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Public hospital reform is one priority area in the healthcare system reform that China launched in 2009. The Chinese government invested over $10bn for pilot projects in public hospital reform in rural China. However, little evidence exists on their effects. Using a quasi‐natural experiment design, we evaluated the effects of a public hospital pilot project in Hubei province on inpatient spending. We obtained inpatient claims data from 1/1/2011 through 6/30/2013 for enrollees in the New Cooperative Medical Scheme in two counties: Danjiangkou, one of the pilot counties selected for reform in September 2012, and Laohekou, a similar, adjacent county serving as the control group. Using a difference‐in‐differences approach with propensity score weighting, we found that total inpatient spending increased ¥1160 (95% CI 1155–1166), out‐of‐pocket spending increased ¥385 (95% CI 382–389), length of stay increased 0 …