Using the data collected from the health facility-based survey, part of the national health service survey conducted in 1993 and 1998, this paper tries to examine changes in labour productivity among the county-level hospitals and township health centres in rural China, and to analyse factors affecting the changes. The results presented in the paper show that the average number of outpatient visits per doctor per day and the average number of inpatient days per doctor per day declined significantly over the period from 1986 to 1997. The main factors resulting in the reduction of productivity are associated with the increase of inappropriate staff recruitment in these health facilities, the significant decline of rural population covered by health insurance, particularly rural cooperative medical schemes (CMS), and the rapid rise of health care costs. The latter two factors also have brought about a reduction in the use of these health facilities by the rural population. The paper suggests that the government should tighten up the entrance of health and non-health staff into the rural health sector and develop effective measures aimed to avoid providing pervasive financial incentives to the over-provision of services and over-use of drugs. In addition, other measures that help to increase the demand for health services, such as the establishment of rural health insurance, should be considered seriously.
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