China's $124-billion overhaul of its healthcare system needs to address the prescription of unnecessary drugs and treatments - a widespread practice relied upon to finance the medical sector, the World Bank said Thursday.

China is spending 850 billion yuan ($124 billion) to reform its healthcare system over the next three years as part of an ambitious plan to provide basic medical coverage and insurance to the country's 1.3 billion people.

The country's mostly State-owned, public hospitals rely on profits from the sale of drugs and expensive treatments and tests to cover operating expenses. The facilities have been accused of aggressively prescribing expensive and sometimes unnecessary drugs and treatment, creating a heavy burden on patients and wasting medical resources.

"Clearly, new ways must be found to finance healthcare," World Bank officials said in a report issued yesterday on reforming China's rural health system. Reforms should encourage health providers to watch their costs and prescribe treatments appropriately, the report said.

A system must be put in place that doesn't encourage the delivery of "unnecessary care or care that is unnecessarily expensive," said Adam Wagstaff, the report's lead author.

"I think this is going to be the biggest challenge," he said. The World Bank noted that China has several pilot projects under way to address the issue.

Yanzhong Huang, director of the Center for Global Health Studies at Seton Hall University in New Jersey and an expert on China's health system, said drug sales in the countryside contribute nearly 50 percent of the revenue of health facilities.

"Village doctors, in order to increase their revenues, have strong incentives to over-prescribe or provide excessive services," Huang said.

Since the Chinese government introduced the New Rural Cooperative Medical Scheme in 2003, about 830 million rural residents have joined the program.

The annual premium is about 100 yuan per capita, shared by participants, and central and local governments.

Currently, the program mainly covers the hospitalization treatment for participants suffering from major diseases, according to the Ministry of Health. However, rural residents are also burdened economically by outpatient medical care.

"The poor and the sick would be better protected under a program that could cover outpatient services," said Jack Langenbrunner, human development coordinator of World Bank's China program.

Source: China Daily