Summary of Key Points
The implementation of annual salary systems in public hospitals is becoming a trend in reform efforts, with many regions advancing such initiatives and refining their details. In Gaochun District, Nanjing, it has been specified that the annual salary of hospital directors shall not exceed 2.5 times the average salary of the staff within the hospital and should be decoupled from the hospital's financial performance. The assessment focuses on public welfare and quality. This model originated in Sanming, Fujian, but the standards vary across regions, depending on factors such as hospital level, local employee salaries, or the average salary of the hospital's own staff. The reform is expanding from directors to department heads, although it has not yet been widely applied to ordinary doctors. There are concerns within the industry regarding financial pressures and the pricing mechanism for medical services.
Nanjing Gaochun District's Annual Salary System
The core elements of Gaochun District's system include:
- Salary cap: The annual salary of the director cannot exceed 2.5 times the average salary of the staff.
- Decoupling from income: The director's salary is not linked to the hospital's earnings, eliminating the incentive for directors to order more tests or prescribe more medications solely for financial gain.
- Performance assessment: Evaluation is based on ten criteria, such as hospital rankings, community health initiatives, medical safety, and disciplinary development. Good performance earns extra points (e.g., establishing new key specialties), while poor performance results in deductions (e.g., major safety incidents).
- Team coordination: The salaries of deputy directors and other team members are 0.7 to 0.9 times that of the director and are tied to the director's assessment results.
- Comparative benchmarks: Salaries are compared both within the hospital and with similar hospitals (e.g., general vs. specialized hospitals). Assessment outcomes are categorized into four levels (2.0 to 1.4), with higher coefficients for better performance.
In summary, the director's salary is limited, and they cannot rely on the hospital's profits to increase their pay; instead, they must improve the hospital's public welfare and quality to earn a higher salary.
The Origin of the Annual Salary System: Sanming, Fujian
Sanming has been a national model for healthcare reform, implementing the annual salary system for directors as early as 2013:
- Financing: Directors' salaries are funded by the government, completely separating them from the hospital's income.
- Expansion to all staff: In 2015, a "target annual salary system" was introduced for all employees, with salaries calculated based on workload and performance.
- Unified standards in 2021: Regardless of hospital level, doctors' basic annual salaries were set according to their professional titles (e.g., 300,000 RMB for department heads, 250,000 RMB for deputy directors), with adjustments based on performance (up to a 20% increase or decrease).
- Visible results: After the reform, doctors' average annual salaries increased from 56,500 RMB to 201,100 RMB, and directors' salaries rose from 98,400 RMB to nearly 400,000 RMB. The total hospital salary budget more than quintupled.
While Sanming's experience has been widely referenced, not all regions have adopted it verbatim.
Variations in Annual Salary Standards for Directors
Currently, there is no uniform standard for directors' annual salaries. The main methods of determining these salaries include:
1. Based on hospital level/type: For example, the salary for a director at a municipal general hospital in Sanming is 500,000 RMB, while at a county-level hospital, it is 400,000 RMB; specialized hospitals may have lower salaries.
2. Based on local employee salaries: For instance, the after-tax salary for a hospital director in Yinchuan is 300,000 RMB.
3. Based on the average salary of the hospital's staff: This is the most common method, with variations such as Hainan setting the limit at 3 times the average, Anhui between 2 and 4 times, and Shaanxi up to 5 times.
The flexibility in these standards varies significantly from region to region. Some areas leave room for adjustment (e.g., Anhui's range of 2-4 times), while others are more restrictive (e.g., Shaanxi's cap of 2.5 times).
Will the Annual Salary System Extend to Ordinary Doctors?
The reform is currently focused on directors and team members, with a few regions extending it to department heads:
- Progress in other regions: Anhui has allowed other management positions to adopt the annual salary system; Sichuan is piloting it for team and department heads; Guangzhou has included all management levels; Shanghai is exploring this for functional department heads.
- Industry consensus: Chen Haixiao, a former director from Taizhou, believes that the annual salary system for directors serves as a precursor to reforms for doctors, with the goal of increasing their fixed salaries while still relying on performance-based payments.
- Concerns: Experts like Cai Jiangnan in Shanghai are concerned about the broader implications of the reform. For example, if directors' salaries change, will it affect doctors and nurses? Will there be pressure on civil servants and teachers' salaries? Additionally, funding the system over the long term is challenging, as medical service pricing must be adjusted first to make technical expertise more valuable.
Although ordinary doctors have not yet benefited from the annual salary system, this is one of the potential directions for future reforms.
The Critical Issue: Financing
The core question regarding the annual salary system is where the funding will come from:
- In Sanming, the government covers the full cost, allowing a complete separation from hospital income.
- In other regions, if hospitals are responsible for funding, there may still be a link between salaries and financial performance.
- More fundamentally, medical service prices need to be adjusted. Currently, the value of doctors' expertise (e.g., consultations and surgeries) is undervalued, making it difficult to sustain the annual salary system without changing how medical services are priced.
In conclusion, the annual salary system in public hospitals is an important step towards returning hospitals to their public welfare mission. However, to truly benefit ordinary doctors, deeper issues such as funding and pricing mechanisms must be addressed.