• Weng-Foung Huang, Jerry Kai-Chun Fu, Chen-Han Chueh, Hsin-Hung Chen, Li-Jiuan Shen, and Yi-Wen Tsai.
• Institute of Health and Welfare Policy, National Yang Ming Chiao Tung University, Taiwan.
• J Formos Med Assoc. 2024 Oct 7.

BackgroundIn this study, using Taiwan's National Health Insurance (NHI) as an example of a single-payer system, we examined the extent of pharmaceutical procurement profits (PPP) and evaluated their impact on the financial performance of healthcare institutions.MethodsWe extracted data from financial statements and healthcare service declarations of NHI-contracted hospitals from 2015 to 2021. Financial data concerning PPP, health service profits (HSP), and total operating profits (TOP) from each hospital were analyzed. The impact of PPP on hospitals with positive and negative HSP was further investigated.ResultsThe total PPP across all hospitals studied gradually increased from NT$30.6 billion in 2015 to NT$47.0 billion in 2021. In 2021, 28.1% of all hospitals reported a deficit in HSP. PPP appeared to have a significantly positive impact on the financial performance of these hospitals. It not only enhanced positive profits, but also helped mitigate or completely offset the negative profits from HSP. The effect of PPP seems to be more pronounced for hospitals with larger HSP values, suggesting that larger hospitals benefit more from PPP in absolute terms.DiscussionAverage PPP increased during the study period, increasingly affecting hospitals' financial stability across all strata. The gap between TOP and HSP in medical centers has gradually widened, suggesting an increase in non-health service profits. In this study, we propose a payment policy reform that fosters sustainability of the healthcare and financing system under universal health coverage and corrects the potential distortions caused by PPP.Copyright © 2024 Formosan Medical Association. Published by Elsevier B.V. All rights reserved.

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