Summary of Key Points
In 2025, the total number of inpatient medical treatments covered by national healthcare insurance (for both employees and residents) experienced its first negative growth in five years, with a decrease of 3.3%. This decline was mainly due to a significant drop in the number of inpatient treatments for residents (a decrease of 4.8%), while there was only a slight increase of 0.3% for employees. The underlying reasons include: residents avoiding unnecessary medical consultations due to economic pressures; hospitals abandoning the speculative practice of admitting more patients to boost revenue under the DRG/DIP payment reform; and an shift in patients from inpatient care to outpatient services and day surgeries; some costs also flowing to off-campus pharmacies. The increase in outpatient visits offset nearly half of the decrease in inpatient expenses, but both outpatient services and pharmacies may face stricter cost control measures in the future.
I. Negative Growth in Inpatient Treatments: Resident Healthcare Insurance Bears the Brunt
The negative growth in inpatient treatments in 2025 came entirely from resident healthcare insurance (a reduction of 9.79 million visits), with almost no decrease in employee healthcare insurance coverage. Why are residents being so frugal?
- Economic Impact: Residents without stable employment or those from rural areas are more affected by the economic downturn, delaying necessary medical treatments (such as follow-ups for chronic diseases or minor surgeries) and some even opting to cancel their insurance coverage.
- Cost Reductions: The average cost per inpatient visit for residents decreased by 0.9%, and for employees by 1.6%. Overall, national inpatient expenses fell by 98.4 billion yuan—equivalent to the annual revenue of ten large hospitals with annual revenues of over ten billion yuan each.
II. Hospitals No Longer Find It Profitable to Admit More Patients: DRG/DIP Leads to Higher Losses
Previously, hospitals would try to admit more patients (e.g., treating minor illnesses as inpatient cases or splitting a single hospitalization into multiple visits) to earn more from healthcare insurance. However, this strategy is no longer effective:
- Losses from Underpaid Admissions: For example, if the actual cost of treating a condition is 5,000 yuan but the insurance covers only 10,000 yuan, it is considered a “low-benefit case,” and the hospital receives less payment. Such cases account for over 10% of all admissions, so hospitals must limit them to less than 5% to avoid losses.
- Penalties for Splitting Admissions: Splitting a single hospitalization into two separate visits results in fines from healthcare insurance authorities, making it unprofitable.
- Hospitals Changing Their Approach: Hospitals are shifting from focusing on admitting as many patients as possible to admitting the right type of patients. For instance, surgical procedures (like appendectomies) generate higher profits, while internal medicine departments (especially those treating oncology patients, which are highly costly and result in losses of over 80%) are forced to control the number of beds. County-level and secondary hospitals, which rely heavily on internal medicine admissions, are hit the hardest; some have had to expand their facilities but then find them vacant, leading them to convert them for elderly care.
III. The Trend of Shifting from Inpatient to Outpatient Care: Patients Save Money, but There Are Hidden Issues
Although the number of inpatient treatments decreased, the number of outpatient visits increased. In 2025, the number of general outpatient visits for residents rose by 6.4%, and for patients with chronic or special diseases by 18.4% (12.4% for employees).
- Why the Shift to Outpatient Care?: Outpatient care is cheaper. For example, day surgeries, where patients can be discharged on the same day, are much more cost-effective than traditional inpatient stays. Some hospitals, such as Renji Hospital in Shanghai, have even moved complex surgeries to outpatient settings, and smaller hospitals are adopting similar practices.
- Offsetting the Decline: The increase in outpatient expenses amounted to approximately 46.9 billion yuan, compensating for nearly half of the decrease in inpatient expenses.
- Hidden Issues: Some hospitals encourage patients to buy expensive prescription drugs from off-campus pharmacies before being admitted, which saves the hospital money but increases the patient's out-of-pocket costs.
IV. The Future: Stricter Regulations for Outpatient and Pharmacy Services
The trend of shifting from inpatient to outpatient care will not go unnoticed by healthcare authorities:
- Outpatient Cost Control: Some regions are piloting “APG” (a form of group-based payment similar to DRG for inpatients). For example, after the Jinhua pilot, the growth rate of outpatient healthcare insurance expenditures decreased from 25% to less than 10%. This may be rolled out nationwide in the future, but it is more challenging due to the variety of outpatient conditions.
- Stricter Pharmacy Regulation: Healthcare insurance authorities are integrating hospital and pharmacy information systems. Currently, 71% of designated pharmacies have joined the pre-payment reminder system (with an 82% adoption rate among pharmacies) to prevent fraud.
- Pressure on Pharmaceutical Companies: Pharmaceutical companies, which previously only targeted hospitals, now need to serve both outpatient and pharmacy services, leading to increased supply chain and sales costs. They may need to hire more staff or work harder, and also face the risk of prescriptions being intercepted.
Conclusion
The negative growth in inpatient treatments is not entirely bad news. On one hand, it indicates that patients are becoming more rational in their medical decisions, and on the other hand, it shows that hospitals are no longer relying on excessive inpatient care to generate revenue. However, we must also be wary of the shift in the burden of out-of-pocket expenses to patients. Future cost control reforms for outpatient services and pharmacies will further affect the behavior of hospitals, pharmaceutical companies, and patients.