Responding to growing public criticism of soaring medical fees, lack of access to medical services, poor doctor-patient relations, Chinese government will launch a pilot program to reform its public hospitals.

"As China aims to provide universal medical service to 1.3 billion people," Chen Zhu said, "state-run hospitals must be overhauled."

"A compensatory mechanism will be set up in public hospitals," Chen said at a national health work meeting on Thursday.

He specified, under the reform plan, the government will be responsible for giving subsidies to build public hospitals' infrastructure. Money will also be spent on purchasing big medical apparatus, key academic research, doctor training and covering health care costs for retirees.

The government will also give special subsidies to hospitals providing public health services such as disease prevention, inoculation and health education.

"The plan will tilt in favor of hospitals specializing in epidemic diseases, vocational diseases, psychiatry, traditional Chinese medicine, maternity and pediatrics," Chen said, suggesting those institutions would be eligible for more funding under the reforms.

How will hospitals make money?

At heart of the reform will be changes on how hospitals should make money.

"We aim to cut hospitals' involvement with drug sales to cut drug prices, medical supply prices and physical check-up fees," Chen said.

He noted that resulting money shortfalls could be met by government subsidies and a reasonable rise in medical service fees passed on to patients. Some of those fees might be covered by the basic medical insurance refund, according to Chen.

China began reforming its medical system in 1992 as it tried to abolish a system under which governments covered more than 90 percent of medical expenses.

Due to a lack of government funding, public hospitals have, for years, mainly operated using profits from medical services and drug prescriptions. This profit-driven method of management meant "heavy burdens on patients and led to a waste of medical resources," Chen had said earlier.

Government funding accounted for only about 17 percent of the expenditure of the health sector.

According to the Chen, the government will set up hospital monitoring institutions to ensure transparency in management and quality of medical service.