More State-owned hospitals in China are to lose their government support and will have to adapt to the market as the country's entire health service undergoes inevitable reform, experts predicted.

The unexpected epidemic of severe acute respiratory syndrome (SARS) has made the central government determined to take an unprecedented action with regard to the country's public health system.

The relevant departments under the State Council, such as the Ministry of Health and the National Development and Reform Commission, are making investment plans with huge budgets to improve the country's public health networks, according to a three-day national working conference on health that ended yesterday in Beijing.

One of the main tasks in the coming years will be the further development of the healthcare system so that it can better prevent and control epidemics such as SARS.

The newly added task is expected to bring new change to the system of providing medical treatment, another side of the reform campaign, said Cai Renhua, director of the China National Health Economics Institute.

One change to the medical system in China, a developing country that still can only allocate limited funds to healthcare, is that the various levels of government should give up their ownership of and financial support to many State-owned hospitals, Cai told China Daily in an exclusive interview yesterday.

"The reform is a comprehensive project in which the two sides of it - prevention and control, and medical treatment - should be combined and go side by side,'' Cai noted.

While encouraging more hospitals to adopt market principles, governments at various levels should also continue to own some high-level general hospitals, infectious disease hospitals, medical academies, and hospitals of traditional Chinese medicine, Cai said.

At the same time, great support should also be given to the development of community health services, which are still quite backward in China.

Currently, most of China's hospitals are State-owned and under pressure to make major changes to lower their medicine prices and improve their efficiency and services.

These hospitals have been a heavy financial burden to the country's health authorities.

The bed-occupancy rate in Chinese hospitals has been decreasing over the past 20 years and it was only about 50 per cent on average last year, official statistics show.

Official statistics show that, in 1999, government investment in medical treatment was eight times that spent on prevention and control of phenomena such as epidemics and outbreaks of poisoning, which have been in urgent need of financial support, Cai noted.

In recent years, government investment in disease prevention and control has decreased as a proportion of total health expenditure.

Making more hospitals adopt market principles will not only help those hospitals improve their levels of service and management but also help the various levels of government develop healthcare with the limited money they have, Cai added.

In the mid-1990s, the Chinese health authorities decided to let hospitals in China be partially funded by foreign investors.

Top health officials attending this week's Beijing conference, including Vice-Premier and Health Minister Wu Yi, have said China will deepen reform of its medical treatment, encouraging hospitals to absorb private investment and to reform their management.

Editor: Liao Ming