Developments in healthcare in China

Over the past 25 years, China has experienced tremendous success in its economic and social reforms, leading to a dramatic improvement in the quality of living for many Chinese, especially in the urban areas.

With demands increasing, the Chinese government started a health reform in 2009, which has EUR 140 billion worth of investments.

For the short-term plan of the healthcare reform, five keys are defined: basic medical insurance system, a national essential drug scheme, a grass root medical service scheme, a basic public health service, and reform of public hospitals. These fields open tremendous opportunities for the Chinese medical industry. China can also be a huge market even for niche products. It is expected that the Chinese Life Sciences & Health will continue to grow impressively and become the second largest LSH market in the world before 2020.

Opportunities in urban areas such as Beijing, Shanghai and Guangzhou are very different from the poor provinces of Shanxi, Gansu, or Henan. The second tier however may be more receptive of business opportunities, as they are competing to come ahead of others.

Government policies and reforms

Chinese healthcare is heavily influenced by the local government policies and resources. For large city hospitals, it is rather easy for them to purchase high-end, expensive products from foreign countries. One of the ways these hospitals advertise is through the possession of famous brand products to attract patients. On the other hand, most countries and township health centers only have the basic equipment, and these low end products are produced by domestic manufacturers.

In order to improve the health quality in the country, health reforms have been made to accomplish the following goals:

  1. Universal coverage of basic insurance.
    Billion or 90 per cent of the Chinese population takes part in three basic health insurance programs. The average coverage of healthcare is around 75 per cent in cities and 60 per cent in rural areas.The National Development and Reform Commission (NDRC) has listed the “essential drugs”—with fixed prices—which should have prescription by doctors and are reimbursed.
  2. National “Essential Drug” system implementation.
  3. Accessible ‘grass roots’ healthcare and reform of public hospitals.
    There are three levels of hospitals in China, which are based on their quality and scope of services. With a total of 13,503 hospitals in 2011, the large majority are in level 1 and level 2. Level 3 hospitals total 1,399. In order to improve this situation, China will build or renew 2000 country hospitals. There will also be a stimulation of urban and rural hospitals.
  4. Public health improvement.
    Public health surveillance systems have greatly improved since the outbreak of SARS. Through vaccination programs, the prevalence of major infectious diseases is controlled and managed.

Challenges in the public health sector

Per 1,000 people, China has 1.8 physicians and 1.7 nurses whereas the US has 2.4 physicians and 10.8 nurses. China’s medical stuff qualifications are also fairly modest—doctors and nurses lacking tertiary qualifications.

China’s primary care system is also weak. Acute care facilities treat only minor discomforts such as colds because the Chinese often self-refer to specialists. This self-referring also leads to inefficient and overuse of resources.

China also has a problem with overcrowding and few high-quality step-down care facilities. This results to acute-care hospitals keeping patients longer to an average of 12 days.

Investment opportunities

China’s 12th Five-Year Plan provides investment opportunities in the following growth areas in the country’s healthcare industry.

1. Primary care

By 2015, the Chinese government plans to train 150,000 general practitioners and promote health management contracts between them and families. There are a number of things that prospecting investors need to work on, and that includes the building of solid system despite the preference of the Chinese to self-refer to specialists.

2. Rehabilitation and long-term care facilities

The establishment of step-down care system is expected to provide the right care at the right place at the right cost. Facilities also need to attract competent medical staff and keep them.

3. Hospitals

In order to find success in the healthcare industry, providers must provide the right business model, in view of the risk, investment location, and its skills and expertise. Providers must also offer financial, non-financial, and performance-based incentives in order to attract top providers and create a distinctive culture.

4. Technology

China’s huge population and shortage of well-trained physicians, among others, can help bridge the gap in healthcare by offering patients better access at reduced costs.

5. Information systems

China is giving IT more attentions in its ability to provide better care coordination, hospital management, and public health and resource management.

To those that want invest in China, they must understand that realities differ in the various parts of the country. A thorough market research should be done that is already prepared by Alliance Experts for your privilege.

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