The government also invested 63 billion yuan ($10 billion) between 2009 and 2011 in the construction and improvement of 33,000 hospitals at local levels. Uneven distribution of medical resources between rural and urban areas had long been a subject of public criticism before the reform.

Furthermore, reform programs have been launched in over 2,000 public hospitals across the country, centering on separating these facilities' medical services from pharmacy operations. China's public hospitals have long been criticized for charging patients with excessive prices for medication. The hospitals often give doctors incentives to prescribe expensive and sometimes unnecessary medicines, a practice that has been sabotaging patients' faith in the healthcare providers.

In an effort to curb the soaring drug prices, the government unveiled an essential drug list in 2009, which subsidizes 307 common Western and traditional Chinese medicines so that hospitals can sell them at the price of production costs. All essential medicines are listed by their generic names, and drug producers compete to supply essential medicines through public procurement.

Selling essential drugs at cost became compulsory in all community-level clinics in July 2011.

A major pilot reform on China's large hospitals started in July, when all public hospitals in the southern boomtown of Shenzhen and one in Beijing began scrapping their drug markups. Under the new initiative, the markup is removed and the economic losses incurred will be covered by increasing medical consultation and service fees.

In the trial at Beijing Friendship Hospital, outpatients' 5 yuan ($0.80) registration fee and up to 14 yuan ($2.20) consultation fee were replaced by a service fee ranging from 42 yuan ($6.70) to 100 yuan ($15.90), depending on the qualifications of the physician. Meanwhile, the hospital has cut the 15-percent markup it charges on drugs.

Rural doctors shortage

China Youth Daily reported on August 13 that the Chinese countryside faces a shortage of 530,000 doctors.

According to a report on China's medical resources released by the Ministry of Health, by the end of 2011 China had a total of 6.203 million health workers and only 1.126 million of them worked at China's 66,000 rural clinics.

Meanwhile, Li Ling, an economics professor from Peking University who studied China's healthcare reforms for years, told China Youth Daily that only 100,000 of China's 600,000 annual medical school graduates will join the healthcare workforce.

"This indicates that despite a robust increase in the supply of medical school graduates, facilities in rural areas and at the communities still cannot find qualified staff. Almost no fresh graduates are willing to work in rural areas," Li said.

According to a 2012 survey on medical school students conducted by Wang Hongman, a professor with the Institute of Medical Humanities of Peking University, less than 5 percent of respondents are willing to work at medical institutions at counties or townships and nearly 30 percent expect their starting annual incomes to be above 200,000 yuan ($31,700).

Zhu Zhixin, Vice Chairman of NDRC who supervised China's healthcare reforms, said in December 2010 that because of the low salaries, limited career advancement opportunities and poor working conditions, rural and community clinics couldn't recruit qualified personnel and were suffering from a brain drain.

A doctor's position in major hospitals in large cities has become so highly sought after that most of them require job candidates to have a doctoral degree. When medical school graduates cannot squeeze into facilities in large cities, instead of seeking jobs at facilities in counties or townships, many of them change their career directions to become pharmaceutical representatives, research assistants or teachers.

Li told China Youth Daily that rural medical facilities suffer from the most acute shortage in general practitioners. According to newspaper Health News, China has only around 80,000 certified general practitioners and there is a gap of at least 245,000 practitioners. Zhu Shanzhu, Dean of the School of Basic Medical Sciences at Fudan University, told Health News that in China general practitioners lag far behind specialists in terms of income, social status and career development opportunities.

Starting from 2010, the Central Government initiated a three-year program of providing every township clinic in China's less-developed western areas with one medical school graduate in general practice. Selected high school graduates receiving free medical school education and living allowances they will serve at a designated facility for at least six years after graduation.

"Reformers should install career development paths for people working at rural and community medical facilities to ensure that they can obtain training opportunities and better benefits packages in the future," Li told China Youth Daily.

Email us at: lili@bjreview.com