China’s cash-strapped local hospitals are avoiding a government-subsidized loan scheme for equipment upgrades, despite the need to quickly prepare for a surge in cases as Beijing eases its draconian zero-covid policy.
China’s cabinet, the State Council, announced in September that it would offer local hospitals a total of more than 200 billion yuan ($29 billion) in loans with interest rates of just 0.7% or less for buy devices ranging from CT scanners to surgical robots.
But most hospitals have yet to apply for the plan despite a deadline later this year, according to government advisers and medical equipment manufacturers. Hospitals said China’s zero-Covid regime, which has severely restricted movement in the country and reduced consumption, had undermined their financial health and their willingness to take out new loans.
“We have suffered a drop in revenue in recent years as the zero covid policy prevented patients with other illnesses from going to the doctor,” said the team leader at a hospital based in Changzhou, near Shanghai. “We don’t have an incentive to buy new devices.”
After nearly three years of draconian lockdowns, contact tracing and mass testing, Beijing this month abruptly eased its coronavirus restrictionsunleashing a so-called wave of exit infections that has spread through the capital and other large cities.
Critics have accused Beijing of failing to adequately plan for the zero-Covid exit in terms of vaccines and increasing the capacity of its health system to deal with more serious cases. COVID-19 cases.
But the credit subsidy program, which ended a 10-year ban on public hospitals buying equipment using bank loans, was aimed at helping modernize the underfunded health system and was part of efforts to stimulate the economy. In crisis.
Some hospitals jumped at the opportunity. The wealthy eastern province of Fujian demanded in September that all hospitals in the county apply for at least 100 million yuan in subsidized loans, an official with the China Association of Medical Equipment said.
“Such cheap money is not easy to come by,” the official said.
However, it soon became clear that Beijing would have a hard time meeting the loan quota. The medical equipment association official said hospitals in the country’s underdeveloped northern provinces had little interest in the plan, although many needed equipment upgrades.
Large hospitals were also cautious about leverage. An official with the equipment department of Huashan Hospital, one of the largest in Shanghai, said it would only use low-interest loans to buy “necessary” devices.
“We are not going shopping just because the government has made cheap credit available,” the official said.
The lack of business has dampened hospital demand for better devices. Zhu Weizhen, founder of a Shanghai-based maker of ultrasound equipment that regularly deals with hospitals across the country, estimated that the Chinese health system’s annual revenue had fallen by a third since zero-Covid began in 2020.
“Travel restrictions have forced many patients to postpone or cancel their medical appointments,” Zhu said. “That has affected the results of the hospitals.”
As uncertainty grew over when and how Beijing would lift its covid restrictions, hospitals feared they would struggle to pay even low-interest debt.
“We are not going to take out a two-year loan to buy a CT scanner that takes five years to pay back,” said the Changzhou-based hospital executive. “We don’t know when the demand for health services will return to normal.”
Some of those hospitals that got beyond their means were counting on government bailouts if things went wrong, authorities said.
In the eastern province of Jiangxi, the Jinxi County People’s Hospital obtained a two-year, 258 million yuan subsidized loan from the China Development Bank last month, official records show. The hospital made just Rmb112m in revenue from its main operation last year.
That meant the hospital would have to rely on increased government support to service the debt even though the local authority’s own revenue had been cut due to zero-Covid, a hospital official said.
“We applied for the loan based on political considerations, not commercial ones,” the official said, adding that the local government was interested in securing the loans to help boost the region’s economy.