Assessing the relationship between the hospital grading system and medical resource utilization: evidence from China

Improving medical resource utilization is a significant global challenge. In China, the hospital grading system serves as a key policy to promote collaboration and division of labor among institutions of different grades, with the goal of enhancing the overall performance. However, the medical resource utilization in China remains suboptimal. This study examines the relationship between the hospital grading system and medical resource utilization, offering insights for advancing the healthcare system. Using data from 31 provinces in China spanning 2010 to 2019, this study applies a dynamic panel data model to analyze the relationship between the hospital grading system and medical resource utilization. In addition, a mechanism analysis explores how the hospital grading system may influence utilization through the structure of resource allocation. The hospital grading system demonstrates a significant negative association with the utilization of both outpatient and inpatient medical resources, with the impact varying across regions and levels of resource endowment. Furthermore, disparities in the allocation of resources between hospitals and primary healthcare institutions constitute a key mechanism through which the hospital grading system undermines overall utilization. This study finds that the hospital grading system is associated with a reduction in medical resource utilization in China. The results provide evidence to inform reforms aimed at revising hospital grading system standards, optimizing medical resource allocation and improving overall system performance in China, while also offering potential lessons for other countries facing similar healthcare challenges.