Editor's note: While the health care reform battle rages in Washington, D.C., China has been quietly revamping its own massive health care system — with decidely mixed results. In this three-part special report, Kathleen E. McLaughlin and photographer Sharron Lovell tracked the results on both urban and rural residents.

BEIJING — The price list at a top Beijing hospital explains a lot about what is wrong with China’s health care system: An appendectomy by a leading surgeon, available to any Chinese citizen, costs only $34.

This is not because the doctors or the equipment come cheap — Peking University People’s Hospital attracts the top medical talent in the country. It has the seventh highest-paid doctors in China and imports cutting edge technology from around the world. The low cost of surgery is not because the communist government makes up the funding gap between patient prices and the actual cost of care.

Instead, it is simply because the central government set a maximum hospital rate 20 years ago in an attempt to guarantee health care access to all citizens. It hasn’t allowed them to be raised since, despite China’s massive economic growth, increased personal income and rising inflation. In short, that $34 doesn’t cover much and the costs are made up in other ways.

“Over the past 20 years, this has created a deficit for us,” said Wang Shan, president of the hospital and a professor of surgery. As a result, China’s hospitals and other medical centers have turned to other means to make money and improve their quality. While prices are capped on most services, they are allowed to make profits on prescription drugs — a measure critics say has led to rampant over-prescribing of often unneeded medication, causing problems in personal and public health. Testing and diagnostics, where there is room to profit because much has been invented and perfected since price caps were imposed, also leave room for money-making and potential overuse.

With so many pressures on making money to fund the business of health care, Wang is constantly looking for new ideas. He is trying to use new western management techniques to make things more efficient at the People’s Hospital, even while attracting new doctors and improving the quality of care. But the core problems remain, and even though this is the mega-urban capital, many of the critical issues facing this hospital trace back to the total breakdown of China’s rural health care systems.

Whereas rural residents often are reluctant to use local clinics and county hospitals, they will travel hundreds of miles to visit the leading hospitals in major cities like Beijing. And because of the way the system is set up — guaranteeing care without the needed base of government funding — hospitals like the one attached to Peking University are overloaded with patients.

On an average day, the Peking University People’s Hospital sees about 7,000 patients, 30-40 percent of whom have traveled from outside Beijing to get medical care here. While in recent years private clinics and medical care have emerged as new options, large, well-heeled hospitals like this one — where government officials and the elite go for their health care — remain at the top of the Chinese medical system.

“The Chinese health care system is definitely different than the American health care system,” said Wang. “Any person enrolled in the social medical welfare system can come to this hospital.”

But with travel costs, drugs and diagnostics, and other additions to the total bill, not everyone can afford it. Still, tens of thousands of people travel every year to Beijing to see the best doctors, often spending their life savings in the hope the treatment they can get in the capital is better than anything they can find back home. Huang Yanzhong, a visiting researcher at the National University of Singapore who is writing a book about health care in China, said there used to be a referral system, under which rural residents would first visit local and regional medical centers and gradually move up the chain as warranted. With the disintegration of rural health care throughout the 1980s and 90s, however, places like this hospital have become the expensive first-line treatment option for many.

Huang said for most big hospitals, prescription drugs account for 50 percent of their income, while diagnostics, government support and fees make up the rest. It’s clear, he said, that deep and meaningful reform is needed to bring better doctors and facilities to rural areas to stem the outflow of patients. But there’s a built-in conflict in the system, creating a battle over where essential cash needs to be spent: Those who now have the best care, in Beijing, at places like the Peking University People’s Hospital, don’t want to lose it.

“The majority of people have only a weak voice in the policy-making apparatus, but they’re exactly the people who need the most help,” said Huang.

The first part of China’s massive health care reform focuses on providing a safety net to 200 million rural residents without insurance. More will follow, with further reforms targeted through 2020. How officials weigh the balance between shoring up the flailing rural system and keeping the urban ideals intact remains to be seen.

Related Stories