Abstract:One of the ultimate objectives of medical insurance payment system reform is to foster the transformation of the compensation mechanism of public hospitals through economic leverage, by which promote public hospitals reform and control supplier-induced demand and excessive utilization of healthcare, and ultimately motivate providers to attach more importance to safety, quality and efficiency other than profit. To sustain long-term development, hospitals ought to positively adapt to the requirements of the reform and enhance management capacity, by restructuring strategic planning, financial management, medical processes, salaries distribution, information management, etc, and thus achieve multiple goals such as cost, efficiency, quality, safety and responsiveness.