The draft for public comment proposes that cities should, with tertiary hospitals serving as the leading institutions, establish voluntary mechanisms for division of labor and collaboration with secondary hospitals and community health centers through medical consortia or other arrangements; in rural areas, county-level hospitals should serve as the leading institutions and establish such mechanisms with township and village health care institutions, allowing for the reallocation of pharmaceuticals among hospitals participating in these collaborative networks.

　　The draft for public comment proposes that cities should, with tertiary hospitals serving as the leading institutions, establish voluntary mechanisms for division of labor and collaboration with secondary hospitals and community health centers through medical consortia or other arrangements; in rural areas, county-level hospitals should serve as the leading institutions and establish such mechanisms with township and village health care institutions, allowing for the reallocation of pharmaceuticals among hospitals participating in these collaborative networks.

　　For a long time, patients have tended to seek care and medication at large hospitals, leading to overcrowding in these institutions while smaller township and community hospitals remain largely underutilized. In response, the National Health and Family Planning Commission recently launched a public consultation on the implementation of tiered diagnosis and treatment, with a clear commitment to advancing this model this year. According to reports, the draft consultation document proposes that, in urban areas, tertiary hospitals should serve as the leading institutions, collaborating voluntarily with secondary hospitals and community health centers through medical consortia or other arrangements to establish a mechanism for division of labor and collaboration; in rural areas, county-level hospitals should take the lead, forging similar collaborative arrangements with township health institutions, under which medications can be allocated and distributed among participating hospitals within the collaborative network.

　　Solving the problem of “the drought-stricken die of thirst, and the flood-stricken drown”

　　Mao Qunan, spokesperson for the National Health and Family Planning Commission, previously stated: “The concept of tiered diagnosis and treatment sounds relatively simple, but in practice it is quite complex. To effectively address the current concentration of patients in large hospitals, tiered diagnosis and treatment represents a promising solution—and this approach is also supported by international experience. This year, we will vigorously advance the implementation of tiered diagnosis and treatment by formulating guiding opinions on the system and launching pilot programs in selected areas undergoing reform of urban public hospitals. We will also encourage medical institutions at all levels to clearly define their respective functions and roles, optimize the allocation of medical resources, and establish a tiered diagnosis and treatment model characterized by primary care as the first point of contact, two-way referrals, differentiated management of acute and chronic conditions, and coordinated collaboration between different levels of care.”

　　Several tiered diagnosis-and-treatment models have already been implemented, including those promoted by health administrative departments in Hubei, Zhejiang, and Jiangsu provinces; those led by medical insurance authorities in Qinghai and Gansu provinces; and models spearheaded by medical institutions. Previously, a representative from the Guangdong Provincial Health and Family Planning Commission disclosed that this year Guangdong will formulate and issue policies to establish a tiered diagnosis-and-treatment system. These policies will leverage initiatives such as the establishment of medical consortia, paired-support programs, and multi-site practice to enhance the service capabilities of county-level hospitals and primary-level medical and health institutions. Furthermore, a comprehensive approach integrating healthcare delivery, medical insurance, pharmaceuticals, and pricing mechanisms will be employed to foster an orderly healthcare-seeking pattern characterized by first-contact care at the primary level, two-way referrals, differentiated management of acute and chronic conditions, and coordinated linkages between different levels of care.

　　According to reports, the next step in the National Health and Family Planning Commission’s reform agenda is to guide the public toward appropriate triage and分流 based on the tiered diagnosis-and-treatment model. Mao Qunan revealed that, in drafting the “Guiding Opinions on Tiered Diagnosis and Treatment,” the Commission has thoroughly taken into account the current realities and has decided to launch pilot programs for tiered diagnosis and treatment first at selected pilot hospitals undergoing public-hospital reform. Prior to rolling out these pilots, the Commission has mandated that all necessary preconditions be carefully assessed and addressed—for example, once the tiered system is in place, the costs of bed fees and diagnostic tests associated with referrals should be affordable for patients, thereby reducing their financial burden; moreover, the allocation of benefits must be directly linked to the corresponding services provided, and a detailed, equitable, and implementable mechanism for benefit-sharing must be established. Only in this way can we ensure that the implementation of tiered diagnosis and treatment does not impose new burdens on the public when seeking medical care.

　　The siphon effect in large hospitals

　　Li Tao, Deputy Director of the Center for Health Development Research, believes that numerous challenges remain in the pilot implementation of tiered diagnosis and treatment. Limited fiscal investment, unreasonable pricing of medical services, and an imperfect health insurance payment system have resulted in a lack of effective compensation mechanisms for public hospitals. Consequently, these hospitals have long adopted a strategy of pursuing efficiency and growth through scale expansion, making it difficult for large single institutions to shift course in the development of the tiered diagnosis and treatment system.

　　In addition, the current “siphon effect” of large hospitals in the tiered diagnosis and treatment system—drawing resources, talent, and patients away from lower-level institutions—has resulted in an inverted-triangle pattern of resource allocation and created unfair competition in service delivery vis-à-vis primary-care facilities. The inertia in the flow of resources and patients is impeding the development of the tiered diagnosis and treatment system, and many industry insiders believe this represents the greatest challenge facing the system today.

　　Meng Qingyue of the Center for Research on China’s Health Development at Peking University told reporters that the quality of medical services is highly heterogeneous, resulting in a stark contrast between high-quality and basic care, with top-tier medical institutions exerting a dual “siphon” effect on both healthcare professionals and patients. In 2012, among practicing physicians in medical institutions, the average share holding an associate degree was 28%, while those with a secondary vocational diploma accounted for 15.5%; in township health centers, however, the proportion with an associate degree rose to 42.4% and that with a secondary vocational diploma to 35.7%; at the village level, 60%–70% of doctors were former barefoot doctors.

　　Under this “siphon effect,” community healthcare has consistently failed to establish a meaningful brand in the competitive healthcare market. As one president of a top-tier Grade-III hospital candidly told a Nanfang Metropolis Daily reporter, in an environment where the strong grow stronger, large hospitals have continuously enhanced their brand equity and expanded their footprint over the years, while community healthcare has been relegated in patients’ eyes to a mere supporting role in the healthcare market. This vast disparity in roles cannot be bridged by modest differences in reimbursement rates or other preferential policies. After all, high-quality medical care remains patients’ most fundamental and non-negotiable demand.

　　He also stated, “Relying solely on policies such as reimbursement caps makes it difficult to change the current situation in which grassroots hospitals are largely ignored. Moreover, in a certain sense, policy support can inadvertently send the wrong signal, giving rise to the misconception that community healthcare is inherently inferior and that its services must necessarily be low-priced.”

　　“Hierarchical diagnosis and treatment should not be about ‘hierarchy’ per se, but rather about ‘division of labor and classification.’ Community physicians and family doctors, by establishing long-term, stable patient–physician relationships, serve a relatively small population and focus on common and frequently occurring diseases.” Zhu Hengpeng, a researcher at the Institute of Economics of the Chinese Academy of Social Sciences, argues that a high incidence rate does not necessarily reflect weak clinical expertise. Whether the incidence is one-quarter, one-tenth, or one-hundredth of the population, community physicians spend their entire careers serving only these three categories of patients; as for rare diseases and serious illnesses, that is precisely what specialized hospitals are meant to handle—this is the essence of division of labor and classification.

　　Zhu Hengpeng stated that we should avoid placing the burden on the presidents of Grade-III hospitals to devise a tiered diagnosis-and-treatment system and to figure out how to retain top-tier physicians in community settings. Grade-III hospitals are specialized institutions that focus on complex and rare diseases; they should be allowed to concentrate on delivering high-quality, core services. By contrast, the directors of community health centers should be tasked with developing strategies to keep patients at the primary-care level. To this end, these centers should be granted autonomy over staffing, revenue allocation, operational management, and personnel decisions, enabling them to recruit, deploy, and assign staff in accordance with the principle of “merit-based hiring,淘汰 of underperformers, promotion of high-performers, and demotion of mediocrities.” Within their capacity, they should build well-qualified, competent family-doctor teams. Autonomy in revenue distribution will ensure that physicians who work harder, deliver better outcomes, and attract more patients receive higher compensation, thereby fostering a personnel and remuneration system characterized by survival of the fittest and reward for effort. Meanwhile, operational autonomy will incentivize community health centers to develop patient-attracting services.

　　May undermine the existing essential medicines system

　　For enterprises, the implementation of tiered diagnosis and treatment will reshape the existing market order. As the general manager of a northern pharmaceutical company pointed out to a Nanfang Metropolis Daily reporter, one provision in the current draft for public comment that is particularly important for businesses is the stipulation that “medicines may be reallocated among hospitals under a mechanism of division of labor and collaboration.” If this provision is put into practice, it will effectively circumvent the current National Essential Medicines List, because it would allow primary-level hospitals to stock the same medications as tertiary hospitals, thereby reducing the constraints imposed by the list. Moreover, if all provinces, cities, and counties across the country were to establish referral pathways with lower-level medical institutions, the scale of such a system would be enormous.

　　At present, the essential medicines system is a key policy aimed at primary-level medical institutions. Each province has its own stringent regulations regarding the proportion of essential medicines used and the corresponding procurement expenditure, with relatively high targets in place. However, due to differences in prescribing practices and other factors, many tertiary hospitals have historically been unable to procure certain medications at the primary level. Meanwhile, patients have long developed stable medication regimens, which further discourages even chronic disease sufferers from being referred to primary care facilities. This situation has, to some extent, exacerbated the challenges of facilitating such referrals. Therefore, the reallocation of medicines among hospitals that have established mechanisms for division of labor and collaboration should be viewed as a pragmatic measure designed to address the practical issues arising in this context.

　　Representatives from several pharmaceutical companies have stated that the large volume of patient referrals and the corresponding influx of referred patients result in extensive internal reallocation of medications, which will fundamentally disrupt the prescribed drug-formulation ratio system for essential medicines and undermine their utilization. As demonstrated by the Xiamen pilot program, one key lesson learned in facilitating chronic-disease referrals is to expand the formulary of drugs used to treat such conditions; given that chronic diseases account for 30% of outpatient visits at major hospitals, the associated drug expenditures are substantial and cannot be overlooked.

　　This move is likely to deal a severe blow to companies that had previously assumed that inclusion in the National Essential Medicines List would automatically grant them access to the essential medicines market—and even expected to thrive in it. As one general manager of a pharmaceutical firm noted, “Even if prices are slashed to gain entry into primary-level medical institutions, the products may still fail to capture market share because they are not aligned with the drug formularies used in tertiary hospitals.” (Nanfang Metropolis Daily Online)