City of Paris

Joint Venture and Collaboration
On October 25, Xinhua Press reported that Sanofi-Aventis (Paris, France) had signed a letter of intent with Min Sheng Pharmaceuticals (Hangzhou, China) to launch a new consumer pharmaceuticals company focused on vitamins and mineral supplements. Vitamins and minerals together represent the single largest category of over-the-counter pharmaceuticals in China. In 2009, China’s OTC market reached 70 billion RMB and is expected to continue double-digit growth due to increased income and health awareness, in part through the government’s effort to educate consumers and encourage preventive health. Min Sheng’s “21-carat gold” brand is the leading vitamin brand in China. Earlier, on October 14, Medtronic announced plans to collaborate with China in developing a new generation drug-eluting stent. Medtronic has been in China since 1996 and has made numerous donations to help improve cardiovascular health, including training of some 1,800 physicians.

Debate on Future of Chinese Medicine Continues
At a recent discussion forum in Beijing, opinion leaders expressed concern that practitioners of traditional Chinese medicine (TCM) are not receiving fair compensation compared to practitioners of Western medicine. They cited the fact that the average Western medicine practitioner now receives 200,000 RMB as annual compensation, while the Chinese medicine counterpart gets 140,000 RMB. The difference in compensation is rooted, at least in part, in the reimbursement structure. Currently, only 97 of the 3,966 reimbursement codes are for TCM. Second, similar procedures are not compensated equally. For example, a cast placed by a TCM practitioner receives 40 RMB, compared to 160 RMB received by a Western medicine counterpart. The third reason is the lack of an overall compensation system for TCM hospitals. The experts agree that TCM needs to figure out how to survive before it can flourish.

Five Billion (RMB) Allocated to H1N1 Prevention
Since April of this year, the central Chinese government has allocated 5 billion RMB to the prevention of an H1N1 epidemic. This does not include expenditures by local governments. On October 13, the Ministry of Health (MOH) published new guidelines (third edition, 2009) for the management of H1N1. It identifies high-risk individuals for aggressive treatment, starting with hospitalization. MOH designates pregnancy, obesity, age under 5 or over 65 and those with chronic diseases and immunodeficiency as high risk.

The Chinese View: Why Americans Have a Hard Time with Healthcare Reform
The Chinese Academy of Science members offer their opinion on America’s difficulty with healthcare reform. It boils the issue down to Americans’ “fear of taxation and big government” and cites the repeated attempts, starting with Truman and on to Democrat successors Kennedy, Johnson and Clinton, to reform America’s healthcare system. It traces Americans’ fear of taxation and government back to colonial days, suggesting that even the poor without adequate healthcare coverage today mistrust the government and any nationalization of healthcare.

More Mobility and Improved Income Potential for Doctors
Breaking from tradition, the Ministry of Health is loosening regulations to allow doctors in China to practice at multiple locations. (Up until now, doctors have only been able to practice at the specific hospital where they are employed.) It listed three conditions under which doctors can practice at multiple locations: when assigned by the government to support rural healthcare needs or emergencies, when serving multiple hospitals within a community health system, or when formally accepting employment from more than one hospital. In each case, specific applications have to be filed with relevant entities. The third option, multiple employers, is estimated to increase a doctor’s income by more than 100,000 RMB (about $15,000). It is also being hailed as a way to increase access to skilled medical care.

Pay-for-Performance Policy and Other Cost Control Measures
“If a healthcare worker can do the work of one and a half or two people, and we increase his pay by 20 percent to 50 percent, we will be able to control costs while increasing compensation,” said Minister of Health Chen Zhu at a press conference. The pay-for-performance policy, enacted on October 1, is one component of China’s healthcare reform and has been garnering a lot of press recently. The Ministry of Health is also implementing policies to reduce the price hospitals may charge for pharmaceuticals. This year, 30 percent of hospitals are expected to reduce their profit margin for certain basic drugs to zero. Another component is the establishment of clinical pathways to standardize diagnosis and treatment in order to increase efficiency and control costs. Minister Chen noted that one outcome will be the reduction of the length of hospital stays. And, with the pay-for-performance policy, better outcome will translate to more income for doctors and healthcare workers.

Traditional Chinese Medicine: Science or Alchemy?
Traditional Chinese medicine (TCM) continues to be an area of focus for China as policy makers and practitioners craft strategies for continuing development. The Third Traditional Chinese Medicine Development Conference will convene November 16-19, 2009, in Wuzhou, Guangzhi, with the goal of publishing a strategic analysis of current status and future trends to be used as a reference tool for practitioners, policy makers and commercial developers. Meantime, an impassioned editorial in Worker’s Daily decries the fact that, more and more, TCM is being challenged to provide the same level of clinical trial evidence and scientific descriptions of modes of action as Western medicine. The editorial suggests that rejecting everything that science cannot explain is assuming that our scientific knowledge today is sufficient to explain everything.

Since April this year, when the healthcare reform policy was announced, the Chinese government has spent 71.6 billion RMB on healthcare reform. Following is a snapshot of what is being reported in the Chinese media.

A focus on community health

In August, at the Work Group on Community Health convened in Xian, Minister of Health Chen Zhu announced that one of the near-term priorities is to build up the healthcare work force and, specifically, to train 160,000 community health workers by 2011. According to Minister Chen, by the end of 2008, a total of 7,232 community health centers and 21,895 community health stations had already been established, and this effectively covers 98 percent of all townships. In some areas, the community health facilities are meeting 30 percent of urgent care needs, providing much-needed relief to hospital urgent care departments. This relief is especially timely in light of other health crises such as those around infant formulas and swine flu. Minister Chen pointed out that there is still significant work to be done in building infrastructure. Aggressive goals for building the community health service system include the creation of 3,700 new and/or updated community service centers and 11,000 community health stations within three years; using government investment to move forward quickly in upgrading and standardizing the community health infrastructure; and a push toward uniformity in public health services. Minister Chen stressed the importance of local government in strengthening the public hospital system, building up the preventive health system and working with community health organizations in exploring the interface between health insurance and community health.

Note: Since China does not have a primary care or physician referral system, citizens can see any physician of their choice. The lack of healthcare facilities in less populated areas, combined with this “open” system, has resulted in congestion at big hospitals. In this context, “community health” refers to making healthcare more accessible to people living in smaller cities or more rural areas and relieving the congestion at big hospitals.

Getting to the root of the problem at big hospitals

In urban areas, one key area for reform is the contentious hospital business model, which relies on revenue from pharmaceuticals and medical device use to subsidize traditionally low service fees for physicians, and which is a major source of patient dissatisfaction, conflicts between physicians and patients, and outright malpractice. Toward this end, Opinions and Directions for Public Hospital Reform, to be published by the Ministry of Health in September, will launch a pilot program at about 100 hospitals in 12 cities. Significantly, best practices that evolve from programs such as these may well be written into the law to ensure implementation.

On a more tactical front, hospitals are also working to implement a heretofore nonexistent appointment system for outpatient visits. In August, the Ministry of Health published a “solicitation of public opinion” as a first step toward developing and implementing an appointment system, and in this solicitation, the Ministry stated the goal of having an appointment system in place at all Category IIIA hospitals by October. It further stipulated that hospitals may not increase charges for the appointment service without permission and may not work with intermediary organizations to implement the appointment system. Additionally, the solicitation asks hospitals to come up with a standard system for making specialists available to patients. (One of the issues with the current system, or lack of it, is that patients have to go to hospitals very early in the morning to get in line for a specialist of their choice. Depending on how hospitals assign patients to specialists, some patients may learn that they are not able to see the specialist of their choice only after they have spent hours waiting.) Lastly, to avoid fraud and scalping, the Ministry wants to see ways for verifying patient identity incorporated into the system. Meantime, trial appointment systems at hospitals in major cities such as Beijing have met with mixed responses.

In July, citing lack of evidence of safety or efficacy, China’s Ministry of Health issued an urgent “cease and desist” order for electric shock therapy administered to boys and girls at the request of panic-stricken parents looking for an end to the distraction that is causing their children to abandon schoolwork and normal social life in favor of online activities. What is interesting about the Ministry of Health’s decision is that it comes as a surprise to bewildered parents, who continue to bring their children to treatment centers and wonder what will replace the banned therapy. In fact, there are more than 300 treatment centers and special schools for “Internet addiction” in China today using various oral or injected pharmacotherapies, seclusion, and verbal threats as well as corporal punishment, often without the benefit of psychological counseling and sometimes even without proper facilities or qualified teachers. Yet, desperate parents pay the equivalent of several hundred U.S. dollars a month in the hope of putting their children back on track with their education.
All of this has resulted in fierce debates on the Internet. Teenagers who have undergone shock therapy tell of excruciating pain and sometimes burns in the treatment area (typically the forehead). They compare their harsh treatment to Auschwitz and express irreparable anger toward their parents. Psychologists are coming out to advocate that parents look toward improving communication with their children and providing better guidance as the path to recovery. A movie chronicling the rehabilitation of one such addict became an instant hit on the Internet, and the producer has urged parents to develop a better understanding of the reasons behind their children’s addiction before turning the problem over to these treatment centers.

Like all things in China, the scale of the problem is astonishing. The Chinese media estimate that of 160 million youths estimated to be Internet users in China, about 10 percent have some level of addiction. Psychologists and sociologists suggest that the three root causes are lack of a healthy family environment, a deficiency in the school system and a poor social culture.

At the Health Economics Forum on June 21, 2009, attended by 30 or more specialists representing China’s Ministry of Health, the Center for Disease Control, and the Chinese Medical Association, as well as hospitals and health journalists, the Ministry of Health reported that China’s healthcare expenditures will rise by 10 percent on an annual basis for the next five years.

Cancer, stroke and heart disease are the three major health threats representing a significant economic burden, with 7.2 million people hospitalized for these three diseases in 2003 at an average cost of 5972 RMB per person. To put this into context, urban per capita income in the same year was 8472 RMB, while rural per capita income was 2622 RMB.

Chronic diseases now represent 80 percent of all illnesses and 75 percent of total deaths. By 2010, chronic diseases will account for 85 percent of all deaths. Specialists at the forum cited cervical cancer and hypertension as examples of illnesses for which early detection and intervention can significantly improve outcome.

The forum commented on the cost of diagnostics, citing World Health Organization statistics that diagnostics accounts for only 1 percent of total healthcare expenditures, while two thirds of healthcare decisions are based on diagnostic results. The forum concluded that a broad use of diagnostics is an appropriate measure for healthcare cost containment.

During the opening ceremonies of the Stroke Prevention and Diagnosis Meeting attended by more than 300 specialists in China, Minister of Health Chen Zhu stated that the cost of treatment for stroke has reached 20 billion RMB. Slightly more than half of this total can be attributed to direct hospital costs associated with ischemic stroke. Mortality attributed to stroke is four to six times that attributed to cardiac arrest, and the cost burden of stroke is ten times that of cardiovascular disease.

Equally sobering is the comparison with other countries. Stroke is the number one cause of death in China, with a mortality rate four times higher than those of Western countries, and three and a half times that of Japan. Notably, the recurrence of stroke is 27 percent in Beijing—the highest among major cities worldwide. Overall, 40 percent of stroke patients presenting at outpatient clinics are recurrences, while one third of all stroke patients can be expected to have an event within three to five years after initial diagnosis.

According to Minister Chen, the strategy for reducing the incidence of stroke will include identifying high-risk populations and early diagnosis and intervention; thus, investments in screening and prevention may hold the greatest promise in the near future. Along these lines, developing standards of care for diagnosis, management and surgical intervention is the highest priority. The goal is to establish care centers at a regional, provincial and local level within three years. Public awareness and education will also be an important component.