Impact of the new health care reform on hospital expenditure in China: A case study from a pilot city

•Study the impact of China's new healthcare reform plan on hospital expenditures•Controlling heterogeneity and sample selection by endogenous switching regression•The new healthcare reform significantly reduces total hospitalization expenses.•Stress the importance of realigning incentives for healthcare providers in China

This study evaluates the preliminary effects of the new healthcare reform plan for hospital expenditures in China. Cross-sectional patient-level data are used for the analysis. We employ an endogenous switching regression model to account for heterogeneity and sample selection. The results show that the reform plan can significantly reduce total hospitalization expenses and medication fees for patients who select the pilot hospital. It may exert inadequate control over inspection fees, but as the advance of the reform, the control is likely to improve gradually. Our findings underscore the importance of realigning incentives for healthcare providers in China.