Research on Expenditure Accounting of Traditional Chinese Medical Hospitals in Shanghai

Presenter: Hai Lin

Abstract

Objective: To understand the economic operation of traditional Chinese medicine hospitals(TCMH) by analyzing health expenditure of TCMH in Shanghai from 2001 to 2007; to discover existing problems in the development of TCMH, and to provide decision-making reference for TCMH by comparing it horizontally with western medicine hospitals(WMH) in Shanghai.

Methods: According to the instructive methods of total expenditure on health, revenue-expenditure data of TCMH in Shanghai was collected, analyzed and assessed.

Main Results:

The results of Shanghai Health Accounts showed that Shanghai Total Expenditure on Health (by provider) grew from RMB 24.9bn (approximately US$ 3bn, official exchange rate, the same below) in 2001 to RMB 57.1bn (US$ 7.5bn) in 2007, in which expenditure of TCMH grew from RMB 1.2bn (US$ 0.1bn) to RMB 2.7bn (US$ 0.4bn), with a yearly growth rate of 15%. Expenditure of TCMH accounted for nearly 5% of total health expenditure, and 6% of hospital expenditure. Both ratios decreased first and then came up from 2001 to 2007, reaching its bottom in 2003.

As for revenue, from 2001 to 2007, subsidies from governments obviously increase, going from 7% to about 12%. Compared with WMH, TCMH depended more on pharmaceutical income. Though the proportion of pharmaceutical income had decreased from 56% in 2001 to 53% in 2007, it was still 9% higher than that of WMH. Meanwhile, only about half of the pharmaceuticals revenue came from Chinese Traditional Patent Medicine and Chinese Traditional Herbal Drugs, and the proportion had a trend of decrease, from 55% to 53%, while the revenue proportion of western drugs increased year by year.

Along with the revenue growth, expenditure of TCMH increased with a yearly rate of 17% (higher than 15% in WMH) from 2001 to 2007. The balance of payments reached its peak value in 2004 (RMB 0.12bn, US$ 0.01bn) and decreased in the following two years. With the official implementation of new policy on drug price addition in 2007, a deficit of RMB 0.15bn (US$ 0.02bn) showed up in TCMH, accounting for half of the financial subsidy, while the situation of WMH was quite the opposite, still having a surplus in 2007.

When analyzing the drug price addition in TCMH, the addition rate of TCMH was always lower than that of WMH before 2003. Then things went to the opposite, especially in 2005 and 2006, the rate in TCMH being 4% higher than the other. But the difference narrowed down to only 1% in 2007.

Discussion and Suggestions: The government has paid more attention to and injected more funds in TCMH since 2003. But problems still exist in the development of TCMH, including great dependence on drugs, reduction in usage of traditional Chinese medicine, more and more obvious westernization, etc. Under the current policies, TCMH are experiencing a serious loss and an extremely tough time of operation. Therefore, it is urgent for the government to enhance its support to TCMH in terms of policy and funds.