The Impact of the New Rural Cooperative Medical Scheme on Activities and Financing of Township Hospitals

order to increase access of the poor to health services, reduce out-of-pocket expenditures and avoid catastrophic health expenditures. Township hospitals are the first level health facilities in Chinese referral system of medical services. The paper deals with an impact analysis of the NRCMS on activities, efficiency and financial structure of township hospitals in Weifang prefecture, Shandong Province. Twenty four township hospitals and nine years (2000-2008) composed the dataset. The NRCMS reform was implemented gradually in townships, between 2003 and 2006. Results from the estimation of the fixed effects model show that NRCMS has a significant impact on activities and financial structure of township hospitals. Both the number of outpatient visit and discharged patient increased with the implementation of the reform, which means that the insurance scheme positively impact utilization of health services. Also, the average length of hospital stay (ALOS) and the bed occupancy ratio improved. NRCMS decreased average length of stay at hospital and increased the bed occupancy rate. A better utilization of township hospital inputs is permitted by the insurance reform. Concerning financial structure, the share of business income generated by drug selling increased with the implementation of the reform. Two sources of heterogeneity are checked. Impact of the reform is different over time an