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The VIP floors.

A medical university in China wanted to build a state-of-the-art hospital to further its goals of providing medical care, conducting research, and fostering teaching. A planning committee from the university took the idea to city officials, who also believed the city needed a new hospital and agreed to help with the cost. The planning committee then approached a foundation in Hong Kong, which made a very large donation to help build a new hospital for the new century.

The hospital opened three years ago. A lovely garden surrounds the hospital, and the building itself is an architectural masterpiece--modern, graceful, welcoming, and highly functional. Much of the medical equipment is the latest and best, and effective use is made of information technology. Any city and university would be proud of this facility.

The hospital directors established two VIP floors at the hospital. They called the wards on these floors "special needs" wards to distinguish them from the "basic medical service" wards in the rest of the hospital. The VIP floors are not reserved for people with high social status (as the old "senior cadre" wards were), but are open to all who are willing to pay the extra price. In return, patients receive many amenities: private rooms with private toilets, telephones, color televisions, refrigerators, better food, flowers, newspapers, and other comforts. But they are to receive the same standard of medical care.

The VIP floors have been a financial success. The additional revenue they bring in is added to the general hospital fund that covers, among other expenses, the cost of uncompensated care. The hospital provides a lot of uncompensated care because it strives to treat all emergency cases, regardless of ability to pay.

Should other Chinese cities, universities, and hospitals emulate this arrangement?


by Yali Cong and Linying Hu

After the People's Republic of China as founded in 1949, private clinics and hospitals were phased out. By 1966 virtually all clinics and hospitals were owned by the government or worker collectives. These clinics and hospitals provided health care services within the framework of a planned economic system. But since the 1980s, China has been undergoing a great transformation as hospital administration has become subject to market economics.

Two problems stand out in this time of change. One is making health care available to the 70 percent of Chinese people living in the countryside. To its credit, the government began to implement a new Countryside Cooperation Health System in 2003. A second challenge is to make health care more affordable for city residents. One survey of people who refused hospitalization when doctors recommended it found that over 60 percent of the refusals were due to financial reasons.

Health care reform in the 1980s sought to make patients pay more in order to reduce the government's financial burden. In 1980, personal health expenditure was 21.2 percent of the total expenditure for health care; now it is over 58.3 percent. Hospitals receive only limited financial support from the federal government, usually less than 10 percent of their total income. They also receive revenue from selling medicine and providing health services. Additional reforms were instituted in an effort to control hospitals' revenue from the sale of medicine (most hospitals earned 60 percent of their funds this way). Since 1999, when the government began to distinguish between treatment and the sale of medicine, this latter source of revenue has decreased. On the one hand, hospitals cannot function well on government funds alone, but on the other, the price of current basic health services does not reflect their real value.

Hospitals in China now face more pressure than ever. Under such circumstances, managers at public hospitals have focused more attention on non-basic health care services. Some managers have instituted "special needs" wards, or VIP floors such as the one described above, to increase income and to compensate for money lost in providing the basic medical services that government policies support. In fact, a number of public hospitals have adopted different types of VIP arrangements. Even though some private hospitals emerged in the last decade, public hospitals still play the dominant role in providing health care, and not much of their space is allocated to those buying VIP perks. In Shanghai, for example, only 2.58 percent of beds at public hospitals are devoted to VIP services.

Given the great financial pressures under which hospitals must function, we believe that VIP floors are an ethically acceptable expedient, if the following qualifications are met. First, public hospitals should remember that their mission is to provide affordable, high-quality care for everyone. Second, patients should not be induced to receive profitable but unnecessary care. Third, hospitals should not use their public funding unfairly. Given the growing gap between the rich and the poor, and since hospitals use some public health resources, hospitals ought not to make a profit by serving the rich differently.

Finally, accounting methods need to be transparent. If VIP floors are designed to supplement basic services, the public must know how much compensation a hospital receives for basic medical service. Hospitals need to be prevented from using public health resources to make a profit and then hiding the profits from the government.

In order to fulfill its commitment to public health, the government may need to institute a policy that regulates clearly and transparently how many beds must be provided for basic services. They must also regulate how profit from special wards should underwrite basic medical service in order to determine at what point hospitals should stop employing their VIP wards to supplement their federal subsidies and open up more of their services to those who cannot afford special treatment. Addressing this ethical issue is difficult because it involves taking a close look at health economics and social welfare at a time when China is experiencing great social and economic change.


by James Dwyer

I discussed a case similar to this with a group of Chinese medical ethics teachers. Most of them had no objection to the arrangement, provided the standard of medical care was the same for patients from all financial strata. I also discussed a similar case with a group of American students. Most of them thought the arrangement was fine, comparing it to flying first-class: better food, more leg room, same pilot. Perhaps I'm too fussy, but I find the arrangement ethically misguided. Since the logic of the market and the idea of consumer freedom have come to dominate our institutions and feelings, I'm not sure I can explain what I find objectionable. But I want to try to make sense of my reactions.

First, I question the foundation's decision to help fund a state-of-the-art hospital. China is undergoing a tremendous social and economic transformation. This has benefited many people, but the benefits have been unevenly shared, and the social and environmental costs have been very high. Although people in many cities have benefited economically, hundreds of millions of people, especially those who live in the countryside, cannot afford even very basic health care. The old system of public health and basic care has broken down or become outmoded. Meanwhile, public health problems abound: the HIV problem is not being adequately addressed; industrial accidents and pollution are taking a frightful toll; migrant workers lack official status and access to care; over 50 percent of Chinese men smoke; and the suicide rate among rural women is extremely high. Surely, the foundation could have donated money in ways that would have promoted health and reduced health disparities. But it wanted to help fund a state-of-the-art hospital.

Second, I don't accept the premise that the standard of medical care is and will remain the same for rich and poor patients. The VIP floors will probably have more doctors and nurses per patient. The hospital staff on these floors will be more experienced and attentive. Residents and students, if allowed at all, will be more carefully supervised. When it comes time to buy new equipment, these floors will be first in line. But let's suppose for the sake of argument that the standard of medical care remains the same. I still find the arrangement ethically objectionable. This case is not primarily about whether individuals have some abstract right to use their wealth to buy certain goods and services. It's not even about how they got their wealth--through hard work and social contribution, or through inherited privilege and political connection. This case is about the kind of public institutions and social attitudes we should strive to create. Here is where the VIP arrangement fails. It misses important social opportunities.

The best way to serve the uninsured is not to create separate VIP floors. The best way is to work to create a system of universal care that is inclusive. Ensure that rich and powerful people are served by the same system as everyone else. If the VIPs are in the system, then they will work to keep the system in good shape. I can't see how VIP floors move China any closer to a universal and inclusive system. Indeed, they may exert pressure in the opposite direction.

The VIP arrangement fails to foster solidarity and equality. In spite of formal pronouncements, modern societies are not very committed to civic solidarity and substantial forms of equality. We need to think more carefully about the social forms, practices, and institutions that would help to create and express a sense of solidarity and equality. I'm not suggesting that all citizens need to dress alike. But I do believe that all citizens who visit this hospital--a hospital supported by a university, city, and foundation--should receive the same care, respect, attention, and amenities.

We need to make a transition to better institutions. The problem is getting clear about where we are, what direction we should head, and how to move in that direction. To overcome many injustices that mark social institutions, we will need to create appropriate conditions in social and economic life and to foster appropriate attitudes in daily interactions. VIP floors don't do that. They move us in the wrong direction.
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Title Annotation:case study; better hospital accomodation
Author:Yali, Cong; Linying, Hu; Dwyer, James
Publication:The Hastings Center Report
Geographic Code:9CHIN
Date:Jan 1, 2005
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