Health system strengthening in China: progress, challenges and ways forward

Introduction

Health system strengthening has become a critical priority for global health, especially in achieving Universal Health Coverage (UHC) and advancing Sustainable Development Goals (SDG). Globally, health systems face increasing pressure from challenges such as rising healthcare costs, an aging population, and the growing prevalence of non-communicable diseases (NCDs). Countries across the globe are grappling with these challenges as they seek to balance cost containment with improving the quality and accessibility of healthcare. The World Health Organization (WHO) and global health policymakers emphasize the importance of robust health systems to ensure equitable access to quality health services, financial protection against the rising cost of health care, and improved health outcomes for all populations [1]. UHC, which ensures that all individuals have access to essential health services without financial hardship, is a cornerstone of global health improvement efforts. Strengthening health systems is essential to meet these goals, ensuring equitable access to quality care and addressing both existing and emerging health threats.

China’s health system reform, launched in 2009, represents one of the most ambitious and wide-reaching efforts to address these global health system challenges. Facing escalating healthcare costs, inadequate access to care, and deep disparities between urban and rural populations, the Chinese government initiated a series of reforms aimed at creating a basic healthcare system that provides equitable access to all citizens. The goal of these reforms was not only to contain costs but also to ensure that the majority of the population could access essential health services without falling into poverty due to medical expenses [2]. This marked a significant shift from earlier decades when healthcare was predominantly market-driven, leading to unequal access and increased out-of-pocket payments for patients.

China’s health system reform offers valuable insights for other nations facing similar challenges. Its success in rapidly expanding health coverage and reorienting its healthcare delivery system towards primary health care provides a potential model for countries seeking to strengthen their own health systems. Moreover, China’s experience underscores the importance of strong governance, substantial financial investment, and a willingness to experiment with policy innovations in achieving health reform goals.

This article aims to explore the progress China has made in strengthening its health system, the ongoing challenges it faces, and the future directions of its health reforms. By examining China’s journey through the lens of global health system strengthening, this article will draw lessons that can inform health reform efforts in other countries.

Progress in Health System Strengthening

In 2009, China initiated an overall health system reform to achieve universal health coverage. The primary objective of China’s health reform was to establish a basic healthcare system that would provide affordable and equitable access to essential services for the entire population. The reform sought to address several key issues: the rising cost of healthcare, the inequality in access to care between urban and rural areas, and the financial burden of Out-of-Pocket (OOP) payments that led to medical impoverishment for millions of citizens [3][4]. By creating a healthcare system that covered all citizens, the reform aimed to improve equity, accessibility, and affordability, ensuring that all Chinese people could receive basic health services without falling into poverty.

The health system reform can be divided into three distinct phases, each with evolving priorities and goals (Table 1). The overall health system reform including the following key measures.

Expansion of Social Health Insurance

One of the most remarkable achievements of China’s health reform has been the rapid expansion of social health insurance. By 2015, over 95% of the population was covered by one of the three major health insurance schemes: The Urban Employee Basic Medical Insurance, the Urban Resident Basic Medical Insurance, and the New Rural Cooperative Medical Scheme (NCMS). Specially, NCMS was introduced to address the healthcare needs of rural residents, who had been largely underserved prior to the reforms. By 2015, it had become one of the largest healthcare insurance schemes globally, providing rural populations with affordable access to both outpatient and inpatient services [5]. In 2016, URBMI and NCMS were merged into one scheme, i.e. Urban and Rural Resident Basic Medical Insurance. This near-universal coverage represented a massive leap forward in terms of healthcare access [6].

Strengthening Primary Care

Recognizing the need to reduce the overreliance on hospitals and provide more localized and preventive care, the government made significant investments in strengthening primary care. Primary care facilities, especially in rural areas, were previously underdeveloped, lacking both infrastructure and qualified health workforce. To address this, the reform focused on building new community health centers, upgrading existing facilities, and increasing the number of trained healthcare providers at the primary care level [7].

Since 2009, the government invested heavily in improving the capacity of primary care institutions. This included not only the physical infrastructure but also human resources, with efforts to train and recruit more doctors, nurses, and community health workers. The goal was to make primary care the first point of contact for patients, reducing the burden on overcrowded hospitals and providing more continuous and coordinated care [4].

Moreover, to improve service delivery, China introduced a family doctor system, in which general practitioners lead teams to provide comprehensive and continuous care for enrolled residents. This model, aimed at increasing patient trust in primary care, has shown promising results in areas such as chronic disease management and preventive care [6].

Public Hospital Reform

Public hospitals are central to healthcare delivery in China, and their reform has been a key component of the overall health system strengthening strategy. Historically, public hospitals faced several challenges, including inefficiencies in management, financial dependency on drug sales, and overprescription driven by profit incentives. The reform focused on addressing these inefficiencies and improving the governance of public hospitals [8].

A major aspect of the public hospital reform was the introduction of governance structures that allowed hospitals greater autonomy in management while holding them accountable for performance outcomes. One of the significant measures was the removal of the 15% mark-up on drug sales, which had previously incentivized hospitals to overprescribe medications in order to increase profits6. This reform helped to realign hospital incentives towards better patient care, rather than profit generation.

Additionally, new payment models were introduced, shifting from a fee-for-service system that encouraged overuse of services to more efficient mechanisms such as case-based payments and global budgets. These models were designed to contain costs while ensuring that hospitals could provide high-quality care [9].

Equalization of essential public health services

Since the commencement of health system reform in China in 2009, the provision of essential public health services has been pivotal, with a focus on enhancing population health and reducing disparities in health service access. The funding for these services has been predominantly public, with a structured mechanism that ensures a steady increase in financial support. This includes a per capita subsidy model that has seen significant increments, thereby expanding the range and depth of services offered. The service package itself has evolved to encompass a broad spectrum of health interventions, starting with foundational services like vaccinations and maternal and child care, and progressively incorporating comprehensive care for the elderly, chronic disease management, and targeted health education.

A critical aspect of the reform has been the emphasis on equity, aiming to bridge the gap in essential public health service delivery between urban and rural populations. This has been addressed by bolstering the primary health care infrastructure in rural areas and ensuring widespread accessibility to services [10].

Essential Medicines Program

The Essential Medicines Program was a cornerstone of China’s health reform. Prior to the program’s implementation, access to affordable and effective medication was a significant barrier for many people, especially in rural areas. High drug prices and overprescription of expensive medications were common, exacerbating the financial burden on patients. To combat this, the Essential Medicines Program aimed to provide a standardized list of essential drugs that were available at lower, regulated prices across the country [11].

The program made essential medicines more affordable and available in public healthcare facilities. This policy ensured that healthcare providers, particularly at primary care levels, prescribed these essential medications as the first line of treatment, reducing reliance on more expensive drugs that were often promoted for profit motives. By eliminating the 15% drug mark-up in public hospitals and health centers, the government was able to curb overprescription, improve medication affordability, and make sure that critical drugs were accessible to patients across China.

Integrated healthcare system reform

China’s integrated healthcare system reform focuses on promoting collaborations between institutions at different levels to enhance service efficiency and accessibility. Four types of health service entities have been developed: urban medical groups, county medical communities, specialized medical alliances, and telemedicine collaboration networks. These alliances serve as platforms for resource integration, institutional cooperation, and seamless service delivery. By the end of 2022, over 18,000 medical alliances had been established nationwide, with telemedicine networks covering all cities and counties.

To improve the continuity and convenience of services, China has introduced family doctor contracted services. These teams, with a focus on comprehensive health management, provide integrated services, including prevention, treatment, care, rehabilitation, and health education to contracted residents, particularly key populations such as children, perinatal women, the elderly, and patients with chronic conditions like hypertension and diabetes. More than 70% of these key populations are now covered1.

In addition, China is advancing digital health to support universal health coverage. The integration of digital tools into the healthcare system includes the creation of Regional Health Information Platforms, enabling mutual recognition and data sharing among institutions. Over 8,000 hospitals are connected to this platform, with 17 provinces sharing electronic medical records and 204 cities allowing the mutual sharing of test and examination results¹. Through digital health and telemedicine, high-quality services are now more accessible to patients in grassroots, remote, and rural areas.

Major Achievements of the Reform

The implementation of these key reform measures has led to substantial progress in strengthening China’s healthcare system, particularly in terms of healthcare access, financial protection, and improved outcomes.

Continuous development of healthcare resources

China has experienced a rapid growth in healthcare resources in the recent decades, particularly in terms of health personnel. According to the China Health Statistics Yearbook 2023, the number of practicing doctors grew from 1.6 million in 2000 to 4 million in 2023¹. Registered nurses also increased from 1.3 million to 5.6 million during the same period¹. The number of general practitioners per ten thousand people increased from 0.81 in 2012 to 3.28 in 2022¹. Together, these figures reflect significant improvements in healthcare capacity. Alongside the growth in healthcare personnel, the expansion of healthcare facilities has also improved access to medical services by promoting the standardized construction of primary healthcare institutions and continuously enhancing their ability to diagnose and treat common diseases, as well as their public health service and health management capabilities. Currently, 90% of urban and rural households can reach the nearest medical point within 15 minutes⁵. Furthermore, China’s total health expenditure has consistently risen, increasing from 458.7 billion CNY in 2000 to over 9 trillion CNY in 2023, demonstrating a significant financial commitment to healthcare⁵ (table 2). This upward trend in spending is well-documented in studies, which indicate that investment in healthcare has contributed to improved service availability and quality across the country.

Increased Utilization of Health Services and Improved Health Outcomes

The expansion of health insurance coverage and the strengthening of primary care have contributed to an increase in the utilization of healthcare services. More people, particularly those in rural areas, now have access to essential medical services, leading to earlier detection of diseases and improved management of chronic conditions [12]. China has made great progress in SDG indicator 3.8.1, i.e. essential health service coverage. According to WHO statistics, the indicators increased from 66 in 2010 to 81 in 2021, well above the regional average⁴ [13].

China’s focus on preventive care, vaccination, and health education has also yielded significant improvements in public health outcomes. Additionally, chronic disease management programs, such as those for diabetes and hypertension, have helped patients manage their conditions more effectively, reducing complications and improving overall quality of life. Life expectancy has increased from 74.8 in 2010 to 78.6 in 2023⁵.

Reduction in Out-of-Pocket Expenses

One of the most significant achievements of China’s health reform has been the dramatic reduction in out-of-pocket healthcare expenses. Before the reforms, patients were paying an unsustainable portion of their healthcare costs, with OOP expenses accounting for approximately 60% of total health expenditure in 2000. This high financial burden often drove households into poverty, particularly when facing major health emergencies [9].

By expanding public health insurance schemes and regulating drug prices through the Essential Medicines Program, China successfully reduced OOP expenditures to less than 30% by 2016. This has greatly alleviated the financial strain on individuals and families, allowing more people to seek medical care without the fear of incurring catastrophic costs [9]. The reduction in OOP expenses has been particularly beneficial for low-income and rural populations, who were previously the most vulnerable to medical impoverishment. The poverty alleviation efforts also greatly contributed to the financial protection for the poor group [13].

One of the most significant achievements in China's health system reform is the implementation of the Sanming model. This model addressed critical challenges in health system reform by focusing on comprehensive changes in governance, financial incentives, and service delivery. Frequently cited as a benchmark for public hospital reform across China, the Sanming model has demonstrated how systemic transformations can enhance both cost efficiency and the quality of care. This case study is demonstrated in table 3.

Key Challenges in Health System Strengthening in China

China’s health system reforms have made substantial progress in expanding coverage and improving access to healthcare, but several challenges continue to impede the realization of a fully efficient, equitable, and sustainable health system. These challenges primarily stem from the fragmentation in service delivery, issues related to the quality of care, health financing constraints, and governance gaps. Addressing these challenges is critical for the long-term success of the reforms and the achievement of UHC.

The healthcare system lacks sufficient integration and coordination, falling short of meeting the public’s need for continuous and comprehensive services. The collaboration mechanisms between specialized public health institutions, primary healthcare facilities, and hospitals still need further improvement. This results in overcrowded hospitals, longer wait times, and unnecessary admissions, with a hospital-centric model that undermines primary care’s role in managing less severe cases and providing preventive services, adding strain to the overall system [4][7]. The healthcare system also has limited connectivity and insufficient sharing of personnel, technology, equipment, data, and information, further hindering cohesive functioning. There is an ineffective integration of medical treatment, prevention, rehabilitation, care, and elderly services, and insufficient coordination between different levels of the system [6]. As a result, the system struggles to effectively address issues like chronic disease management, and its overall efficiency needs improvement.

The quality of healthcare services needs improvement and still falls short of meeting the public’s expectations for ‘accessible and satisfactory care’. China is among the countries with the greatest progress in healthcare quality and accessibility worldwide. However, there is still significant room for improvement in service quality. Compared to developed countries, China’s healthcare workforce, particularly in primary care, still has significant gaps in qualifications and training, leaving many providers ill-equipped to deliver comprehensive care [14]. In particular, the regional disparities in healthcare quality and the need to enhance primary healthcare services have affected patient choices for medical care.

Rising healthcare costs and the fragmented nature of China’s health insurance schemes have raised concerns about the system’s long-term financial sustainability. The aging population and increasing prevalence of non-communicable diseases like diabetes and hypertension are placing additional strain on healthcare spending for both individuals and the state [15]. Demand for advanced medical technologies further escalates costs. Additionally, the fragmentation of insurance schemes, each with distinct rules and benefits, creates inefficiencies and disparities. For instance, rural residents typically receive fewer benefits and face higher out-of-pocket expenses compared to urban employees, resulting in unequal access to care [5].

Ways forward

The future of China's healthcare system is poised for significant transformation, with the overarching goal of achieving the Healthy China 2030 vision. This long-term strategic plan is designed to propel the country towards a more equitable and efficient healthcare landscape, addressing the multifaceted challenges of modern healthcare delivery. The following sections outline the key areas of focus that will shape the evolution of China's healthcare system in the coming years.

Healthy China 2030 Vision

The Healthy China 2030 strategy represents a comprehensive approach to public health, with a clear focus on reducing health disparities and ensuring that all citizens have access to quality healthcare services. This vision is underpinned by the understanding that health is a fundamental human right and an essential component of social and economic development.

One of the key objectives of the Healthy China 2030 plan is to manage the rising tide of chronic diseases, which have become a significant burden on the healthcare system. This will involve a shift towards preventive care and PHC, with an emphasis on early detection, health education, and disease management. The strategy also highlights the importance of promoting healthy aging, given the country's rapidly aging population. This will require a reorientation of healthcare services to better meet the needs of the elderly, including the provision of geriatric care and the development of age-friendly health policies.

Moreover, the vision extends beyond the traditional scope of healthcare to encompass environmental health, food safety, and lifestyle improvements. Recognizing the impact of these factors on population health, the strategy calls for a holistic approach that integrates health considerations into all aspects of public policy. This includes efforts to improve air and water quality, ensure the safety of the food supply, and promote healthy lifestyles through public education campaigns and community initiatives.

Further Integration of Health Services

A critical aspect of the future direction for China's healthcare system is the further integration of health services. This involves strengthening primary care as the foundation of the healthcare system and enhancing the referral systems between primary, secondary, and tertiary care. The aim is to create a seamless continuum of care that allows patients to navigate the healthcare system with ease and receive the appropriate level of care based on their needs.

One key area of focus is the integration between medical services and public health, particularly for the management of NCDs. Policy recommendations in this area could include the establishment of comprehensive care models that bridge the gap between clinical treatment and preventive public health measures. This could involve the development of community-based health centers that not only provide primary care but also offer health education, screening programs, and lifestyle modification support to prevent and manage NCDs such as diabetes, hypertension, and cardiovascular diseases. This holistic approach can help in early detection, effective treatment, and better long-term management of these conditions, thereby reducing the burden on the healthcare system.

The integration of health services and social care for the elderly is another vital aspect of China's healthcare policy. As the population ages, there is a growing need for services that cater to the unique health and social needs of older adults. Policy recommendations should emphasize the development of integrated care systems that combine medical care, long-term care, and social support services. This might involve creating geriatric care units within hospitals, establishing home care services that provide both medical and social care, and promoting the use of assistive technologies to help elderly individuals maintain their independence. Furthermore, policies should consider the role of family and community in providing care, supporting the development of community-based programs that encourage intergenerational interaction and social engagement. By integrating health and social care, China can ensure that its elderly population receives the comprehensive support they need to maintain their health and quality of life.

To facilitate the integration of health services discussed above, it will require the development of robust information systems that facilitate communication and coordination among different healthcare providers, residents and the community. It will also necessitate the training of a healthcare workforce that is equipped to work in interdisciplinary teams and provide comprehensive, patient-centered care. In addition, the creation of a unified national health financing system is envisioned to reduce fragmentation and ensure that all citizens have access to affordable and high-quality healthcare services.

Enhancing Governance and Accountability

The Chinese government, recognizing the pivotal role of health in the nation's development, must reaffirm its political commitment to prioritizing health and integrating health considerations into all policies. This commitment should be reflected in the formulation of a national health strategy that centers on the well-being of the people. By adopting a "health in all policies" approach, the government can ensure that health considerations are taken into account across various sectors such as education, environment, and urban planning. This holistic approach will not only improve the governance of the health system but also enhance accountability by setting clear goals and metrics for health outcomes, which can be tracked and reported on regularly.

To enhance the governance and accountability of the health system, China should promote the integration of medical services, health insurance, and pharmaceuticals, drawing on the successful experiences of Sanming model. This coordination mechanism approach can streamline the healthcare delivery process, improve the efficiency of resource allocation, and ensure that patients receive coordinated care. By aligning the interests of providers, insurers, and pharmaceutical industry, this model can help to control healthcare costs, reduce inefficiencies, and enhance the quality of care. It also necessitates the establishment of mechanisms for data sharing and joint decision-making among these stakeholders to ensure transparency and accountability.

Effective governance and accountability in the health system require the involvement of multiple stakeholders, including the private sector, as well as community and resident participation. This inclusive approach ensures that diverse perspectives are considered in health policy and service delivery. By engaging private healthcare providers, the system can benefit from innovation and competition, which can drive improvements in quality and efficiency. Community and resident involvement, on the other hand, can help to tailor services to local needs and empower individuals to take charge of their health, embodying the concept that individuals are the first responders for their own health. This participatory approach also fosters a sense of ownership and responsibility among all stakeholders, which is crucial for maintaining the accountability of the health system.

Conclusions

The journey of China's healthcare system reform illustrates a remarkable transformation that has been underway for decades. The progress made is evident in the expansion of health insurance coverage, the establishment of a basic public health service system, and the significant strides in reducing health disparities. The commitment to managing chronic diseases and promoting healthy aging through the Healthy China 2030 strategy is a testament to the country's long-term vision for public health. As we look to the future trajectory of health system strengthening globally, the lessons from China's reforms are invaluable. The future of healthcare lies in collaborative efforts, innovative solutions, and a steadfast commitment to the health and well-being of all citizens.

The experiences drawn from China’s health system strengthening can be summarized as follows:

First, placing health at the center and prioritizing PHC is fundamental to constructing a high-quality and efficient healthcare service system. The implementation of the Healthy China Strategy, a major initiative by the Chinese government, represents an essential response to the key challenges in the health sector. This strategy is a significant measure to advance the high-quality development of health system. Regardless of the resources available, adopting a "people-centered" approach and emphasizing the enhancement of PHC will enhance public participation and support, which in turn fosters further development.

Providing people-centered integrated care is the core function of a high-quality, efficient health system. The health service entities and family doctor contracting services integrate various aspects of healthcare, including disease prevention, diagnosis, treatment, nutrition, rehabilitation, nursing, and health management. These services ensure the provision of comprehensive and continuous healthcare to the public.

Strengthening the whole-process management of key diseases serves as a critical entry point for health system strengthening. Focusing on specific diseases and linking specialist services with health management offers an effective means to build an integrated service system. This approach makes it easier for healthcare professionals to understand, engage with, and contribute to the health system reform, thereby facilitating the integration of the healthcare system.

Creating shared and aligned interests around health improvement is essential for the sustainability of an integrated health system. System integration involves connecting previously fragmented institutions and resources. For such integration to be sustainable and continue evolving, it must be driven by shared and aligned interests, such as bundled payment mechanisms for health service providers.

Finally, application of information technology plays a crucial supporting role in building an integrated healthcare system. The application of information technology across the supply, demand, and management sides of health services has proven effective in shaping a new people-centered health governance model. By leveraging information technology, the health system can be integrated, allowing for the provision of "comprehensive and full-cycle health services" to the public.