Final Push for Public Hospital Salary Reform: Strict Prohibition on Linking Compensation to Pharmaceuticals, Consumables, and Medical Examinations

Release time:

2025-03-01

2018 was a pivotal year for the large-scale expansion of pilot programs for public hospital salary reform. In accordance with the relevant directives issued by the Ministry of Human Resources and Social Security and three other ministries, this year, in addition to the previously designated pilot cities, at least one public hospital in each remaining city was required to launch a pilot program for salary reform. With less than five months remaining until the conclusion of this round of pilots, public hospital salary reform across the country is now entering its final sprint phase.

Final Push for Public Hospital Salary Reform: Strict Prohibition on Linking Compensation to Pharmaceuticals, Consumables, and Medical Examinations

2018 marked a pivotal year for the large-scale expansion of pilot programs for public hospital salary reform. In accordance with the relevant directives issued by the Ministry of Human Resources and Social Security and three other ministries, this year, in addition to the previously designated pilot cities, at least one public hospital in each remaining city was required to undertake a pilot reform of its salary system. With less than five months remaining until the conclusion of this round of pilots, public hospital salary reform across the country is now entering the final sprint phase.

　　Recently, the Guangdong Provincial Government issued the “Action Plan for Deepening the Comprehensive Reform of Public Hospitals in Guangdong Province,” which calls for accelerating pilot programs to reform the remuneration systems of public hospitals and establishing remuneration and allocation mechanisms that are tailored to the characteristics of the healthcare sector. Building on the earlier pilot experience in Huizhou City, Guangdong has now designated Shenzhen, Zhuhai, Dongguan, and Foshan as special pilot cities for this year’s reform of public hospital remuneration systems. The Action Plan stipulates that the methods for determining overall remuneration levels and performance-based pay caps should be refined; the autonomy of public hospitals in internal distribution should be fully implemented; an incentive-oriented approach should be adopted to strengthen the public-service orientation of these institutions; the motivation of medical staff should be effectively boosted; and a target annual-salary system for the principal leaders of public hospitals should be advanced.

　　Other regions are also accelerating efforts in this area. For example, Jilin Province has proposed establishing a performance appraisal system and internal compensation distribution mechanism that are oriented toward public welfare, encouraging the principle of “more work, more pay; better performance, better rewards” to enhance the attractiveness of medical positions. Liaoning Province, meanwhile, has stipulated that setting revenue-generation targets for medical personnel is strictly prohibited and that their remuneration must not be linked to income from drugs, consumables, or medical examinations.

　　“Promoting salary reform in public hospitals is the ‘key link’ in deepening public-hospital reform and strengthening the public-service orientation of such institutions,” said Guan Bo, an associate researcher at the Institute for Social Development of the National Development and Reform Commission, in an interview with Economic Information Daily. He noted that establishing a more rational income-distribution mechanism for public hospitals and developing a compensation system that aligns with the industry’s distinctive characteristics—namely, the long training period required for medical personnel, high occupational risks, substantial technical complexity, and heavy professional responsibilities—will not only recognize the economic value of human capital in healthcare delivery but also fundamentally curb the problems of overtreatment and profit-driven demand stimulation in the provision of medical services.

　　Given the unique characteristics of the healthcare sector, reform of the compensation system is a comprehensive undertaking that can have far-reaching implications for the success or failure of healthcare reform. “In piloting compensation reforms in public hospitals, it is essential to emphasize the comprehensiveness, equity, and scalability of the reform,” said Guan Bo. He added that compensation reform should be closely coordinated with reforms in health insurance payment models, hospital human resources management systems, and performance appraisal and other management mechanisms. In addition, it is crucial to strike a balance among different job categories—such as physicians, nurses, technical staff, pharmacists, and administrative personnel—by both fully incentivizing key managerial leaders and high-level talent and enhancing the remuneration of frontline clinical specialists, while also tilting resources toward scarce specialties and positions, such as pediatrics. In this way, compensation reform can effectively optimize the distribution of rewards and serve as a powerful lever for boosting overall employee motivation.

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