quality of compulsory education. The commitment of the municipal government to fiscal equalization is an important element of Dalian’s success in serving the poor and migrants best in terms of basic schooling among the five surveyed cities. Of course, a lot of useful experience in improving the allocation of public resources to basic education exists also outside the surveyed cities, namely in other cities and at provincial level. Worth noting is, for instance, the initiative of Jiangsu and Zhejiang provinces, in which the provincial governments fund vouchers to distribute scholarships to poor students province-wide.

**_In health, among the surveyed cities, Shanghai-Pudong and Shenzhen have supported training in community health center personnel and have financially encouraged the utilization of community health centers_** (see Box 3).  Consequently, these measures have allowed more low-income citizens to obtain affordable quality care.

## **Box 3 Strategy for community health centers in Shanghai-Pudong and Shenzhen**

In Shanghai-Pudong and Shenzhen, municipal governments support community health centers (CHCs) as grassroots-level providers for health prevention, health promotion, and basic clinical and family planning services. The objective is to expand access to affordable and timely primary care and reduce the demand for primary care at specialized hospitals.

According to the citizens’ scorecard survey, CHCs serve more than a quarter of the total outpatient visits and about three percent of the total inpatient visits in Shanghai-Pudong, which are the highest shares among the five surveyed cities. In Shenzhen, the survey revealed high use of CHCs for non-medical purposes.

Both cities increased funding for CHCs and took measures to enhance their capacities and utilization. For instance, the cities established a center to train general practitioners for CHCs, and require specialized hospitals and Centers for Disease Control to rotate their staff to CHCs, train community health workers, and actively participate in health promotion in the community. For health professionals, practice in CHCs has become a requirement prior to promotion. Furthermore, the cities mandate urban basic medical insurance and similar schemes to offer higher reimbursement for services in CHCs compared to hospitals.

Among the other measures to strengthen CHCs, Shanghai-Pudong has introduced vertical integration of the local health resources, dual referral system between CHCs and hospitals, systems for sharing information and resources across the different levels of health facilities, and better internal financial management processes. Since 2007, Shanghai-Pudong has also experimented in performance monitoring, delinking CHC staff salaries from the cost of treatments provided, and adjusting salaries according to overall, well defined, performance.

In Shenzhen, CHCs are sponsored and managed by hospitals and particularly engage in health promotion and prevention (with a strong role in immunization), family planning, mother and child health, chronic disease management, rehabilitation, and care for senior citizens. To enhance the quality of CHC services, Shenzhen has also implemented a comprehensive performance monitoring and evaluation system.

Source: Background papers and municipal government websites

# **Provider payment system**

**_Research has shown that the existing provider payment mechanisms have distorted incentives away from the interest of citizens_** .<sup>15</sup> In China’s cities as well as rural areas, public sector units entrusted with the provision of public services and vital government functions, including monitoring and surveillance, have been obliged to generate their own revenues.  To a large extent, the revenues come in the form of user fees, count for extra-budgetary revenues, and are used to cover salaries and other operating cost.  Fees and other extra-

> 15 See, for instance, _Health System Reform in China,_ The Lancet, October 2008.

33