Chinese psychiatric hospitals exposed for faking diagnoses in insurance fraud scheme

An undercover investigation by The Beijing News has uncovered psychiatric hospitals in Hubei province systematically defrauding national health insurance funds by admitting mentally healthy people, fabricating diagnoses, and inventing treatments.

The investigation took place in December last year when a reporter went undercover as a nursing assistant, infiltrating the Xiangyang Hong'an Psychiatric Hospital and the Yichang Yiling Kangning Psychiatric Hospital.

The report states these hospitals used lures such as "free hospitalization and free transportation" to attract the elderly and individuals seeking to quit alcohol.

In both facilities, the reporter discovered that many inpatients showed no obvious signs of mental abnormalities.

The investigation found hospitals routinely admitted mentally healthy people, with one doctor explicitly offering to create a fabricated mental disorder diagnosis.

In some instances, hospital staff—including nursing workers and security guards with no psychiatric history—were diagnosed as “mental patients” to inflate patient numbers.

To evade rules limiting hospitalization duration, the Yichang hospital frequently staged “fake discharges,” only to readmit the same patients shortly afterward.

The report revealed that patients not only failed to receive effective treatment but were also subjected to harsh management and even beatings from the hospital staff, which allegedly led one patient to commit suicide.

Authorities in Xiangyang and Yichang confirmed to The Beijing News that special investigation teams have been formed.

They are now conducting a comprehensive city-wide review of psychiatric facilities, promising strict and swift action against any verified violations in line with the law.