CHINA'S health care system is ailing, and the prognosis for a cure in the near future is not good.

Wharton health care management professor Lawton R. Burns recently returned from Beijing, where he and Gordon G. Liu, professor of economics at Peking University's Guanghua School of Management, co-taught a four-day course on China's health care system.

The course, attended by 20 Wharton students and 20 Peking University students, looked at such topics as quality and availability of care, the disparity between rural and urban health care, corruption in the delivery system, medical training and the needs of a growing elderly population.

Underlying some of China's most basic health care challenges is the "wide but shallow distribution of health insurance," says Burns.

Recent reforms have extended health care to 95 percent of the population - most of whom have never had insurance before - a development that has somehow caused strains on the delivery system.

Now that consumers have access, "everyone wants to go to the major academic health centers, which means there are enormous lines starting early in the morning to get in and see a specialist," says Burns, who toured several health care facilities during his teaching week. Not everyone gets through the line, however, and people who do get in don't always get the results they want.

"People expect good care now, and when they don't receive it, they sometimes blame the doctors," notes Burns, adding that there have been cases of medical personnel physically attacked by dissatisfied patients.

For the Chinese government, the issue is cost: How do you fund health care for a new group of insured people, in both rural and urban areas, who had until recently been lacking coverage for even the most basic health care needs?

"There is always a trade-off between increasing access to health care, and funding that access. It has to do with the 'Iron Triangle'," says Burns, referring to a phrase that describes the three main cornerstones of health care: access, cost and quality.

The difficulty comes when regulators try to improve all three, or even two, at once. "If you increase access, you increase cost. So how do you balance the two," especially when the expectations of newly insured consumers are rising so quickly?

More money, more prestige

The problem of access to quality care is especially acute in rural areas of China.

"Physicians find big disparities in terms of income, status and access to technology in the countryside versus the city," says Burns, noting that doctors naturally tend to gravitate to the research opportunities, higher salaries and clearer career paths offered by big urban medical facilities. "Why would a doctor move from a Class 3 urban hospital to the lower pay of a Class 1 or 2 hospital in a rural area? Doctors lose prestige and money by going outside the cities."

Indeed, with so much investment and technology targeted to urban medical centers - which then attract the best doctors and the highest-paying patients - meaningful redistribution of physicians is difficult to bring about.

Burns does suggest one option: Provide incentives to medical students through a national rural health service program that encourages them to practice in rural areas for the first two or three years after graduation.

The program could target new doctors who come from the countryside and might be more inclined to return there to work.

4-2-1 problem

China's aging population presents the health care system with another challenge, and one that is likely to get worse, as it will in many other countries facing a similar demographic shift.

According to figures from the United Nations, almost one third of China's population, or 438 million, will be over 60 by 2050, more than double the current number of 178 million.

Often referred to as "the 4-2-1 problem," the policy has meant that one child has to support two parents and four grandparents.

Meanwhile, few organized long-term care or home health care systems exist despite the increasing number of people who will need these kinds of services.

While China's aging problem is significant, France and Japan face an even bigger problem in this area because they have more restrictive immigration policies, according to Burns. "In the US, what keeps our aging problem under control is the fact that we allow in immigrants who work, pay taxes and support the elderly, thereby keeping our age-dependent ratio lower than that in more restrictive countries."

While the US has a positive and fairly high rate of immigration, China has a negative rate - meaning that more people leave the country than enter.

Another "ticking time bomb" in China is the middle-aged Chinese male who works long hours in often stressful conditions, says Burns. "Many suffer from hypertension and diabetes, and 30 percent to 50 percent of them smoke.

"All the Western diseases are showing up in China - the most popular Western restaurant now is Kentucky Fried Chicken- which means the country will have a growing problem with early onsets of chronic illnesses, comparable to the US."

Health care reform in China is further impeded by the fact that the heads of many Chinese medical centers tend to be appointees rather than professionally trained managers, Burns says, which results in serious performance and governance issues. Nor does the country's medical education system offer hospital administration programs.

Add to that the existence of kickbacks at various junctures in the delivery process: Hospitals, for example, get kickbacks from drug and device companies, and hospital executives give a portion of these kickbacks to their doctors.

All these challenges will cause problems for the provincial and central governments in China that must foot the health care bill, Burns adds.

Adapted from China Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. To read the original, please visit: http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&articleid=2814