An unintended complementarity: how the outpatient pooling policy increases inpatient services in China

This study investigates the relationship between outpatient and inpatient services within China's tiered healthcare system following the implementation of outpatient pooling reform. Data were sourced from official administrative healthcare service records across counties in Sichuan Province (2010-20) and individual survey data from the China Health and Retirement Longitudinal Study (2011-18). Using a staggered difference-in-differences design with an imputation model, we identified an unexpected increase in hospital admissions post-reform, which was contrary to the policy's intent to optimize healthcare resource allocation. We found that increased use of outpatient services was positively associated with demand for inpatient care, demonstrating a complementary effect. Mechanism analysis revealed that the rising hospital admissions were partly attributable to two factors: (i) expansion of outpatient services in primary care institutions generating an induced hospitalization effect that contributed to the rise in inpatient volume and (ii) hospitals improving inpatient service efficiency by shifting selected diagnostic and treatment tests to the outpatient account. These findings confirm the complex interaction between outpatient and inpatient services and underscore the need for a more effective design of the medical insurance payment system to enhance the efficiency of China's healthcare services.