Chinas health care reform should focus on health care delivery system instead of health insurance system and drug circulation system.The reform of these three systems can be likened as "one body,two wings".Health care delivery system should be the body,with health insurance system and drug circulation system as two wings.Chinas health care system is totally different from western nations.In western countries,the focus of reform is on health insurance system,not on health care delivery system.It is through health insurance system reform to improve and perfect the health care delivery system.So,the problem in Chinas health care system is neither Americans nor Britains,but a typical problem with Chinese characteristics.The root problem in Chinas health care system is physicians moral hazard,which is even more serious in state-owned hospitals.Physicians abuse the hospitals reputation and hospitals abuse government-designated reputation( i.e.hospital ranking).The result is the director of publicly-run hospitals has no incentive to monitor the physicians behavior and administrative organs lack no incentive to monitor hospitals and its directors.The underlying cause is the "father-son like relations" originating from "integration of regulation and management" between administrative organs and hospitals.The imperative for Chinas health care system reform is to establish health care providers reputation.The cutting point is to separate regulation from management.Based on Chinas situation,the shortcut way is to remove the state-run hospitals to the charge of Stateowned Assets Supervision and Administration Commission (SASA) at all levels.The health care system should be open to the non-public sector.The reform on health insurance system should also be carried out so that health insurance system plays a greater role in negotiating and bargaining with health care providers.