthcare

A lack of a comprehensive health plan for the employees is most likely to result in indirect, recurring losses for companies. Several studies corroborate this:

In a Canadian government study, the Canada Life Assurance Company experimental group realised a four per cent increase in productivity after starting an employee fitness program. Further, 47 per cent of programme participants reported that they felt more alert, had better rapport with their co-workers, and generally enjoyed their work more.
Swedish investigators found that mental performance was significantly better in physically fit workers than in non-fit workers. Fit workers committed 27 per cent fewer errors on tasks involving concentration and short-term memory, as compared with the performance of non-fit workers.
Studies by various US and UK-based medical research institutes have shown that 80-90 per cent of people of any age, gender, physical fitness and profession who use a computer regularly are likely to suffer from vi-sion and health problems.
Another study conducted by Department of Human Factors Engineering, University of Occupational and Environmental Health, Japan, showed that visual strain occurred after 60 minutes of video display terminal (VCD) task.

A close look at these only supports the fact that a sizeable portion of employees suf-fer from health problems that are mostly work generated and that well-planned, comprehensive health promotion programmes can help in reducing such ailments. This would in turn pave the way for rise in overall productivity.

However, corporates have hardly realised the existence of this silent troublemaker, leave alone assessing the magnitude of the problem. Hence, they continue to extract more work hours which results in a stressed life-style for employees. "While at first, corporations may appear to benefit from workers' added effort during long, stress-filled days, rising health care premiums may show otherwise. One study based on the Multiple Risk Factor Intervention Trial, for instance, showed men who skipped their annual vacation were more likely to die from coronary heart disease than were couch potatoes or smokers who do get away for a little annual rest and relaxation," wrote Wendy D Lynch in Business Health about the American work scenario. Globally, corporate houses are flooded with over-stressed employees trying to attain strength from their cups of coffee and puffs of cigarettes. Many employees report for work on time and work for unlimited hours. That the company stands to earn more if employees put in additional work hours is only a myth.

Workplace stress, arising out of a poor match between job demands and the capa-bilities, resources, or needs of workers, has severe health consequences for em-ployees. Stress-related disorders encompass a broad array of conditions, including psychological disorders (e.g., depression, anxiety, post-traumatic stress disorder) and other types of emotional strain (e.g., dissatisfaction, fatigue, tension, etc.), mal-adaptive behaviours (e.g., aggression, substance abuse), and cognitive impairment (e.g., concentration and memory problems). Refer to figure 2.

Causes of work-related stress:

Job stress may be caused by a complex set of reasons. Some of the most visible causes of workplace stress are:

Job Insecurity: Organized workplaces are going through metamorphic changes under intense economic transformations and consequent pressures. Reorgani-zations, takeovers, mergers, downsizing and other changes have become major stressors for employees, as companies try to live up to the competition to survive. These reformations have put demand on everyone, from a CEO to a mere executive.
High Demand for Performance: Unrealistic expectations, especially in the time of corporate reorganizations, which, sometimes, puts un healthy and unreasonable pressures on the employee, can be a tremendous source of stress and suffering. Increased workload, extremely long work hours and intense pressure to perform at peak levels all the time for the same pay, can actually leave an employee physically and emotionally drained. Excessive travel and too much time away from family also contribute to an employee`s stressors.
Technology: The expansion of technology�computers, pagers, cell phones, fax machines and the Internet�has resulted in heightened expectations for productivity, speed and efficiency, increasing pressure on the individual worker to constantly operate at peak performance levels. Workers working with heavy machinery are under constant stress to remain alert. In this case both the worker and their family members live under constant mental stress. There is also the constant pressure to keep up with technological breakthroughs and improvisations, forcing employees to learn new software all the times.
Workplace Culture: Adjusting to the workplace culture, whether in a new com-pany or not, can be intensely stressful. Making oneself adapt to the various as-pects of workplace culture such as communication patterns, hierarchy, dress code if any, workspace and most importantly working and behavioural patterns of the boss as well as the co-workers, can be a lesson of life. Maladjustment to workplace cultures may lead to subtle conflicts with colleagues or even with su-periors. In many cases office politics or gossips can be major stress inducers.
Personal or Family Problems: Employees going through personal or family problems tend to carry their worries and anxieties to the workplace. When one is in a depressed mood, his unfocused attention or lack of motivation affects his ability to carry out job responsibilities.

The question worth asking is: does corporate culture make you healthy? The very values and convictions a company promotes, can improve health at the place of work if work is interpreted as a source of health. However, many companies have got into the habit of tending to associate work with disease and of concentrating al-most exclusively on the prevention of accidents, occupational diseases and work-induced ailments. A corporate culture based on partnership can be particularly valu-able in turning work into a source of health by way of the design and organisation of work.

A case in point is GlaxoSmithKline (GSK) is a world-wide operating pharmaceutical and healthcare company, employing over 100,000 people in the UK alone. GSK has 23 sites. The Employee Health Management Department co-ordinates GSK's Occu-pational Health, Employee Health Support and Resilience work. The merger of Glaxo Wellcome and Smith Kline Beecham allowed a review of both legacy companies' approaches to health in the workplace and has afforded the opportunity for new and innovative work. GlaxoSmithKline's Mission is to improve the quality of human life by enabling people to do more, feel better and live longer. There is also an emphasis on working towards building a corporate culture which promotes personal and organisational resilience. Personal resilience is characterised by a positive, focused, flexible, organised and proactive attitude in the context of work-life balance, physical health and mental well being. Organisational interventions in areas such as work practices, management behaviour and work environment, reduce barriers and enable positive health outcomes and sustainable organisational effectiveness. GSK is placing considerable emphasis on the importance of a healthy work-life balance. Effective use of population health measures to identify priorities and drive targeted interventions is a key to enhancing health and well being. As a means of identifying health needs, GSK uses a health risk appraisal tool that is offered to all GSK staff. With these aggregate health profiles, targeted high risk interventions are developed and implemented. Some examples include smoking cessation, weight management and physical activity interventions. Implementation on the spot is accompanied by Health Improvement Teams in which all parties concerned cooperate.

1.3 Aim of the study

The study attempts to compare the HR health care systems of China and UK. It will establish similarities and differences vis-�-vis each nation's political, economic and social set up. The attempt is to draw on the experiences of each other and learn from the successes and failures of the healthcare systems in each country. More importantly, an earnest endeavor of the study is to find a way for China to improve its small and medium-sized companies' staff medical care insurance problem.

1.4 Objectives of the study

1.5 Significance of the study

Chapter 2: Review of Related Literature

China beckons...

China is positioned to overtake Germany in 2008 and become the world's third larg-est economy after the US and Japan. Major drivers of this performance include:

Exceptional economic growth�approaching 11% in 2006, the fastest rate since 1995.
An increase in the average standard of living.
Improved health awareness.
Rapid expansion of social insurance programmes and significant investment by major industry players.

Continued strong GDP growth exceeding that of other emerging countries such as Brazil, India, and Russia, is predicted to position China as the largest economy globally by 2040. This will not only drive the population's ability to spend more on healthcare, but it will also, as affluence and chronic diseases increase, feed a greater need for innovative drugs.

On the demand side, disease profiles in China have shifted to more expensive chronic and speciality diseases such as cancer. This trend is exacerbated by a rap-idly aging population and urbanisation. Even with the fast growth of healthcare in recent years, there are still significant gaps in diagnosis, treatment and compliance in all major categories. Indeed, in some treatment areas, these gaps appear to be widening.

Business activity has already started to expand outside traditional large urban areas in China. Combined with increasing diagnosis and treatment rates this is creating huge potential for the industry to secure new avenues of growth and optimise return on investment and setting up China to become the seventh largest pharmaceutical market by 2010.

Healthcare in China

The Chinese government faced a mammoth task in trying to provide medical and welfare services adequate to meet the basic needs of the immense number of citi-zens spread over a vast area. Although China's overall affluence has grown dramatically since the mid-1980s � per capita income has increased many times over, and caloric intake has become comparable to that for Western Europe � a great many of its people live at socio-economic levels far below the national average. The medical system, moreover, labours under the tension of whether to stress quality of care or to spread scarce medical resources as widely as possible. In addition, there has been a repeated debate over the relative balance that should be struck between the use of Western and traditional Chinese medicine. While the Cultural Revolution pushed the balance toward widespread minimum care with great attention paid to traditional medicine, policy after the late 1970's moved in the other direction on both issues; by the late 1980's the proportion of doctors of Western medicine had exceeded those of traditional practices.

At the same time, the medical establishment has been affected by this major influ-ence: along with 1980's initial period people's commune disintegration, the original rural cooperative's medical service system rapidly disintegrated in a majority of ar-eas. In the cities, the public health services system and the labour insurance medical service system also gradually declined in the varying degree. But the medical service relates to national economy and the people's livelihood and the social stability, and the related problems are extremely complex, the establishment of this new system is slower, compared to other professions.

The health of the Chinese populace has improved considerably since 1949. Average life expectancy has increased by about three decades and now ranks nearly at the level of that in advanced industrial societies. Many communicable diseases, such as plague, smallpox, cholera, and typhus, have either been wiped out or brought under control. In addition, the incidences of malaria and schistosomiasis have declined dramatically since 1949.

As evaluated on a per capita basis, China's health facilities remain unevenly distributed. Only about half of the country's medical and health personnel work in rural areas, where approximately three-fifths of the population resides. The doctors of Western medicine, who constitute about one-fourth of the total medical personnel, are even more concentrated in urban areas. Similarly, about two-thirds of the country's hospital beds are located in the cities.

China has a health insurance system that provides virtually free coverage for people employed in urban state enterprises and relatively inexpensive coverage for their families. The situation for workers in the rural areas or in urban employment outside the state sector is far more varied. There are some cooperative health care programs, but their voluntary nature produced a decline in membership from the late 1970's.

The severest limitation on the availability of health services, however, appears to be an absolute lack of resources, rather than discrimination in access on the basis of the ability of individuals to pay. An extensive system of paramedical care has been fostered as the major medical resource available to most of the rural population, but the care has been of uneven quality. The paramedical system feeds patients into the more sophisticated commune-level and county-level hospitals when they are available.

Managing the Quality of Healthcare

The quality of family planning services in four rural countries in China was assessed in a 1987 survey with a sample of 318 randomly selected married women of reproductive age. The quality measures used were:

Availability of contraceptives
Information given to users
Provider knowledge about methods

It was found that quality could be improved by providing a better method mix, by in-creasing the providers' level of knowledge about contraindications and side-effects of methods, and by supplying more and better information to the users about the methods they selected.

Healthcare coverage in China before reforms

Prior to reforms, healthcare coverage for the Chinese population was financed pri-marily by means of three programs:

The rural sector used a cooperative system,
The government insurance system, which covered civil servants, workers in public agencies, universities, handicapped military officers, and university students; and
The labour insurance system, which covered state-owned enterprise (SOE) em-ployees and their dependents.

Patients not covered under these three programs paid for health services out-of-pocket. By 1975 the government and labour insurance systems covered almost 100 percent of the urban population, and the cooperative system covered almost 85 per-cent of the rural population. Overall, the three healthcare financing plans covered nearly 90 percent of China's population in 1975.

Healthcare Transformation and Reforms in China

China's economic reform policy is predicated on two tenets: decentralization and privatization. These economic reforms have notably improved many aspects of China's economy. Their impact on China's healthcare system, however, has been quite different. Decentralization and privatization inadvertently created a budget crisis for China, resulting in the decision to decrease funding for social services such as healthcare. After a decade and a hall of economic reform, the central government's role in financing healthcare diminished to half of what it used to be; patient out-of-pocket payments more than doubled as a share of national health expenditures; and the rural cooperative medical system virtually ceased to exist.

Economic reforms in the 1980s altered the governmental budgetary structure. In or-der to relieve budgetary pressure, the government encouraged its subordinate units to generate direct revenue through the sale of goods and services. Such revenues are categorized as off-budget funds that are retained by the units as discretionary income. Though included in the overall state budget, off-budget revenues are not distributed through the central budget appropriation. In this way, hospitals were in a position to generate large amounts of off-budget revenues through four operational categories:

Medical services,
Retail sale of pharmaceuticals,
Sale of various remedies and solutions manufactured in-house, and
Miscellaneous services.

However, off-budget revenues notwithstanding, prices of most medical procedures remained pegged to outdated indexes. For example, 1994 prices were based on a 1989 index that was nominally adjusted in 1990 while the average annual inflation rate from 1989 to 1995 was 11.1 percent. Moreover, while prices of medical services remained fixed, controls on the prices of medical inputs (wages, equipment, etc.) were lifted, resulting in systemic operating deficits.

Recurring deficits ensured a continued dependence on some form of government subsidy. Hospitals were required to report in their budget the amount of estimated operating deficit. The government would then provide subsidies on the basis of one of the following:

The amount of the deficit,
A percentage of specified expense items such as wages, facility repairs, etc., or
A fixed monetary amount.

Consequently, although hospitals were supposedly individually responsible for op-erations, they still relied on government subsidies to remain financially viable. Such dependence guaranteed a high level of government influence on the strategic and operational management of the hospitals.

At fiscal year-end, actual surpluses and deficits from each of the four operational categories were combined, and, together with any budgetary deficit subsidies from the government, were allocated to a number of hospital funds designated for specific uses. These funds were collectively defined as Designated Items Funds and were used to

Replenish productive assets,
Further business operations, and
Reward workers in order to motivate them toward operational excellence.

In addition to operational sources, hospitals directly obtained funds from the Ministry of Finance and the Ministry of Health that were earmarked for specific uses (equipment acquisition, repairs, and debt repayment). Separately, resources that were restricted for the purchase of specific equipment and facilities could also be received from individual donors and investors. Finally, hospitals also obtained bank loans to finance specific capital projects.

Chinese hospitals did, and still do, function as self-sufficient units, not only providing medical services to the public, but also providing housing, meals, and other social welfare benefits to their employees. Hospitals sell pharmaceuticals at retail prices and engage in the manufacturing and packaging of traditional Chinese medicines. The Chinese hospital is therefore a multi-faceted entity engaged in a wide range of economic activities. A select number of hospitals with the most advanced facilities were owned by the central government. Rural and other urban hospitals were owned by provincial governments. The Ministry of Finance would first approve the budget for the Ministry of Health, which then allocated funds to the provincial health bureaus. The health bureaus then proceeded to allocate their funds to each hospital. Accordingly, hospitals were subject to the jurisdiction of the Ministry of Health, which was subject to the fiscal directives of the Ministry of Finance. In this sense, all hospitals in China were, de facto, state-owned before economic reforms.

In the last two decades of economic reform, China saw its healthcare financing sys-tem develop from a centrally-funded model to that of a hybrid between laissez faire and government funding. In the rural sector, the government adopted a laissez faire policy, resulting in the development of small-scale community financing schemes in place of the monolithic rural cooperative system that collapsed as a result of reforms. A study of 30 poor rural counties found that 16.5 percent of villages maintained some type of community financing scheme. The schemes were funded through the collection of set fees from each household, forming a pool of resources. One third of these schemes covered services ranging from primary care to inpatient care, whereas two thirds of these schemes only covered primary care. All schemes incorporated coinsurance and copayment fees for inpatient services. In 1994, the government announced a new general policy directive in rural healthcare financing. The main points were:

The government role is to establish policy;
Each community organizes its own collective basic healthcare financing;
Funding will come from government, collectives, and individuals;
Priority should be given to preventive health;
Schemes should vary according to local economic capacity; and
The schemes should be accountable to the people.

In the urban sector, the most notable change in healthcare financing has been a series of experimental insurance schemes. The most successful one so far, currently operating in about 50 Chinese cities is a plan that requires the employer and worker to contribute 10 percent and one percent, respectively, of the worker's annual wages into a fund. The fund then allocates six percent to the worker's individual account, and the remaining five percent to a common fund. Health expenses are first paid from the worker's individual account. If expenses exceed total resources in the individual account, the worker pays a maximum deductible of rive percent of annual income. Any expenses still in excess of what has been paid are covered mostly by the common fund, up to a limit.

Developments in both rural and urban sectors illustrate the importance of combining government policymaking with private initiatives. The Chinese government has provided a policy framework in which private parties are allowed to experiment with various types of financing. Although these experiments may result in more cost-effective delivery of services, equity is still a concern since these plans cover only the employed. Government subsidies are needed to cover health services for the unemployed and the poor.

Financing Healthcare in China

Efficiency and equity in access to health care are the two important aspects of China's new health policy. In order to realize the new policy China should finance health services by different benefit packages within social insurance financed by general tax, employers and individuals in the urban and also in the rural areas.

There is an association between health-financing systems and patients' drug use, care-seeking behaviour, and health providers' prescription.

The uninsured patients had a significantly higher average number of drugs per visit. They were prescribed antibiotics to a significantly higher degree than the insured, a small proportion of them using newer antibiotics. The insured patients, however, had significantly higher average medical costs than the uninsured. Most health providers were of the opinion that the patients' insurance was related to their prescribing of treatment, that a bonus in relation to the revenue from drug prescriptions provided an incentive for providers to over-prescribe, and that the insured patients had a better access to expensive drugs and were to a greater extent referred to specialised health facilities. Health providers' choice and use of drugs were influenced by the market factors. In 1994, more insured patients than uninsured were hospitalised at the suggestion of a doctor. A logistic regression analysis showed that only 'out-of-pocket' payment influenced the proportion of hospitalised patients and that the influence was negative. The fee-for-service- based insurance led to a higher growth of health care cost, to a shift from preventive to curative medicine and to a higher level of tertiary Curative care cost. It also induced a higher per capita consumption of drugs.

It was found that the uninsured patients received more drugs at lower drug costs per visit than the insured. This implies that they received cheaper drugs than the insured. The insured patients, however, had a better access to expensive drugs and treatment. This implies that the uninsured patients do not have the same access to health care for similar needs.

In conclusion, the health-care financing systems appear to influence patients' drug use and health providers' prescribing. Insured patients have significantly higher av-erage medical (drug) costs per visit, and better access to expensive drugs and treatment such as hospitalization than uninsured. Health providers' prescriptions are influenced by patients' insurance status and financial abilities, bonus payment mechanism, and market factors. The fee-for-service-based insurance leads to a higher growth of health care cost, to a shift from preventive to curative medicine and to a higher level of tertiary curative care cost. It also induces a higher per capita con-sumption of drugs.

China's transition into a market economy has exerted some influence on the health sector in terms of a significant growth of facilities, but it has also produced a range of destabilizing social costs.

In hospitals where the poor are relieved of paying the price or user charges only a minority of indigents received discounts and the hospitals lacked incentives for effi-ciently carrying out the programs.

As far as the effect of new urban health insurance system is on hospital charges is concerned, there is a lower rate of increase in hospitals charges in the city imple-menting the urban health insurance reform.

In the operation of TB control programs in a decentralized financial system, there is weak government support to the TB control program and less developed DOT (di-rectly observed therapy) programs in the poorer counties. TB patients suffered heavy financial burdens. The decentralized financing system had negatively affected the provision of public health programs such as TB control programs.

In the impact of retail price control of drugs on hospital drug expenditures was a rapid increase in total drug expenditures increased as rapidly as before. Drug ex-penditure per patient for cerebral infarction showed indistinct results, indicating that the regulation was not effective. Utilization rather than price was more determinative for drug expenditures.

The development of revenues, costs and performance in the hospital sector showed that hospitals had expanded their staff and invested in new medical equipment. The corresponding change of outputs in terms of outpatient and inpatient performance showed a slower increasing rate, resulting in a diminishing productivity rate over time.

The market-oriented health care system in China is faced with different 'market fail-ures' problems such as limited access to health services for the poor and the inaccuracy in relying on market mechanisms for services characterized by positive externalities, such as the public health programs. Financial autonomy has given health providers the incentives to maximize revenues. Government interventions to contain costs and improve efficiency show that a sole reliance on the price mechanism is insufficient and must be combined with other tools set by regulators and insurers.

After the Reforms...

China's $124-billion overhaul of its healthcare system needs to address the prescription of unnecessary drugs and treatments - a widespread practice relied upon to finance the medical sector.

China is spending 850 billion Yuan ($124 billion) to provide basic medical coverage and insurance to the country's 1.3 billion people.

The country's mostly State-owned, public hospitals rely on profits from the sale of drugs and expensive treatments and tests to cover operating expenses. The facilities have been accused of aggressively prescribing expensive and sometimes unnecessary drugs and treatment, creating a heavy burden on patients and wasting medical resources.

World Bank suggested that new ways must be found to finance healthcare . Reforms should encourage health providers to watch their costs and prescribe treatments appropriately, the report said.

According to Yanzhong Huang, director of the Centre for Global Health Studies at Seton Hall University in New Jersey and an expert on China's health system, drug sales in the countryside contribute nearly 50 percent of the revenue of health facili-ties. Village doctors, in order to increase their revenues, have strong incentives to over-prescribe or provide excessive services.

Since the Chinese government introduced the New Rural Cooperative Medical Scheme in 2003, about 830 million rural residents have joined the program. The an-nual premium is about 100 Yuan per capita, shared by participants, and central and local governments. Currently, the program mainly covers the hospitalization treat-ment for participants suffering from major diseases, according to the Ministry of Health. However, rural residents are also burdened economically by outpatient medical care.

China's healthcare transformation illustrates several key lessons in using a two-track framework of public-private cooperation.

First, healthcare improvement cannot be defined solely as increases in the level of hospital-based tertiary care. All too often, developing countries redirect their funding priorities toward hospitals to the detriment of public health spending. The result is a sharp increase in health expenditures without the concomitant improvement in health status.

Second, basic preventive public health services behave differently from hospital-based tertiary health services in regard to funding policies. The former is a good that has externality implications, whereas the latter responds better to privatization. Therefore, government subsidies are critical to public health services, whereas pri-vate funding is a viable option for hospital services. In choosing to concentrate central government funding on preventive medicine, basic rural health services, and non-elective medical procedures, the Chinese government's recent policy of "three preservations and three sacrifices" acknowledges this point.

Third, given that the hospital sector in China is moving toward a market framework, an appropriate accounting system is a sine qua non. The new accounting system now resembles the US hospital financial accounting system prior to 1993. It is a fund accounting system structured within the framework of assets = liabilities fund balance. Compared to the old system, the new one is more streamlined and trans-parent. The number of special funds has been reduced and more expense accounts have been added to reflect business reality. The new system thus better enables financial statement users to assess the flow of resources and its effect on financial position. In this sense, the new system is better suited to decision making in the current milieu of economic reform. However, this system only produces financial statements that do not allow for cost determination and other significant managerial decision-making tasks. In the minds of those who operate the Ministries of Finance and Health, unfortunately, a financial accounting system seems to suffice for all decision-making purposes, irrespective of what kind of information managers really need.

Fourth, as is partly illustrated in the previous paragraph, the remnants of central planning still persist. The government continues to exercise control over hospital operations as evidenced by the budgetary nature of hospital financing. Subsidies, although significantly reduced, still comprise a prominent feature of hospital opera-tions. Hospitals must submit their annual budgets for prior governmental approval even though most of their revenues are now derived from off-budget sources. More-over, the two-track pricing policy remains in place despite price reforms in other sec-tors of the economy. Faced with distortions caused by differential government regu-lation--low prices for basic services, higher cost-plus prices for pharmaceuticals--one solution would have been to liberalize basic services, thereby effecting a rational balance. Instead, the government resorted to its habitual solution of exerting more control by requiring hospitals to remit pharmacy revenues generated above a government-determined ceiling.

There is no question that China is moving toward market-based healthcare, and that the market generally does a remarkable job of providing this service efficiently. The challenge for China lies in these areas:

developing an insurance scheme which comes as close as possible to main-taining the universal coverage enjoyed by the population under the command structure;
maintaining a level of government funding and subsidy to counteract the ex-ternality and public goods problems; and
continuing to generate the appropriate accounting standards and train the necessary professionals to ensure that the price signals on which the market relies are accurate, timely, and lead to efficient resource allocation deci-sions.

Healthcare in the UK

Medical care in the nineteenth century was principally private or voluntary. However, sickness was a primary cause of pauperism, and the Poor Law authorities began to develop 'infirmaries' for sick people. The number of infirmaries grew very rapidly after the foundation of the Local Government Board, because of the influence centrally of doctors.

The demand for the infirmaries was at first resisted by a deliberate emphasis on the stigma of pauperism, of which the main legal consequence was the loss of the vote. Few people who became paupers had the vote, but after the extension of the fran-chise in 1867 and 1884, the numbers increased dramatically. In 1885, the law requiring people to be paupers before using the infirmaries was abolished.

Prior to 1948, health services were mainly based on three sources:

Charity and the voluntary sector.
Private health care. Hospitals were fee paying or voluntary; primary care was mainly fee-paying or insurance-based.
The Poor Law and local government. Poor Law hospitals were transferred to local government by the 1930 Poor Law Act.

These were unified when the NHS was formed in 1948.

Initially, the NHS had a tripartite (three-part) structure, with three branches - hospi-tals, primary care and local authority health services. In 1974, a 'unified' structure was introduced, with three main levels of management, at Regional, Area and Dis-trict level. The 1974 reorganisation led to a great deal of disruption, and was heavily criticised. Following political disagreements, Area Health Authorities were abolished in 1982 - throwing out of the window ideas like local integration of services and co-ordination with social services authorities.

The National Health Service (NHS) is the name commonly used to refer to the four publicly funded healthcare systems of the United Kingdom, collectively or individu-ally, although only the health service in England uses the name 'National Health Service' without further qualification. The publicly-funded healthcare organisation in Northern Ireland does not use the term 'National Health Service', but is still com-monly referred to as the 'NHS'. Each system operates independently, and is politi-cally accountable to the relevant devolved government of Scotland (Scottish Gov-ernment), Wales (Welsh Assembly Government) and Northern Ireland (Northern Ire-land Executive) and to the UK government for England.

Originally, three services (for England and Wales, Scotland and Northern Ireland) were established by separate pieces of legislation and began operating on 5 July 1948. The Department of Health had responsibility for the NHS in England and Wales, the Scottish Office had responsibility for the NHS in Scotland and the Gov-ernment of Northern Ireland had responsibility for public health in Northern Ireland. Following the creation of a Welsh Office in 1964, responsibility for public health ser-vices in Wales was transferred to it from the Department of Health in 1969 . In turn, responsibility for NHS Wales and NHS Scotland transferred from the Welsh Office and Scottish Office to the Welsh Department of Health and Social Services and the Scottish Government Health Department, respectively, under devolution in 1999. The Northern Ireland Executive Department of Health, Social Services and Public Safety have responsibility for health services in the province.

There is no discrimination when a patient resident in one country of the United Kingdom requires treatment in another. The consequent financial matters and paperwork of such inter-working are dealt with between the organisations involved and there is generally no personal involvement by the patient comparable to that which might occur when a resident of one European Union member country receives treatment in another.

NHS in Principle

The right to welfare. The NHS is seen by many people as the core of the 'wel-fare state'. People receive health care as a right. There is no right to health care on demand. The principal rights are a right to be registered with a gen-eral practitioner, and the right to be medically examined. This generally means that a general practitioner must visit a patient on the list who makes a request, though it has been accepted that examination at a distance may be feasible. There is no formal right to receive any treatment. This is within the discretion, or 'clinical judgment', of the doctor.
Comprehensiveness. The NHS is held to protect all citizens. Access to health services depends on registration with a general practitioner. Homeless people in particular have great difficulty gaining access to primary care, because without an address it is generally impossible to register. The service itself has never been comprehensive. The NHS does ration re-sources according to priorities. Not only are there not regular checkups for everyone, but there are long waiting lists, and people with quite serious needs - like those from the 1950s onwards needing renal dialysis - may die, because the cost of treatment is greater than the NHS is ready to bear.
A free service at the point of delivery. The initial idea was that no-one should be deterred from seeking health services by a lack of resources. Charges were first introduced by the Labour government in 1950. They were substan-tially increased by the Conservative government after 1979. The 1988 Act re-moved free eye tests.

Throughout its history, the NHS has been dominated by the hospital services, in particular by the high-status university hospitals. The bulk of expenditure on the NHS (over 70%) goes on hospitals. General practice, though it deals with the vast majority of reported illness - probably over 95% - accounts for less than 10% of spending.

The NHS inherited a misdistribution of resources, especially in London where the main hospitals were concentrated in the centre of the city. London's lack of adequate primary care coverage and over-reliance on hospitals for treatment has created recurring problems. The Labour government in the 1970s attempted to redress the balance by transferring resources from hospital care to primary care, limiting the growth of better served regions, and favouring the development of some underfunded specialties, like medicine for the elderly. This led to hospital closures. The policy was continued by the Conservatives in the 1980s.

Complaints about the NHS tend to focus on the problems of hospitals: waiting lists, lack of spare capacity, and 'shroud-waving' in response to spending controls. The severity of the problems is possibly exaggerated. Enoch Powell, a former Minister for Health, commented on "the continual, deafening chorus of complaint" which characterises the NHS. By contrast with the private sector, where people always pretend that things are better than they are, the system of finance in the NHS "endows everyone providing as well as using it with a vested interest in denigrating it."

To what extent does the inverse care law apply today?

The National Health Service was established in 1948 to address the inequality in healthcare services. It was set up as a service that was free at the point of use, that was responsive to local needs and that had a good geographical spread of services. The idea was that everyone receives the same high standard of care. This meant that a wide range of services would be available to people who could not afford them.

ies and research have also shown that the inverse care law is still apparent today.-

One study looked at the effect of socioeconomic deprivation on waiting times for cardiac surgery. Deprived patients were more likely to develop coronary heart disease but less likely to be investigated and undergo surgery. It has also been shown that children growing up in socioeconomic deprivation have poorer health than their peers in higher social classes. Another study has shown that increasing socioeconomic deprivation is associated with a higher prevalence of psychological distress but shorter consultation lengths (i.e. a lack of primary care resources).

In present day general practice, quality and outcomes framework payments to prac-tices are based on the care delivered to patients. A recent study looked at depriva-tion and the quality of primary care services and found that the quality of care deliv-ered falls with increasing deprivation (examples were in glycaemic control monitoring in diabetes and in influenza immunization uptake). This is clear evidence of the fact that the inverse care law still applies.

There are clear differences in the incidence of ill health by social class. Figures from the UK show that people in lower social classes, including children, are more likely to suffer from infective and parasitic diseases, pneumonia, poisonings or violence. Adults in lower social classes are more likely, in addition, to suffer from cancer, heart disease and respiratory disease.

There are several possible explanations for these inequalities.

Artefact explanations: Both 'health' and 'social class' are artificial categories con-structed to reflect social organisation.
Natural and social selection: This would depend on the view that people who are fittest are most likely to succeed in society, and classes reflect this degree of selection.
Poverty leads to ill health, through nutrition, housing and environment.
Cultural and behavioural explanations: There are differences in the diet and fit-ness of different social classes, and in certain habits like smoking.

Thus, there are major inequalities in access to health care according to social class (what Tudor Hart once called an 'inverse care law'; that those people in the worst health receive the least services)

Relentless concern with cost-cutting and market-defined 'efficiencies' over the last two decades has drastically eroded the central premises of universal healthcare in Britain. The undermining of central taxation as the funding base has been accompanied by governments shifting the costs and risks to patients and their families. The costs and risks of continued care will pass to the individual, especially the elderly, who account for around 50 per cent of all hospital admissions. The fundamental principle of universal services, free at the point of delivery, will be undermined.

The UK's NHS was the first state organisation in the world to provide free universal healthcare. Today, it is an organisation with some severe structural problems, which means that waiting lists for treatments even for urgent operations have grown and the standard of treatment in some hospitals has deteriorated. Many Britons in the higher income bracket purchase private health insurance and there is a growing number of employers providing private cover as standard to their employees.

The National Health Service is essential to Britain's identity. But Britons grouse about it, almost as a national sport. Among their complaints: it rations treatment; it forces people to wait for care; it favours the young over the old; its dental service is rudimentary at best; its hospitals are crawling with drug-resistant superbugs. Without an endless budget, the N.H.S. does have to ration care, by deciding, for instance, whether drugs that might add a few months to the life of a terminal cancer patient are worth the money. Its hospitals are not always clean. It is bureaucratic. Its doctors and nurses are overworked. Patients sometimes are treated as if they were supplicants rather than consumers. Women in labour are advised to bring their own infant's diapers and their own cleaning products to the hospital. Sick people routinely have to wait for tests or for treatment. A little over one in 10 Britons has some sort of private supplemental insurance; others pick and choose when to use the N.H.S. and when to pay out of pocket for the top specialists or speedier care.

Taken as a whole, Britain's universal healthcare system has evolved into a ram-shackle structure where tests are underperformed, equipment is undersupplied, op-erations are underdone, and medical personnel are overworked, underpaid and overly tied down in red tape. In other words, your chances of coming out of the Brit-ish medical system alive are dramatically low.

There is no country in the world that delivers comprehensive, equitable healthcare through the market and on the back of for-profit providers. Yet governments across the world are rushing to follow the British path and are dismantling their healthcare systems. They and their citizens are in for a shock. When the market comes to health, access to care will be a lottery decided at the local level. The fear and uncer-tainty of the past are set to reappear.

The British health care system is experiencing serious problems with its funding, service, and staff that vary in severity across the region. A long-standing problem has been long waiting times for care, particularly for elective services and proce-dures. In the United Kingdom in 1990, 41.2 percent of Britons reported waiting more than 12 weeks between seeing a specialist and receiving surgical care. A NHS watchdog group reported that some PCTs lack essential senior staff, forcing "some practices to close their lists, while other areas suffer from a severe lack of district nurses. There are also long waiting lists for therapists, particularly physiotherapists." Another study found that for the past several years, waiting to see a specialist and waiting for elective surgery have been ranked as the first and second most critical failures of the NHS. There are also allegations of declining quality of equipment and staff; another group, Audit Scotland, found that a quarter of all NHS equipment in Scotland has become dangerously outdated, while "only half of Scotland's health trusts could demonstrate that staff had a proper understanding of the equipment." Together these factors have contributed to serious dissatisfaction with the health care system. In the London Telegraph, Sheila Lawlor declared that the question was "who provides the healthcare and whether we get value for money. The answer, patently, is that we do not." Those who can afford it may opt for private care: conservative shadow health secretary Liam Fox suggested that the number of people opting for private care rose by 29% in 2001 because of dissatisfaction with the NHS. A recent poll found that 35% of British citizens ranked health care the most pressing national issue. A 1999 poll found that a slim majority of 55.7 percent were very or fairly satisfied with their health care system, while 42.3 percent were fairly or very dissatisfied with it.

In terms of cost containment, the NHS recently announced that hospitals would, for the first time, receive a standardized fee for 48 different types of treatments for NHS patients as part of an effort to standardize the cost of care and reduce costs. The British Medical Association, however, has protested that "some tariffs will be far lower than the real costs of providing care, putting undue pressure on hospitals to make cuts." The NHS is also experimenting with a system in which patients can re-ceive treatment in other countries, provided that demand for that treatment far ex-ceeds supply in Great Britain.

China versus UK

When people are asked to name the most important problems that they and their families are currently facing, financial worries often come out on top, with health a close second. In one country out of two, personal illness, health-care costs, poor quality care or other health issues are the top personal concerns of over one third of the population surveyed (Figure 1). It is, therefore, not surprising that a breakdown of the health-care system - or even the hint of a breakdown - can lead to popular discontent that threatens the ambitions of the politicians seen to be responsible.

The World Health Organization in its first ever analysis of the world's health systems used five performance indicators to measure health systems in 191 member states.

According to WHO Director-General Dr Gro Harlem Brundtland, the main message from the report was that the health and well- being of people around the world de-pend critically on the performance of the health systems that served them. Yet there was wide variation in performance, even among countries with similar levels of in-come and health expenditure. It is essential for decision- makers to understand the underlying reasons so that system performance, and hence the health of popula-tions, can be improved.

According to Dr Christopher Murray, Director of WHO's Global Programme on Evi-dence for Health Policy, all countries were under- utilizing the resources that were available to them. This leads to large numbers of preventable deaths and disabilities; unnecessary suffering, injustice, inequality and denial of an individual's basic rights to health.

The impact of failures in health systems is most severe on the poor everywhere, who are driven deeper into poverty by lack of financial protection against ill- health. The poor are treated with less respect, given less choice of service providers and offered lower- quality amenities.

The main failings of many health systems are:

Many health ministries focus on the public sector and often disregard the fre-quently much larger private sector health care.
In many countries, some if not most physicians work simultaneously for the public sector and in private practice. This means the public sector ends up subsidizing unofficial private practice.
Many governments fail to prevent a "black market" in health, where wide-spread corruption, bribery, "moonlighting" and other illegal practices flourish. The black markets, which themselves are caused by malfunctioning health systems, and low income of health workers, further undermine those systems.
Many health ministries fail to enforce regulations that they themselves have created or are supposed to implement in the public interest.

Health insurance is often purchased to shift risk as illnesses are often unexpected and accompanied by monetary losses. Individuals thus are said to face a risk of los-ing some of their wealth, which means the existence of the loss and its amount are uncertain. This risk creates concern on the part of the consumers, and they are usu-ally willing to pay something to avoid the risk. One way of dealing with the risk is to shift it to someone else. Insurers are organisations that specialise in accepting risk. When an insurer accepts a large amount of risk, the average loss to the insurer be-comes predictable. Of course, there are costs of operating such as risk-sharing or-ganisation. These include the administrative expenses associated with determining probabilities, setting prices, selling policies and adjudicating claims. The owners also expect a return on their investment (profits). These expenses and profits are included in the fee (called premium) that each individual must pay to obtain insurance. There are a variety of ways in which risk can be shifted. It can be done privately, by the purchase of insurance. Insurance organisations such as Blue cross, Blue Shield, Prudential and Aetna sell health insurance policies either directly to individuals (individual policies) or through groups such as employers and professional associations (group policies). In addition, health maintenance organisations (HMO's) act as both insurers and providers of care. The government also acts as a payer of bills for a large number of individuals, although strictly speaking it is not an insurer as most of its revenues are in the form of taxes, not premiums, and the often the covered individuals are not the ones who pay the taxes. Thus the government does not manage its healthcare related expenditures on am insurance basis. Government style risk sharing is referred to as risk pooling.

If we look at international healthcare spending as a percentage of GDP across the world, we find that both China and UK are in the 5.1 to 8.0% percent bracket as shown in figure 7.

A comparison between China and UK however reveals that UK devotes larger share of its GDP towards healthcare. Refer to figure 8.

Globally in 2006, expenditure on health was about 8.7% of gross domestic product, with the highest level in the Americas at 12.8% and the lowest in the South-East Asia Region at 3.4%. This translates to about US$ 716 per capita on the average but there is tremendous variation ranging from a very low US$ 31 per capita in the South-East Asia Region to a high of US$ 2636 per capita in the Americas. Refer to figure 9.

The share of government in health spending varies from 76% in Europe to 34% in South-East Asia. Where government expenditure in health is low, the shortfall is made up in low-income countries by private spending, about 85% of which is out of pocket. This means that payment is made at the point of accessing health services. Such payment does not allow for pooling of risks and leads to a high probability of catastrophic payments that can result in poverty for the household.

External resources are becoming a major source of health funding in low-income countries. From a share of 12% of total health expenditure in 2000, external re-sources represented 17% of low-income country health expenditure in 2006. Some low-income countries have two thirds of their total health expenditure funded by ex-ternal resources. In these situations, predictability of aid is an important concern.

A more detailed examination of the healthcare expenditures of China and UK brings to the fore that China spends about 5.4% of her GDP while UK spends 8.2% of her GDP on healthcare. The government's share in this healthcare spending is higher in case of UK (close to 90%) as compared to China (more than 50%). Clearly, government in UK bears a greater burden in doling out healthcare services to people.

In both countries, private prepaid insurance is purchased by a small number of people, as evident from low share of private pre-paid expenditure in private healthcare expenditure - 5.8 % in China and 7.9% in UK. This is also apparent from the high government share in healthcare spending.

The four wing elements, that might be characterised as the most relevant strengths of the social protection in China are:

Firstly, the Chinese health care sector is changing fundamentally from a sys-tem that provides services almost free of charge to a contributory system with high cost-sharing.
At the same time, it is changing from a small risk pooling size (business unit) to a larger risk pooling size at municipal level.
Additionally, Medical Saving Accounts (MSA) has recently been implemented for increasing households' resources for ambulatory care.
And, last not least, the sector reform includes also strengthening the role of the local authority in financing and managing SHI.

The lessons that can be drawn from the recent policy on social protection in health in the Peoples Republic of China allow for a series of more general conclusions that are worth to point out:

In countries with a huge informal sector, such as China, tax funded health care financing has proved to be a possible option, complemented to SHI, or ensuring universal access to adequate health care for entire population.
Financial protection should focus on catastrophic health expenditures to pre-vent impoverishment of households due to medical spending by reconsidering coverage and reimbursement ceilings implemented in SHI funds.
Effective socio-political interventions and provider payment mechanisms that send positive signal towards the efficient and equitable use of resources should be considered. The Chinese system should reconsider the effective-ness of high co-payments for containing costs and envisage the deterring ef-fects on access to essential health care.
Governments play a key role for achieving sustainable and financially viable social security systems. The central government should focus first of all on tasks like ensuring adequate health financing especially in the poorer regions and areas; contributing to the SHI fund in order to decrease the contribution rate of employer and employees and to make the system more attractive for stakeholders; sharing the risk among cities (national risk pooling) by establishing risk equalisation mechanisms and standardising provider payment and fee schedules for referral cases beyond regions and cities.
The limited management capability of the local governments in purchasing health services should be taken into account during the implementation of SHI. Central and local governments should handle the transfer of responsibility appropriately and create learning mechanism to improve system efficiency and sustainability in the long run.

The main structure of the Chinese health care system faces many acute problems and serious future challenges. Even though the system is constantly trying to adapt to population needs and improve its performance there is official recognition of fun-damental problems like insufficient coverage and lack of expenditure control. The central government is aware of the necessity of increasing its investment in health care substantially. These problems interact and create a complicated situation for the governing authorities.

Improvement Strategies and possible future changes

A number of strategies have been developed to improve the quality of care and speed of the reform.

The monopoly of government owned facilities in the provision of community health services needs to be broken. Individual or company investment should be welcomed. Competition can help the spread of the reform.
Furthermore, human resource management should be reformed. Unlike the past, different units of community health services should be allowed to choose their employees freely with a selection process based on ability and performance.
A key performance indicator system for funding should be introduced. The government should change its funding arrangement from treatment based alone to performance based. With this initiative, the government can change the focus of the provision of community health services from disease treat-ment to holistic patient care.
The government can introduce the concept of health care as a business. The different community health care organizations or centres should be allowed to go beyond the geographical boundary to provide services to other districts. They should also be allowed to group into bigger organizations and therefore have better financial power.
The health care reform undertaken by China to change from hospital-based care to community-based care in the city is huge and many difficulties are encountered. The training of GPs requires more resources, and the status of GPs along with community health services development requires more recognition from the bureaucrats and the public. Many regions especially the poorer areas are falling behind in standards of care, training and resources. These problems are enormous and China may welcome international co-operation to improve the quality and quantity of the training of community health workers including GPs.

The UK National Health Service was established over 50 years ago. At the time it was designed to provide comprehensive and universal access to health care on the basis of need rather than ability to pay. For this reason the overwhelming majority of services were provided free at the point of use. It was also decided to fund health care from general taxation rather than adopt the social insurance system used by a number of other European countries.

These features remain an important part of the present NHS. Despite, the growth of user charges in some areas (e.g. pharmaceuticals, dental and ophthalmic services, long-term care for elderly people), most primary and secondary health care is still provided free at the point of use. Successive public opinion polls indicate that this system continues to command widespread public support and results show a strong attachment to the NHS as a national institution. Furthermore, despite frequent fund-ing 'crises' resulting from tight finance limits set by successive governments, there has been no serious attempt to move away from a system of general tax-based funding.

However despite this continuity, there have been many management and organiza-tional changes affecting the way in which services are delivered. The most radical of these was introduced in 1991 when the Conservative Government of the day, under the leadership of Margaret Thatcher, introduced an internal market. They represented a fundamental attempt to change the culture of the NHS by introducing private sector and market-style mechanisms into a large, public sector bureaucracy. Evidence on the performance of the internal market, in terms of the criteria of effi-ciency, equity, choice and responsiveness, and accountability, has recently been reviewed by Le Grand et al (1998). They suggest that much of the evidence is inconclusive.

On efficiency it is possible to point to increases in the Department of Health's cost-weighted index of activity over the early period of the reforms. This increase is more likely to have arisen through increases in funding than as a consequence of the reforms themselves. And yet there were substantial increases in management and transaction costs, although attributing these to the reforms themselves is problem-atic.

The main research finding on equity relates to the two-tier system associated with GP fund holding (GPFH). This feature in particular was heavily criticized by the pre-sent Labour Government when they were in opposition. There is little research evi-dence to suggest that trust status improved the quality of care or that patient choice increased. However GP fund holders did succeed in bringing about a number of improvements in the quality of services, albeit on a small scale. They seemed to be more successful than health authority purchasers in obtaining responsiveness from providers. Regarding accountability, the reforms were associated with a quite marked increase in central control and upward accountability. These imposed sub-stantial management costs in addition to costs associated with the functioning of the internal market.

Overall, Le Grand et al conclude that it is perhaps remarkable that such a radical programme of reform should produce so few marked changes on the key criteria of performance. One possible explanation they put forward is that the internal market was not really put to the test; that is, its functioning was hampered because the in-centives were too weak and the constraints too strong.

On the other hand, the 1991 reforms did bring about some marked changes in cul-ture and organization. The involvement of GPs in decision-making and an emphasis on devolved purchasing or commissioning is one such change. The general belief in the desirability of the purchaser-provider split is another one. Emphasis on the need for services to be both clinically effective and cost effective - within an environment of accountability - was also strengthened through the 1991 reforms.

Indeed it is these elements that have been retained in the reform programme cur-rently being implemented by the Labour Government elected in 1997. Despite their opposition to the internal market whilst in opposition, separation of commissioning and providing roles, emphasis on primary care-based devolved decision-making, and a continued quest for improvements in clinical and cost effectiveness all remain important features of their approach. However, in contrast to the previous Conservative Government, they attach more importance to collaborative working and partnership as mechanisms for achieving their objectives, rather than competition. Greater emphasis on the elimination of health inequalities and on health outcomes are also key features of the present government's approach.

The performance of NHS acute hospital trusts is improving against standards that are getting tougher, but more needs to be done to raise standards further, according to the second nationwide assessment of England's hospitals published by Health Secretary Alan Milburn.

For the second time, a performance ratings system has been used to award NHS Trusts in England a star-rating based on their performance for patients. The best acute hospital trusts are awarded three stars and the poorly performing trusts no stars. This year there are more three star hospitals and fewer zero stars than last year.

The best performing trusts will be given up to £1 million each to further improve ser-vices. The extra capital funding will support further improvements in patient services.

Based on performance in 2001/02, trusts have again been rated according to their performance on things that matter most to patients, such as waiting times and hospi-tal cleanliness. However, the targets are now tougher. There are four times as many CHI inspection reports taken into account this year than last in the star ratings. There are almost double the number of indicators against which hospitals are judged. And the indicators themselves are harder. For example, Trusts are scored not just as breast cancer waiting times as they were last year but on all cancer waiting times.

Despite these tougher measures, the results are encouraging. Of the 304 NHS Trusts that have been rated for their performance in 2001/02, 68 received the high-est three-star rating, 172 received two stars, 54 received one star and 10 received no stars. Of the 158 English acute hospital NHS trusts, 47 improved their rating compared to last year, 36 received a lower rating and 75 stayed the same.

Poorly performing trusts will be given time to turn around a hospital within an agreed timetable. Otherwise managers from a new register of experts will be given the chance to compete for the franchise to turn performance around. Non-NHS bod-ies from the voluntary, public or private sectors, as well as current NHS managers, have been invited to apply to be included on the NHS Franchising Register of Expertise.

Hospitals with three stars will be given extra funding and additional freedoms from Whitehall control. They will also have the opportunity to apply to become NHS Foundation Trusts.

Chapter 3: Methodology used for the study

Any research carried out involves two types of data: qualitative and quantitative. The way we typically define them, we call data 'quantitative' if it is in numerical form and 'qualitative' if it is not. Notice that qualitative data could be much more than just words or text. Photographs, videos, sound recordings and so on, can be considered qualitative data.

The qualitative-quantitative distinction has led to protracted arguments with the pro-ponents of each arguing the superiority of their kind of data over the other. The quantitative types argue that their data is 'hard', 'rigorous', 'credible', and 'scientific'. The qualitative proponents counter that their data is 'sensitive', 'nuanced', 'detailed', and 'contextual'. This kind of polarized debate has become less than productive. And, it obscures the fact that qualitative and quantitative data are intimately related to each other. In fact, all quantitative data is based upon qualitative judgments; and all qualitative data can be described and manipulated numerically.

After we define the research problem; develop and implement a sampling plan; con-ceptualize, operationalise and test your measures; and develop a design structure; we need to get to the analysis of the data.

In data analysis involves three major steps, done in roughly this order:

Cleaning and organizing the data for analysis (Data Preparation) - Data Preparation involves checking the data for accuracy; entering the data into the computer; transforming the data etc. The data can be drawn from two sources:

Primary source where data are generated by the investigator himself through various methods
Secondary source where data are extracted from the existing pub-lished or unpublished source, that is, from the data already collected by others. It saves a lot of time, effort and money of the investigator; but then he has to be conscious and judicious in their use.

Data from secondary sources are already arranged or organised. A minor re-arrangement can be undertaken. However, primary data are in a haphazard form and need some arrangement so that it makes some sense. The steps in-volved in this process are:

Editing: This involves the removal of omissions and inconsistencies involved in the collected information.
Classification of data: It follows editing. It involves arranging data ac-cording to some common characteristics. Normally the raw information received from the respondents is put on the master sheets.
Tabulation: It is the last step in the arrangement process. Information is tabulated in the form of frequency distributions or tables, where infor-mation is arranged in columns and rows.

After the data have been arranged and tabulated, they can now be pre-sented in the form of diagrams and graphs to facilitate the understanding of various trends as well as the process of comparison of various situa-tions .

Describing the data (Descriptive Statistics) - Descriptive Statistics are used to describe the basic features of the data in a study. They provide simple summaries about the sample and the measures. Together with simple graph-ics analysis, they form the basis of virtually every quantitative analysis of data. With descriptive statistics you are simply describing what is, what the data shows.
Testing Hypotheses and Models (Inferential Statistics) - Inferential Statis-tics investigate questions, models and hypotheses. We use inferential statis-tics to try to infer from the sample data what the population thinks or to make judgments of the probability that an observed difference between groups is a dependable one or one that might have happened by chance in this study. Thus, we use inferential statistics to make inferences from our data to more general conditions; we use descriptive statistics simply to describe what's go-ing on in our data.

In most research studies, the analysis section follows these three phases of analysis. Descriptions of how the data were prepared tend to be brief and to focus on only the more unique aspects to your study, such as specific data transformations that are performed. The descriptive statistics that you actually look at can be voluminous. In most write-ups, these are carefully selected and organized into summary tables and graphs that only show the most relevant or important information. Usually, the researcher links each of the inferential analyses to specific research questions or hypotheses that were raised in the introduction, or notes any models that were tested that emerged as part of the analysis.

Qualitative data is subjective, rich, and in-depth information normally presented in the form of words . In this dissertation, qualitative data is derived from semi-structured or unstructured interviews. This qualitative data from interviews has been analysed for content (content analysis) or for the language used (discourse analy-sis). The target groups interviewed involve:

Staff from social welfare institutions in China and UK
Several employers across China and UK
Researchers whose research areas cover the topic of this dissertation.

When using a quantitative methodology, we are looking for ideas, concepts and atti-tudes from experts or practitioners in the field. In order to collect and record data through interviews with the target group mentioned above, the direct personal inter-view technique was resorted to. The information collected was analysed for content. Content analysis consists of reading and re-reading the transcripts looking for simi-larities and differences in order to find themes and to develop categories. This is es-sential to make sure that nothing important is left out by only selecting material that fits one's own ideas.

This dissertation uses quantitative methodology to gather quantitative data using a questionnaire. Questionnaires collect data by asking people to respond to exactly the same set of questions. The choice of questionnaire is influenced by research question and objectives and the resources available. The five main types are on-line, postal, delivery and collection, telephone, and interview schedule. Prior to designing a questionnaire, you one must know precisely what data needs to be collected to answer research question and to meet objectives. The validity and reliability of the data collected and the response rate achieved depend largely on the design of the questions, the structure of your questionnaire, and the rigour of the pilot testing. When designing the questionnaire we should consider the wording of individual questions prior to the order in which they appear. Questions can be divided into open and closed. The six types of closed questions are list, category, ranking, rating (scale), quantity and grid. Questionnaires must be introduced carefully to the respondent to ensure a high response rate . The respondents of the questionnaires used in this research include

employees of selected companies in China and UK, and
randomly selected residents of China and UK.

These questionnaires will be made available to respondents via:

Email
Post
Telephone
Personal Visits

Collected data is summarised next with summary statistics. Summary or descriptive statistics describe the original data set (the set of responses for each question) by using just one or two numbers - typically an average and a measure of dispersion . Secondary data and the response counts or percentages associated with a question can be displayed in diagrammatic forms such as a line graph, bar chart or pie chart. These can greatly enhance your findings and subsequent discussion. These will be included to:

state the obvious, such as the largest and/or the smallest, or the trend
highlight something that is not so obvious.

This descriptive analysis of the collected data will be done to facilitate comparisons between the countries in question with regards to their similarities and dissimilarities. At the same time strengths and weaknesses of the two countries will be highlighted against their social, economic and political backdrop. This descriptive analysis of the data is done in the next chapter - 'Presentation, Analysis and Interpretation of Data'.

A lot of analysis can be undertaken with data that is produced from quantitative re-search. Discussion should be presented clearly and logically and should be relevant to research questions, hypotheses or objectives. Findings from the primary data collection and analysis will be linked to the literature review. Similarities and differences between the literature and findings are then discovered. The findings may confirm to some literature findings or alternatively differ. Either way, reasons will be given to authenticate why any of the two situations mentioned above resulted. This inferential analysis is done in the last chapter - 'Summary, Conclusion and Recommendations'.

Chapter 4: Presentation, Analysis and Interpretation of Data

To study the healthcare systems of both countries, an interview was conducted with respondents

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