High cost

Wang Xianghua, a farmer from Hebei province, always worried about getting sick some day.

"A cold will cost me at least 200 yuan if I see a doctor in hospital," said the 54-year-old man. He only earns some 6,000 yuan after a full year's hard work in the farmland.

Wang has witnessed some families in his village ruined by illness. A serious disease could easily drag people into impoverishment if the patient is not recruited into China's medical insurance system.

Public hospitals in China enjoyed full government funding before 1985. The situation has changed since then as public hospitals embarked on a market-oriented reform along with the deepening of the reform and opening up policy adopted in late 1978.

Analysts say the market-oriented reform has improved the medical service to some extent. But the fact that doctors and hospitals peddling expensive drugs and prescribing unneeded treatments to supplement salaries and revenue have resulted in soaring medical expenditures on the part of patients.

Wen has said the hospital system's reliance on profits from drug prescriptions has to be changed to solve the problem of high medical costs.

China's State Council passed a long awaited medical reform plan in January 2009 which promised to spend 850 billion yuan by 2011 to provide universal medical service to the country's 1.3 billion population.

Sixteen cities have been selected to pilot the public hospital reform this year, the most difficult part of the entire health care reform.

Fair competition

In his report on Friday, Wen called for equal policy treatment to private hospitals, especially in the fields of market admittance and granting medical insurance status.

"The rational allocation of medical resources would not be achieved if non-government capital is kept out of the medicare market," said Gu Xin, a professor of Government Management College of Peking University.

He believes that introducing hospitals of different ownerships into a fair market will promote reasonable allocation of medical resources, a recipe believed to be effective in appeasing public complaints.

"If these become true, private hospitals will surely have a bright future," said He Guohao, special assistant to the president of Xiamen Chang Gung Hospital in Fujian province.

Being the first hospital funded by a Taiwan firm in the Chinese mainland, Chang Gung has successfully built a reputation, thanks to its patient-oriented services and reasonable charges since it began operating in 2008.

"Doctors' incomes are not based on the prescriptions of drugs, but on the number of patients they treat and the quality of service,"  He said.

The measure has boosted the flow of patients to increase by five times in just a year, He said.

In addition, Chang Gung's doctors could apply for evaluation of professional qualifications, a common practice in the mainland to determine people's work ability.

"Not all private hospitals are so lucky. Many others may face great troubles in development without the qualification of medical insurance or evaluating doctors' professional levels," He said.

However, Shi Xijie, president of Guangji Hospital in Jiangxi province, was pessimistic about the prospect of private hospitals.

"I don't think private hospitals could enjoy equal treatment as public ones in a short time. At least, it takes time to win public trust."