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Unpacking the red packets: institution and informal payments in healthcare in China

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Abstract

Informal cash payments from patient to healthcare providers for services provided by the healthcare system have attracted increasing scholarly interest. However, the root and mechanism of informal payments are not well understood. This paper contributes to the literature by positing informal payments as informal institutions. We use a nationally representative longitudinal survey in 28 provinces in China to explore the root of informal payments. Our empirical findings suggest that patients’ informal payments for healthcare services may originate from information acquisition and processing, failure of government and market in allocating healthcare resources, and disparities in utilization. Further, this informal institution could be changed by the self-reinforcement of individual patients. These findings suggest that policies to facilitate transparency and to remove institutional barriers, such as the introduction of market competition, may reduce the incidence of informal payments.

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Notes

  1. Chinese government launched hierarchical management of public hospitals (owned and run by various levels of governments) in 1989. Hospitals are certified into three levels (primary, secondary, and tertiary) according to the number of beds, coverage and functions, and each level is subdivided to three sub-levels (A, B & C). Tertiary A hospitals, the highest level, are composed of hospitals owned by the former Ministry of Health and other central governmental departments, and provincial and major urban hospitals. Secondary hospitals are mainly composed of prefecture and county hospitals, and primary providers include community and township hospitals. The process is similar to the accreditation process but has a consequence in resource allocation.

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Acknowledgements

This work was supported by the Key Research and Development Plan of Gansu Province, China [20YF8GA068], the Fundamental Research Funds for the Central Universities [21lzujbkydx030], and the National Office for Philosophy and Social Sciences [ 20AZD032]. We are also grateful to Prof. Kirk Emerson of Arizona University for her insightful and helpful comments and suggestions.

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Authors and Affiliations

  1. School of Management, Lanzhou University, #222 Tianshui South Rd, Lanzhou, 730000, China

    Ning Liu & Guoxian Bao

  2. China Research Center for Government Performance Management, Lanzhou University, Lanzhou, China

    Ning Liu & Guoxian Bao

  3. College of Public Health, University of Georgia, Athens, USA

    Zhuo Chen

  4. School of Economics, University of Nottingham, Ningbo, China

    Zhuo Chen

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  1. Ning Liu
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Liu, N., Chen, Z. & Bao, G. Unpacking the red packets: institution and informal payments in healthcare in China. Eur J Health Econ 22, 1183–1194 (2021). https://doi.org/10.1007/s10198-021-01330-z

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