Abstract
A hierarchical medical system anchored in primary healthcare is a critical mechanism for global healthcare systems to alleviate financing pressures and enhance health outcomes. Leveraging panel data from Zhejiang Province (2017-2022), this study evaluates how regional global budget payment reforms, implemented within county medical communities, influence the progression of the hierarchical medical system. The reforms were associated with a 3.0% (90% CI: -6.3 to 0.3, P < 0.1) reduction in patient volumes at county-level hospitals and a 30.2% (95% CI: 3.1-57.4, P < 0.05) surge in downward referrals to primary institutions. Concurrently, primary facilities saw an 8.3% (95% CI: 0.56-16.0, P < 0.05) increase in outpatient visits and 6.9% (95% CI: 0.15-13.7, P < 0.05) revenue growth. From the perspective of health performance, there was a 1.33% (95% CI: -2.57 to -0.09, P < 0.05) reduction in premature mortality from major chronic diseases. Mechanism analysis reveals that the regional global budget payment reshapes the incentives for both county-level hospitals and primary healthcare institutions. Under cost-containment pressures, county-level hospitals strategically redirect non-critical patients to primary healthcare institutions through formal referral protocols, while the latter are financially incentivized to provide healthcare services. These findings demonstrate how payment reforms can recalibrate provider behavior in vertically integrated systems, offering an explorable pathway for building people-centered, integrated healthcare systems through health insurance leverage.