Healthcare, Health Insurance and Medicine Linkage Reform (in the

Case of Sanming City) Policy Research Synthesis

Yiran Chen

School of Public Administration, Zhejiang University of Traditional Chinese Medicine, Hangzhou 310000, China

Keywords: Medical, Service Level, Medical Institutions.

Abstract: This study uses the linkage reform of medical care, medical insurance, and medicine as its theme to analyze

the current state, issues, and future direction of the collaborative reform of medical care, medical insurance,

and medicine in China, using the literature research method. The study proposes strategies for public hospital

price reform, hierarchical diagnosis and treatment linkage, including optimizing the price mechanism and

improving health insurance payment. The practice cases analyze the reform of Sanming City, demonstrate its

effectiveness, and point out its problems, such as the increase in the volume of services in Sanming, the need

to strengthen capacity enhancement and the issue of "poor helping the rich" in the health insurance coordina-

tion. To support the linkage reform of pharmaceuticals, medical care, and medical insurance to develop in-

depth, creating a more effective, equitable, and sustainable health care service system, and offer a firm guar-

antee for everyone's health, will also be necessary for the future to optimize the linkage mechanism, adjust to

new trends, and strengthen policy synergy.

1 INTRODUCTION

The linkage reform of medical care, medical

insurance, and medicine is examined because it can

advance the growth of the healthcare system, enhance

the effectiveness and quality of medical services, and

offer more scientific justification and

recommendations for its advancement. More than 20

years after the health care reform was put into effect,

the proposal for the linking reform of medical care,

health insurance, and medicine was made. At that

time, the Chinese public was still calling for reform

in the medical and health care sectors. For a long time,

the relative independence of the reforms of health

insurance, medical care, and medicine caused a

fragmentation problem in the health care reform

policy. It is difficult to accomplish efficient and

consistent work requirements among various

departments because of the lack of unity of interests

and goals. As society developed quickly and people's

living standards continued to improve, the demand

for medical and health services increased, and they

also increased the standards for the quality and

efficiency of these services. The uneven distribution

of medical resources and the uneven quality of

medical services have also contributed to several

obstacles for the public in receiving medical

treatment. Therefore, it has become an urgent

requirement to push the linking reform of medical

care, medical insurance and medicine to overcome

this problem. Through the analysis of the mechanism

and realization path of the linkage reform of

healthcare, health insurance, and medicine, it can

make the reform policy more comprehensive and

scientific. It can also help break down departmental

segmentation, promote policy synergy, and solve the

fragmentation problem. These are just a few of the

many reasons why the study of linkage reform of

healthcare, health insurance, and medicine is

important. The key objective of the "three medical

institutions" linkage is to promote and maintain the

health of the people and to provide patients with high-

quality medical services by improving the medical

service level and capacity of medical institutions.

Second, it can enhance the quality and efficiency of

medical and health care services, study how to realize

the rational allocation of medical resources through

linkage, and protect the people's demand for medical

and health care services. A concrete practice of

adhering to a systematic concept of promoting the

development of medical and health care, as well as an

unavoidable necessity to better meet the people's

growing demand for health care, is the current reform

of the linkage between medical care, medical

insurance, and medicine, which has been gradually

Chen, Y.

Healthcare, Health Insurance and Medicine Linkage Reform (in the Case of Sanming City) Policy Research Synthesis.

DOI: 10.5220/0013965400004912

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Innovative Education and Social Development (IESD 2025), pages 88-93

ISBN: 978-989-758-779-5

promoted in various places. This includes the

promotion of synergistic development and

governance of medical insurance, medical care, and

medicine, as well as the realization of each in its own

way and in support of each other. The three health

care sectors—health insurance, health care, and

medicine—are linked together, and the primary

components of the linked reform of these sectors are

the reform of the health insurance system, the reform

of the health system, and the reform of the drug

distribution system. The reform aims are achieved by

addressing the issues brought about by the separate

operation of each sector and encouraging

improvements in the healthcare system. This is

accomplished by connecting different resources and

implementing unified management to increase

efficiency. In order to improve the quality of health

care services, optimize resource allocation, and meet

the needs of the public, reforms to health insurance

payment methods and policies for the purchase of

medications and medical consumables will be made

possible by the linked reform of health care, health

insurance, and medicine. In order to provide

references for the creation and application of linked

policies, this paper provides an overview of the

history, significance, real-world successes, issues and

obstacles, and ways to improve the linkage reform of

healthcare, health insurance, and medicine. The main

structure of the article is divided into the connotation

and purpose of the reform of linkage of healthcare,

health insurance and medicine, specific contents,

practical cases, challenges and solutions, future

development trend and conclusion.

2 MAIN ELEMENTS OF THE

REFORM OF THE LINKAGE

BETWEEN HEALTH CARE,

HEALTH INSURANCE AND

MEDICINE

The linkage of medical care, health insurance, and

medicine contains the paths of realizing the policy

and the safeguard measures. These qualities of the

reform policy itself are examined, as well as the

theoretical perspective of synergy of medical care,

health insurance, and medicine, including the

connotation, goal, and specific content of its reform.

It consists of medical care, medical insurance, and

medication. Medical care encompasses all levels and

kinds of medical and health facilities and services,

medical insurance is a system of complete protection,

and medicine is the system of linked product

production and distribution. The goal of the linkage

reform of medical care, health insurance, and

medicine is to advance the reform of these three fields

in a comprehensive way, with the linkage between

public policies serving as the central component. This

will ensure that the action plans and operational

mechanisms of the participating subjects are

coordinated and harmonized. Through policy

changes, the government reshapes the institutional

environment, minimizing institutional conflicts and

voids and causing the three domains to achieve a

condition of institutional coupling (Zhao and Fu,

2021). The reform of the health care delivery system

started in 1985 with proposals for "relaxing policies,

streamlining administration, decentralizing power,

mobilizing funds from various sources, and

broadening the vision of the development of the

health sector. The groundwork for further reforms

was laid by the reforms implemented during this time,

which had an impact on the distribution of resources

and the way of supply of medical services. As the

reform developed, new requirements for health

insurance and medicine supply were also introduced

by the healthcare service system, which led to the

emergence of connections and interactions among

medical care, health insurance, and medicine

(Jakovljevic et al., 2023).

Protecting and promoting people's health is the

primary objective of medical care reform, medical

insurance, and pharmaceutical linkage, which is

consistent with the development of the

pharmaceutical and medical healthcare industries.

The pharmaceutical industry makes sure that products

are safe, effective, and reasonably priced; the medical

industry seeks to create a system of high-quality,

integrated, and efficient services; and the health

insurance industry creates a multi-level protection

system and acts as a strategic buyer. The

interdependence of the three sectors and the linkage

reform is an inescapable necessity for developing the

healthcare reform, which may enhance the mutual

support of the reforms in each area and avoid the

distortion of the rules and the failure of the reforms.

First of all, based on the investigation of the two parts

of governance subject and demand analysis to find

out the new decision-making path.

The central and local governments, government

functional departments, and the primary body

involved in healthcare activities make up the main

body of governance. They are responsible for

analyzing the demand for health care, determining the

reform path, measures, and support conditions, and

urging the functional departments to improve the

reform measures under the direction of all levels of

Healthcare, Health Insurance and Medicine Linkage Reform (in the Case of Sanming City) Policy Research Synthesis

government. To ensure that the reform of medical

care, health insurance, and pharmaceutical linkage

goes smoothly, it is also necessary to improve

technical support means, such as information

technology support and health technology assessment

capabilities, and to improve relevant institutional

mechanisms, such as organizational leadership,

financial input, negotiation and consultation,

monitoring and evaluation, and incentive and

constraint mechanisms (Zhao and Fu, 2021).

Additionally, the international focus on changes aims

to enhance the health care system's overall coherence,

and wholeness. In order to achieve national health

goals, supply-side changes, regulation and

supervision, health financing, and suitable payment

mechanisms are all crucial and interconnected

elements. Payers should create a unified incentive

mechanism, rationalize the incentive mechanism

between supply-side and service purchase payments,

reform payment methods, modify reimbursement and

compensation policies for medical institutions at all

levels, and strengthen the capabilities of health

insurance management organizations. Based on the

People Centered and Integrated Health Care model,

the supply side should develop a hierarchical

diagnosis and treatment service delivery system that

incorporates information technology,

interdisciplinary teams, vertical and horizontal

integration, and the creation of a primary care system.

To guarantee quality, safety, and performance and

preserve market order, the regulatory side must

enhance regulatory procedures and bolster oversight

in the fields of public health, medical services, and

pharmaceuticals (Rao, 2019).

The goal of medical system reform in Western

developed nations is to balance medical vitality and

order, efficiency and fairness, by optimizing the

service structure and presenting the trends of

legalization, competition, grading, and industry

division. Through universal healthcare insurance,

functional transformation, and payment method

reform, the healthcare system is being enhanced to

combat moral hazard and adverse selection. Changes

in production, distribution, and pricing management

have been brought about by the pharmaceutical

system reform, and these changes have significant

ramifications for the reform of China's

pharmaceutical system. In terms of the relationship

between health insurance and healthcare, the US has

implemented a managed care system and consistently

improved the way that health insurance is paid for,

whilst the UK has chosen an internal market

approach. A distinct payment system and a maximum

price control mechanism are implemented by the

healthcare insurance and medicine linkage, which

also shows up in the separation of interests and

business linkage. Western developed nations lower

transaction costs and increase the intensity of reform

in the linkage reform promotion mode of

pharmaceuticals, health insurance, and medical care

by separating management and operation and

integrating competent authorities (Zhao, 2018).

3 PRACTICAL EXAMPLES OF

REFORM

As an example, the practice of reforming public

hospitals in Sanming City has achieved stage-by-

stage results in terms of increased service volume and

improved risk resistance of the health insurance fund.

Sanming City started the comprehensive reform of

public hospitals in 2012, taking the reduction of

medical costs and the improvement of fund operation

efficiency as the starting point, and clarifying the path

of synergistic reform of medicine, health insurance

and healthcare. In the field of medicine, a series of

strict drug management measures have been

implemented. The citywide drug markup has been

completely abolished, a price-limit on drug purchases

has been implemented, and the "one product, two

rules", "two-vote system" and "drug procurement

dean's responsibility system" have been strictly

enforced. These measures have effectively lowered

drug prices and reduced unreasonable markups in the

drug distribution chain. At the same time, the

implementation of tracking and monitoring of key

medicines and the monitoring of auxiliary, nutritional

and high-rebate medicines have standardized the use

of medicines and curbed the phenomenon of wasted

and irrational use of medicines. In order to encourage

medical staff to improve the quality and efficiency of

their services, the medical community has actively

investigated reforming the hospital income

distribution system, included indicators like cost

control and medical service quality in the appraisal,

and established an annual salary system for hospital

directors as well as an appraisal and evaluation

system for physicians (technologists). Unhealthy

behaviors in the medical sector have been

successfully reduced by strict oversight of medical

staff behavior and the implementation of a dean's

accountability system for the control of commercial

bribery in the area of medicine sales and purchases.

In addition, strict control of "big checkups" and "big

prescriptions" has led to more reasonable and

standardized medical services (Liu et al., 2017). An

IESD 2025 - International Conference on Innovative Education and Social Development

analysis of the impact of the linkage reform in

Sanming City from the standpoint of health insurance

also reveals the phenomenon of "the poor helping the

rich" at the municipal level of coordination, in

addition to issues with a large percentage of

individual health insurance accounts, a decline in the

ability of the employee health insurance fund to

provide mutual aid and assistance, an unreasonable

order of medical care for employees, a tendency to

use high-level medical resources, and an irrational

setting of the health insurance payment policy. There

is a significant outflow of finances, the

reimbursement policy is strict but ineffectual, and the

pressure to seek medical care outside of the

coordinated region is unrelenting. The outpatient

special disease system should be eliminated, and

outpatient hospitalization should be implemented in a

fully integrated manner, as the outpatient protection

level is restricted and the outpatient special disease

reimbursement policy is unjust (Zhang, 2019). The

linkage reform of medical care, medical insurance,

and medicine requires not only a straightforward

connection between the three programs, but also

adherence to its fundamental development logic and

the allocation of interests among the primary interest

groups in order to prevent the contradictions from

getting worse. This is demonstrated by the practical

case study.

4 DEVELOPMENT HISTORY

Reviewing the development of the concept of linkage

reform of medical care, medical insurance and

medicine, it has gone through many stages and lasted

17 years. Putting forward the concept of linkage

reform of medical care, health insurance and

medicine, then emphasized the synchronous reform,

then put forward the linkage reform and continuously

developed and perfected it, and the current reform has

achieved certain results, but there are still many

problems. For example, there are controversies over

positioning, concepts, pivots and modes, focusing

mainly on the comparative choices between

administrative and market-oriented, which is

essentially a dispute over the concept of mechanism

design. In addition, there are also challenges in

designing deeper reforms around the goal of universal

health and promoting the sustainable development of

medicine and health care (Zhao, 2017).

Some areas have experimented with payment

system reforms such capitation, pay-for-performance,

and pay-for-disease. These reforms have affected the

quality of healthcare services while also reducing and

controlling healthcare expenditures to some extent.

Pay reforms can encourage medical institutions to

increase efficiency and optimize the medical service

process, which in turn affects the medical service

system's operating mechanism. Beijing's pay-for-

performance pilot, for instance, has decreased

medical expenditures and patients' out-of-pocket

expenses without lowering the quality of medical

care. Simultaneously, appropriate payment systems

support the optimization of the drug supply chain and

aid in directing the prudent use of medications (Liu et

al., 2017). Various approaches are being used to

modify the cost of medical services in public

hospitals, however there are numerous issues with the

current state of the reform. Unreasonably high

medical expenses, distorted prices, a lack of effective

mechanism formation, a flawed public hospital

compensation system, problems with medical service

payment, and an incompletely developed synergistic

mechanism between departments are all still present.

In order to categorize and control pricing, optimize

internal structure, enhance the cost accounting

system, boost government investment, and enhance

the compensation mechanism, market mechanisms

ought to be used from a medical standpoint. From the

standpoint of medical insurance, it should encourage

the reform of payment systems, establish negotiation

mechanisms to control costs, and improve the

articulation between medical insurance policy and

price adjustment. According to the pharmaceutical

perspective, it is essential to control the

manufacturing and distribution of pharmaceuticals,

implement "separation of medicine," lower drug

prices, and appropriately modify the cost of medical

services (Zi et al., 2018). Medical care, health

insurance, and medicine are all strongly tied to

hierarchical diagnosis and treatment.

Medical insurance can encourage the integration

of medical resources, standardize the order of access

to medical care, and reduce the disparity between

urban and rural areas. Pharmaceuticals protect the

distribution and uniformity of medications, which is

a crucial component of the quality of medical

services. Medical care is the foundation, and the

ability of primary medical care services influences the

application of hierarchical diagnosis and treatment.

Changes in the disease spectrum, urbanization,

population aging, and the new economic norm are

some of the issues affecting China's healthcare

system. To ensure the seamless implementation of the

hierarchical diagnosis and treatment system and to

advance the advancement of health care, a patient-

centered mechanism should be put in place to make

clear the allocation of responsibilities, make use of

Healthcare, Health Insurance and Medicine Linkage Reform (in the Case of Sanming City) Policy Research Synthesis

the role of health insurance, and enhance the

negotiation process (Bai and Fang, 2018). A key

pillar for the reform's success is China's achievement

of universal health insurance coverage, which

supports the reform of the country's medication

supply and medical services systems. The public now

has more access to healthcare services due to the

expansion of health insurance coverage, which means

the healthcare system must further optimize resource

allocation and enhance service capacity to

accommodate more patients. In order to guarantee

that the supply of medications can satisfy patient

needs, the expansion of health insurance coverage

simultaneously places increased demands on the drug

supply chain (Yu, 2015). Regarding the impact of

policy implementation, using artificial intraocular

lenses as an example, the establishment of day

surgery wards, the removal of the consumables

markup, changes to the health insurance payment

policy, banded purchasing, the Diagnosis Related

Groups health insurance payment method, and other

policies have all contributed to the improvement of

medical efficiency, the reduction of patient burden,

the improvement of medical care quality, and the

control of consumable costs. Achieving a win-win

balance among the three parties of "medical care,

medical insurance, and patients" requires further

optimization of the linkage reform policy of medical

care, medical insurance, and medicine. This includes

playing the role of medical insurance bond,

increasing the coordination of many reform policies,

and improving the reform of medical insurance

payment methods, payment for diseases, innovative

technology and medical material support, and

protection of special populations (Wang et al., 2022).

5 FUTURE DEVELOPMENT

TRENDS

After the linkage mechanism has been optimized,

more research is required to determine how to create

a more scientific and effective mechanism. In

particular, comprehensive studies are required to

address the selection and integration of administrative

and market-oriented linkage models, the coordination

of all parties' interests, and the enhancement of

incentive and constraint mechanisms. In order to

increase the overall effectiveness of policies, future

research on the synergy of policies related to medical,

health insurance, and pharmaceutical linkage reforms

must be strengthened. This includes the synergy of

policy formulation, implementation, and evaluation

as well as how to make sure that medical, health

insurance, and pharmaceutical policies are

interconnected and form synergies at different levels

and in different areas. Research on how to better

adapt reforms to these changes—such as meeting the

demand for managing chronic diseases, integrating

Internet healthcare resources, and optimizing

healthcare insurance payment methods to adapt to

new healthcare technologies—is also a crucial area of

focus for future studies given current conditions like

population aging, changes in the spectrum of

diseases, and the advancement of information

technology.

6 CONCLUSION

It is important to clarify the meaning of the term

"linkage of medical, health insurance, and

pharmaceutical reforms," emphasizing that it refers to

the integration of several parties through the joint

promotion of reforms in the domains of

pharmaceuticals, health insurance, and medical care.

Maintaining and advancing people's health is the

main objective of the reform, with a focus on the

medical sector to create a high-quality and effective

medical and health service system. It also emphasizes

the significance of sound, pertinent institutional

mechanism, as well as technical assistance to improve

the means of safeguards and support conditions. The

majority of existing research focuses on individual

regions, and the actual situation in different places

varies, so the solutions provided by the existing

research may not be applicable. It is also important to

summarize foreign experiences and advance the

development of China's reforms by sorting out the

practices of western developed countries in this

regard. In order to achieve the common reform

goals—which include reshaping the relevant

institutional environment and behavioral rules and

reaching institutional coupling—the linkage reform

of medical care, health insurance, and

pharmaceuticals aims to coordinate and support their

operation mechanisms and the action strategies of the

governing bodies through the integrated promotion of

the reforms in these three areas. In order to ultimately

protect and promote the health of the people, the

linkage reform of healthcare, health insurance, and

medicine, as a developing system, needs to be more

actively promoted in all aspects of its construction.

The present study this paper can offer higher-quality

medical services to the general public by fortifying

the linking system's construction and allocating

medical resources as efficiently as possible. It should

IESD 2025 - International Conference on Innovative Education and Social Development

keep strengthening and advancing the governance

and synergistic growth of medicine, health insurance,

and health care in the future, providing a strong basis

for the Healthy China strategy's implementation.

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