Differentiation copayment design to improve the multi-tiered healthcare system in China

The Chinese healthcare system is a tiered system comprising hospitals at different levels. With limited resource, the system is expected to function well if care of various types can be delivered at appropriate tiers. However, without clear regulation, many patients visit upper-level comprehensive hospitals even for simple services while more ill patients may encounter denial of care there. On the other hand, lower-level community hospitals are often underutilized for the same reason. By the investigation in this paper, we found that the medical reimbursement policy affects patient's medical-care-seeking behavior to some extent. To guide patients to select the hospital reasonably, alleviate the congestion in the upper-level hospitals and improve the utilization of the lower-level hospitals, the differentiation copayment design between upper-and lower-level hospitals is proposed. From the perspective of China's macro-health environment, we conducted a systematic analysis of the system. We first analyzed the impact of the copayment on the patients' behavior of first-visit and reverse referral respectively. We then developed a queuing network model to capture various types of patient flows, and applied the BCMP theory to derive analytical results on queuing performance measures of hospitals at both levels. Finally, we combined the analyses and built an optimization model to design the final optimal copayment. Through this work, we expect to provide insights into the medical insurance policy to guide the government to manage the healthcare system effectively.