In April 2009, the Chinese government launched a national health care reform program, with the goal to provide affordable, equitable and effective health care for all by 2020. Since then, government spending on health care has more than tripled. By 2012, with substantial government subsidies, 97 percent of the Chinese population were covered by one of the three basic medical insurance schemes in China.

Pay-for-performance in health care holds promise as a policy lever to improve the quality and efficiency of care. Although the approach has become increasingly popular in developing countries in recent years, most policy designs do not permit the rigorous evaluation of its impact. Thus, evidence of its effect is limited.

This paper outlines the results of a prospective provider-payment reform experiment in two counties in China's Shandong province. The experiment estimates – at the level of the township health center (THC) – the relative effects on the cost and quality of care in relation to the shift from prescribing drugs on a fee-for-service (FFS) to two alternatives: a capitated global budget (CGB) and a combination of CGB and pay-for-performance (P4P).

 In China, health care providers have traditionally been paid fee-for-service and overprescribing and high out-of-pocket spending are common. In this study, township health centers in two counties were assigned almost randomly to two groups: in one, fee-for-service was replaced by a global capitated budget; in the other, by a mix of global capitated budget and pay-for-performance.

The Success Factors for Women’s and Children’s Health report shows that despite political and economic challenges, rapid reductions of maternal and child mortality and dramatic improvements in reproductive health and rights are possible.

The report highlights 10 countries that mobilized action across society, using data to drive decisions to address their unique circumstances. As a result, in the 10 “fast-track” countries, there were 2.4 million fewer child deaths and over 70,000 fewer maternal deaths by 2013 when compared to 1990 mortality rates.

This World Bank and Government of China paper examines health provider payment reforms in China—the present system and how it evolved, and changes that would improve it in the context of ongoing health reform. It includes sections on experiments with case-based payment systems, pay-for-performance, alternative government budget payment methods, and an examination of the lessons learned and next steps in China.

Available in English and Chinese.

Inappropriate incentives as part of China’s fee-for-service payment system have resulted in rapid cost increase, inefficiencies, poor quality, unaffordable health care, and an erosion of medical ethics. To reverse these outcomes, a strategy of experimentation to realign incentives for providers with the social goals of improvement in quality and efficiency has been initiated in China.

With more than one million new cases each year, it is the second largest epidemic in the world, behind only India. Poverty helps to spread TB, and TB reinforces poverty, sickening the poor especially in their adult (i.e., most productive) years. Their incapacitation and death are tragedies in themselves but they also contribute to the impoverishment of families, and impact the country as a whole.

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