Hospital to stop selling medicine at markup

Beijing Friendship Hospital, chosen by the city's health authorities as the first to stop selling medicine at a 15 percent markup beginning on July 1, will charge more for consultations. 

The cost to consult a doctor at Beijing's public hospitals is normally no more than 14 yuan ($2). However, starting in July the Friendship Hospital will charge 42 yuan to 100 yuan for each consultation. Patients covered by the city's healthcare insurance will be reimbursed 40 yuan.

The higher consultation fee will cover the money lost from selling medicine at a lower price. 

Liu Jian, president of the Friendship Hospital, said that 50 to 60 percent of the hospital's revenue comes from medicine sales. 

According to Liu, the hospital earned 110 million yuan in 2010 from the markup on medicine prices. Last year, the figure was 126 million yuan. 

It is estimated that the increased consultation fee will make up for most of the money from the loss of the markup margin, though the hospital's revenue will "slightly" decrease by 2.2 million yuan after the reform, Liu said.

"The (city) government has got our back in the reform," Liu said, explaining that there will be a way to compensate the hospital if the reform cuts into its revenue.

The consultation fee varies from 42, 60, 80 to 100 yuan, based on a physician's professional title. Fang Laiying, head of the city's hospital management bureau, believes the new pricing system will encourage patients to save for the city's healthcare insurance fund. 

"Most patients' problems can be solved by the 42-yuan level of consultation … but many of them are wasting (the fund)," Fang said.

On the other hand, prohibiting hospitals from selling medicines at a 15-percent markup will discourage hospitals from prescribing expensive or excessive medicines, which in turn also will save more for the fund.

"Cutting off the markup changes where hospitals get their revenue and setting up the new consultation fee will encourage them to improve their medical service," Fang said.

The increase of the fee allows medical workers to earn what they deserve, Liu said. "We have been calling for a raise on fees we charge for many years. … The reform shows (society's) respect to doctors' work."