The heterogeneous impacts of government on health system efficiency in China's new health reform, 2010-2019.

Background: Contextualizing in China's recent health reform, we empirically explore the heterogeneous effects of two distinct government roles, accommodating private hospitals vs investing in public hospitals, on health system efficiency.

Methods: We use panel data covering 31 provinces during 2010-2019 to assess health system efficiency. We incorporate health service volumes and population health outcomes to ascertain health system outputs, employing the non-radial directional distance function to estimate efficiency. We employ Bayesian Tobit quantile regression to explore the heterogeneous effects of the share of private hospitals and government subsidy to public providers on efficiency.

Results: China's health system inefficiency scores range from 0 to 0.45. The association between the share of private hospitals and inefficiency score are only significant in higher-inefficiency quantiles (coefficients -0.0258, -0.0315 and -0.0327 for quantiles 0.7, 0.8 and 0.9), meaning a heterogeneously positive impact for low-efficiency provinces. The association between government subsidy and inefficiency score are positive for all quantiles (from 0.0339 to 0.0567), meaning persistent negative impacts on efficiency.

Conclusions: The heterogeneous impacts of the share of private hospitals suggest that the government should accommodate more private hospitals in provinces with low efficiency. The persistent negative impacts of government subsidy suggest that the government investment seems not be subjected to economic objectives.