Hospitals admit fake patients, create false treatment records: Undercover investigation exposes insurance fraud

A media investigation in central China has revealed an alleged scam involving several private psychiatric hospitals. These facilities admitted healthy people to misuse the public medical insurance system.

An undercover report by Beijing News found that many patients in institutions in Xiangyang, Hubei province, showed no abnormal behaviour. They received little or no real treatment.

Healthy individuals said they agreed to stay because hospitals had promised free admission and living expenses. Under China’s healthcare system, patients usually pay part of their bills. Public insurance covers the rest.

Once admitted, hospitals allegedly used patient identities to create false treatment records and claim insurance money.

Xiangyang, a city of about 5.3 million people, has more than 20 psychiatric hospitals, most opened in recent years. When a reporter posed as a relative and contacted over 10 centres, staff reportedly said patients would not be charged medical fees. They would only pay minimal living costs there.

“What we hope is that your relative can live here for a long period of time. He can live here for however long he wants,” the South China Morning Post quoted a worker as telling the reporter.

In early December, an undercover reporter joined Xiangyang Hongan Psychiatric Hospital as a nurse to investigate alleged insurance fraud. The private hospital, opened the previous summer, houses around 50 patients.

According to a senior nurse, most patients show no or only very mild mental health symptoms. Some elderly residents in their 70s simply need physical care.

Staff reportedly treat them like nursing-home residents because the facility is far cheaper than regular elder care centres.

Another nurse working with the reporter revealed that he himself was officially listed as a patient. His personal details were stored in hospital records even though he required no medicine or treatment.

He was allowed to enter or leave the building freely. He admitted to cooperating with the hospital to cheat the public insurance authority.

Billing records showed that one patient who had stayed for 90 days was charged 12,426 yuan ( ₹1.63 lakh). Only about 500 yuan ( ₹6,565) covered medicines. More than 6,000 yuan ( ₹78,000) was claimed for different medical treatments.

However, the patient said he had taken only basic medicine and never received those treatments. The findings raise serious questions about oversight and misuse of public healthcare funds in the region.

During the undercover investigation, a doctor told the reporter that the hospital's medical equipment was very limited. Despite this, many institutions reportedly charge a daily treatment fee of about 130 yuan ( ₹1,706) to the public medical insurance system.

The reporter further witnessed disturbing behaviour by nurses, who were seen slapping, kicking and beating patients with a water pipe. Similar suspected insurance fraud and physical abuse were reported at another nearby facility in Yichang.

Patients’ mobile phones were confiscated, and their contact with families was tightly restricted. Hospital workers allegedly tried to stop patients from leaving.

“The rules here are strict. I have no freedom. It feels like I have been in jail for five years,” SCMP quoted a patient who had stayed at Yiling hospital as telling the reporter.