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Sick Practice

At least 13 hospital executives have been found guilty of corruption this year, raising concerns among experts over China’s abilities to fight fraud and bribery in its medical system

By Zhou Qunfeng Updated Jul.1

A visitor takes a photo at the 86th China International Medical Equipment Fair (CMEF), Shenzhen, Guangdong Province, November 23, 2022 (Photo by VCG)

A bribery scandal involving a top-ranking official at one of China’s leading pediatric institutions has once again exposed ongoing corruption in the country’s healthcare system.  

After a nearly yearlong investigation, Wei Yongxiang, the former president and deputy Party secretary of the prestigious Capital Institute of Pediatrics, was fired for allegedly accepting money that “could potentially compromise his ability to perform his duties impartially,” Beijing Municipal Party Discipline Authority announced on its website on March 26.  

Wei displayed a readiness to “become a target” for bribers and was expelled from the Communist Party of China, the announcement read.  

Thirteen hospital directors and vice-directors were also found guilty of corruption following a separate monthlong investigation launched on January 9, 2023.  

The majority of the bribes were traced back to pharmaceutical companies, medical equipment manufacturers and construction contractors.  

The cases have raised concerns among experts about widespread corruption in China’s healthcare system.  

“In most cases disclosed over the past few years, these corrupt activities would have remained undetected had it not been for the bribers themselves or the suspects’ rival colleagues exposing them,” Zhao Chun, chairman of the Medical Clinical Specialty Development Committee at the China Medical Foundation, told NewsChina. 

Bad Directors 
Wang Tianchao, born in 1957, worked odd jobs from a young age to help support his siblings. Despite economic hardships in the wake of the Cultural Revolution (1966-1976), Wang became a top medical student. He joined Yunnan Provincial First People’s Hospital, rising to become its director in 2004.  

However, his power led to corruption, first through cash bribes from patients seeking preferential treatment, then from doctors in exchange for promotions they were unqualified for. He also meddled in the purchase of medical equipment and the hospital’s contracted projects, news website Sohu.com reported on March 11, 2023.  

By the time he was arrested in 2014, Wang had amassed 120 million yuan (US$17.35m) in bribes, owned 100 apartments and 100 parking spaces. In 2017, he was sentenced to life imprisonment.  

Wang’s case is not unique. In the first 11 months of 2022, 55 public hospital directors and Party secretaries were suspected of corruption, according to the People’s Daily Online.  

An official in Yunnan revealed details of a corruption case involving an inflated hospital bid for a digital angiography system, which provides imagery to detect problems with blood flow in the brain, heart, lungs and kidneys.  

“The system sold for 5.79 million yuan (US$840,000), but the contract price to the hospital was more than doubled to 11.7 million yuan (US$1.69m),” said Yang Xinyu, an official from the Commission for the Discipline Inspection of the Communist Party of China (CPC) and the Commission of Supervision, Yunnan Province.  

In a 2020 anti-graft documentary made by Yunnan authorities, investigators recoil from a strong odor as they uncover large vats filled with moldy cash hidden by Yang Benlei, former director of the Traditional Chinese Medicine Hospital in Chuxiong Yi Autonomous Prefecture, Yunnan Province. According to investigators, Yang had the final say in all medicine and facilities procurement at the hospital.  

Requesting anonymity, a doctor from a top tertiary hospital in Shandong Province told NewsChina that the current system empowers hospital leaders, making oversight difficult. 
Hospital committees that procure medicine and equipment often dare not protest the decisions of their directors and Party secretaries who decide their promotions, Zhao said.  

Wang Xiuhua, former secretary-general of the Shandong Hospital Association, suggested in his 2016 article “A Lesson Learned from Wang Tianchao” that public hospital chiefs’ power should be contained by listing their duties under supervision, thus reducing opportunities for secretive operations. 

Bribery Under Wraps 
Hidden methods of bribery are hard to detect and track, involving bidding rules, commission fees, invisible stakeholders and symposiums.  

For example, He Xianwei, director of Huzhong People’s Hospital in Daxinganling, Heilongjiang Province, on the surface seemed to dress plainly and live within his means.  

However, after barely serving six months as hospital director in 2014, He began demanding kickbacks from a pharmaceutical company chairman.  

A March 2021 report from the Central Commission for the Discipline Inspection of the CPC and the National Commission of Supervision detailed their transactions.  

They rendezvoused in a quiet alley, where the chairman agreed to pay He a 15-percent commission for medications sold to the hospital from August that year.  

He also demanded payment in cash under the strictest confidence, otherwise he would end their cooperation. According to investigators, He’s dealings were not easily detectable.  

It was not until a briber’s confession that prosecutors were able to collect enough evidence to build a case against He. The lawsuit involved more than 10 pharmaceutical and medical equipment companies.  

Despite the anti-graft drive, hospital directors still manage to receive bribes and evade prosecution. According to Huang Xianfeng, Party secretary of the disciplinary watchdog in Yuhuan, Zhejiang Province, four methods of bribery are hard to trace.  

Hospitals can set rules for open bids that favor specific vendors. They can also profit by cooperating with third-party buyers for kickbacks, as invisible stakeholders in pharma companies, and through deals at the many medical industry conferences held at resort destinations across the country.  

Zhao Chun said drug companies and medical equipment manufacturers have many options to exert influence through bribes. “For instance, they can bribe retired hospital directors... or target the relatives of incumbent directors, which is hard to detect,” he explained. 

Pulling the Plug 
Hospital directors started to amass power in 1982, when the Ministry of Health (now the National Health Commission) separated Party management from hospital operations as part of China’s reform and opening-up.  

In 2018, hospital directors were put under the supervision of Party secretaries to contain their power.  

However, according to Zhao, this system faces challenges due to the medical industry’s complexity. “The corruption taking place is very clandestine, and those without decades of clinical experience rarely notice the tricks used in hospital operations such as procuring medical facilities,” he said.  

Wang Minggao, a senior expert at the Think Tank on Clean Governance in Hunan Province, told NewsChina that Party supervision is problematic because those appointed often lack medical expertise.  

“Instead, candidates... are appointed to the position of [hospital] Party secretary based only on rank and seniority, which nullifies the function of supervision,” he said.  

From 2020 to 2022, the National Health Commission collaborated with authorities such as the Ministry of Public Security to investigate medical corruption.  

Zhao Chun told NewsChina that hospitals should promote only the most talented people, improve auditing and supervisory bodies’ professional knowledge and contain directors’ powers. 

He also called for more transparency in hospital purchases. “Hospitals can play tricks with pricing when information is not transparent. Therefore, they need to publish a clear price list online so that patients are well-informed and have a comprehensive view of price differences between hospitals,” he said.