Public Services and Informal Profits: Governing Township Health Centres in a Context of Misfit Regulatory Institutions

Abstract

AbstractChina's healthcare system is governed by institutions that are mutually incompatible. Although healthcare providers are supposed to offer affordable curative care services and engage in public health and administrative work, they receive insufficient financial support from the state and rely on generating informal profits and grey income. The “institutional misfit” between this public welfare mandate and medical service providers’ market orientation is particularly pronounced in the case of township health centres (THCs), a generalist type of healthcare provider with a key role in China's healthcare system. Based on fieldwork in four county-level jurisdictions, this study explores how local governments and THCs interact to cope with institutional misfit. It sheds light on a large variety of informal practices pertaining to human resources, healthcare services, drug procurement, health insurance and capital investment. Local governments deliberately neglect regulatory enforcement and collude with THCs to generate informal profits, behaviour which undermines service quality and increases healthcare costs. The study also shows that while the New Healthcare Reform altered the informal and collusive practices, it has failed to harmonize the underlying institutional misfit. To date, we see only a reconfiguration rather than an abandoning of informal practices resulting from recent healthcare reforms.