For many years, the practice of hospitals subsidizing their medical services with drug sales has been a major problem in China. This has led to some in the profession generating extra income through prescribing unnecessary and expensive treatment.

The Chinese government has introduced a series of policies to address the situation. CCTV reporter Nie Jia went to a hospital in Sichuan province to see how government funding is working.

A new batch of medicine arrives. With sensors, the computer scans and records all the information about the drugs. This also goes back to the supplier via the internet to make sure the order is correct. As part of a pilot scheme, this is how this health clinic in a small township in Sichuan province now operates.

Luo Wei, head of Health Clinic in Xing Yi township, said, "By using computers, we streamline our processes and reduce waiting times for patients - from registering, checking up, to prescriptions, everything can be done over the internet."

The new computer system also monitors medical practices. At the local health bureau, we are shown how the online supervision works. They have designated on-line supervisors to monitor drug use, medicine prices, and every single prescription made by doctors in any given hospital. This has also led to more transparency between the hospitals and drug companies.

Lan Haiying, head of Health Bureau in Xinjin county, said, "We now use a third party for drug transactions. We have a medical management center under the health bureau and the center directly makes transactions with medical companies through the information platform."

For patients, they can clearly see the benefits of this new system.

Yang Yubin, a patient, said, "I’m seeing the doctor for my cold. In the past, it would normally cost 20 yuan, now, it only costs 7 yuan."

Xu Hongwei, doctor of Health Clinic in Xing Yi township, said, “Now there is on-line supervision, we can’t prescribe expensive and unnecessary drugs. Even if we wanted to, we dare not do that."

And to cut out the temptation of prescribing pricey medicines even further, funding from the government has proved to be essential.

Lan Haiying, head of Health Bureau in Xinjin county, said, "In order to ensure the further development of hospitals and motivate medical staff, further regulations are needed regarding government subsidies and how much the funding should be."