Can health maintenance organizations develop rapidly in China?

In recent decades, China's medical system reform has never been interrupted, and some new policies have recently become more groundbreaking. For example, the government encourages the establishment of private and foreign-funded medical institutions, allowing doctors to practice more and form doctor groups, cancel hospital drug additions, and so on. In these changes, the introduction of HMO has sparked heated discussions among many experts. Both public medical institutions and private medical groups are studying how to integrate HMO into the Chinese medical market. In August 2015, six public hospitals and 35 community medical centers in Luohu District of Shenzhen City were co-ordinated to form the Luohu Hospital Group in the form of a single legal entity. Through resource integration and cost control, as well as cooperation with the National Basic Medical Insurance, the group will be responsible for the comprehensive health care services of the population within its jurisdiction, and is the first public HMO organization in China. At the same time, some large insurance companies (such as Ping An Insurance) and listed medical groups (such as Evergrande Health) have publicly announced that they are studying the introduction of HMOs in their business models.

HMO (Health Maintenance Organization) refers to a health maintenance organization that provides members with a full range of health care services by charging their members monthly fixed insurance costs. This concept originated in the United States, and the most successful case was Kaiser Permanente ("Caesar Medical") in California. Caesars Medical is characterized by the content of the services it provides to its customers and the payment mechanisms in it. It provides a full range of medical services including medical insurance plans, outpatient services, emergency services, hospitalization, pharmacies, and preventive care. The diagnosis or treatment provided by Caesar Medical's hospitals or clinics is recorded in its internal electronic system, which forms a wealth of data for research by its internal researchers, thereby improving the level of medical technology services and reducing service costs. Most of the payment mechanisms of traditional medical institutions are paid according to the service items, but Caesar's payment mechanism is prepaid by the person: each person pays the fixed insurance expenses in the fixed period and all the medical expenses incurred during the period. In general, members of Caesars Medical can maintain their daily medical expenses at a lower cost, but do not include the medical services that members seek outside of Caesar's medical system.

健康维护组织能否在中国迅速发展?

Caesars Medical's close integration of insurance and medical care is very rare. It is highly regarded by many insiders for providing high quality and efficient medical services. Former US President Barack Obama has repeatedly publicly praised Caesars Medical's highly efficient medical system. However, its business expansion in the United States is not always smooth. It ended its operations in North Carolina, Tennessee, the Dallas Fort Worth area and the suburbs of New York due to huge losses. It can be seen that despite its remarkable achievements, this business model does not apply to all regions of the United States. So, is this model feasible in China, a country with completely different cultural and economic characteristics from the United States? Will it be unacceptable?

analysis

In China, a superpower with a large population, different regions have different economic and demographic characteristics. The medical and insurance markets in rural and urban areas vary widely. This paper only analyzes the internal and external factors of the possibility of developing HMO in urban areas of China.

price

There is a clear distinction between the medical market and the traditional freely competitive market or monopoly market, mainly reflected in the uncertainty of patients' demand for medical care and the infectious characteristics of medical needs in the population. Therefore, some people think that the influence of price factors in the medical market limited. However, in the RAND HIE research project, which is well-known in health economics, researchers have verified the importance of price factors in the medical economy. The specific results show that their demand curve is downwards, whether it is outpatient, inpatient or emergency, that is, the higher the price, the lower the demand. Moreover, the demand curve for hospitalization and emergency services is more sensitive than for outpatients. Therefore, prices will have a huge impact on the supply and demand of the medical market.

In the United States, the price of a medical item is determined by an insurance company in consultation with a medical service provider (hospital and clinic). Although the United States has only two of the largest national health insurance plans (Medicaid and Medicare), which can concentrate on the price of medical services that are lower than the average market price, but only cover special groups (respectively vulnerable groups and Older population). Other people, whether they are buying commercial medical insurance or purchasing medical services when they need it, can only afford more expensive medical services because of weaker bargaining power. Under this pricing model, the United States has become the world's most expensive medical service and the country with the highest proportion of medical expenditure (17.1%).

Because of the high price of medical services and the uncertainty of their needs, other people have huge demand for commercial medical insurance. Commercial medical insurance institutions need to conduct business negotiations with third-party medical institutions when they are engaged in related businesses in order to reduce costs. As you can imagine, this is a very labor-intensive job. Therefore, if the commercial medical insurance institution can provide health care services to its members, it can avoid high medical expenses and time and energy spent negotiating with third-party medical institutions, thereby improving their competitiveness. Therefore, expensive medical services are one of the reasons for the rapid development of HMO in the United States.

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