Summary

The current healthcare reform is a three-pronged package of centralized procurement, DRG/DIP, and physician salaries, aimed at lowering procurement prices, capping per-disease medical-insurance spending, and severing the link between medical activity and drug and medical-device revenue. Dr. S believes the rationale for cost control is valid, but the old system has been overhauled on several fronts at once after operating for decades, affecting the entire ecosystem of hospitals, doctors, manufacturers, and patients; the adjustment period could be “very long.” What 卫诗婕 calls the Pinduoduo-ization of healthcare refers to using massive order volumes to support prices bid down close to cost.
The clearest result of centralized procurement is a sharp drop in costs, but what has been compressed is not just manufacturer profit—it also includes in-theater support, emergency response, product choice, and supply flexibility. Common orthopedic steel plates have fallen from about RMB20,000 to usually no more than RMB3,000, with some priced below 10% of the original cost; meanwhile, vendor staff who once arrived on call at 2 a.m. now need to be scheduled 1-2 days in advance, while approval for rare consumables can take as long as six months. “No one works for free”—low prices are rewriting the entire service chain.
Clinical quality signals have emerged, but individual experience cannot be extrapolated into a conclusion that all centralized-procurement products are substandard. Based on his observations, Dr. S says spinal anesthesia that once covered roughly 2.5 hours of surgery now wears off for some patients after 1.5 hours, while local anesthesia can also produce cases where “the patient is still in severe pain after the injection, as if nothing had been administered”; he explicitly withholds a causal judgment: “Was the drug no good, or did I just happen to run into it?” He says only that the probability of such incidents is much higher than before.
Low-priced domestic substitutes for some medical devices have lowered the cost barrier while shifting part of the product risk and remediation cost onto doctors and patients. Dr. S has seen domestic steel-plate locking screws fail to tighten and shed metal shavings as they were driven in; doctors could only pick out the fragments, adjust the angle, or replace the plate. Some imported consumables remain in centralized procurement today because manufacturers once entered the bidding process and voluntarily cut prices, but some now view the business as loss-making, are merely running down inventory, or have already stopped supplying it. If imported drugs and devices continue to exit after inventories run out, public hospitals may be left with only domestic options; Dr. S believes most domestic products “are indeed not as good as imported ones,” and the gap between today’s RMB10,000 treatment and the RMB50,000 treatment of the past could widen. 卫诗婕 sums up the result as: “The patient is still the one who ultimately loses.”
The distributional effect of reform is not a simple downgrade for everyone: basic healthcare is expanding even as the middle tier disappears. Lower-income patients gain a more affordable option between “having medical care and having none,” while affluent patients can still move to high-end private hospitals. The group under the most pressure is the middle class, which once bought relatively good drugs, devices, and services at prices that were not extreme: a similar minor fracture that cost about RMB50,000 at a public hospital before now costs just over RMB10,000, while some private hospitals may charge RMB400,000. “In the future there will only be the RMB10,000 option and the RMB400,000 option—the RMB50,000 option will be gone.”
DRG/DIP leaves the risk of overruns with hospitals, which pass it through bonuses, department targets, and admission decisions to doctors and patients. A knee-joint fracture illustrates the problem: a cap of about RMB48,000 covers a simple case, but a clot requiring placement and removal of a filter can add RMB20,000-30,000 immediately; adding artificial bone makes an overrun all but inevitable. The result is that patients with severe, high-cost conditions are more likely to be turned away, while doctors willing to take them face the dilemma: “If you don’t treat them, you can’t live with yourself; if you take them, you lose money.”
If the annual-salary system is rolled out at the levels described on the program, the key variable for public hospitals will shift from procurement savings to the quality and stratification of their talent supply. The program cited annual pay of about RMB150,000-200,000 for residents, with Dr. S giving RMB150,000 as a specific example, and a ceiling of about RMB200,000 for attending physicians; after performance deductions and statutory benefits and housing-fund contributions, take-home pay could be just RMB150,000-160,000 or less. Eliminating gray income is one backdrop to the reform, but on-book income is not enough to support life in major cities, potentially pushing prominent doctors into private hospitals and leaving public hospitals able to provide only “the most basic—in other words, the lowest-end—medical services.”
DRG/DIP generally covers more than 90% of ordinary cases, but leaves the overrun bill with hospitals and transmits it to doctors and patients through bonuses and admission decisions. In the hypothetical discussed, a patient uses RMB2,000 of medical services and still pays RMB200 out of pocket under the original reimbursement ratio; when the insurer and hospital settle six months or a year later, if the disease cap is only RMB1,000, the hospital ends up losing about RMB800. 卫诗婕 notes that the numerical details may not be exact, but the mechanism is broadly right. Once the cap is exceeded, the hospital may absorb the loss, deduct the doctor’s bonus, or make the doctor involved bear it; Dr. S understands that top-tier hospitals should not refuse patients, but they may evade those expected to run over budget by citing “no beds” or saying “we can’t do it,” or have patients discharge and re-register, creating the insurance-prohibited practice of “split hospitalization.” Asked whether such patients get kicked around like a football, Dr. S answers: “Yes.”
The reform’s real test is not how much cheaper a particular drug becomes, but whether price, quality, service, hospital finances, and physician incentives can settle into a stable new equilibrium. Dr. S’s three experiences over the past five years are, in sequence, DRG making surgery “a loss as soon as it’s finished,” centralized procurement keeping costs within the cap but leaving doctors with “not even the equipment to use,” and the prospect of an annual-salary system making him consider leaving Beijing, Shanghai, and Guangzhou. As doctors move from “welcoming every patient with their eyes lighting up” to “either going mad or becoming numb,” the healthcare system’s long-term supply capacity may matter more than short-term price cuts.

Deep dive

1. Healthcare reform rewrites the ecosystem through 3 mechanisms

Dr. S breaks the reform into 3 parts: centralized, volume-based procurement of drugs and medical devices; DRG/DIP bundled payment by disease; and a physician annual-salary system that is still in pilot programs but, in his understanding, will be rolled out broadly over the next 5 years. Each changes a different layer: procurement, insurance settlement, and physician income.
In his explanation, DRG mainly sets a payment ceiling by disease category, while DIP adds factors such as age, comorbidities, and treatment method. Two appendicitis patients—the young and healthy versus an elderly patient with diabetes, hypertension, and a prior myocardial infarction—cannot consume the same amount of medical resources.
The framework follows the logic of the Sanming healthcare reform: as insurance funds come under pressure, spending is reduced by controlling procurement prices, per-disease costs, and physician incentives. Dr. S agrees that the policy “has its reasons,” but warns that the old ecosystem has been stable for decades: “If you move one thing here, everything else has to move too.”

2. “Pinduoduo-ization” comes from using national orders to bid near cost

Dr. S initially thought “Pinduoduo-ization” sounded “a bit too low-end.” After 卫诗婕 explained the thin-margin, high-volume model, he accepted that open bidding could push manufacturers to slash prices aggressively in exchange for orders from hospitals nationwide. He still said he did not really understand the term and simply thought Pinduoduo was low-end; the conclusion that the analogy fits came mainly from 卫诗婕.
As Dr. S understands it, drug procurement began its pilot in January 2019 and was implemented on a large scale in April, after which consumables in different departments were gradually added. 卫诗婕 cited an interview example in which enteric-coated aspirin fell from RMB0.60 per tablet for the original drug to RMB0.03 after centralized procurement—an offer priced almost at cost.
The drop is even more visible in orthopedics: a commonly used steel plate that once cost about RMB20,000 now costs a few thousand yuan, with the most expensive generally no more than RMB3,000. “Basically it’s down to 10%—and some are less than half of that.” Dr. S was “stunned” the first time he saw the price.

3. The RMB20,000 paid for more than a steel plate

Dr. S later realized that the old price also bought an operating-support package. Vendor staff operated fluoroscopy equipment during surgery, helped with sterilization, and answered questions about how to use different plates and screws. Orthopedic devices are too numerous for doctors to study every product detail one by one.
In the past, even an emergency operation at 2 a.m. could bring a vendor representative in with one phone call. After the price fell from RMB20,000 to RMB2,000, doctors often had to give 1-2 days’ notice, and representatives began keeping regular working hours. “No one works for free. Everyone has a family to support.”
In-theater representatives who once might have earned several hundred yuan per case now make only tens of yuan, and their willingness to provide service has fallen accordingly. When 卫诗婕 asks why winning manufacturers can simply “turn around and walk away,” Dr. S says these people are not public-sector employees; once their income falls sharply, they may indeed stop taking the work.
Young doctors have also lost a key training environment. Early in his career, Dr. S would ask device representatives during surgery about screw direction, plate placement, and how to handle abnormalities. Now the equipment staff are often absent, leaving new doctors to figure things out themselves as the workload, uncertainty, and risk to patients all increase.

4. Standardized procurement covers major procedures but misses rare needs

Centralized-procurement products can cover most common surgeries but not the full range of highly varied injuries. Dr. S points out that the people implementing centralized procurement are not frontline clinicians, while special consumables with very low usage have no basis for entering a volume-procurement program.
When the winning product cannot meet the needs of a procedure, doctors must apply for an off-catalog product. His hospital needs at least 1 day of advance notice in the fastest cases; an extremely rare or expensive product may require 6 months of waiting and approval by the hospital president’s office. “A lot of things you want to use now simply aren’t available.”
卫诗婕 describes the system as a double-edged sword: patients pay substantially less for drugs and surgery, but a “one-size-fits-all low-price regime” struggles to meet the needs of minority and individualized cases. Dr. S agrees, adding that surgical scheduling may consequently take longer than before.

5. Anesthetics and steel plates expose clinical quality concerns

On the complaints that “anesthetics don’t put you to sleep, blood-pressure drugs don’t lower blood pressure, and laxatives don’t work,” Dr. S says that, based on his observations, some centralized-procurement drugs are indeed less effective than the imported products used in the past. But individual cases cannot establish whether the drug is responsible or the outcome was coincidental.
Spinal anesthesia used to cover roughly 2.5 hours of surgery; now some patients begin feeling pain after 1.5 hours, requiring additional drugs or even a switch to general anesthesia mid-procedure. This kind of disruption is “much more common than before.” Emergency debridement under local anesthesia also still produces intermittent cases of severe pain after injection—“as if nothing had been administered.”
The device problem is more visible: some domestic steel plates have locking screws that will not tighten, or shed metal shavings as the screws are driven in. Doctors can only pick out the fragments, adjust the screw trajectory, and, if necessary, replace the plate. Dr. S says he never encountered these problems with imported products.
When 卫诗婕 asks whether doctors can compensate for the defects, Dr. S answers bluntly: “The quality of the surgery still depends most on the doctor.” Experience can manage a tool failure, but that means abnormalities in low-priced products are being converted into a higher technical burden for physicians.

6. Centralized-procurement drugs are not synonymous with generics; the dispute is over screening

Dr. S first clarifies the concept: a centralized-procurement drug is simply a drug that won the centralized tender—it may be an originator or a generic. In practice, most winners are lower-priced domestic generics, because the lowest bidder wins; imported manufacturers are often unwilling to cut prices that far.
In his explanation, generics can be produced after a patent expires based on the active ingredient, but excipients, manufacturing processes, purification, and testing procedures still have to be worked out independently. Differences in equipment, personnel, and experience across companies can therefore create quality gaps. 卫诗婕 also stresses that generics cannot be equated wholesale with inferior drugs.
The real question is whether centralized procurement has selected products with stable clinical performance. Dr. S believes winning drugs generally correspond to genuine, high-volume clinical demand and at least solve the problem of having a drug available. But it is difficult to judge whether efficacy fully meets practical needs, and with the range of choices narrowed, he does not know how quality will be backstopped.

7. Low prices expand basic care while squeezing out the middle tier

Dr. S believes the reform is friendlier to patients with limited ability to pay, including blue-collar workers and farmers. Treatment that may previously have been unaffordable now offers at least a basic level of medical protection. The wealthiest patients were already choosing high-end private care and are similarly less affected.
The biggest change is for the middle. In the past, patients could obtain relatively good drugs, devices, and services at a price that was “not particularly high” in public hospitals. In the future, they may be left with only low-cost basic public care and extremely expensive high-end private care.
His example of the gap: a similar minor fracture cost about RMB50,000 at a public hospital before centralized procurement and DRG, but now costs just over RMB10,000, while some private hospitals may charge RMB400,000. “In the future there will only be the RMB10,000 option and the RMB400,000 option—the RMB50,000 option will be gone.”
When 卫诗婕 asks whether the interests of the middle class are what is really being affected, Dr. S replies, “You could put it that way.” Most short-term patients may not notice, but people taking medication over the long term already do: if the imported blood-pressure drug they used previously does not win the tender, public hospitals cannot stock it, leaving patients to buy it at a higher price from pharmacies.

8. If imported supply exits, public and private care may stratify further

Some imported products remain in centralized procurement today because their manufacturers once entered the bidding process and voluntarily cut prices. But Dr. S has heard that some companies consider the business loss-making, are merely running down inventory, or have already stopped supplying it.
His concern is explicitly conditional: if imported drugs and devices continue to exit centralized procurement after inventories are exhausted, public hospitals may be left with only domestic options. Dr. S believes most domestic products “are indeed not as good as imported ones,” so the gap between today’s RMB10,000 treatment and the RMB50,000 treatment of the past could widen.
Some of these imported products may not leave China altogether, but instead shift to fully self-pay treatment in private hospitals. Dr. S expects public hospitals to remain the backbone of China’s healthcare system, while private hospitals may become more numerous and absorb high-end demand.

9. DRG/DIP leaves overruns with hospitals

The conversation uses a hypothetical case to illustrate the mechanism: a patient consumes RMB2,000 of medical services and still pays RMB200 out of pocket under the original ratio. When the insurer and hospital settle the account 6 months or a year later, if the cap for that disease is only RMB1,000, the hospital ultimately loses about RMB800. 卫诗婕 notes that the numerical details may not be entirely accurate, but the mechanism is broadly correct.
DRG/DIP generally covers more than 90% of ordinary cases. The problem is concentrated in patients with multiple complications or unusual treatment paths. Once the cap is exceeded, the hospital may absorb the loss, deduct the doctor’s bonus, or make the doctor involved bear it, depending on the hospital’s management system.
Under Dr. S’s understanding, top-tier hospitals should not be able to refuse patients, but may avoid those expected to exceed the payment cap by saying there are “no beds” or “we can’t do it.” When 卫诗婕 asks whether these patients are kicked around like a football, Dr. S answers: “Yes.”

10. The same fracture can shift from surplus case to guaranteed loss

Dr. S uses a knee-joint fracture to show the conflict between bundled pricing and clinical variation. The DRG cap is about RMB48,000; consumables for a simple case cost about RMB5,000, and the procedure can usually be completed for about RMB20,000 including anesthesia and hospitalization, leaving ample headroom.
If the patient also has a lower-limb thrombosis, placing and removing a filter adds roughly RMB20,000-30,000. If the bone has collapsed, several thousand yuan of artificial bone may also be needed. Under the same diagnostic label, this type of patient is “basically guaranteed to exceed the cap.”
Some emergency fractures first require an external fixator and a later plate operation after the swelling subsides, making it similarly easy to break through the cap. Dr. S admits that he has been very reluctant to accept such patients, but when the condition is urgent, he cannot get past his conscience and usually takes them anyway.
At least at his current hospital, he has not yet been made to pay for the losses; management only holds periodic meetings to issue reminders. But if these cases become too numerous and the hospital’s overall DRG balance turns negative, everyone’s bonuses will be affected. Individual medical ethics therefore come into direct conflict with collective finances.

11. Constantly changing metrics make hospitals route patients around settlement rules

Beyond DRG, hospitals also assess average length of stay, surgical volume, the drug-to-total-spending ratio, and insurance spending. A high drug ratio can trigger suspicion that doctors are colluding with pharmaceutical representatives, layering more “non-medical” constraints onto clinical decisions.
Dr. S has lived through several settlement regimes: first, hospitals were paid according to actual spending; then they were given a fixed total budget, with the surplus retained by the hospital; later, the surplus was clawed back, and saving too much could even reduce the next year’s allocation. If the annual budget was RMB40 million but only RMB30 million was spent, the following year might come with just RMB30 million.
Hospitals adjust their behavior with the rules. When the budget is close to being exhausted, they admit fewer insured patients; when the budget can be retained, they have an incentive to save insurance money; when the surplus will be clawed back, they admit insured patients in a year-end rush to spend the full allocation. Dr. S describes it as “a pot of water on the stove: it can’t boil dry, and it can’t overflow.”
To avoid exceeding the permitted cost, doctors sometimes have patients discharge and then re-register for admission. Dr. S explicitly says this is the insurance-prohibited practice of “split hospitalization.” He believes hospitals cannot absorb losses indefinitely, so the pressure will ultimately be passed back to departments and doctors through bonus deductions and similar measures.

12. Physician incentives shift from doing more surgery to minimizing losses and surviving

Under the old system, hospitals were largely responsible for their own profits and losses, while drug, device, testing, and hospitalization revenue affected both hospital and physician income. Early on, the system even tacitly operated on “supporting healthcare with drug revenue.” Dr. S acknowledges that this created incentives for overtreatment at some institutions, but says doctors at legitimate public top-tier hospitals were already heavily burdened and widespread overtreatment was not common.
The annual-salary system is intended to sever the commission logic, with doctors of the same rank in the same region earning broadly similar pay whether they work at a township clinic or a top-tier tertiary hospital. The reform has also largely eliminated the gray income of the past. But mainland doctors’ on-book income is not enough to match their years of training, workload, and the cost of living in major cities.
The level cited on the program was annual pay of about RMB150,000-200,000 for residents; Dr. S gives RMB150,000 as a specific example. For attending physicians, RMB200,000 is the ceiling, and after performance deductions and statutory benefits and housing-fund contributions, actual pay may be only RMB150,000-160,000 or less. By comparison, he says that, to his knowledge, residents in Hong Kong earn roughly RMB700,000-800,000 a year, reflecting a different set of conditions for “high pay as an anti-corruption policy.”
Looking back over the past 5 years, Dr. S has experienced 3 waves of disillusionment. Early DRG made surgery “a loss as soon as it was finished”; after centralized procurement cut prices, cases were less likely to exceed the cap, but with vendors and consumables unavailable, “even wanting to serve the public wasn’t enough to deliver care”; now the prospect of an annual-salary system has him seriously considering leaving Beijing, Shanghai, and Guangzhou.

13. Public healthcare ultimately depends on whether doctors stay

Dr. S believes that “China is a huge country—if you won’t do it, someone else will,” but immediately concedes that the replacement may not be as capable. If prominent doctors leave for private hospitals as their incomes fall, public hospitals will still have people working in them, but may be able to provide only “the most basic medical services.”
He does not portray doctors as unconditional sacrificial figures: “Doctors are people too. Doctors have to eat, and doctors have families to support.” A conscientious doctor who keeps accepting patients certain to exceed the cap, or even pays out of pocket, will struggle to sustain both a career and a family life.
The sharpest contradiction is this: “When a seriously ill patient comes in, if you don’t treat them, you can’t live with yourself; if you take them, you lose money and get sued.” This is not an occasional dilemma. After 10 years in clinical practice, he says, “you either go mad or become numb,” and he judges that he has simply become much more numb.
Dr. S rejects the label “angels in white,” calling it a form of “praise that kills.” “I’m an ordinary person. I’m a doctor. Being a doctor is just my job—a job that supports my family.” At the close of the program, 卫诗婕 borrows the theme of the television drama The White Storm to summarize healthcare reform as “a contest of forces and balance”: lowering the barrier to basic care is a genuine gain, but whether the new ecosystem can absorb the costs to quality, talent, and ethics will require a long adjustment.

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