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Could non-public employees in China’s public hospitals gauge healthcare demand?

In response, reader Seth made the following comment: “How about the fact that most employees in public hospitals can be regarded as public employees themselves since they have [shiye bianzhi] 事业编制 ?” I wanted to take some time to answer this question because I think it is a nice way to continue the discussion I started last week.

The short answer is that it’s far from clear that most employees in public hospitals can be regarded as public employees, as that term is commonly defined in a market system. Indeed, confidently being able to define who within a Chinese public hospital is or is not a public employee, is or is not a civil servant, has or does not have some sort of bianzhi is a question that has proven hard to answer. Nevertheless, this may simply be because not enough people have taken the time to look. I think that this question would be a very valuable topic of research because it could lead to a great proxy for healthcare demand. Let me explain.

To begin it’s important to give the proper context, define the term ”shiye bianzhi 事业编制 ”.

To do that we start with the second word in the term, bianzhi 编制, which is popularly used to refer to an official post or position, but formally bianzhi refers to “a system for determining the functions of government, the number of organs and the number of personnel employed in each organ.”  (Yuen Yuen Ang, PhD, University of Michigan, Counting Cadres: A Comparative View of the Size of China’s Public Employment, December 23, 2011, China Quarterly, Forthcoming).

The bianzhi system is nationally administered by the  State Commission Office for Public Sector Reform (SCOPSR), or 中央机 构编制委员会办公室 Zhongyang jigou bianzhi weiyuanhui bangongshi, and locally administered by smaller local establishment offices (bian- ban 编办). (Yuan Yuan Ang).

Every unit in the Chinese bureaucracy, including hospitals, is allocated a certain number of bianzhi by the local establishment office, which in line with the definition above determines its official staff size and budgetary allotment. (Yuan Yuan Ang). This grant of bianzhi is composed both administrative level bianzhi (xingzheng bianzhi 行政编制）and subsidiary bianzhi (shiye bianzhi 事业编制), the latter of which is the type that Seth brought up in his comment. (Yuan Yuan Ang).

But, the number of bianzhi allotted to a hospital or administrative unit is not necessarily indicative of the number of state-funded ( i.e. public) employees in that unit. That’s because in addition to bianzhi, there are many bianwai (编外),or outside of bianzhi employees, who are brought on to perform roles that are necessary to the unit’s operations but unmet by centrally administered bianzhi allotments. (Yuan Yuan Ang). For example, a hospital may need 50 nurses, but the official bianzhi only provides for 30. In this case the hospital would bring in additional nurses on a bianwai or contract-based part time basis (hetongzhi 合同制) . Although far from an official source, I found at least one Chinese source that indicates bianwai hiring to be the norm,  claiming the majority of nurses are now hired on a part-time basis, while bianzhi spots are held on reserve as recruiting incentives for four-year college and graduate school students from top schools.

In addition, there seems to be a connection between high numbers of non-bianzhi employees and a departments ability to create its own revenue. The higher the number of non-bianzhi employees, the stronger the ability of a department to earn its own revenue independent of bianzhi allotments.(Yuan Yuan Ang).

So under this scenario, what about the shiye bianzhi question posed by Seth leads me to think it could be a good proxy for gauging healthcare demand? If you’ve made it this far, you realize that the number of shiye bianzhi will probably not give us much insight into this answer. Rather, the key lies in figuring out the rate of hiring hired outside of the bianzhi system. An increasing rate would be a good indicator of demand for services in a particular service industry over any period of time because it would be indicative of two possibilities things. First, that a hospital’s original capacity for providing services was no longer adequate thus necessitating additional hiring. Second, that the hospital adept enough at meeting the demands of the market that it could support its own hires independent of the centrally administered bianzhi budgetary allotment. Both of these facts would be of great value to a private investor or entrepreneur. It might be a reason in favor of investing in a certain public hospital, or a strike against the same investment.

As another example, if a public entity, let’s say a public government hospital, suddenly started hiring more workers in a given year, then someone wishing to open a private hospital in the same area could extrapolate that the state-funded government hospital intends to increase its bid for market share in the future.  In addition, it may also be a sign that the government hospital is intent on keeping the market it has and acting boldly to prevent the entry of other competition. By the same token, a decreasing rate of hires, or even an increasing rate of fires, could indicate equally advantageous information for making strategic decisions.

Please readers, let us know what you think by email or in the comments section. Seth, thank you again for the comment. As you see, it raises many more questions than we have answers to.