A few years ago I was talking to a Shanghai businessman about China’s health care system and his experience with it. He told me of his own personal encounter, which gave a certain insight into the delivery of health care. One evening his mother-in-law suffered a medical emergency. While she was being transported to the hospital, his first action was to call his friends and tell them to bring all of the cash they had on hand to him. When he went to the hospital he had about 5000 yuan (US$660) in his pocket. It took 3000 yuan to finally persuade the specialist just to come in to see her. His mother-in-law was seen and treated. The businessman considered himself very lucky.

In the latest issue of Health Affairs, Maureen Lewis has written an article on “informal payments” and health care in developing countries. These informal payments are under-the-table, mostly illegal payments, bribery, or gifts that patients give to health care workers for variety of purposes. They are a significant form corruption and symptomatic of bad management according to Lewis. They are widespread, largely unreported, and typically indicative of under-funding and the absence of accountability.

In China, these informal payments and gifts are know as “red packages or envelopes” usually containing cash.

Why there is little systematic data, I’d like to highlight a few points made by Lewis, as well as those cited in an excellent review of the research over the last several years into this area by Bloom et al. ( referenced by Lewis) on the situation in China.

• Selected studies in China of “red packages” paid to providers report that payments average 140–320 yuan per hospital visit (US$16–US$36), with referral hospitals averaging 400 yuan (US$44), roughly 90 percent of half-monthly income.

• Red packages have always been around but have become more common in China’s new market economy. One study reported that health workers in 190 hospitals recently turned 3.5 million yuan in such payments over to local government. Another found that over 50 percent of inpatients in Shengyang had paid a red package averaging 260 yuan. Yet another found that 74 percent of inpatients had made informal payments. Most studies focus on urban health facilities, however, one reported that health workers in rural Jiangxi also receive red packages.

• Patients give red packages to doctors or other health care workers to allow them to jump the queue or obtain special services such as shortened admission time for surgery or for longer lengths-of-stay in hospitals. Patients pay to receive more-attentive and “higher-quality” care, as they perceive it. Longer lengths-of-stay do not necessarily mean better clinical care, but patients tend to value shorter waits, longer hospital stays, and attentive treatment by medical staff. Quality as perceived by patients increased with the amount paid informally.

• Health workers have ambivalent attitudes towards red packages. One study reported that 21 percent of doctors said they accepted them to compensate for unrealistically low pay, 59 percent refused them on ethical grounds and 15 percent turned them down for fear of punishment. Another survey found that 31 percent of recent medical school graduates thought that red packages were normal.

• The government has become increasingly concerned. The government treats red packages as unethical and unprofessional. They punish offenders with fines, loss of bonuses, termination of employment, postponement of promotion, demotion and/or loss of the right to prescribe drugs. A recent strategy has been to ask patients and doctors to sign an agreement not to pay or receive a red package.

• Few strategies exist to control informal payment. Raising official fees as a substitute for under-the-table payments showed positive effects as does transparent official fee policy, indeed greater transparency in all fiduciary functions. Civil-service reform and increasing the accountability of public workers often play a key role in improving governance and relinquishing reliance on informal payments.

China’s health care reform advocates will have to confront these issues as they begin to modernize the country’s health care system.These informal payments are health care’s dark side and ripe for the picking by China’s anti-corruption forces. But a careful hand has to be played here. Root cause analysis and systemic approaches need to be considered. Just lopping of the heads of doctors will certainly not fix the problem.