Are services delivered by community health centers more cost‐effective? Evidence from urban China

China has introduced a system of community health centers (CHCs) to provide primary care. To test whether services provided by such centers are more cost-effective than treatment at local higher‐level hospitals, the study compared health outcomes and expenditures for patients with hypertension and diabetes mellitus in three cities. We hypothesized that treating patients in stable condition at CHCs is less costly than providing treatment in higher‐level hospitals with no differences in health outcomes. Results indicate that daily drug and other medical expenditures were consistently equal or lower for patients seeking treatment in CHCs than for those treated in hospitals. Patients also saved time by visiting CHCs. Health outcomes, measured as mean arterial pressure for hypertension and plasma glucose for diabetes, were similar for patients seeking treatment in CHCs and hospitals in most cases. Results suggest that CHCs are more cost‐effective than hospitals in treating chronic diseases. Findings may also indicate that those patients seeking care at hospitals have more serious – and therefore more expensive and time‐consuming – conditions. Further empirical research is needed to clarify these results. Copyright (C) 2009 John Wiley & Sons, Ltd.