The government is rolling out a pilot program to boost spending on public hospitals, as well as cut pharmaceutical and treatment costs, Health Minister Chen Zhu said yesterday.

The move includes government subsidies to build public hospital infrastructure, buy medical equipment, train healthcare professionals and cover medical costs for retirees.

Chen did not elaborate on the specific amount of subsidy, but he called the program a "compensation scheme" that would involve addressing the high pharmaceutical costs in the country.

The authorities will select several cities to try out the pilot program, which is expected to last three years. Chen did not say which cities would be part of the trial.

"We expect the pilot program to help us form a general idea to lay the foundation for nationwide reform," he said.

"As China aims to provide universal medical services to 1.3 billion people State-run hospitals must be overhauled," he said.

The country's public hospitals have been the focus of current reforms in its medical system.

Due to a lack of government funding, public hospitals have, for years, mainly operated through profits from medical services and drug prescriptions. This profit-driven model of management meant "heavy burdens on patients and a waste of medical resources", Chen had said earlier.

Government funding accounted for about 17 percent of the expenditure of the health sector in recent years.

To deal with the "imbalance" in the allocation of medical resources, which have been concentrated in major urban hospitals, the government is now considering relocating or integrating some State-run hospitals, Chen said.

Similarly, there are moves to increase the number of county-level hospitals, he said.

The central budget will allow for the construction of about 2,000 county-level hospitals in the next three years, with work slated to begin this year. The goal is to ensure each county has at least one hospital of national standard, the ministry has said.

There are more than 1,600 counties in the country.

(China Daily January 9, 2009)