Objective To explore an advanced and effective method of hospital cost management so as to improve the effectiveness of hospital economic management. Methods A variety of methods were used, including field research, expert consultation, activity-based costing management, business process reengineering, and satisfaction survey combined with statistics and computer network technology. Results A system for implementing activity-based costing was established and remarkable results were achieved in lowering the cost of patient care, optimizing business process, raising the staff's awareness of cost, and assisting in development decision-making. Conclusion Activity-based costing, an advanced method of cost management, is of great significance to Chinese hospitals in reducing operational cost, optimizing work process, and improving the effectiveness of management.

As part of the activities of the year of hospital management, the Ministry of Health recently issued A Guide to the Assessment of Hospital Management (provisional) so as to help the health administrative departments at various levels reinforce hospital management, assess hospitals in a scientific, objective and accurate manner, promote the inteusional construction of the hospitals, and constantly improve the level of hospital management. The author reviews the implementation process of hospital assessment in China and the historical background of the issuing of the Guide, discusses its guiding ideology, main goals, formulation principles, key content, and chief features, and explains and analyzes the key issues and major assessment content. The author gives a brief account of his understanding of the Guide for discussion and references to others.

It is imperative to do a good job of the following four tasks so as to promote the building of the hospital via ethics and the progress of its culture level. The first task is to strengthen ideals and convictions and tamp the ideological basis. It is important to implant ideals and convictions, enhance the awareness of the "military spirit" and pay special attention to the "official ethics" of leading cadres. The second task is to enhance the advancement of medical ethics and raise the level of professional morality. It is important to strengthen medical ethics education, amplify rules and regulations and intensify supervision and control. The third task is to take patient care as the core of medical work and deepen quality service. It is important to strive for continuous quality improvement, bring in innovations in medical services and increase input in hardware. The fourth task is to consolidate the cultural building of the hospital and give full play to the edifying role of culture. It is important to optimize the environment of cultural building through upholding the "spirit of the General Hospital" and conducting a variety of cultural activities.

Hospital construction under the new circumstances must adhere to the pivotal theme of development, giving it priority so as to turn out talents, produce results, better quality and achieve benefits. It must adhere to the idea of human oriented service, never stopping to meet the masses constantly increasing health needs and earnestly safeguard their health rights while stressing the all round development of the staff. It must adhere to all round, coordinated and sustainable growth, promoting harmonious development so as to realize the organic integration of speed, structure, quality, and benefit and ensure the late emerging advantages and continuity of hospital development. It must adhere to the integration of theory with practice, proceeding in all cases from reality so as to work out goals of all round, coordinated and sustainable growth, correctly handle relationships and contradictions appearing in the course of hospital growth, and guide the various aspects of hospital work with a scientific approach to development.

A description of the positioning of public hospitals in China, and an exploration of such issues as their compensation mechanism, management system, and operation mechanism. The authors hold that it is imperative to maintain a reasonable balance of the government, society and individuals in their share of healthcare expenditure, prioritize funding recipients, and encourage medical cost payment based on disease diagnosis groupings; to precisely distinguish the ownership, operation right, decision right, and supervision right of public hospitals, for building an effective incentive and supervision mechanism; to further consolidate the president responsibility system and target responsibility system, build a flexible talent use system and distribution mechanism, build a better quality control mechanism, a strict expenditure and cost control mechanism, and a scientific talent development mechanism as well.

As China witnesses constant development of its market economy and gradual deepening of reform in its medical and health cause,the ability of domestic hospitals to adjust their operational management strategies in due course is crucially related to their survival and development amidst market competition.Hospital managers,while stressing quality and economic control,should attach special importance to the brand effect of their hospital and step up hospital brand building,the focus of which lies in patient satisfaction and loyalty and hospital popularity and reputation.Only in this way can they constantly create advantages,enhance core competitiveness and put their hospital in an invincible position amidst market competition.

The Eleventh Five-year Program period will be a very important period in the historical development of China;it will also be a key period for domestic hospitals to deepen reform and achieve steady growth.Doing a good job of the five years' work will be of great significance to promoting reform of the medical and health system,strengthening and developing the hard-won good situation,speeding up hospital construction and growth,and solving such problems facing the common citizens as "it is difficult and expensive to see a doctor".The authors offer suggestions and hope to arouse discussions as to how hospitals ought to formulate a Eleventh Five-year Program that will meet their own growth needs with the guidance of a scientific approach to development.

With Chinas accession to the WTO, implementation of the intellectual property agreement, exemptions and reductions of tariff and cancellation of non tariff barriers, and execution of the general agreement on services and trades will exert a widespread impact on the domestic medical market. Reform of the medical and health system will become extremely urgent; competition in the market of medical services will grow increasingly fierce; management of human resources will find itself in a dilemma; and supervision and control of the medical market will turn more difficult. A thorough study of the opportunities and challenges confronting the medical industry after Chinas WTO entry will, therefore, contribute to a better understanding of the reality and adequate preparation for the challenges. It is imperative to establish the idea of lifelong learning, to always remember that "development is a golden principle"; to set up the commanding elevation of talents in the 21 st century; to speed up innovations in medical technology; and to construct a modern hospital management system.

In light of the emergence and development of the idea of people oriented management, the paper discusses the cultural pathways for people oriented management. People oriented management is a must for the progress of advanced culture; hospital culture is in essence people oriented culture; hospital culture and people oriented management are intrinsically unified; and cultural strength constitutes the hospital's perpetual competitiveness. For this reason, it is imperative to pinpoint the intrinsic demands of hospital culture and people oriented management so as to enhance the hospital's credibility and competitiveness. The following steps can be taken: ①identifying common objectives; ②fostering and upholding the hospital spirit; ③cultivating the idea of people oriented services; ④developing a "learning type" hospital; and ⑤making full use of the human resources on the basis of the "four respects".

The paper systematically elaborated the concept of corporate governance structure of public hospitals and theories in relation. In addition, it analyzed the status quo and problems existing in corporate governance structure of public hospitals in China, proposing the basic principles and the council model of corporate governance structure. The authors emphasized the following responsibilities and rights of the council, the president, and the board of supervisors in such a framework: 1) As the hospital's highest decision-maker, the council exercises the rights of ownership, playing a decisive role in hospital management; 2) the president is appointed and dismissed by the council, and authorized to run the hospital; 3) the supervisors are responsible for overseeing the council and senior management. In the end, this paper summarized the external environment required for building corporate governance structure of public hospitals.