In recent years, public hospitals have faced mounting financial and operational pressures, a trend that has drawn attention at the national level. Recently, the National Health Commission, in collaboration with the State Administration of Traditional Chinese Medicine, jointly issued the “Guiding Opinions on Strengthening the Operation and Management of Public Hospitals,” which notes that as the revenue and expenditure scale of public hospitals continues to expand, their business activities—covering medical care, education, research, and disease prevention—as well as economic operations such as budgetary management, asset administration, and cost control, and resource allocation involving personnel, finances, materials, and technology, have become increasingly complex. Consequently, economic operating pressures are steadily intensifying, underscoring the urgent need to uphold the public‑service orientation, accelerate efforts to address internal operational and managerial shortcomings, and pursue greater efficiency through refined management.

The Opinions stipulate that hospitals shall establish an operations management committee, which shall be primarily responsible for formulating and refining the hospital’s organizational framework and internal rules and regulations; setting annual objectives, performance indicators, and plans for operations management; reviewing analytical and evaluative reports on operations management; and proposing recommendations and improvement measures to enhance the hospital’s operational management.

The opinions also propose advancing the socialization of logistical services; strengthening the management of utilities—water, electricity, gas, and heating—as well as catering, environmental sanitation, building facilities, and security; optimizing service processes, standardizing management mechanisms, and reinforcing energy‑consumption control; and exploring a smart, “one‑stop” service model to continuously enhance the quality and efficiency of logistical support.

At the same time, we will strengthen operational guidance for clinical, medical technology, and ancillary service departments. We will explore establishing an operations support team to monitor departmental performance on a regular basis, providing effective guidance to help clinical departments enhance operational efficiency. Additionally, we will reinforce institutional management and cost control across teaching, research, preventive care, and logistical support functions.

Attachment: Guiding Opinions on Strengthening the Operational Management of Public Hospitals

To the Health Commissions and Traditional Chinese Medicine Bureaus of all provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps; to the budget-managed hospitals of the National Health Commission and the State Administration of Traditional Chinese Medicine:

At present, public hospitals are experiencing continuous expansion in both revenue and expenditure. Their operational activities—covering medical care, education, research, and disease prevention—as well as their economic management—including budgetary funds, asset administration, and cost control—and resource allocation across personnel, finances, materials, and technology have all become increasingly complex. Consequently, economic operating pressures are mounting, making it imperative to uphold the public‑service orientation, swiftly address internal operational and management shortcomings, and pursue efficiency through refined management. To implement the requirements set forth in the “Guiding Opinions of the General Office of the State Council on Establishing a Modern Hospital Management System” (Guobanfa [2017] No. 67), promote high‑quality development of public hospitals, accelerate the transformation of management models and operational approaches, and further enhance the scientific, standardized, refined, and information‑based levels of hospital operations and management, these guiding opinions have been formulated.

I. General Requirements and Basic Principles

Public hospital operations management is a comprehensive set of managerial activities—encompassing design, planning, organization, implementation, control, and evaluation—centered on enterprise-wide budgeting and business process management, and supported by full-cost accounting and performance management. It comprises a suite of management approaches and methodologies aimed at the scientific allocation, meticulous administration, and efficient utilization of the hospital’s core resources, including human capital, finances, materials, and technology.

(1) Enhance awareness. Strengthening the operational management of public hospitals is a crucial lever for guiding high-quality hospital development in line with the new development philosophy and for implementing a modern hospital management system; it is an intrinsic requirement for deepening the comprehensive reform of public hospitals and establishing a new operating mechanism that upholds public welfare, motivates staff, and ensures sustainability; it is a robust measure to reinforce supply-side structural reform and effectively improve the efficiency of core functions such as medical care, education, scientific research, and disease prevention; and it is an important means of alleviating financial pressures on public hospitals while enhancing the efficiency of internal resource allocation and operational management performance.

(II) Overall Requirements. Guided by the principles of health and wellness work in the new era and the strategic plan for the development of public hospitals, we will uphold the public‑service orientation and strive to achieve an organic integration of social and economic benefits. We will vigorously promote the deep integration of core clinical services with operational management, embedding modern management concepts, methods, and technologies across all domains, levels, and processes of operations management to enhance the precision and sophistication of such management. We will remain committed to high‑quality development and substantive capacity building, leveraging improved management systems, business process reengineering, optimized resource allocation, and strengthened analysis and evaluation to transform operational management into a driver of value creation, thereby effectively improving operational efficiency and input‑output productivity. Particular attention will be paid to economic activities inherent in various business operations—i.e., those that generate revenue or consume human, financial, and material resources—while establishing and refining internal control and risk‑monitoring mechanisms and measures that both comply with standardized business management requirements and meet the needs of risk prevention and control. All public hospitals nationwide are required to continuously strengthen their operational management; tertiary public hospitals should set an exemplary standard.

(3) Basic Principles.

1. Principle of Public Welfare. Grounded in the principle of public welfare, this approach takes meeting the health needs of the people as both its starting point and ultimate goal, thereby maximizing social benefits and service effectiveness.

2. Principle of Holistic Integration. Develop the annual operations management plan with a focus on the big picture, engage all employees in every stage of operational activities, coordinate demand across the board, and allocate resources efficiently.

3. Principle of Integration: Fully integrate operational management with core business activities such as clinical care, education, research, and prevention, thereby fostering value creation through these activities.

4. Cost-efficiency principle: Balance operating costs with operational efficiency, striving to achieve appropriate operational efficiency at a reasonable cost.

5. Principle of Adaptability. Grounded in objective realities, establish operational management models, structures, and mechanisms that align with the unique development characteristics of public hospitals.

II. Establishing an Operational Management Organizational Framework

(4) Strengthen organizational development.

The hospital’s principal leader assumes overall responsibility for the hospital’s operations and management, while the chief accountant assists in carrying out specific tasks. Each deputy director is responsible for the tasks assigned to their respective area of oversight.

Hospitals shall establish an Operations Management Committee, which shall be primarily responsible for developing and refining the hospital’s organizational framework and internal rules and regulations; formulating annual operational management objectives, performance indicators, and plans; reviewing operational management analysis and evaluation reports; and proposing recommendations and improvement measures for hospital operations management.

Hospitals shall designate a department responsible for operations management to carry out the following key functions: formulating and drafting operational management policies, plans, and analytical evaluation reports; proposing recommendations for refining operational processes, optimizing resource allocation, and improving performance‑assessment indicators; organizing and facilitating the effective implementation of various operational management measures and tasks; and conducting analyses and evaluations of operational performance and preparing corresponding performance‑analysis reports.

Hospitals should strengthen the staffing of their operations management departments by assigning personnel with expertise in finance, auditing, human resources, clinical medicine, nursing, pricing, medical insurance, information technology, and engineering to serve as operations managers, thereby effectively assuming responsibility for day-to-day operations management. Hospitals should also actively implement systems such as operations assistants and price‑management coordinators to support and coordinate clinical departments in enhancing internal operational efficiency and price‑management practices.

(5) Streamline the operational mechanism. Within the hospital, an efficient management system should be established, featuring scientific decision-making, clear division of responsibilities, coordinated implementation, analytical evaluation, and effective communication and feedback.

1. Strengthen the decision-making mechanism. Any matter related to “three major issues and one significant matter” in operational management must be reviewed, discussed, and approved by the Hospital Party Committee. For matters requiring a legality review, a formal opinion on legal compliance shall be issued.

2. Improve the division-of-labor mechanism. Clearly define the responsibilities and specific roles of the Operations Management Committee, the lead operational management department, business units, and the administrative and logistics management department in operations management.

3. Refine and implement the mechanism. Decompose and specify operational management objectives and tasks at each level, assign principal responsibilities at every tier, and ensure the effective execution of all tasks.

4. Strengthen the evaluation mechanism. Conduct regular operational monitoring, compliance inspections, and analytical assessments to dynamically track and evaluate progress and implementation outcomes in operational management.

5. Establish a feedback mechanism. Communicate and provide timely feedback on operational performance and evaluation outcomes across all levels within the hospital, fostering two-way horizontal and vertical collaboration and promoting coordinated development at both the hospital and departmental levels.

(6) Enhance the institutional framework. Hospitals should, in alignment with their operational objectives and the demands of refined management, focus on core resources—human, financial, material, and technological—and on core functions such as medical care, education, research, and disease prevention. Guided by resource allocation, process reengineering, and performance appraisal, they should establish and refine an operational management system that clearly defines organizational structures, roles and authorities, decision-making mechanisms, business standards, and operational procedures. Furthermore, they should improve policies and procedures covering human resource management, space and facility‑equipment management, performance management, financial management, asset management, risk prevention and control, and information technology management, thereby ensuring standardized operations, efficient inter‑departmental coordination, and enhanced operational efficiency and quality.

III. Clarify Key Tasks in Operations Management

(7) Clarify the scope of management.

1. Optimize resource allocation. Based on the hospital’s construction plan and its medium- to long-term development strategy, establish standardized criteria for the categorized allocation of human, financial, material, technological, spatial, and facility resources; strengthen resource coordination and optimization, promote dynamic alignment among various resource types, and enhance the capacity of internal resource allocation to support the coordinated delivery of clinical care, education, research, and preventive services.

2. Strengthen financial management. Enhance oversight of comprehensive budgeting, cost accounting, capital construction finance, economic contracts, pricing, and medical insurance settlement to lay a solid foundation for operational management. Integrate organizational development goals, performance‑assessment metrics, and quality‑control procedures into financial management to ensure its roles in service delivery, risk mitigation, and governance. Further promote the sharing and collaborative use of financial information to provide robust support for business growth.

3. Strengthen asset management. Enhance the management of monetary funds, fixed assets, intangible assets, materials and supplies, and construction-in-progress, establishing a comprehensive, end-to-end management system covering procurement, issuance, and inventory. Ensure effective oversight across all stages—asset allocation, utilization, and disposal—and reinforce the analysis, monitoring, and evaluation of asset‑use efficiency.

4. Strengthen logistics management. Promote the socialization of logistical services; enhance management of water, electricity, gas, heating, catering, environmental hygiene, and facility maintenance, while optimizing service workflows, standardizing management mechanisms, and reinforcing energy‑consumption control. Explore a smart, “one‑stop” service model to continuously improve the quality and efficiency of logistical support.

5. Strengthen operational guidance for clinical, medical technology, and ancillary service departments. Explore the establishment of an operations support team to systematically monitor departmental performance and development, providing effective guidance to enhance operational efficiency in clinical units; reinforce institutional management and cost control across teaching, research, preventive care, and logistical services.

6. Strengthen the integration of clinical and financial management. Enhance awareness of budgeting, cost control, performance management, and internal controls, embedding financial management requirements into core hospital business processes and all stages of quality assurance to foster deep integration between clinical operations and resource management. Explore and refine standardization of clinical pathways, standardize clinical terminology, and promote standardized management of healthcare delivery. Reinforce process oversight and internal monitoring to ensure that clinical service activities are effectively translated into economic outcomes.

7. Strengthen operational risk prevention and control. Enhance internal audit oversight, risk management, and internal control systems, and establish sound mechanisms for risk analysis, assessment, and mitigation. Reinforce internal controls at the organizational, financial, and business levels to achieve end-to-end management of all hospital‑related economic activities. Establish a routine joint inspection and review mechanism involving departments responsible for medical services, pricing, finance, and other areas, and conduct both scheduled and unscheduled inspections to ensure standardized management of medical services, thereby preventing violations of laws, regulations, and ethical standards driven by the pursuit of financial gain. Strengthen debt‑risk management and strictly prohibit borrowing for construction purposes.

8. Strengthen internal performance assessment. Hospitals shall, in accordance with the performance‑assessment indicators established by the competent authorities for health and traditional Chinese medicine, develop an integrated internal performance‑assessment framework. They should conduct comprehensive evaluations across clinical care, education, research, preventive services, and discipline development, thoroughly assessing the effectiveness of operational management. Furthermore, they should leverage information technology to ensure the quality of assessments and closely integrate assessment outcomes with efforts to enhance internal management.

9. Advance the informatization of operational management. In accordance with national and industry‑issued standards for hospital information system development, strengthen the construction of internal operational management information systems to integrate physical flows, financial flows, business flows, and information flows into a unified whole; enhance the seamless interoperability of various information systems to ensure the standardization, completeness, and validity of all types of data, thereby supporting the collection, analysis, evaluation, and monitoring of operational data; and reinforce operational management information security by improving technical safeguards and institutional frameworks.

(8) Optimize management processes. Hospitals should integrate personnel, finances, materials, and technology across all operational stages through process management, thereby establishing a unified management system. Centered on patients and clinical needs, guided by public‑service principles and institutional development strategies, and driven by the goals of refined management and enhanced quality and efficiency, hospitals should adopt systems thinking to comprehensively coordinate and optimize their management processes, achieving systematic, scientific, standardized, and intelligent process management.

1. Streamline operational processes. In accordance with the standards and inherent requirements of business activities, develop flowcharts for each hospital operational process in a sequential manner. For each activity, provide a detailed description that incorporates its regulatory basis, management principles, quality standards, job responsibilities, scope of work, and resource allocation—including personnel, finances, materials, and technology. At the same time, integrate internal control requirements into every stage of the operational workflow to ensure seamless linkages, mutual checks and balances, and effective risk mitigation.

2. Evaluate operational processes. From the perspectives of quality, risk, time, and cost, conduct regular reviews to assess the scientific rigor, compliance, and adaptability of each operational process; identify issues, analyze their root causes, and formulate recommendations.

3. Optimize operational processes. Adhering to a problem‑oriented and goal‑oriented approach, with a focus on systematicity, synergy, and efficiency, continuously refine the design of operational workflows to ensure they can promptly adapt to the evolving internal and external environments and conditions of the hospital.

4. Promote the standardization and digitalization of process management. Operational processes that have been tested in practice and proven feasible should be promptly codified into formal rules and regulations and integrated into information systems, striving to ensure that operations are conducted in accordance with established procedures, run in a standardized manner, and achieve high quality and efficiency.

(9) Strengthen information support. Hospitals should make full use of modern information technologies and enhance the standardized development of integrated hospital operation and management information platforms.

1. Establish an operations management system and a data center to achieve end-to-end resource management. The system will focus on five major domains—human resources, finance, materials, basic operations, and comprehensive decision-making—and six key areas of activity—healthcare, medical insurance, pharmaceuticals, education, scientific research, and disease prevention. Key components include: a human resources management system; financial systems for fund settlement, accounting, budgeting, full-cost management, and audit oversight; a performance appraisal system; a materials management system covering pharmaceuticals, reagents, high-value consumables, low-value consumables, office supplies, disinfection equipment and materials, and material barcoding; a procurement management system encompassing supplier management, procurement planning, and order processing; a formulation management system for traditional Chinese medicine raw materials and finished products, as well as herbal decoction pieces and prepared formulations; an asset management system for real estate, medical equipment, logistical assets, intangible assets, and construction-in-progress; and management systems for internal control, projects, contracts, research, education, and logistics. Additionally, the framework will incorporate foundational platforms, data interfaces, and an operational data center.

2. Promote interconnectivity and integrate business systems with operational systems. Hospitals should leverage information platforms to strengthen the standardization and regularization of their information systems, enhance collaborative data sharing, and achieve seamless connectivity between clinical and administrative systems. By implementing information system applications, hospitals can re‑engineer and redesign existing workflows, enabling data to flow more efficiently and fostering full integration between business management and operational management.

3. Leverage data analytics techniques to build an operational data warehouse. Hospitals should extract relevant data from their clinical, educational, research, and preventive‑care information systems to support operational management decision‑making, cleanse and transform this data into an operational data warehouse, and use it as a foundation for operational data analysis, visualization, and the development of operational decision‑making models.

(10) Enhance the quality of decision-making.

1. Establish a decision‑analysis framework. Leveraging various management theories and methodologies, integrate operational data and economic performance metrics to build a decision‑analysis system across three levels: strategic, managerial, and operational decision‑making.

2. Advance the development of an integrated decision‑analysis platform. By standardizing, integrating, and automating the processing of operational data, we will enable data sharing, enhance data utilization, and provide comprehensive, accurate, and timely data support for the continuous improvement of hospital operations management.

3. Strengthen the application of analytical findings. Hospitals should prioritize the use of decision‑analysis results in areas such as business management, resource planning, financial coordination, and risk management, thereby further enhancing operational efficiency and managerial capabilities and advancing the development of a modern governance system and the improvement of governance capacity.

IV. Strengthening Organizational Support

(11) Strengthen organizational leadership. Health and traditional Chinese medicine authorities at all levels shall attach great importance to the operational management of public hospitals under their jurisdiction, clearly define objectives, tasks, and timelines, and, through a combination of comprehensive promotion and pilot initiatives, guide these hospitals in implementing all requirements for operational management. Each public hospital should regard operational management as a key component of its sustainable development, formulate specific implementation plans and assign responsibilities, and ensure the smooth execution of related work. Public hospitals operated by other departments shall follow these guidelines accordingly.

(12) Strengthen communication and coordination. The competent authorities for health and traditional Chinese medicine shall, throughout the process of advancing the operational management of public hospitals, provide enhanced guidance, monitor progress and evaluate outcomes, assist hospitals in addressing practical challenges, and ensure the effective implementation of operational management measures. Public hospitals, for their part, should establish internal coordination mechanisms and proactively report any issues encountered during implementation.

(13) Strengthen the summarization of experience. Health and traditional Chinese medicine authorities at all levels should prioritize practical results, thoroughly identify and disseminate exemplary cases. Public hospitals are required to carefully review and summarize both successful practices and challenges in their operational management, and promptly report these findings to the corresponding health and traditional Chinese medicine authorities.

National Health Commission, State Administration of Traditional Chinese Medicine

December 21, 2020