The Great Leap Forward in Chinese Health Services

“eHealth” represents a promising market for those able to take advantage of business opportunities.

china health services

In today’s China the medical system remains under the control of the government although the word “system” is stretched a bit here. Indeed there’s no central database and patient’s files are not shared between hospitals. In China 90% of the medical charges are reimbursed by social security (also managed by government). 40% of the medical expenses go into medicine and 70% of the medicine requires prescription. Meanwhile growing middle class and its health-consciousness calls for reliable expertise, services and products, especially outside of tier-1 and tier-2 cities.

Those voices are being heard in Beijing as 12th Five-Year Plan (ended in 2015) prioritized the development of an affordable, accessible health care for China’s entire population. Starting in 2016, the 13th Five-Year Plan promoted the concept of “Health China” to national strategy, requiring the Medicare sector to accelerate its computerization process, including the options on multi-site practice doctors (today they “belong” to certain hospitals) and hierarchical treatment.

Moreover, the China’s National Health and Family Planning Commission (NHFPC) released guidelines on telemedicine service. This helped to promote robust development of telemedicine service, optimize resource allocation and improve medical service level and quality.

In business terms China’s health and Medicare market has estimated worth of $600 billion (4 trillion RMB). As the Chinese population is aging, there’s 20% annual growth rate and the market is expected to double its worth over next five years and represent up to 10% of China’s GDP. Investors are likely to focus on 4 key fields:

• Medicare service;
• medicine and bio-technology;
• eHealth;
• precision medicine.

It is worth keeping in mind eHeath market in PRC is different compared to Western countries as it serves mainly to fill the gaps in traditional health services. Therefore promising area in China include

• chronic disease management and the wearables related to the disease;
• post-surgery rehabitation;
• e-Commerce of medicine;
• appointment booking services.

Here is short-list of solutions already accepted on the new market which set the scene for new investors:

CRM front-end including appointment scheduling, reservation for the outpatient services, online lab report and follow-up services. This type of services starts to be integrated into WeChat and Alipay like 好大夫在线, Guahao or xywy;
Doctor tools including medical record management, medicine information, clinical guidelines which serves as virtual assistants for doctors. Best examples are 杏树林, Chunyu Doctor or 平安好医生;
Self-diagnosis and enquiry platform such as Chunyu Mobile Health, 平安好医生 help patients with self-diagnosis, interaction with doctors, and sign up for family physicians;
Patient management(focus on a specific type of disease) includes dentistry, cardio-vascular, diabetes, respiratory, dermatology, pregnancy. 微糖 or Doctor Tang by Tencent are the most significant solutions implemented;
Hardware equipment and wearables that record the physiological data including blood pressure, blood sugar level, temperature, heart rate. These products are usually the expansion of medical equipment or wearable company into eHealth such as 久安医疗;
E-commerce platform for medicine provides detailed information and instructions for medicine, and able to propose points of purchase based on geo-data of the users. In the future when the license is opened for medicine to be sold online, this market will have great potential. DXY (丁香园) and Medicine hall by Tmall are the most significant solutions.

Chinese eHealth sector shows a strong dynamism with numerous local start-ups that have tried to find an entry point in this market. Some of them target the modernization of hospitals IT system taking advantages from the opportunity arisen from the national health reform. Other rely on a potential disruptive technology of wearable equipment and big data. For all of them now the most essential is to find a feasible profitability model: indeed as long as China’s private medical insurance industry will not be in shape, main income will continue to come from pharmaceutical companies, private hospitals, commercial insurance, government procurement and private employers.