Impact of lack of sufficient incentives on the healthcare provision of township


 Background China's government launched a large-scale healthcare reform from 2009. One of the main targets of this round reform was to improve the primary health care system. Major reforms for primary healthcare institutions include increasing government investment. However, it is lack of an empirical study based on large sample to catch long-term effect of increased government subsidy and lack of sufficient incentives on township healthcare centers (THCs), therefore, this study aims to fill this gap by conducting an empirical analysis of THCs in Shaanxi province in China.Methods We collected nine years (2009 to 2017) data of THCs from the Health Finance Annual Report System (HFARS) that was acquired from the Health Commission of Shaanxi Province. We applied two-way fixed effect model and continue difference-in-difference (DID) model to estimate the effect of percentage of government subsidy on medical provision. Results A clear jump of the average percentage of government subsidy to total revenue of THCs can be found in Shaanxi province in 2011, and the average percentage has been more than 60% after 2011. Continue DID models indicate every 1% percentage of government subsidy to total revenue increase after 2011 resulted in a decrease of 1.1% to 3.5% in THCs healthcare provision (1.9% in medical revenue, 1.2% in outpatient visit, 3.5% in total occupy beds of inpatient, 1.1% in surgery revenue, 2.1% in sickbed utilization rate). The results show that the THCs with high government subsidy reduce the number of medical services after 2011.Conclusions We think that it is no doubt that the government should take more responsibility for the financing of primary healthcare institutions, the problem is when government plays a central role in the financing and delivery of primary health care services, more effective incentives should be developed.


Box 1 The entire history of China's township healthcare centers
The main component of PHIs in rural China is township health centers (THCs). The entire history of China's THCs is about how to balance the relationship between government and market in terms of financing ( Figure.1). At the stage of the People's Republic of China funded (1958 -1980), the government strongly supported and financed the THCs, and people's health statue intensely promoted during this period [14]. At the stage of Economic Reform andOpen Up (1981 -2001), the government changed the financing policy and made the THCs into the market, which caused a massive loss of technical staff from THCs and resident's healthcare utilization in THCs decreased [14][15][16]. After aware of the shrinking of THCs, the government began to increase the subsidy to THCs from 2002 and continue to increase it from 2009 [7].
[Insert Figure 1 109 We chose the percentage of government subsidy to total revenue of THCs as the explanatory 110 indicator that can identify the degreed of compensation of THCs from the government.

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Considering the lack of efficient incentives would firstly affect the medical services provided by 112 THCs, we selected the indicators that can reflect the amount of inpatient and outpatient services 113 as the explained variable. Moreover, some confounders will affect the THCs' provision, such as 114 number of physicians and sickbeds, we chose these confounders as control variables. The detail 115 about variables including in this study can be found in • where i indexes THCs and t indexes years.

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• is the indicator that can reflect the amount of inpatient and outpatient services of THCs.

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• is the government subsidy as % of total revenue of i THCs at t time.

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• is the control variable.

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• is the year fixed effect.

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• is the THCs fixed effect.
• is the residual error.
applied a difference-in-difference (DID) model to compare the average effect of subsidy 131 percentage on the provision of medical services of THCs before and after 2011. However, the DID 132 model used in this study is different from standard DID model [21], the difference is that the 133 intensity of treatment is a continuous measure (i.e., government subsidy as % of total revenue).

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The detail about the continuous DID model can be found here [22]. Estimating equation (2) is 135 written as: Where,

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• where i indexes THCs and t indexes years.

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• is the indicator that can reflect the amount of inpatient and outpatient services of THCs.

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• is the government subsidy as % of total revenue of i THCs at t time.

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• is the control variable.

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• is the year fixed effect.

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• is the THCs fixed effect.

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• is the residual error. As we found, the distribution of explained variables is over discrete in the process of 147 descriptive analysis, and we made a logarithmic conversion of explained variables in models. All 148 analysis in this study was performed by R 3.5.3 [23].

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Basic information of explained and explanatory variables 152 We can find a clear jump of the average percentage of government subsidy to total revenue of 153 THCs in Shaanxi province in 2011 from Figure.2, and the average percentage has been more than 154 60% after 2011. In terms of medical services, medical revenue, and inpatient and outpatient 155 services increased from 2010 to 2017, and there was a decrease in surgical income and no increase 156 in sickbed utilization rate (Table.2). Furthermore, Figure.  with the government subsidy increase, the incentive strategy shifts from profit-driven (e.g.,

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prescribing diagnostic tests and drugs) [10] to "approved task, approved revenue and expenditure, 204 performance-based bonus", which means each THCs will be set an annual task. How to set task 205 goals plays a key role in maintaining the quality and efficiency of health services in THCs.

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However, factually, the task is simply approved by reference to service population and average 207 health service provision of the THCs over the past three years [20]. Under the situation that high 208 government subsidy, unscientific task setting method, and lack of incentive in salary system, it is 209 common sense that staffs in THCs have no incentives to do extra work after completing the task.

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Therefore, THCs firstly reduced high-risk medical services, such as hospitalization and surgery,