Healthcare's for-profit non-profit balancing act

Comprehensive legislation is also needed in the hospital sector, to improve the productivity of State-owned hospitals. Professional governance, process standardization, performance evaluation, and quality and safety accreditation, are the main areas requiring detailed legislation. For example, the structure of a "board of directors" for public hospitals requires top-down legislation and secured ten-plus years of tenure. These boards of directors may include non-healthcare executives from different backgrounds to improve professional expertise in running a business. Hospital administration executives should be protected to aggressively pursue productivity and profits. The non-profit "mission" applies to the distribution of such "profit", instead of the creation process.

Enforcement of execution is urgent for the pharmaceutical sector in China, to protect quality and to encourage innovation. It is currently the only sector in the Chinese healthcare industry that is mainly privatized and commercialized. But unfortunately, it is also a showcase for legislation whose execution has failed. The massive uncertainty and fast-changing regulations have badly hurt the structure of the industry. Very few pharmaceutical companies are willing to invest in quality and innovation, simply because of the uncertain margins and returns. Not surprisingly then, the pharmaceutical industry is mission limited.

Luckily, there are techniques that can be used to improve the healthcare industry. The legislation covering multiple healthcare sectors can be well organized by tracing "four flows", namely the flows of people, goods, data, and money. Compared to the traditional way of reforming separate sectors, legislation covering reforms based on these four flows will cover the core processes. At the end, the process of service provision is what matters and this links the mission with margins in different healthcare industry sectors.

The author is a committee member of Chinese State Council's Healthcare Reform Expert Advisory Committee.