Public hospital reform is the most crucial component of the national healthcare reform program. While some progress has been made in the past three years, not everything has proceeded smoothly. Experts and officials in related fields are discussing further improvements to the system at the ongoing annual session of the Chinese People's Political Consultative Conference (CPPCC).

By the end of 2011, 95 percent of all Chinese had already been covered by some form of health insurance, according to official statistics.

But experts participating in a medical group discussion during the CPPCC remain concerned that it is too expensive for patients to see doctors at large public hospitals, and that some hospitals continue to depend on prescription drug sales to boost their revenue.

Shen Zhongyang, executive director of Tianjin First Center Hospital and a member of the country's top advisor body, says it will take a long time to end such practices at public hospitals because of the absence of coordinated policy support.

"My suggestion is to establish a compensation mechanism so hospitals stop profiting from the sales of drugs. It is not a matter of profit; however, the operation will have problems due to lack of capital flow if we only depend on government funding. It is feasible to realize the reform goals only if we have a scientific compensation system." Shen says.

Vice Minister of Health Wang Guoqiang, who also attended the meeting, agrees that public hospitals should put in place a step-by-step approach to stop relying on prescription drug sales for profits.

"The main solution, I think, is increasing financial investment and proceeds from actual operations and gradually getting rid of the current practice. Second, we should reform the methods of payment and adjust the prices of medical services to better reflect the value of medical workers." Wang says.

The current structure of hospitals' revenue streams is skewed in part because the cost of medical services is too low. This means that some health care workers cash in on prescribing unnecessary drugs and ordering unnecessary medical tests, which burdens the country with higher medical bills.

To address that, Wang says the current health care insurance payment system must be fine-tuned. He also suggests government encourage diversified financing to invest in and set up nonprofit hospitals.

The increased investment could improve the "hardware" of public hospitals quickly, although the recruitment of talented medical staff and establishment of efficient management systems would remain problematic for health care reform in the long term.

To date, trials in hospital reform have been conducted at county-level hospitals which are experiencing shortages of skilled doctors.

He Wei, President of He Eye Hospital in Shenyang, Liaoning Province, says a coordination mechanism should be established between big public hospitals and grassroots medical service institutions.

"One way is to enforce the reasonable distribution of medical workers and create some incentive programs to encourage social capital to invest in human resources. The other is that we can provide short-term and practical training courses to medical workers in local hospitals." He says.

The current health care system has only one method for evaluating workers, although it is considered unsuitable for encouraging more enthusiastic medical workers. Some experts suggest that different assessment systems for employees in various jobs be set up to motivate all medical workers.

The members of the discussion group also stressed that public hospitals must retain their focus on serving the public and place top priority on people's health.

China's State Council, or Cabinet, passed a medical reform plan in January 2009, which began the following year with 16 cities piloting public hospital reform projects.