Longitudinal Association of Salaries for Medical Staff With Medical Service Utilization and Expenditure in China, 2007–2016

Objectives: To test the hypothesis that higher salary levels of the medical staff are associated with lower medical service utilization and expenditure. Methods: Using longitudinal data from 31 Chinese provinces for the period 2007-2016, we constructed fixed effects models to analyze the association between the salary of medical staff and medical service utilization, medical expenditure, medication expenditure, and medication proportion. Results: A 10,000 CNY increase in medical staff's salaries was associated with a 0.89% decrease in the average number of annual inpatient admissions per person; 1.88 and 1.59% decreases in average expenditures per outpatient visit and inpatient admission, respectively; 3.05 and 2.66% decreases in drug expenditures per outpatient visit and inpatient admission, respectively; 0.58 percent point and 0.39 percent point decreases in the share of drug expenditure in outpatient and inpatient, respectively. When medical staff's salaries increased by 450,000 CNY, the turning point was reached when the maximum medical expenditure savings offset the medical staff salary increases, yielding a 634 billion CNY surplus from medical expenditure. Conclusions: Our results supported the hypothesis that higher salary levels of the medical staff are associated with lower medical service utilization and expenditure. Further studies are requested to test whether higher medical staff's salaries will attenuate over-treatment and that savings from reduced prescriptions and service charges will offset the increased salaries of medical staff.