Medical institutions across the country are to come under the administration of local health authorities in a bid to repair a system that has been critizized for its sky-high fees, a top official has said.

The government has already agreed the basic framework of the reform, Health Minister Chen Zhu said in a report published last week.

The move will "deepen" the reform of the health system by 2020, he said.

The main issues are improving public medical care, health insurance, the drug supply, and the management of medical institutions. Until those goals have been reached, China will have a healthcare system that is no better than what is available in "medium developed" countries, Chen said.

Medical institutions in China are owned and managed by a range of different bodies, including central and local health authorities, and other government departments. This has hindered reform, the report said.

Some hospitals are overburdened with patients, while others are operating below capacity, it said.

The report also said the healthcare system was under-funded. However, the government has promised greater investment, including more funds for the control and prevention of diseases.

Figures from the Ministry of Health show that in 2004, less than 6 percent of the country's GDP was put back into the health sector, accounting for just 17 percent of the total amount spent on healthcare over the year. Of the remainder, medical insurance schemes covered about 29 percent of the costs, with patients left to shoulder 54 percent.

Spending on medicine accounted for 44 percent of the total, compared with 15 percent in Europe. The report said profits from drug sales sustained many medical institutions.

Many people struggle to pay for medical care, the report said, with a large number falling victim to the high fees hospitals charge for treatments not covered by State subsidies.

In response, the government will eventually subsidize both patients and healthcare providers, the report said.

(China Daily January 2, 2008)