Evaluation of the Effect of China’s Health Care Reform Based on Prospect Theory

Guan Yueyue，Huang Zhe

(School of Business Administration，Shenyang Pharmaceutical University，Shenyang 110016，China)

Abstract Objective To evaluate the effect of health care reform policy in China comprehensively and provide suggestions for its further implementation.Methods Data on the effect of health care reform were obtained from“China Health Statistics Yearbook”and National Bureau of Statistics of China and the indicators were selected by corrected item total correlation (CITC) and Cronbach’s α reliability coefficient.Then，the selected indicators were calculated through the prospect theory model.Meanwhile，the gray relation analysis method was introduced to enlarge the differences between the advantages and disadvantages to make the comprehensive evaluation result more obvious.Results and Conclusion The implementation of China’s health care reform has a significant impact on China’s medical and health system.However，the effect of the policy will become less with the increase of the total amount.An effective management can ensure that the policy continues to play its role.

Keywords:new health reform;prospect theory;policy evaluation

1 Introduction

With the publication of the document on“Deepening the Reform of the Medical and Health System”in March 2009，China began a new round of health care reform[1].The new health care reform aimed to establish a sound basic medical and health system covering urban and rural residents，which could ensure the safety，effectiveness，high quality and low cost of medical treatment for Chinese[2，3].New health care reform policy of China has gone through more than ten years from 2009 to 2020.In the past decade，China’s health system had been continuously improved，which included the public hospital reform，hierarchical medical system，and essential drugs system[4].But there are still some problems unresolved.For example，Chinese have been puzzled by“difficulty and high cost of getting medical service”.Nowadays，China’s health care reform has come to a critical period.Therefore，evaluating the effect of health system reform policy by using scientific methods is essential to its continued advancement.

Since the new health care reform was launched in China，a large number of researchers have studied the new health reform policy from different perspectives，aiming to find some scientific and effective evaluation methods.The data related to health care reform from 2000 to 2019 are analyzed to set up the scientific and reasonable models and select evaluation indicators.And then，the changes of effect are explored before and after the implementation of the new health reform policies，so as to provide suggestions and references for further health care reform in China.

After the reform and opening up in 20th century，China has accelerated the pace of economic construction[5-7].In order to develop good health services with Chinese characteristics，China also started a long-term health system reform[8].China’s health system had undergone a transformation from government-led to market-led mode before 2009[9，10].The market-led mode greatly stimulated medical enterprises，which led to the rapid development of the health system.Meanwhile，the drawbacks of the market-oriented mode were highlighted.For instance，the primary health institutions lost their positions gradually[11]because of the inadequate investment from the government and their pursuit of economic interests，which greatly weakened the public health system[12].Difficulty and high cost of getting medical service became a livelihood problem in China.In view of the various problems，the public began to doubt the market-led mode of the health system.Therefore，health care reform must begin as soon as possible to build a new health system，which will solve the historical problems thoroughly[13，14].

The problem of difficulty of getting medical service is caused by unreasonable allocation of medical resources.High quality medical resources are concentrated in the tertiary public hospitals in big cities，and the shortage of resources in primary medical institutions become a common phenomenon in China[15，16].Therefore，allocating medical resources to the primary health institutions has undoubtedly become a major challenge to the new health care reform[17].Based on this，the reform of regional health system focused on adjusting the allocation of medical resources.Integrated health system is the major method to promote the rational allocation of medical resources and the implementation of the policy of hierarchical medical system[18].At the same time，China attached importance to training a large number of high-level medical practitioners for the grass-roots unit[19].These measures can divert patients to different hospitals and make the allocation of medical resources more reasonable，which will eventually solve the problem of difficulty of getting medical service.

The causes of the problem of high cost of getting medical service are complex，which mainly include the unreasonable operating mechanism of medical institutions[20]，the unbalanced development of health services，and the irregular drug production and circulation order.In view of the above problems，Chinese government has committed to improving the public welfare of medical institutions for the masses，so as to make health services more fair and accessible.In order to eliminate the phenomenon of increasing drug prices to support doctors，public hospitals cancelled medicine markups policy.Meanwhile，the scientific compensation mechanism，medical service price system and doctor’s personnel salary system were reconstructed.Besides，the payment mode of medical insurance was reformed to avoid excessive medical treatment and the increase of medical insurance financial subsidies[21].Chinese government implemented“Major Disease Protection Policy”to reduce the burden of medical treatment for patients，which could prevent patients from returning to poverty due to illness.In the aspect of drug price reduction，the government also introduced relevant policies such as“two invoice system”“centralized procurement with target quantity”and“price negotiation”[22].

Evaluating policies can tell whether they are scientific or the implementation is effective，which is important for functioning smoothly[23，24].In recent years，some domestic researchers have conducted in-depth research on policy evaluation[25-29].Their main research methods are to use theoretical tools to construct models.Kim and Jeon[30]established a policy evaluation framework based on the six-step method to evaluate the effect of health care system in Korea.Guo and Zhou[31]put forward three key factors of the policy evaluation system，analyzing their relationship and building an evaluation system accordingly to evaluate the green transformation policies of the city.Chen，et al.[32]used the Keynes DSGE model to assess euro monetary policy and pointed out effective ways to increase policy returns.Ma and Feng[33]evaluated the information policy of China，introducing the S-CAD method to systematically test the policy documents，and excavating the problems in the process of policy formulation and implementation.

To sum up，there are various methods for policy evaluation in China，but few researchers evaluate the effect of health reform policy[34，35].And the existing studies evaluate the policy mainly by giving weights subjectively，without considering the impact of psychological factors on people’s decision-making.However，the prospect theory can avoid this shortcoming.Besides，the gray relation analysis method is introduced to enlarge the difference between the advantages and disadvantages，making the comprehensive evaluation result more obvious.Therefore，based on the prospect theory，a set of scientific and feasible indicators system of the effect of health care reform policy is established to provide a reference for the implementation and improvement of the new health reform policy.

2 Theory brief

Prospect theory，also known as the expectation theory，is proposed by both Nobel Laureate Kahneman and the cognitive psychologist Amos Tversky[36].It is used to predict the individual’s decision-making in the face of risk，which is different from the traditional theory of expectancy[37].Prospect theory effectively combines psychological research with economics research and reveals the decision-making mechanism under conditions of uncertainty.It can not only explain various decision-making behaviors in society，but also help the government to make better policy decisions[38].Prospect theory divides the risk decision-making process into two stages:editing and evaluation.In the editing stage，decision makers collect and process information according to frame and reference point.In the evaluation stage，decision makers make decisions based on value function and weighting function[39，40].Therefore，the prospect value functionv(x)and the probability weight functionω(p) will influence the prospect value together，the prospect value can be expressed by the following formula:U=∑ω(p)v(x) .

Grey system theory originated from the control theory，which was put forward by Deng，a famous Chinese control scientist in 1981[41].The interrelationships among many objective things and factors are relatively complicated.People cannot obtain comprehensive and sufficient information when they understand，analyze，and make decisions，and it is not easy to form clear concepts，these are all gray factors.Grey relation analysis (GRA) method analyzes and studies the gray system，and solves how to find the correlation and measurement value from the random time series for factor analysis，and then provides a basis for system decision-making.As a multi-factor system analysis method，GRA is based on the grey system theory.The core of GRA is to explore the geometric correspondence among the factors by relying on the data series of each factor[42].It is important to quantitatively determine the primary and secondary factors affecting dependent variables according to the size of grey relation coefficient.Compared with other analysis methods，the grey relation analysis method has a lower requirement on the sample size of each factor in the system，which can reduce the loss caused by information asymmetry to a large extent，and is suitable for solving the problem of determining the relation degree of less sample size[43].The grey relation analysis method can be expressed by the following formula:

3 Indicators and data screening

Scientific and representative are particularly important for the evaluation indicators of the new health reform.Based on the research and analysis of literature and the actual situation of new health reform policy of China，the evaluation of the effect of the policy should involve the national economic，government health expenditure，and health service efficiency，so as to establish a comprehensive multiindication evaluation system[44-46].

In this paper，the data of various indicators related to the effect of the new health reform policy from 2000 to 2019 are obtained from“China Health Statistics Yearbook”and National Bureau of Statistics of China(Table 1)[47，48].In order to purify the indicators system，SPSS19.0 is used for data analysis，and the corrected item total correlation (CITC) is taken as the standard of purifying indicators.Then，Cronbach’sαreliability coefficient is used to test the consistency of the indicators system.The results showed that the CITC of“average hospitalization days”“natural growth rate of population”“number of health institutions”and“number of medical and health institutions”was less than 0.5，so it was excluded.Generally，the internal consistency of the indicators is good whenα＞ 0.7，so two indicators“the number of health personnel”and“the number of medical postgraduates”are excluded in turn.Finally，we get the evaluation indicators system of the effect of the new health care reform policy after purification (Table 2).

Table 2 Evaluation indicator system for new health care reform policy

4 Principles and methods

Based on the prospect theory，grey relation analysis method is used to enlarge the difference between the advantages and disadvantages of the indicators，and the weight of the indicators is calculated by using the entropy weight method.The specific steps are given below.

4.1 Non-dimensional indicators

According to the principle of reward and punishment，the range of indicators value is limited to [-1，1].If the indicator value is greater than the average value，it is positive.If the indicator value is less than the average value，it is negative.The formula can be expressed as follows:

The decision matrix can be simplified as follows:

4.2 Determine the ideal scheme and the grey relation coefficient

4.3 Entropy weight method to determine indicators weight

4.4 Calculate the comprehensive prospect value

If the schemeiis inferior to the positive ideal solution，the scheme is loss-type.If the schemeiis better than the positive ideal solution，the scheme is a benefit-type.Therefore，the value functionv(xij) is as follows:

The decision weight functionω(pj)is:

Then the comprehensive prospect value of the schemeSiis:

5 Results and discussion

The results of comprehensive evaluation of the effects of health reform policies in China fluctuated from 2000 to 2019 (Fig.1).According to the trend of the curve，it can be divided into five stages.From 2000 to 2004，the fluctuation range of the comprehensive prospect value of the effect of health reform policy is large.From 2004 to 2009，the comprehensive prospect value of the effect of health reform policy shows a slow downward trend.From 2009 to 2012，the comprehensive prospect value of the effect of health reform policy decreases slightly，and then it rebounds substantially.From 2012 to 2014，the comprehensive prospect value of the effect of health reform policy is stable.And from 2014 to 2019，the comprehensive prospect value of the effect of health reform policy is declining.

Fig.1 Evaluation results the effect of health care reform policy of China from 2000 to 2019

Comparing the comprehensive evaluation results of the effect of health care reform policy with the development process of health care reform policy of China，we can see that the implementation of new health care reform policy in 2009 has a significant impact on health system of China.

From 2000 to 2004，China began to promote the process of market-led mode of the medical system in an all-round way[49].Although the government increased health investment year by year，it still could not afford the rapid growth of total health expenditure.The government’s financial input was insufficient and the market was not regulated reasonably in time，which led to the failure of the health service market.Therefore，the comprehensive prospect value of the effect of health reform policy fluctuates greatly from 2000 to 2004.The outbreak of SARS virus in 2003 led to a sharp decline in the comprehensive prospect value of the effect of health reform，which also exposed the loopholes of the public health emergency mechanism and the weakness of the prevention system of China[50].From 2004 to 2009，due to the inherent drawbacks of the market-led mechanism，the phenomenon of chasing interest had spread in China’s health industry，and various problems appeared，such as imbalance of medical resources allocation，rapid growth of drug fees，imperfect medical insurance system and chaotic circulation links[51].In view of the above problems，the government tried to solve them by increasing the proportion of health finance，but it failed.These problems can only be relieved temporarily，which is impossible to fundamentally alleviate the medical burden for the public.Therefore，the comprehensive prospect value of the effect of health reform policy from 2004 to 2009 shows a slow downward trend.

At the beginning of the new health reform，Chinese government put the implementation of the essential drug system，the improvement of grass-roots medical services，the training of suitable talents and the promotion of basic medical security system in the first place[52].From the trend of the comprehensive prospect value from 2009 to 2012，it can be seen that the pre-investment led to a small decline in the comprehensive prospect value of the effect of the new health reform policy.But the subsequent sharp recovery shows that the pre-reform policy effects are significant.From 2012 to 2014，the implementation of several policies，including the reform of public hospitals，the training of general practitioners，and the rescue mechanism for major diseases，coupled with the superposition of the diminishing marginal effect of the early policies led to a short plateau of the comprehensive prospect value of the effect of the new health reform policy.From the comprehensive prospect value of the effect of the new health reform policy in China during 2014 to 2019，the effect of the policy implementation is not obvious，but the comprehensive prospect value shows a downward trend.By analyzing the implementation of various policies，we can see that the easy content of the new health reform has been basically completed so far，entering a critical stage.During this period，the formulation and pilot stage of the new policy，including hierarchical medical system，canceling medicine markups and Two Invoice System，had not yet fully played their roles.Therefore，the development was slow.For example，the system of hierarchical medical system was proposed in 2013，but its general program was set up until some related documents were issued in 2015.It was not until the end of 2018 that the trial of hierarchical medical system was launched[53].Another example is the public hospitals.They have been the focus of the new health reform since 2012，and the canceling medicine markups is the reform target.But until 2017，it was fully implemented in public hospitals[54].Due to the time lag of nearly five years between policy formulation and implementation，the comprehensive prospect value of the effect of health care reform policy shows a downward trend from 2014 to 2019.

6 Conclusions

From the analysis results of the effect of health care reform，the new health reform has made some progress in the process.It is worth affirming that the overall goal and direction of the new health reform are correct，although the practice is unsatisfactory.The effectiveness，timeliness and sustainability are crucial to the implementation of policies.As an important measure to rebuild the health service system，the releasing and implementation of the new policies are necessary for the smooth progress of the health care reform.In addition，the effect of any policy will become less with the increase of the total amount.Therefore，we should focus on the following three aspects to ensure the effectiveness of the new health reform policy.First，policy makers should combine theory with practice to formulate new health reform supporting policies.Second，the administrative departments should cooperate closely，clarifying the division of tasks and strengthening supervision to provide guarantees for the implementation of policies.Third，a reasonable incentive mechanism should be gradually established to enable the public to obtain long-term benefits.

The new health reform has gone through more than 10 years under the situation of interest game and fierce confrontation among all parties.Although it is faced with numerous obstacles，it has always been moving forward.It can be predicted that the new health care reform is expected to make more contribution in the next few years.Health care reform is always in progress，Chinese government should make full use of its institutional advantages，combining with national situation to explore a new health reform road which is scientific，beneficial and sustainable.