Note: China Labour Bulletin recently published our healthcare workers' report: Unprotected yet Unyielding: The Decade-Long Protest of China’s Healthcare Workers (2013-2023).
This is the chapter five.
According to the CLB Strike Map, the third leading cause of healthcare workers’ actions is hospital restructuring (mainly about privatisations), with 25 incidents primarily collected between 2013 and 2019. Over the past decade, China has experienced a new wave of hospital restructuring, affecting public hospitals in pilot provinces and cities (e.g., Luoyang, Henan province; and Kunming, Yunnan province) and hospitals affiliated with state-owned enterprises (SOEs). The idea behind the restructuring is that introducing private capital can reduce the costs borne by SOEs and local governments and make more efficient use of healthcare resources. However, the withdrawal of government subsidies has led many hospitals to experience financial problems. Disputes in the restructuring process, such as changing hospitals’ asset ownership from public to private and offering no compensation to workers whose employment status changed, have slowed down hospital restructuring and even reversed it in some provinces and cities. In this chapter, we address both protests at public hospitals and those at SOE hospitals. Readers can see that healthcare workers championed the public character of healthcare in both protests.
Moderate success in protests against public hospital restructuring
The restructuring of public hospitals dates back to 2009 when the “New Healthcare Reform” was launched. In February 2010, five ministries and commissions, including the National Development and Reform Commission and the Ministry of Health, jointly issued Guiding Opinions on Pilot Reform of Public Hospitals (关于公立医院改革试点的指导意见), which listed 16 cities, including Luoyang and Kunming, as priorities for the pilot reform.
Protests in Luoyang, Henan
Places that were active in hospital restructuring did so because of financial difficulties and the push from the local top officials. Caixin cites the example of Luoyang, Henan province, which launched its public hospital restructuring in 2010 precisely because of financial pressures. In 2010, the healthcare expenditure in Luoyang accounted for about 12 per cent of total government spending, significantly higher than other cities' average of about 6 per cent. This is because in 1986, the former Luoyang District was abolished, with Luoning and other six counties coming under the jurisdiction of the city of Luoyang, which led to the addition of several smaller public hospitals to the city. In addition, Luoyang is an old industrial centre with quite a few state-owned enterprises established before the Reform and Opening Up period. With 11 state-owned hospitals gradually being handed over to the city government, these public hospitals created intense competition. To illustrate, most of the hospitals were less than half-full and they relied heavily on the city government for financial support.
On 13 December 2010, the city government of Luoyang announced its plan to “accelerate the reform of public hospitals restructuring work implementation”, declaring that all city public hospitals must implement ownership reform and gradually move away from government support - except maternal and children’s hospitals, traditional Chinese medicine hospitals and psychiatric hospitals. Public hospitals were to first transform into joint-stock non-profit hospitals owned by all employees, and then either corporate capital would be brought in, or some hospitals would be integrated with other national or provincial medical institutions. However, this plan did not go smoothly.
The CLB Strike Map first documented protests over the restructuring in Luoyang in June 2011. On 11 June, workers at the Luoyang Central Hospital (洛阳市中心医院) protested and petitioned the local government over compensation issues during the restructuring. The tertiary general hospital was a well-run hospital and was an early pilot in the reform. The workers believed that there was a loss of state-owned assets in the process, as some workers pointed to a disparity between the hospital’s annual revenue of over 300 million yuan (U.S. $43 million) and the listing price of only 143 million yuan (U.S. $20 million). In addition, the workers were dissatisfied with the compensation they received for changing status (身份置换金) when they were converted from employees of a public institution to contract workers of a private hospital.
Not only current workers were affected, but also retired workers. On 28 September 2011, nearly 100 retired workers of the hospital blocked the main gate and unfurled up a banner with the words: “Resolutely oppose the betrayal of the Central Hospital by the Secretary of the City Party Committee”, arguing that the privatisation of the hospital would affect their retirement benefits. A report from Radio Free Asia indicates that the public also opposed the privatisation, as the hospital is one of the major hospitals located in the city's centre. Some residents were concerned about the rise in medical fees after privatisation and the quality of medical care in private hospitals. One resident is quoted as saying:
“It is very inappropriate to turn it into a private hospital.”
Another incident took place in May 2015. On 5 May, workers of the Eighth People’s Hospital in Luoyang (洛阳市第八人民医院) gathered in front of the hospital and demanded that the hospital director, Li Yong, step down. A report by the Dahe Newspaper (大河报) showed that the workers gathered to sing the national anthem, the Internationale and Unity is Strength, to protest the director’s embezzlement of the hospital’s assets. The workers pointed out that the hospital completed its shareholder reform in June 2011, but it had not distributed the related compensation, and the distribution of shares was grossly unequal. There were 190 employees of the hospital and a total share capital of about 20 million yuan (U.S. $2.9 million). Out of the remaining 13 million (U.S. $1.9 million) of the total share capital after deducting the compensation payments, Director Li Yong alone accounted for 85 per cent, and several board members accounted for 500 thousand yuan (U.S. $71,429). Meanwhile, less than 90 employees accounted for just over 1 million yuan (U.S. $142,857). With such an unequal distribution of shares, workers’ power were minimised.
In addition, over the past ten years the hospital’s revenue had increased from 8 million to 38 million yuan (U.S. $1.1-5.4 million), but Director Li Yong cited consecutive years of losses as the reason for not raising wages. An intensive care unit department director said his average monthly salary was less than 3,000 yuan (U.S. $428) after working in the hospital for 29 years, and it was difficult for him to support his family. A nurse said her payroll was only 1,800 yuan (U.S. $257) after working in the hospital for 11 years. A support staff only received an average monthly salary of 1,093 yuan (U.S. $156) after 32 years of work. Workers were dissatisfied that the management had disproportionally benefitted from the restructuring and marginalised workers in the process.
The Paper reported that, on 7 May, two days after workers demanded Director Li Yong step down, the hospital held a board meeting and decided that Li Yong would be placed on leave. On 10 May, Li Yong resigned as director of the hospital and chairman of the board of directors, and he was criminally detained on 16 June 2016.
Photo: Protest by workers at the Eighth People’s Hospital in Luoyang. The banner reads, “Give us back the hospital; Li Yong step down.” Photo credit: Twitter @顶丝的顶2956646537, wickedonnaa archive
In July 2017, the Luoyang government announced a shift in the healthcare reform plan. One of the most important points was that it would reverse some privatised hospitals back to public ownership, particularly the Central Hospital and the City Women’s and Children’s Healthcare Centre which might also have been privatised during the reform.
In addition to the diversion/loss of public assets during the restructuring process, hospitals’ financial stability after the restructuring was also an issue since governments’ funds were reduced. An article from Dingxiangyuan cited the Luoyang Central Hospital as an example, pointing out that the pressure to increase revenue had surged after the restructuring. The hospital’s obstetrics and gynaecology department was awarded initially 10 million yuan (U.S. $1.4 million) by the government, but the Ministry of Health later rescinded the award after the restructuring on the grounds that the fund was mainly for public hospitals.
Initially, the Luoyang city government stipulated that after the restructuring, the government’s funding to each hospital would be reduced over time. The funding would remain the same in the first three years, but it would be reduced to 50 per cent in the fourth year, 30 per cent in the fifth year, and completely eliminated by the sixth year. The cut of government funding resulted in a sharp drop in hospital revenues. Coupled with the labour disputes during the reform process, the decision to restructure public hospitals was finally withdrawn. By 2019, the province of Henan called off the restructuring altogether. The government stated that it would take back hospitals that have been privatised, and those that cannot be taken back will be rebuilt by the government. Still, many privatised hospitals have been awaiting to be turned public again. Some privatised hospitals in Henan went into huge debts and could not pay wages, especially during the pandemic.
A protest in Anshan, Liaoning province
The strike at Tanggangzi Hospital (汤岗子医院), a hospital with great historical significance in Anshan, Liaoning province, is another example of workers resisting privatisation. On 19 November 2013, 600 healthcare workers went on strike, blocking traffic. Tanggangzi Hospital is the third largest rehabilitation centre in China, and the striking workers said that the city government intended to downgrade the hospital to the district level so that it could be legally resold to a private company. Dozens of patients showed up to cheer on the strikers. This is the first strike recorded by the Strike Map after Liaoning province announced in 2012 that it would guide private capital to participate in restructuring public hospitals.
Photo: Hospital patients showed up to cheer for the strikers on the day of the protest
Photo credit: Twitter, Wickedonnaa archives
The workers said the hospital is a nationally-renowned rehabilitation and physiotherapy base. Built in 1950, the hospital has geothermal mineral springs with great historical value, as the last emperor Puyi and warlord Zhang Zuolin built the “Dragon Palace Hot Spring” and the “Dragon Spring Villa” there, respectively. Tanggangzi Hospital has served tens of thousands of ordinary people and party and state leaders for over 60 years. Today, the hospital employs more than 600 people, has more than 1,500 beds with an occupancy rate of nearly 90%, and accepts domestic and international patients.
Workers indicated that the downgrading in exchange for investment harmed public interest. One worker said:
“[The project] sacrifices the health of the majority of the people for the benefits of a few at the cost of the interests of the employees and the national resources, which is a shameful act of killing the goose that lays the golden egg.”
If the hospital were downgraded, it would have to be self-financing, and staff benefits would be reduced. Workers said their base salary would be reduced from 2,500 yuan to a little over 1,000 yuan per month (from U.S. $357 to $142). In addition, workers said that the pension would be reduced, citing an example that an employee with more than 30 years of experience would only get back one-third of the original pension. The staff’s city-level health care insurance would also be changed into the district-level plan, and some workers might be laid off if the plan went through.
At the protest scene, the hospital management tried to persuade the workers to leave, but this tactic failed when they could not resolve workers’ concerns. Subsequently, more than 300 police officers arrived to disperse the workers, and in the ensuing situation, several workers were beaten. After the clash, some workers ended their strike, while others continued to protest at the city government building. The management said that the government made the downgrade decision. Even with the workers protest, the government did not relent. The government made it clear that the hospital would not escape downgrading and that workers would be laid off if they did not accept it.
It is unknown if the workers’ strikes and protests succeeded in the end, but judging from the website of the Tanggangzi Hospital in Anshan, the downgrade decision seemed to have come to a pause, and privatisation did not seem to occur. The website shows that the hospital is positioned as a tertiary public rehabilitation hospital and touts the high performance and quality of care.
A protest in Putian, Fujian province
Healthcare workers standing up to the harms of restructuring plans has continued into the present. On 28 June 2023, hundreds of healthcare workers at Putian Hanjiang Hospital (莆田市涵江医院) in Fujian province protested at the hospital’s outpatient building. According to Straits News (海峡都市报), employees said that the hospital had not issued performance pay for three months, paying only base salary. A nurse who has been working for 25 years received a salary of less than 3,000 yuan (U.S. $428), only half of the usual amount she received. The hospital had more than 800 workers, and the performance pay owed to each worker was between 2000 and 5000 yuan (U.S. $285-714).
In 2015, the Hanjiang district government in Putian introduced Sinopharm Group (国药控股) to restructure the Hanjiang Hospital without the consent of most employees. A doctor mentioned in an interview that only 15 per cent of the staff agreed to the restructuring. He said:
“When the staff congress (职工代表大会) was held, most of the staff did not agree with the introduction of private capital.”
However, the article stated that management used underhand tactics: “The hospital leaders apply pressure by threatening staff with unfavourable evaluation and revocation of positions.”
After the restructuring, the hospital gradually changed from a public institution to a private hospital. After privatization, the hospital constructed new buildings, and in mid-2023, it had to repay the bank about 50 million yuan (U.S. $7.1 million). This resulted in the hospital’s inability to pay base salary and performance pay, amounting to about 3.2 million yuan (U.S. $457,143) per month.
An announcement from the hospital admitted that it has been in a financial deficit. However, workers disputed the effect of the market situation on the so-called deficit. A doctor revealed that after the ownership reform in 2015, Sinopharm Holdings acquired the right to manage the hospital due to its slightly more than 50 per cent capital contribution. The hospital set up key performance indicators for each department, and performance pay was deducted from staff in departments that failed to achieve the goals.
In the meantime, the hospital raised its service prices, encouraged patients to undergo unnecessary treatments, and, as a result, received more complaints from patients. In 2023, the government withdrew 1 million yuan (U.S. $142,857) in health insurance funds in response to several violations at the hospital, including duplicate charges and fictitious medical services. In 2022, the then-president resigned after only four months on the job after repeatedly raising the issue of high hospital management and procurement fees. Therefore, management decisions are one of the reasons for the deficit.
Problems arising after hospital restructuring are particularly serious in Putian, which has a relatively early history of healthcare marketization and privatization in the 1980s. Protests against restructuring are likely to continue in the future.
Protests against corporatisations by SOE hospital workers
In addition to restructuring public hospitals, the past few years have also been a peak period for restructuring state-owned enterprise (SOE) hospitals. SOE hospitals are not directly owned by the government but rather are owned and managed by corporations whose assets are owned by the state. Therefore, restructuring these SOE hospitals involves divesting from the SOE. In August 2017, six ministries and commissions, including the State-owned Assets Supervision and Administration Commission (SASAC), issued a guideline which stipulates that the restructuring or transfer of SOE healthcare institutions should be completed by the end of 2018. However, due to the slower-than-expected process of divesting SOE hospitals, the SASAC delayed the target by three years, to the end of 2021.
There are four ways to handle or divest SOE hospitals: closure, transfer to local governments, integration into other state-owned corporations (usually those with medical businesses), and restructuring with private capital. For healthcare workers, the most preferable way out is for the hospital to be handed over to local governments (or public universities). This way, workers can preserve their status and benefits as formal employees of government institutions. However, many local governments are reluctant to take over SOE hospitals due to tight funding and limits on the number of formal workers they can employ. Instead, they choose to transfer the hospitals to other state-owned enterprises or private capital. Therefore, the restructuring process has not been smooth, triggering protests from workers over employment and labour rights issues.
Protests against acquisitions by China Resources
Attracted by the potential of the healthcare industry, SOEs such as China Resources (华润集团) and Sinopharm (国药集团) actively acquired a number of hospitals in the early stages of hospital restructuring. According to Jiemian News (界面新闻), China Resources acquired the hospitals through communications with hospital management (the “high-level route”). After the acquisition, China Resources controlled the hospitals’ human resources and property rights and had the authority to strengthen the management of hospitals.
However, precisely because this strategy bypasses the rank-and-file workers, China Resources has encountered resistance from healthcare staff. In December 2016, in Changchun, Jilin province, the staff of Jilin University No. 4 Hospital (吉林大学第四医院) put up a banner that reads, “We reject China Resources; Our hearts are with Jilin U.”
The hospital was initially affiliated with the FAW Group (China First Automotive Work Group Corporation Limited, 中国第一汽车集团). It was initially intended to merge into Jilin University (its name was also changed to reflect this), but the property rights were never transferred. The acquisition process between FAW and Jilin University ended suddenly, and it was then that China Resources intervened to acquire the hospital, triggering dissatisfaction among the employees.
The demands from the hospital staff included that leaders at all levels make clear the specifics of the FAW negotiations with Jilin University and why they failed and that workers have the right to vote on the direction of the hospital reform. Employees believed that becoming part of Jilin University would improve the hospital’s long-term development and rejected the acquisition by corporations:
“China Resources and Sinopharm are listed corporations that seek profit by nature… The hospital is a public welfare institution… We refuse the cooperation talks between our hospital and China Resources.”
Photo: protest by healthcare workers at Jilin University's No. 4 Hospital
Photo credit: Weibo @火星-小浣熊, China Labour Bulletin Archive
China Resources also faced at least three protests against their other acquisitions from 2017 to 2018, including Guizhou Aerospace Hospital (贵州航天医院), Chengdu Aerospace Hospital (成都航天医院), and Zhanjiang Second Hospital of Traditional Chinese Medicine (湛江市第二中医院). A management representative of China Resources admitted that the Group disregarded the opinions of workers and lacked concern for their well-being in a Caixin interview:
“We have seriously reflected on this internally. We all thought of ourselves as high-flying professional managers. Who has the passion and patience to attend staff meetings, talk one-on-one to the doctors and supporting staff, and pass the buck over mere hundreds of yuan of retirement pensions?”
Another reason for the workers’ opposition is concerns about losing local government funding and insufficient follow-up capital investment. On 22 October 2018, workers at Guizhou Aerospace Hospital protested the transfer to China Resources and demanded that it be transferred to the local government. The petition letter stated:
“If the hospital does not go under the local government, it will lose contact with the locality and get isolated. In the context of a tiered healthcare system [6], without the support of the local government, the hospital will go to a dead end. Experienced staff will leave the hospital. Even if we become a corporation, it will still be an empty shell.”
A protest in Wuhan, Hunan
Workers also protest at SOE hospitals which were acquired by private capital and transformed into for-profit hospitals. On 5 November 2019, employees of Wuhan Commercial Vocational Hospital (武汉商职医院) defended their rights by hanging banners saying “Return the hospital to us,” “Protect our rice bowl [which means job],” and “Seek resettlement [to a proper health institution]”.
The hospital was founded in 1952. It was originally intended to serve the city’s Bureau of Commerce staff and was one of the earliest hospitals to turn to marketization. In 1984, it became self-financing. In 2000, the entire hospital staff became shareholders. After that, the hospital was characterised as a “non-profit hospital” that could not pay dividends, and the chairman and board members did not receive annual salaries. The money earned was used for the hospital’s development and to improve workers’ welfare.
However, in 2015, the hospital turned to a for-profit hospital after being acquired by Sino Great Wall Co., Ltd. (神州长城). However, the acquisition did not bring positive changes. Four years later, the company’s poor business condition led to its delisting from the Shenzhen Stock Exchange, which in turn led to the failed auction of the hospital.
Photo: Banners outside the Wuhan Commercial and Vocational Hospital
Photo credit: Weibo @ Dr. Zuo's Da Guaifa; China Labour Bulletin Archive
From an institutional perspective, it is not easy for either SOE or private capital to operate hospitals that are initially public in nature in a profit-seeking manner, and they often end up withdrawing from the business due to limited profit margins. Zhuang Yiqiang, director of the Institute of Asclepius Hospital Management (GAHA), stated it this way:
“At one time, listed pharmaceutical companies, medical device companies, real estate developers, and even automobile manufacturers were all investing in hospitals. Some acquirers wanted to expand new businesses but lacked the ability to operate the hospitals. They just wanted to tell stories in the capital market.”
Local governments generally prioritize health insurance funding for public hospitals. Private capital is torn between changing hospitals to for-profit models or not because they are likely to lose funding provided by national health insurance. Changing the status to for-profit hospitals will make getting insurance support more difficult.
From the workers’ perspective, hospital privatisation is also problematic not only because of harm to employment status and benefits, but also because of harms to public interest. Workers foresee that private hospitals tend to turn patients into consumers by overcharging them with high-priced and unnecessary treatments, which pushes away patients who are most in need of healthcare in favour of those who can pay. Their collective actions usually gather more support from the community as the issues they go against also concern the general public. Consequently, healthcare workers’ defensive struggles against privatisation receive more concrete responses from the government.
To be continued.
Download the full report as a pdf here.
[6] The staff were probably worried that with more patients directed to primary healthcare institutions, the hospital could face financial strains if it lost the support of government.