According to our findings, the number of permanent staff members in privatized health centers decreased sharply after ownership reform, a finding that strengthens several previous observations with our longitudinal data [28–30]. There are two possible reasons to explain this phenomenon. One is the financial pressure forced these privatized health centers to downsize their payroll [31–33]. Prior to the ownership reform, township health centers were not very profitable and thus depended upon governmental subsidy for their very survival . After privatization, those privatized health centers no longer received any financial resource from local governments. Moreover, the average rate of revenue increase in privatized health centers from 2000 to 2009 was only one twentieth of that in unprivatized health centers (Table 1). The result could be that the revenue in these privatized health centers may not offset the increasing operation cost, and thus they had to cut down on their payrolls as one way of cost containment.
The other explanation is that employees in privatized health centers might choose to leave partly due to undesirable career prospects and financial insecurity. China’s medical professionals in public hospitals heavily rely on their employers for pension, health insurance, further education or training, housing, etc. In a way, they are an alternative kind of government employees. After privatization, these professionals live from contract to contract, which means they lose the stable benefits they used to have. And this loss in benefits has not been compensated for by higher salary. Instead, our finding showed that the average per person salary in privatized health centers actually declined after the privatization during a time when the country’s GDP per capita almost tripled. According to our focus group discussions, the performance evaluation in the privatized township health centers was entirely based on their physicians’ caseload, whereby a higher caseload per physician brings in higher salary for physicians. However, local residents would prefer to go to county hospitals if they have better insurance coverage or have relatively high income, while physicians in township health centers do not have the authority of “gate-keeper” to sign off a visit to county hospitals . The low-income patients and patients covered by the more rudimentary Rural Cooperative Medical System (RCMS)  might be more likely to use township-village level facilities. And many of these potential patients might be more likely to visit central township health centers, which still had public ownership . Therefore the privatized health centers are only left with the low-income patients whose insurance coverage were not that generous at a time they lost the government subsidy, contributing to their low revenue and salary level. For the elder staff members, their pension might still be an incentive for retention, while younger staff members could find it more optimal to resign and seek their career elsewhere. Studies showed that staff members in township health centers were more likely to oppose ownership reform than leaders of health centers and officers in local government . It is no surprise then why we witnessed the loss of human resources after the privatization.
However, we have to admit that there exists an alternative hypothesis that could explain the unsuccessful staff retention among township health centers: China’s urbanization trend. The rural population in Jiangsu Province has been shrinking since 2000 at an average annual rate of 2.6% , a common phenomenon throughout China. So the demand for health service at the township level has been lower than before. This may be also an important reason to explain the unsuccessful staff retention in township health centers. In our study, we didn’t have enough data to rule out this possible causal mechanism.
Ownership reform in China in health system is a reform initiated by the central government . The aim was to attract the individual or organizational capital toward the health system, and then relieve the heavy financial distress on local government . However, from the statistics we collected, the development of privatized health centers seriously lagged behind their counterparts in the public sector, in financial resources and human resources alike. This is not an optimal scenario as township health centers provide fundamental health services to most residents in rural area, who are either without insurance or covered by the rudimentary RCMS. To some extent, township health centers in China share some functions with the local government in term of providing uncompensated care . So the ownership reform in township health centers should be different from that in comprehensive teaching hospitals in urban areas, as those hospitals have a much richer client pool to serve. There were evidences that the government could help more with the health institution’s ownership reform . One suggestion for the local government is to be a sustainable payer to buy these private health services at the township level. As in Turkey, government agencies purchase some of their services from private hospitals, which become a substantial source of revenue for private hospitals . The other suggestion is to pay physicians by the number of insured people, not by the number of patient visits. As in UK, although general practitioners are entirely in the private sector, they still have received public pensions funded jointly with state . For ownership reform among township-level health care facilities, local government should also monitor the post-privatization development and help foster a better policy environment for private health centers (e.g., tax breaks for for-profit private hospitals and tax deduction for donations to nonprofit private hospitals) if unwanted consequence in staff retention is witnessed.
Several important limitations compromise the external validity of our study. Firstly, we didn’t adjust staff ratios based on case-mix index, since there hadn’t been official index published in China by the time we wrote this article. Commonly, health services provided by township health centers are unitary and simple. In addition, all health centers in our study located in same city. So health services provided in these facilities are almost consistent. Comparing the staff amount in different health centers directly wouldn’t significantly bias the result. Secondly, although we briefly interviewed health center executives for a better understanding of the background information, we didn’t interview those staff members who left health centers during or after ownership reform. This would limit our understanding of the real reasons behind their resignation.