China has chosen 16 cities to pilot reform of government-run hospitals in an effort to ease public complaint of rising medical bills, according to an official circular released on Tuesday.

The cities are required to establish a reasonable, effective and optimized medical service system, and to fully motivate all medical workers to provide the public with safe, effective, convenient and affordable medical services, according to the document.

Public hospitals must retain its goal of serving the public interests and their top priority should be protecting people's health, said the document, jointly issued by five ministries including the Ministry of Health.

The cities, including six in central China, six in the east and four in the west, were asked to start the reform from this year.

China in April 2009 unveiled a blueprint for health-care over the next decade, kicking off a much-anticipated reform to fix its ailing medical system. The core principle of the reform is to provide basic health care as a "public service" to the people.

Health Minister Chen Zhu said serving the public interests should be underscored in the health care reform and the public hospitals should play a leading role in it.

MOH statistics show that China had about 14,000 public hospitals nationwide by November 2009.

Li Ling, prof. with the China Center for Economic Research of Peking University, said the reform meant public hospitals would return to its nature of serving the public rather than making money.

"This is key to solving the complaints of costly medical service," Li said.

Public hospitals in China enjoyed full government funding before 1985. Since then the situation changed as public hospitals embarked on a market-oriented reform as economic reform and opening up policy adopted in late 1978 deepened in the country.

"Public hospitals were allowed to make profits to invigorate themselves since then," said Xie Pengyan, professor of Peking University First Hospital. "Our hospital grew fast and my income increased remarkably since that year."

Analysts said the market-oriented reform had greatly improved medical service to some extent. But the fact that hospitals operated using profits from medical services and drug prescriptions also resulted in soaring medical costs.

According to the circular, public hospitals will not be allowed to make profit from drug prescriptions. They should operate on government funding and charges from medical services.

The document also said that efforts should be made to strengthen hospitals in rural areas. Public hospitals are required to train medical workers for grassroots medical institutions.

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