GOVERNMENT-FUNDED CARE: A pharmacist at a rural clinic in southwest China's Chongqing. After becoming fully funded by the government in 2010, the clinic has lowered the charges of medicines and tests (LI XIAOGUO)

The Shanghai Century Publishing Group, which consists of five publishing houses, one magazine, one newspaper and a book trade company, started its makeover to switch from a public institution to an enterprise in 2003.

The group has injected a large proportion of its assets into a joint-stock company whose shareholders include several investment companies. Outside investors sent four people to sit at the Board of Directors of the Shanghai Century Publishing Co. Ltd. to represent their interest in decision-making.

According to People's Daily, the general payment level within the publishing group has been greatly boosted due to the improvement of its profit making capacity after the reform.

Public institutions' employees are also dissatisfied with a probably reduced retirement benefits package after the reform. An anonymous retired professor at Shanghai Jiao Tong University told The Economic Observer that the reform would cut the university's retirees' monthly pension by 1,000 yuan to 2,000 yuan ($318). He said that while the pension gap between retirees of enterprise and public institution diminishes, retired civil servants are enjoying a far better deal, which makes the reform unacceptable.

During a pilot reform in Guangdong Province since 2008, a large number of staff members of universities have applied for early retirement so that they can enjoy better retirement compensation deals before they are diminished by the reform of public institutions. The tide of early retirement has even disrupted normal teaching activities in some universities.

A success story

Like many hospitals in China, Guangdong Hospital of Traditional Chinese Medicine initiated a payment system reform in the 1980s, shortly after the inception of China's reform and opening up.

Before the reform, staff in this hospital was paid mainly according to their academic titles and length of service at the hospital. The reform pegged a physician's salary with the total value of medicines he or she prescribed. "After the reform, physicians became willing to work longer hours and treat more patients in one day while the side effect was that some of them prescribed more unnecessary and expensive medicines to increase their own payment," Xuan Guowei, former president of the hospital, told People's Daily.

In 2000, the hospital conducted another payment reform, pegging the payment with one's workload, performance in training and achievements to reduce patients' total expenses.

Lu Yubo, president of the hospital, said that while the second reform failed to increase staff's paychecks directly, the hospital invested generously in providing the staff with opportunities to improve their skills. "We wanted to make sure that all staff members could see a path to excellence in their own fields in front of them," Lu was quoted by People's Daily.

The hospital started to invite the most prestigious medical experts from around the country to conduct on-the-job training for its staff. "At the beginning, many of my colleagues complained about how frequent and demanding these training sessions were. However, it was not long before we stopped complaining when we realized how fast we became experienced in our fields," said respiratory physician Zhang Zhongde.

The hospital also adopted more flexible and competitive human resources management policies that encourage people to work at posts they like and are best at. Chen Yu, Director of the Human Resources Department of the hospital, told People's Daily that it was not unusual for the administrator of one department to go back to his or her original post of a physician if staff of the department elected a better candidate.

After the reforms, the hospital has grown rapidly. As the largest public hospital in China in terms of the annual number of patients, the hospital has more than 6.3 million outpatient visits every year and received more than 100 million yuan ($15.9 million) in research funding from the government over the past five years.

Public Institutions Reform Timeline

1995: Reforms of the personnel management system at public institutions was launched.

2006: Performance-based salary was introduced into public institutions.

2009: Pilot reforms of the pension system of public institutions started in Shanghai, Chongqing, as well as Shanxi, Zhejiang and Guangdong provinces.

2012: An open hiring system will be adopted by all public institutions by the end of the year.

2015: Categorization of all public institutions will be completed.

2020: A system for managing and operating a public service system with Chinese characteristics will be established.

(Source: The Economic Observer)

Public Institutions Directly Under the State Council

- Chinese Academy of Sciences

- Chinese Academy of Social Sciences

- Chinese Academy of Engineering

- Chinese Academy of Governance

- China Securities Regulatory Commission

- China Banking Regulatory Commission

- China Insurance Regulatory Commission

- State Electricity Regulatory Commission

- Development Research Center of the State Council

- China Meteorological Administration

- China Earthquake Administration

(Source: China Newsweek)

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