Shenzhen has been allying with prestigious institutions for joint establishments in education and medical services. The initiatives include a Tsinghua University graduate school, a Chinese University of Hong Kong campus and a hospital operated by Peking University.
But what local officials consider as their biggest achievement in this endeavor is the HKU-Shenzhen Hospital set up two years ago.
As the mainland’s first public medical institution wholly managed by an overseas entity, the hospital was expected to be a role model for medical reform on the mainland and a showcase of quality medical services and training. The hospital is also backed by China’s Ministry of Health.
But it failed to orchestrate an encouraging start as locals feared the price of medicines and treatment at the facility could be exorbitant, Shenzhen media noted back then. After Shenzhen municipal bureau of health announced that medical insurance cards will also be accepted for payment at the hospital, the patient numbers gradually picked up.
Shenzhen Special Zone Daily notes that the average number of patients received by the hospital’s accident and emergency department has climbed to over 400 per day during the first half this year. People from neighboring cities like Dongguan and Foshan also flock there. It handled 270,000 out-patient and 7,458 inpatient cases in the six months to June.
Now everything appeared to be on track until a leaked report from consulting firm PwC last month showed the hospital was saddled with a combined loss of over HK$1 billion (US$129 million) since its 2012 inauguration. According to PwC’s forecast, the loss can soar to up to HK$4.8 billion within the next decade should problems go unsolved.
Both Shenzhen authorities and the University of Hong Kong (HKU) declined to comment, but Guangdong-based Southern Metropolis Daily has revealed that during initial negotiations, Shenzhen officials pledged that, on top of the 3.5 billion yuan (US$570 million) investment for construction and equipment procurement, the local government would fully subsidize the hospital’s operational expenses for a minimum period of five years, or until 2017.
That was among the major incentives for HKU for the project as it would only need to send doctors and administrative staff.
Yet, due to red tape and other factors, HKU has been advancing money for the hospital’s daily operation, and the amount has added up to almost HK$200 million as of July, Ming Pao reports.
The hospital can turn out to be a financial pitfall for HKU. Reports say HKU Council Chairman Leong Che-hung met with Shenzhen deputy major Wu Yihuan at the end of June to discuss the issue.
But Wu was quoted as saying that all the money will not be paid back until the hospital breaks even. She requested HKU to provide detailed breakdown of money and resources it has poured into the venture — including HKU staff’s number of working hours at the hospital — for the Shenzhen side to examine. According to the PwC report, the hospital is unlikely to break even before 2018.
In an internal report, the university’s financial committee wrote that it was concerned about the recoverability of the amount incurred for the hospital and it advised the university leadership to reconsider HKU’s future commitment to the hospital if there is no satisfactory financial resolution.
Grace Tang, HKU-Shenzhen Hospital Chief Executive, once said that 100 yuan out of the fixed 130 yuan medical service package charge goes toward human resource expenses — it is said that annual remuneration package for a doctor there starts at 300,000 yuan.
Unlike other mainland hospitals that can tap into the hefty profit of selling medicine and getting kickbacks from drug and medical equipment dealers, HKU-Shenzhen Hospital can only rely on government subsidies as it applies the charging system of general practice and specialists at Hong Kong public hospitals to prevent over-charging.
Yet the core issue here is that the Shenzhen government is now reluctant to pour more money as promised, a source familiar with the case told the Guangzhou-based Time Weekly.
This can be reflected in Shenzhen government’s 2014 budget — out of the projected 193.8 billion yuan fiscal revenue for the year, a paltry 7.32 billion yuan (US$1.19 billion), or less than 4 percent, will be used for healthcare and hospital subsidies.
That is in stark contrast to Hong Kong’s figure — the city’s Financial Secretary John Tsang noted in the 2014-15 Budget that the government’s recurrent allocation to the Hospital Authority has increased by HK$15 billion in the past five years and that the total recurrent provision for 2014-15 exceeds HK$47 billion (US$6.06 billion).
It seems that HKU may still have to foot the bill while the Shenzhen side takes time to honor its pledges.
But there are some improvements. Both parties have agreed on initiatives that should help enhance operations like adding extra private beds that are charged at a higher rate, as well as a “green channel” arrangement for efficient customs clearance of imported medical equipment. The 130 yuan fixed package charge will also be raised to 200 yuan starting from next month.
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