The bonus system used in Chinese hospitals has been criticized for eroding doctors’ professional ethics and aggravating patient expense. This research article focuses on one system to improve hospital performance, the balanced scorecard (BSC). We use three data sources to examine the diffusion and implementation of the BSC in China: a questionnaire survey in Shandong Province, a print-media indicators and content analysis of the published BSC papers and semi-structured interviews with managers of Chinese hospitals that use the BSC. The research evidence shows that bonus systems are important, partially because of the poor pay of hospital professionals, and the BSC is perceived as providing a fair system to award such bonuses. This helps explain the relative endurance of the BSC in Chinese hospitals.