Abstract: This paper analyzes the behavior mechanism and its expense effect of the county hospital with the regulatory constraint by modeling the medical behavior of the hospital under drug-proportion regulation ,and carries an empirical analysis on the quarterly Panel-Data of 180 county hospitals in Zhejiang Province. On this foundation, the paper makes a further discussion on the patient's welfare under the regulation with the help of patients' medical utility function, which has a feature of satiation.The research shows that:(1) The drug consumption and it’s expenditure of outpatients decreases under the regulation of the drug-proportion, and the more strict the regulation is, the less the drug expense is; (2) Drug-proportion regulation creates an new induced inspection demand : the average inspection volume of outpatient increases gradually as regulation goes from strength to strength, and it won't reduce until reaching its maximum, and the inspection volume after regulation really exceeds that before; (3) Patients' medical expense per diagnosis cuts somewhat, and the more severe the regulation is, the less the expense is;(4) When the intensity of regulation is minor, the seriousness of overdose will slow down, but the patient also fall into the predicament of excessive inspection and over-prescription, as a result, the patient's welfare is possibly to increase or decrease. When the intensity become serious, regulation will definitely lead to a strait in which excessive inspection coexists with insufficient drug, so patients' welfare is very likely to be slashed because of regulation.