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Healthcare in China: One Western Doctor’s Perspective

It is well recognized that there is a deficit of healthcare services in China, whether it’s actual number of healthcare facilities needed to meet the growing demand from both urban and rural consumers, or a lack of quality care provided at exiting facilities. It is therefore not surprising that the Chinese Government has been encouraging foreign investors to bring in capital and healthcare services expertise in an attempt to alleviate the many burdens on the current medical system.

President Xi has made it clear that reforming China’s healthcare system is a priority and to this extended China allowed in 2014 Wholly Foreign Owned Hospitals (WFOH) in seven Chinese cities (Beijing, Tianjin, Shanghai, Jiangsu, Fujian, Guangdong and Hainan). Whilst this has spurred much interest from foreign investors into the China Healthcare Services sector, realizing good ROI’s is not a forgone conclusion since many challenges still exist to make such private healthcare services a commercial success.

The Hong Kong Chapter of Healthcare Drinks networking event invited Dr. Kate Gaynor (Family Medicine Physician and General Manager, United Family Hospital – UFH – Guangzhou) to present on how this chain of private hospitals and clinics has managed to overcome these challenges and expand successfully in the China market.

UFH opened the first ever foreign-invested hospital in China in 1997 under a JV in Beijing. Beijing United Family continues to provide comprehensive inpatient and outpatient medical care with internationally board-certified Western doctors as well as the most skilled Chinese doctors. Since then the UFH system has added over 19 comprehensive hospital and satellite clinic facilities throughout China and Mongolia.

Dr. Gaynor started off her presentation by highlighting how the current China healthcare system, which is mainly publicly funded, is unique compared to many Western systems:

  • A specialist-based system in hospitals i.e. GP’s are not common nor are primary care clinics
  • Crowded, inexpensive healthcare (RMB5-200/visit), where patients have to pay before being seen by a doctor (95% of patients are reimbursed by capped social insurance which means that they have to ‘top up’ by out-of-pocket payments)
  • Generally good, but fast, clinical care (provided by integrated Western and Traditional Chinese Medicine within the same hospital). Variable quality of care since nation-wide quality standards do not exist.
  • Hospital care does not include food for patients (family is expected to assist with this)
  • Government subsidies are not enough for most China hospitals to survive so they typically have to top up their revenues via various other business practices including having longer in-patient stays, over prescribing for drugs and providing VIP access (typically for high ranking Government officials)

In contrast the UFH system provides:

  • Western management style and nursing models practicing strictly evidence-based medicine
  • Commitment to quality standard & voluntary accreditation (all facilities are JCI accredited)
  • Uniquely comfortable environment with patient centered care
  • Integrated approach to healthcare, rooted in the primary care philosophy

Dr. Gaynor continued by outlining the success factors for unlocking the private healthcare sectors potential:

Providers

  • Focus of increasing the quality of delivered care including introducing primary care services to alleviate the stresses on tertiary care hospital systems
  • Include transparent package pricing for procedures with clear explanations of variable pricing due to unforeseen complications
  • Target different market segments i.e. move away from high end, niche VIP services as the only high quality offering. A growing middle class, with an awareness for quality services and the ability to pay, provides new opportunities to private healthcare providers.

Market & Regulatory Environment

  • Insurance reform is increasing the number of consumers who can afford treatment is private health care facilities. Consumers are adopting more readily available commercial medical insurance and even UFH has recently started to offer its own insuranace plan .
  • Inclusion of private hospitals into the public reimbursement system will make private hospitals more accessible to a large number of Chinese consumers.

Physician mobility

The Government is liberalizing physician employment making it easier for doctors in Government hospitals to also work in private hospitals without loosing their benefits as Government employees. There is even a website where doctors can register in order to gain approval to work in multiple hospital locations.

Structural reform

  • The Government is offering tax stimulus to encourage investment in private healthcare and has relaxed corporate structure regulations (FDI, WFOEs, group legal structure). Clearly indicating the Government’s encouragement for further private investment in this sector.
  • Public-Private Partnership offer another opportunity to invest in China healthcare systems where symbiotic cooperation with public institutions or involvement in the pursuit of national public health goals will be encouraged.

Whilst United Family Health has the advantage of having been in China for several decades and, learning over the years how to refine its strategy to the constantly changing Government policies around healthcare reform, it is encouraging to see a foreign company build a successful private healthcare network in spite of all the obstacles. This can only be a good thing for the Chinese consumer of healthcare services!

Written by: Karin Munasinghe , Karin’s Articles & Activity