The document summarizes China's healthcare challenges and reforms. As China modernized its economy, it neglected public healthcare investments, resulting in low spending and coverage. China now faces rising costs and diseases as its population ages. The government is implementing sweeping healthcare reforms, including expanding insurance coverage to achieve universal healthcare by 2020 and transitioning to a diagnosis-related group payment system to incentivize efficiency. The reforms aim to address inadequate care access and high costs that have plagued China's healthcare system.
STATUS OF HEALTH TECHNOLOGY ASSESSMENT IN INDIA (2010)Ruby Med Plus
Research is well-established on a national level, especially essential national Health research (ENHR), with the Indian Council of Medical Research identifying the priority areas. However, the main users of these research findings are academics and researchers. In India, for commissioned research, there is a direct channel of communication between Health care researchers and policymakers. For non-commissioned research the channels of dissemination to policymakers are less clear and more varied, as dissemination of noncommissioned research is limited to academic channels (e.g. papers in peer-reviewed journals or presentations at conferences). The direct dissemination of noncommissioned research at central government level is available to a range of policymakers by distribution of a research report or inviting key policymakers and other stakeholders to a dissemination workshop often less intensively. Another Major constraint, policymakers may not fully understand how to use research to support policy formation as policymakers may not have the ability to evaluate the quality of a research study, difference between qualitative and quantitative research or to interpret research findings, thus experience difficulties in incorporating research findings into policy development for health care programs, which may lead to the failure to translate research into policy or to extraneous conclusions drawn from research results.
An overview of the China healthcare market, its structure, trends in reform and growth drivers and constraints. Key challenges to participating in China healthcare are highlighted as are best practices of successful foreign companies playing in China healthcare.
Roadmap for Universal Health Care. FDR, PHFI, and Loksatta are convening a Roundtable of experts, thinkers and practitioners to have a purposive dialogue and help evolve a viable, effective model of universal healthcare delivery in India
"The future of healthcare in Africa: progress on five healthcare scenarios", a new report written by The Economist Intelligence Unit (EIU) and sponsored by Janssen, explores Africa's recent progress on several major healthcare challenges. The report looks at the continent's increasing focus on primary and preventive care, the empowerment of communities as healthcare providers, the extension of universal healthcare, the spread of telemedicine, and the role of international donors.
Unsatisfaction Pacient in Healthy Industrial in Indonesiainventionjournals
The porpose of this article is to assess and comparethe needs of public health services withthe healthcare business in Indonesia in line with the increased catastrophic disease and the high prevalence of mental disorders due to economic pressures, unhealthy lifestyle, poor environmental conditions, workload and family company which result in the detriment of state finances and family economy. Meanwhile, high education has made people, with upper middle income, havegood awareness of personal hygiene and tend to seek health services that can provide information and education on current health, including in selecting the type of insurance. Most of them entered the Y gene, as tech-savvy, and want the best facilities, including in selecting hospitals, laboratories, and medicines. This research uses descriptive qualitative approach byexploring the primary data and secondary data to obtain conclusion that healthcare business is very prospective.Although this business hasa formidable challenge, it will not be diminished by the development time.In 2014,healthcare businessinpharmaceutical industry in Indonesia reached IDR 58.2 trillion, and the government has determined the pharmaceutical and medical equipment industriesas the mainstay and priorities until 2035, given the high amount of expenditures per capita on health service each year.The increased level of life satisfaction in terms of healthcareresults in the high level of satisfaction of patients and families with health providers, but the concern isstill more focused on the high price of medicines and services.
STATUS OF HEALTH TECHNOLOGY ASSESSMENT IN INDIA (2010)Ruby Med Plus
Research is well-established on a national level, especially essential national Health research (ENHR), with the Indian Council of Medical Research identifying the priority areas. However, the main users of these research findings are academics and researchers. In India, for commissioned research, there is a direct channel of communication between Health care researchers and policymakers. For non-commissioned research the channels of dissemination to policymakers are less clear and more varied, as dissemination of noncommissioned research is limited to academic channels (e.g. papers in peer-reviewed journals or presentations at conferences). The direct dissemination of noncommissioned research at central government level is available to a range of policymakers by distribution of a research report or inviting key policymakers and other stakeholders to a dissemination workshop often less intensively. Another Major constraint, policymakers may not fully understand how to use research to support policy formation as policymakers may not have the ability to evaluate the quality of a research study, difference between qualitative and quantitative research or to interpret research findings, thus experience difficulties in incorporating research findings into policy development for health care programs, which may lead to the failure to translate research into policy or to extraneous conclusions drawn from research results.
An overview of the China healthcare market, its structure, trends in reform and growth drivers and constraints. Key challenges to participating in China healthcare are highlighted as are best practices of successful foreign companies playing in China healthcare.
Roadmap for Universal Health Care. FDR, PHFI, and Loksatta are convening a Roundtable of experts, thinkers and practitioners to have a purposive dialogue and help evolve a viable, effective model of universal healthcare delivery in India
"The future of healthcare in Africa: progress on five healthcare scenarios", a new report written by The Economist Intelligence Unit (EIU) and sponsored by Janssen, explores Africa's recent progress on several major healthcare challenges. The report looks at the continent's increasing focus on primary and preventive care, the empowerment of communities as healthcare providers, the extension of universal healthcare, the spread of telemedicine, and the role of international donors.
Unsatisfaction Pacient in Healthy Industrial in Indonesiainventionjournals
The porpose of this article is to assess and comparethe needs of public health services withthe healthcare business in Indonesia in line with the increased catastrophic disease and the high prevalence of mental disorders due to economic pressures, unhealthy lifestyle, poor environmental conditions, workload and family company which result in the detriment of state finances and family economy. Meanwhile, high education has made people, with upper middle income, havegood awareness of personal hygiene and tend to seek health services that can provide information and education on current health, including in selecting the type of insurance. Most of them entered the Y gene, as tech-savvy, and want the best facilities, including in selecting hospitals, laboratories, and medicines. This research uses descriptive qualitative approach byexploring the primary data and secondary data to obtain conclusion that healthcare business is very prospective.Although this business hasa formidable challenge, it will not be diminished by the development time.In 2014,healthcare businessinpharmaceutical industry in Indonesia reached IDR 58.2 trillion, and the government has determined the pharmaceutical and medical equipment industriesas the mainstay and priorities until 2035, given the high amount of expenditures per capita on health service each year.The increased level of life satisfaction in terms of healthcareresults in the high level of satisfaction of patients and families with health providers, but the concern isstill more focused on the high price of medicines and services.
Trends in health financing and the private health sector in the middle east a...HFG Project
In the past several decades, countries in the Middle East and North Africa have made significant improvements in developing their health systems and improving the health status of their populations. However, the region continues to face substantial and diverse political, macroeconomic,social, and health challenges. In 2010–2011, the mass uprisings over high unemployment, poverty, and political repression known as the Arab Spring began in several countries. These events led to a wave of social and political upheaval that had enduring repercussions throughout the region. Iraq, Libya, Syria, and Yemen remain embroiled in prolonged violent conflicts. Other countries are more stable but undergoing significant changes and reforms.
To understand current health financing policies and mechanisms, as well as the current role of the private sector in the health systems of the Middle East, the USAID Middle East Regional Bureau commissioned the Sustaining Health Outcomes through the Private Sector (SHOPS) Plus and Health Finance and Governance (HFG) projects to conduct a review of health financing and the private health sector in the 11 low-and middle-income countries in the region, focusing on the years 2008 to 2017.1 The countries included in this analysis are Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, the West Bank and Gaza, and Yemen. This review aims to highlight regional trends and identify gaps in information.
THIS PPT IS ABOUT THE HEALTH CARE SYSTEM IN CHINA MOSTLY STUDIED IN ECONOMICS.
THIS ALSO SHOWS YOU ABOUT THE INSURANCE POLICY AND GDP RATE AND MANY MORE
The Promise & Peril of China's Healthcare Reforms - February 2014Benjamin Shobert
Mr. Shobert kicked off the event by talking about China’s priorities in the early 1980’s, which then only consisted of massive economic development plans. Shobert discussed how China, like America during the industrial revolution, compromised their personal health for economic wealth. He then spoke about China’s foreign direct investment life cycle. He explained that foreign companies in China are welcomed
when needed, but are eventually shown the door when domestic counterparts are able to replace them.
According to Shobert, this phenomenon has been happening since the medieval days of Chinese emperors and dynasties.
Mr. Shobert extensively talked about the promise of China’s healthcare economy. He talked about the billions of dollars spent by the Chinese on healthcare every year, and he showed a survey that explained how the Chinese value healthcare spending above anything else. He discussed the geographic differences of China, which is one of the biggest countries in the world and the home to 1.3 billion people. He then highlighted how motivated the government is in seeking the best healthcare for all their people.
Shobert also talked about the perils and the challenges of China’s healthcare economy. Initially, he gave generalized comments regarding business laws not being implemented and applied to local companies. He highlighted how global pharmaceutical companies are coping with this disadvantage, and he also touched based on the challenges of building a medical staff/team in China.
Towards the end his speech, Mr. Shobert emphasized the expectations of the Chinese economy. He said he believed that the glory days in the 1990’s and early 2000’s of double digit growth every year have passed, and we could expect China to grow “only” at around 7.5% of its GDP per year.
Nevertheless, he reminded everybody that China is still a land of massive growth, and that big opportunities remain for
companies seeking to do business there.
Universal health coverage as a concept was born in 1883 when Germany introduced health coverage for achieving health status of its young population.India, is still attempting to find a way for providing appropriate, affordable and accessible health care to its population.
Trends in health financing and the private health sector in the middle east a...HFG Project
In the past several decades, countries in the Middle East and North Africa have made significant improvements in developing their health systems and improving the health status of their populations. However, the region continues to face substantial and diverse political, macroeconomic,social, and health challenges. In 2010–2011, the mass uprisings over high unemployment, poverty, and political repression known as the Arab Spring began in several countries. These events led to a wave of social and political upheaval that had enduring repercussions throughout the region. Iraq, Libya, Syria, and Yemen remain embroiled in prolonged violent conflicts. Other countries are more stable but undergoing significant changes and reforms.
To understand current health financing policies and mechanisms, as well as the current role of the private sector in the health systems of the Middle East, the USAID Middle East Regional Bureau commissioned the Sustaining Health Outcomes through the Private Sector (SHOPS) Plus and Health Finance and Governance (HFG) projects to conduct a review of health financing and the private health sector in the 11 low-and middle-income countries in the region, focusing on the years 2008 to 2017.1 The countries included in this analysis are Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, the West Bank and Gaza, and Yemen. This review aims to highlight regional trends and identify gaps in information.
THIS PPT IS ABOUT THE HEALTH CARE SYSTEM IN CHINA MOSTLY STUDIED IN ECONOMICS.
THIS ALSO SHOWS YOU ABOUT THE INSURANCE POLICY AND GDP RATE AND MANY MORE
The Promise & Peril of China's Healthcare Reforms - February 2014Benjamin Shobert
Mr. Shobert kicked off the event by talking about China’s priorities in the early 1980’s, which then only consisted of massive economic development plans. Shobert discussed how China, like America during the industrial revolution, compromised their personal health for economic wealth. He then spoke about China’s foreign direct investment life cycle. He explained that foreign companies in China are welcomed
when needed, but are eventually shown the door when domestic counterparts are able to replace them.
According to Shobert, this phenomenon has been happening since the medieval days of Chinese emperors and dynasties.
Mr. Shobert extensively talked about the promise of China’s healthcare economy. He talked about the billions of dollars spent by the Chinese on healthcare every year, and he showed a survey that explained how the Chinese value healthcare spending above anything else. He discussed the geographic differences of China, which is one of the biggest countries in the world and the home to 1.3 billion people. He then highlighted how motivated the government is in seeking the best healthcare for all their people.
Shobert also talked about the perils and the challenges of China’s healthcare economy. Initially, he gave generalized comments regarding business laws not being implemented and applied to local companies. He highlighted how global pharmaceutical companies are coping with this disadvantage, and he also touched based on the challenges of building a medical staff/team in China.
Towards the end his speech, Mr. Shobert emphasized the expectations of the Chinese economy. He said he believed that the glory days in the 1990’s and early 2000’s of double digit growth every year have passed, and we could expect China to grow “only” at around 7.5% of its GDP per year.
Nevertheless, he reminded everybody that China is still a land of massive growth, and that big opportunities remain for
companies seeking to do business there.
Universal health coverage as a concept was born in 1883 when Germany introduced health coverage for achieving health status of its young population.India, is still attempting to find a way for providing appropriate, affordable and accessible health care to its population.
The 2019 edition of the Global Innovation Index (GII) focuses
on the theme Creating Healthy Lives—The Future of Medical
Innovation. In the years to come, medical innovations such
as artificial intelligence (AI), genomics, and mobile health
applications will transform the delivery of healthcare in both
developed and emerging nations.
The key questions addressed in this edition of the GII include:
• What is the potential impact of medical innovation on
society and economic growth, and what obstacles must
be overcome to reach that potential?
• How is the global landscape for research and development
(R&D) and medical innovation changing?
• What health challenges do future innovations need to address
and what types of breakthroughs are on the horizon?
• What are the main opportunities and obstacles to future
medical innovation and what role might new policies play?
Research done while in PwC Mexico. A short version was included as part of a PwC publication "Future of Pacific Alliance", that was presented at the presidental summit in Chile on July 2016.
This presentation is about Healthcare delivery system in China which includes, the demographic features of China and India, how the China's healthcare started with the historical background, Its health reforms, and the newly formed health infrastructure and the programs. Download the powerpoint to visualize the animation included in the slide.
There are numerous changes taking place in South Africa, in the economy, politics and health. All these are interdependent and embedded in a social milieu which brings a number of pressures on health services and systems. The major event in the medium to long term is the impact of the National Health Insurance. Other contextual factors of importance include the range of social determinants of health and disease, with the provision of water, sanitation, electricity and housing being the key services. South Africa will also be influenced in the future by the major diseases it harbours at present. This seminar provided some insight into how these factors will impact on the South African Health Services.
Urban health issues role of government.Dr Chetan C P
Discussion about urban health issues. Why health cannot be addressed in isolation. Trend of health care financing in India. The potential of technology leverage to address access and finally looking at financing solutions to achieve SDG'd.
2. Page2
East Wind – Business Note No.2
The Chinese Healthcare Challenge
Written by Stéphane PHETSINORATH
Abstract
As China modernized its economy during the last
decade, the country chose to overlook the basic
investments in public healthcare, focusing exclusively
on economic growth, exponential urbanization and
increasing industrial output. As a result, China's total
healthcare expenditure is lagging behind at 5.4% of
2012 GDP
1
, and the public part is low and well short of
WHO standards2
. Health spending tends to rise with
incomes, without surprise, China is ranking among the
lowest ratios of the OECD countries: with a spending of
$480 in 2012 (calculations based on ‘Purchasing Power
Parity’)1
, to be compared with the OECD average of
$3,484 per person capita1
, which 7 times more than
China.
How will the potential of Chinese IVD
market look like?
In 2013, the global IVD market reached the
milestone $50 bn mark, with expected CAGR% of
4-5% for 2014-20203,4
. In 2015, the Chinese IVD
market is estimated at $5.5 bn5
, it will be more
than 10% of the global market, maintaining a
sustained growth between 15-20% every year.
The Chinese IVD market is expected to sustain
similar growth for the next decade too, as all major
companies continue to report exceptional
performance in China, making it a potential pillar
of growth in the future. Companies are looking to
invest heavily in a complex and challenging
environment6
, with the hope to secure a profitable
(big) slice of the IVD market.
1
Source: WHO: China Country Information
2
Source: World Health Assembly 1981. A34/5, Section VII, para.6
3
“Global In Vitro Diagnostics (IVD) Market”, Allied Market Research, Jun. 2014
4
“In-Vitro Diagnostics (IVD) Market Analysis and Segment Forecasts to
2020”, Market Research & Consulting, Mar. 2014.
5
“Latest Chinese Guidebook for Application and Approval of Imported
In-vitro Diagnostic Reagent Registration: From Regulations to Practices
(2014 Edition)”, Sept. 2014
6
“Is China’s Healthcare Market Opening too Little, too Late?”, Forbes, Sep.
2013.
What are the key factors behind the
healthcare reform sustaining high pace
growth?
Several factors underlie this rapid rise in
demand for healthcare services. First, China’s
quickly aging population means the country is
experiencing an explosion of chronic conditions
such as diabetes, heart disease and cancer. All of
these conditions can be diagnosed and monitored
using IVD products. Adding to this, the critical
need for detecting infection diseases is crucial, but
especially for a country of 1.3 inhabitants1
and
more than 53% urbanized in close proximity7
. The
pandemic/epidemiological risks of infectious
diseases have been numerously demonstrated,
such as: seasonal influenza, H1N1, Ebola ; or even
hospital acquired infections and antibiotic resistant
organisms.
What are the critical success factors to
tap into this unique growth opportunity?
The new healthcare reform(s) from the
government will shape the new healthcare
environment rules. The deep understanding of the
implications of the reform(s) will be center of the
success in the Chinese market. More importantly,
China’s Ministry of Health is shifting its healthcare
focus to preventative care, largely as a cost
containing measure.
China’s healthcare reform will focus on
attracting a large portion of private foreign (or
domestic) capital to boost the new developments
in healthcare. Trying to attract valuable FDI and
private capital resources, the government wants
to alleviate part of the health burden, encouraging
the private sector to expand quickly.
7
Source: Worldbank Data, 2013
3. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page3
Part I – The Challenge’s Origins
From the 1950s to the 1980s
China has been an ‘administrated’ country for
nearly 2,000 years, especially in the field of
healthcare, where almost all the major medical
facilities and healthcare organizations are entirely
run by the government. In 1949, China is putting
in place the 1st
Cooperative Medical System along
with the development of the collective economy,
improving considerably the quality of healthcare
services.
Between 1950 and 1980, China’s healthcare
system provided basic healthcare to almost all the
country’s population through public health
networks and rural/urban insurance schemes.
Despite government promises to implement
WHO’s primary healthcare strategies designed to
achieve “Health for All by 2000” 8
. But, the
economic reforms of the late 1970s, introducing
market principles, started to destabilize the
balance of the whole healthcare structure9
.
By the late 1980s, the rural health insurance
scheme entirely collapsed and the urban health
insurance schemes were also crippled by the rapid
rise of medical costs and the inefficiency of
state-owned enterprises (main healthcare
expenditure financers). Then, the healthcare
system continuously suffered from chronic
government underfunding, urban and rural
inequalities and overpriced, low quality products
and services. Leading much of the population
without access to medical care, in 1998, and only a
mere 9.5% of the entire rural Chinese population
had medical insurance10
.
The historical legacy
Today, the country’s healthcare system
remains today deeply troubled, plagued by
perverse incentive schemes, and policies. With
spiraling drug costs, inadequate insurance and big
out-of-pocket expenses are all cause for public
distress. In poor rural areas, many forgo
8
“Global Strategy for Health for All by the Year 2000”, 3rd
edition, WHO, 1989
9
“Trade Liberalization and its Role in Chinese Economic Growth”,
International Monetary Fund, Nov. 2003
10
“Development of the Rural Health Insurance System in China Health”,
Harvard School of Public Heath, 2004
treatment because they simply can't afford it.
Chinese public hospitals have the notorious
reputation of underpaying their physicians and
medical staff, which led them to rely on “kickback”
payment through overprescribing drugs and
medical procedures to patients. Over-prescription
of drugs and imagining procedures has led to
soaring medical expenses for Chinese Patients.
“医药洋医”
“Feeding Hospitals by selling drugs”
The Chinese public generally has a low level of
trust in local and community clinics. As results,
public hospitals deliver 90% of inpatient 11
and
outpatient services in China, which account at
least for 2.9% of the Chinese GDP12
.
“看病难,看病贵”
“Seeking medical care is difficult,
seeking medical care is expensive”
With ageing population, 177 m older people
aged > 60 years (13.3% of the total population)13
;
China is facing three main challenges: mounting
costs, problems at public hospitals and a surge of
chronic diseases (heart disease, diabetes and
cancer). Out of every 100 deaths, more than 85
are now caused by chronic diseases, according to
China’s Ministry of Health14
. By comparison, the
U.S Centers for Disease Control and Prevention
says the rate is 70 per 100 in the U.S, and an
average of 63% of deaths world-wide (from WHO).
11
“Healthcare in China: Entering Uncharted Water”, McKinsey, Nov. 2012
12
“China’s 12th
Five-Year Plan: Healthcare Sector”, KPMG, May 2011.
13
“Loneliness and Social Support of Older People in China: a Systematic
Literature Review”, Health & Social Care in the Community, March 2014
14
“China Calls for Health System Overhaul”, The Wall Street Journal, Jul. 2014
4. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page4
Chinese demography is undergoing a very
concerning ‘scissor’ effects, due to the famous
‘One-Child’ policy implemented in 1979. The
favorable demographic dividend of many workers
and few elderly that benefited China’s economy
since 1980 is coming to an end. Soon the numbers
of working-age Chinese per retiree will fall to levels
of more developed countries.
6
Fearing that the rapidly growing population
places an untenable burden on economic growth
and improving standards of living, the policy
prevented 400 m births until 201115
. But Today, in
an attempt to mitigate a near-certain demographic
future of rapid aging, shrinking labor force and
critical gender imbalance, the Chinese
government has adjusted its one-child policy. The
new policy, set at the provincial level, will permit
couples to have two children if either the husband
or wife is an only child. But the country would
continue to age, its labor force shrink and its
gender imbalance persist for generations.
15
Source: China’s National Population and Family Planning Commission
“The [Chinese] population will become
old before it is rich”
“China may soon discover, as many developed
countries have concluded, raising low fertility rates
is more challenging than reducing high fertility”.16
Part II – The Healthcare Reform
The foundations of the reform
In this context, the government is fixing the
objectives of the healthcare reform, aiming to
achieve universal healthcare coverage for the
entire population by 2020. However, the scope
and pace of changes seem more akin to a
‘revolution’ than a reform, which started with an
initial reform cost of 850 bn RMB ($124 bn)17
for
the next three years (2009-2011). And to achieve
this objective, the government has estimated that
the spending will triple to $1 tr. by 202018
.
China is adopting a multiphase reform
strategy to transcend the current payment system
into a Diagnosis Related-Group (DRG) system.
This system classifies patients and set averages
costs and payment for treating similar types of
patients. Hospitals are then rewarded for efficiency,
as they pocket every dollar saved from treating a
patient. Putting in place a real DRG system means
to train managers of over 20, 000 hospitals to DRG
management and collect medical data from the
large number of hospitals and numerous types of
treatment patterns.
“Implementing DRG system will be
colossal work, better to start early”
In 2009, China’s government launched the
official policy entitled ‘Guidelines on Deepening
the Reform of Health-care System’, aiming to
provide ‘safe, effective, convenient and
affordable basic health services’ to all urban
and rural residents by 202019
. The challenge is
enormous, as for bringing the whole healthcare
16
“Easing One-Child Policy May be Too Late”, Yale Global, Jan.2014
17
“The Changing Face of Healthcare in China”, KPMG, Oct. 2010
18
“Chinese Healthcare Improves, but More Reforms Needed”, Voice of
America, Dec. 2014
19
“Towards Universal Health Coverage: China Lessons Learned”, WHO, Jan.
2014
5. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page5
system up to speed, with the “reborn” basic
healthcare insurance coverage of more than 95%
[1.35 m people]19
of the population. The main
focus was to help the people with no resources, no
ability and no one to support them (so-called
“Three No” people20
).
Four years later, the government has actually
spent more than $371 billion21
, as a result, now
over 95% of the country's population has some
basic level of government-provided healthcare
insurance. The central government has spent $100
bn on funding programs related to healthcare
insurance, public health, public hospitals reform,
and strengthening community healthcare
institutions alone. An estimated 46% of that will
be allocated to medical insurance initiatives, 47%
to healthcare provisions, and 7% to public22
.
In 2011, with the release of the Twelfth Five
Year Plan, China made public its plans to spend an
additional RMB 4.4 trillion ($720 billion) beyond
what had already been allocated for the sector.
Healthcare reform becomes one of the top10
priorities of the governments23
. If successful, the
latter investment will fund 150,000 new primary
care physicians, add 2,000 new county-level
hospitals, create 29,000 new township hospitals
and clinics and upgrade 5,000 existing township
health facilities.
At present, practicing physicians in China are
severely underpaid. They have become reliant on
prescribing expensive drugs and imagining
services, as well as getting side payments from
20
“China’s Latest Revolution: Basic Healthcare for All”, International Labour
Organization, Sep. 2009
21
“四年医改财政投入逾 2 万亿 学者称应多补需方”, 财新网, Mar. 2013
22
“Healthcare Reform In China”, IMS.
23
“China’s 12th
Five-Year Plan: Healthcare Sector”, KPMG, May 2011.
patients, to make extra income24
. And profits from
drug sales have driven doctors to overprescribe
which has resulted in soaring out-of pocket
medical expenses for Chinese patients. By aiming
for a full DRG payment system, China is tackling
the most pressing challenge which is access to
affordable healthcare25
. The augmentation of the
price of the medical consultation is unavoidable,
then the price of medicines will decrease, as
consequence the doctors will switch their income
from drugs sales to consultation and the volume of
patients will decrease in Tier 3 hospital.
The increased government spending has
expanded health insurance coverage. As a direct
consequence, the share of out-of-pocket spending
decreased from 56% to 36% in that same period26
.
The reform also generated increased demand for
healthcare, with hospital bed utilization rate up
from 36% to 88%26
. By the end of 2015, the
government plans to increase its budget for total
health expenditures to 33%, compared to 28% at
present, reducing the individuals’ out-of-pocket
expenses from 36% to 30%23
. And to effectively
control medical expenses, clinical pathway is
promoted, and recognition of medical examination
and lab test results among hospitals at the same
level is promoted. In order to eliminate subsidizing
medical services with drug sales a comprehensive
reform on county level public hospitals by
reforming their personnel management, drug
distribution, funding and performance evaluation,
with a focus on enhancing service capacity, and
establishing a new pattern featuring first
diagnoses on grass-roots level27
, mutual referral
24
“How Much Does the Average Chinese Doctor Earn?”, China Medical News,
Mar. 2014
25
“Making Healthcare affordable in China”, WHO, Nov. 2008
26
“What Money Failed to Buy: The Limits of China’s Healthcare Reform”,
Asia Unbound, Mar. 2014.
27
“China to Accelerate Public Hospital Reform”, Xinhua, Nov. 2014
6. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page6
between hospitals, cross-level hospital
cooperation and division of labor28
.
The Essential Drug List (EDL)
Following the reform in 2009, the Essential
Drug List (EDL) system has been established from
scratch. Essential drugs without zero markups are
offered in government-run grass-roots health
institutions. Currently this practice is expanding to
village clinics and other non-government-run
grass-roots health institutions.
All government-run primary healthcare
institutes are now required, to restrict drug
utilization to only EDL-listed molecules (a core
pillar of the essential drug system). Meaning that
hospitals are banned from applying their
traditional mark-ups on sales to patients, in theory
ensuring that rural and low-income patients can
gain access to the most basic medicines at an
affordable price. EDL drugs have retail prices set
by the government, and face further price
suppression through being purchased in bulk by
the government in provincial-level tenders29
. The
provincial tender system also produced such fierce
price competition that tenders were won at below
the manufacturing cost, leading to supply and
quality issues.
28
“Governing Health in Contemporary China”, Yanzhong HUANG, 2013
29
“Exploring Impacts of the Revised EDL and Associated Policies”, IMS
Consulting Group, Apr. 2013
In grass-roots level, the price of essential
drugs has reduced by 30%30
. The proportion of
government funding and medical insurance in the
total revenue has reached 72%, up by 22%
compared to before the reform31
.
In contrast, there are no requirements or
restrictions regarding EDL usage in Grade 2 and
Grade 3 hospitals, thus highlighting large
implementation loop holes and scope differences
in the old system32
. However, public hospital pilot
reform has been making steady progress. Pilot
reform has been carried out in more than 2000
hospitals of 17 national level pilot cities and 37
provincial level pilot cities31
. Modern hospital
administrative systems are tentatively established,
which means the separation of administration and
operation under the larger health system. In pilot
cities such as Beijing and Shenzhen, recent public
hospital reform has made some breakthrough and
achieved preliminary progress in canceling drug
markup, and establishing a brand new funding,
operating and monitoring mechanism.
Primary care
The rise of the Community Healthcare Centers
(CHC): ‘a certainty among a sea of uncertainties’.
The 2009 reform was the 1st
stone to build a real
primary healthcare system, but the investments
are unleashed with the 2nd
step of the 2011 reform.
The development of community hospitals (CHC) in
rural areas has been 100% funded by the
government, and they will provide medical
consultations, chronic diseases follow-up and
preliminary diagnosis.
By the end of 2011, there were 954,000
health institutions, including around 22,000
hospitals and 918,000 grass-roots health
institutions, an increase of 148,000 institutions
compared to 2003 33
. The initial investment
created the foundations for a new primary care
system and the expansion of the overall hospital
30
“Progress and Prospect of Healthcare Reform in China”, Prof. CHEN Zhu,
Minister of Health, May 2012
31
“The Reform and Development of China’s Health Sector Since the 16th
CPC National Congress”, China.org.cn, Sept. 2012
32
“China’s Pharmaceutical Distribution: Poised for Change”, ATKearney,
2012
33
“党的十六大以来卫生事业改革与发展”, 中华人民共和国国家卫生和计划生育委员会, Sep.
2012
7. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page7
capacity. If successful, the latter investment will
fund 150,000 new primary care physicians, add
2,000 new county-level hospitals, create 29,000
new township hospitals or clinics and upgrade
5,000 existing township health facilities34
.
Making it mandatory for those who do not
have a serious emergency to do a first diagnosis
in a CHC, the primary healthcare network will
provide medical consultations from general
practitioners to Traditional Chinese Medicine (TCM)
and will make the first diagnosis, but no surgery.
Improving the reputation and the quality of the
community hospitals, those will be a great asset to
diagnose and to follow the chronic and infectious
diseases. In the past, those same institutions have
lacked of credibility to provide healthcare, and the
Chinese population would always prefer to go to
Grade 3 hospitals before even considering any
diagnosis at a CHC hospital35
.
The ‘Irony’ of the Healthcare Reform
“The average Chinese expects the
government to provide healthcare at no cost”. The
government is under pressure to fulfill its promises,
as delivering the social returns and noticeable
wealth distribution (topic related to corruption) for
the population. Many Chinese families rationalize
the damage to their environment and food supply
because they believe that the eventual economic
progress will result in social benefits, of which
healthcare is the most basic and essential.
Those important healthcare reforms are all
important, but will the results arrive early enough
to satisfy the huge demand in healthcare? The
changes are critical to the country's healthcare
infrastructure, but given China's proclivity toward
34
“Mixed Prognosis”, China Hands, May 2014
35
“Fixing the Public Hospital System in China”, The World Bank, 2010.
spending on infrastructure rather than on services,
questions remain about how impactful this new
funding will be at the ground level. “Why and how
did the well-intended and well-invested healthcare
reform go awry?”
For the Chinese government, the main issue is
the costs: “How do you fund healthcare for a new
group of insured people, in both rural and urban
areas, who had until recently been lacking
coverage for even the most basic healthcare
needs?” Referring to the ‘Iron Triangle’ 36
principle, there is always a trade-off between
increasing access to healthcare, maintaining the
quality, and continuously funding that access,
those are the three cornerstones of healthcare:
Access, Cost and Quality. The challenge comes
when the government try to improve all three, or
even two, at once. Increasing the ‘Access”
definitely increases the cost burden, this requires
extreme agility as to balance everything.
Contrary to the rosy picture portrayed by the
government and some scholars, the reform has
failed to fundamentally address the problem of
access and affordability. According to a survey
released by the Independent Horizon Research
Consultancy Group (Oct. 2013), Chinese people
continue to have difficulty in accessing healthcare
coverage. About 81% of the survey respondents
said it was difficult to see a doctor, and more than
57% said it was more difficult than it was four
years earlier to see a doctor. On the affordability
front, 95% of the respondents noted that it was
expensive to seek care, with 87% saying that the
cost was higher than it was four years earlier. Of
the respondents, 27% said that they opted out of
hospitalization, with 74% attributing this to the
high cost of inpatient care and 41% attributing it
to the difficulty of being assigned a hospital bed.
The problem of access to quality care is
especially acute in rural areas of China. Physicians
find big disparities in terms of income, status and
access to technology in the countryside versus the
city, noting that doctors naturally tend to gravitate
to the research opportunities, higher salaries and
36
“Ticking Time Bombs: China’s Healthcare System Faces Issues of Access,
Quality and Cost”, Wharton University, Jun. 2013.
8. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page8
clearer career paths offered by big urban medical
facilities. The incentives are then very weak to
attract qualified labor from a Grade 3 urban
hospital to the lower pay, lower prestige and lower
support of a Grade 1 or 2 hospitals, especially
when in a rural area.
Funding for the transformation
By far the most complex challenge China has
set for itself, the government needs to find a new
balance to finance its public hospitals, which
account for more than 86%37
of all hospitals of the
country, dealing with 90% of the total healthcare
demand from the Chinese population11
. At the
same time, the number of outpatient visits in 2012
increased by 9.9%, close to double digit growth
from the previous year38
.
The public hospitals receive funding from a
variety of sources. However the government’s
direct subsidies to them have always been
historically low. The fees they charge for medical
services are usually even below true costs (for
example, consultation fees in hospitals). The
healthcare system has been abnormally distorted,
allowing very cheap consultations and
over-prescription of drugs to compensate the
finances. The over-reliance on drug revenue
locked the hospitals in a dangerous funding
situation. Here comes the promising Healthcare
reform, but its progress will be quickly impeded by
the fact that the heads of many Chinese medical
institutions or centers tend to be political
appointees rather than professionally trained
managers, resulting in serious performance and
governance issues. Nor does the country’s medical
education system really offer hospital
administration programs. Adding to that the
existence of widespread corruption, exacerbated
by the new pricing control policies of the
government on low-cost items to make them
widely accessible and available.
Although, the cause of the financial problem is
clear, but the solution is less so. The government
37
“Industry Trends and Investment in China’s Healthcare Market”, PWC,
Aug. 2014.
38
“China’s Healthcare Costs Increase: Official Data”, Xinhua, Jun. 2013.
would like to eliminate the drug markups
(~15%39
), by offsetting the lost through public
subsidies and medical service revenues. However,
the drug revenue weights already more than 40%
of the public hospitals revenues40
. Without strong
financing from the government or real reforms in
the hospital governance, the bottom line of those
institutions are deeply affected, and to
compensate they tend to charge much higher
prices on high-tech equipment and offer more
expensive drugs, devices and procedures.
The following reforms planned for the public
hospitals will target the hospital management
performance: financial, clinical and operational.
This will require a total transformation of the
mind-set and the capabilities of the public
hospitals managers. Although public intuitions will
continue to dominate as the main healthcare
provider, but the private hospital market will grow
significantly over the next few years because the
government has loosened its restrictions in the
field of healthcare private sector. The central
government has clearly voiced a need for the
oversea expertise and experience, opening new
opportunities for international entrants to the
private sector 41 , 42
, changing the regulatory
environment in favor of foreign investors. Public
sector will definitely share the gain in experience,
improving care quality, management efficiency
and healthcare delivery performance.
Affordability disparities
China’s State Council recently announced that
commercial health insurance would be enhanced
to meet demand for improved healthcare services.
39
“Evaluation, in three provinces, of the introduction and impact of China’s
National Essential Medicines Scheme”, WHO, Bull World Health Organization,
2013.
40
“Healthcare Reforms”, Health International, 2010.
41
“China's Healthcare Reforms: Addressing Discontent while Creating a
Consumer Economy“, NBR, Mar. 2013.
42
“China Looks to Boost its Healthcare Service Industry”, China Briefing, Oct.
2013
9. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page9
Reform in this area is much needed, as dramatic
shortfalls in some areas remain. Inequality in
health care provided is a persistent problem
between urban and rural areas, richer and poorer
provinces, and east and west.
Health insurance programs through the Urban
Employee Basic Medical Insurance Program
(UEBMI), the Urban Resident Basic Medical
Insurance Program (URBMI), the New Cooperative
Rural Medical Scheme (NCMS), and the urban and
rural medical assistance program provide access
to health care for select groups of Chinese
citizens43
.
While in name China has achieved 95%
universal health coverage in recent years, benefits
remain low and quality and extent of care and
coverage vary widely. Copays are often very high,
certain drugs are excluded from coverage, and out
of pocket expenses are insufficiently reimbursed.
The out-of-pocket cost issue is the most
pressing, especially in rural areas44
.
Provincial contributions to the URBMI scheme
and county contributions to the NCMS scheme vary,
while contributions to the UEBMI are somewhat
more stable since they are based on employment
and fixed at 8% of the payroll. Together, the
URBMI and NCMS schemes account for the vast
majority of the population. Differences in
43
“Health Insurance Systems in China: A Briefing Note”, World Health Paper,
2010
44
“The Healthcare System Reform in China: effects of out-of-pocket
expenses and saving”, CEIS, Oct. 2013
contributions, particularly outside of the urban
employee medical insurance scheme, have given
rise to large differences in health insurance
coverage. Variations in benefits packages also
contribute to this disparity.
Exacerbating these differences, healthcare
staff in rural areas are often far less qualified than
those in urban areas. Some community health
centers face a problem of poor management.
Services provided to insured patients may be less
cost effective to allow providers to charge more to
these patients. Leading to a medically-induced
poverty, the three insurance schemes focus
primarily on inpatient care, while outpatient
services and catastrophic illness are usually paid
out-of-pocket by the patients45
.
Part III – The Growth Opportunity
Healthcare private sector
The average Chinese consumer is now willing
and able to pay more for premium healthcare than
he was ten years ago. Chinese healthcare
consumers have long been wary of private
healthcare, largely because of the negative
experiences many had with small privately-run
clinics that proliferated across the country in the
'90s. In addition, while paying a doctor a "red
envelope" has become commonplace, most
Chinese anticipate private healthcare to only cost
more.
45
“Private Health Insurance in China: Finding the Winning Formula”,
McKinsey, 2012.
10. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page10
In early 2012, Chen Zhu, China's minister of
health, stated the government's goal to see 20%
of all hospital beds across the country funded
through private investment by 2015. Considering
that as of 2012, only 8% 46
of the country's
hospital beds were privately funded, this is an
ambitious goal.
China’s healthcare reform has emphasized
attracting private and foreign investment to
healthcare institutions. In 2010, several PRC
government agencies released Opinions on
Further Encouraging and Guiding Healthcare
Institutions Set Up by Social Capital, and the State
Council announced that it would encourage
privatizing state-run hospitals and cancel the
70% 47
foreign ownership cap to allow wholly
foreign-owned hospitals.
Because China’s healthcare infrastructure and
services have traditionally been concentrated in
the country’s eastern region and in medium and
large urban areas, the central government aims to
provide more financial subsidies to central and
western provinces and build and upgrade more
facilities in those regions. Foreign healthcare
investors will likely find more incentives outside
the country’s already developed eastern areas. To
expand their presence in the China market, foreign
companies should consider looking to healthcare
facilities that are new or being upgraded and need
assistance developing information technology
systems and stocking medical devices and
pharmaceuticals.
Although, the Chinese government seems to
understand the importance of this dilemma: if it is
46
“China Taps Private Hospitals in Overhaul—Will It Work?”, CNBC, Oct.
2012
47
“China Opens the Door Wider to Private and Foreign Investment in
Healthcare”, WilmerHale, Dec. 2010
successful in spending all of the 2009 and 2011
stimulus money wisely, the country's healthcare
needs will still outstrip the government's
resources 48
. For this reason, new options are
necessary to the realization of those changes,
putting forward two additional sets of policies
designed to draw in private capital, which will
complement the "20% by 2015" goal.
The first policy announcing that the country's
Foreign Direct Investment (FDI) catalog would be
modified in 2012 to allow for 100% foreign
ownership of hospitals, under the so-called Wholly
Foreign Owned Entity (WFOE) structure.
Previously, foreign capital was largely limited to
joint ventures (JV) in China's hospital space, with
capped ownership at 70%.
The second policy would make it possible for
private investors to own entirely a public hospital.
The MOH had piloted this idea several years before
with terrible results, largely because the
privatization scheme was limited to poorly located
and badly under-performing public hospitals that
private capital did not want to own.
The combined effect of the "20% by 2015,"
FDI catalog, and public-to-private transaction
policies is a positive indicator that China's health
care reforms will carve out space for FDI. However,
healthcare investors remain cautious about how
future FDI reforms could impact their ability to
invest capital successfully in China. Leading their
fears is the uncomfortable reality, made especially
clear during this summer's anti-corruption drive
against bribery in the pharmaceutical sector, that
healthcare in China is entering an era where
access and affordability are political matters.
While this is always the case in any part of the
world, it is a particularly sensitive issue in China.
Investors will need to understand the unique risks
they face as providers of a scarce service in China.
These investors will hence need unique
reassurances by the Chinese government that
their investments are safe and secure from future
regressive FDI reforms.
48
“China Healthcare Reform Poses Risks and Opportunities for Foreign
Firms”, China Business, Apr. 2014
11. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page11
Pharmaceuticals (Outlook)
China’s healthcare reform aims to improve the
quality, accessibility, and regulation of
pharmaceuticals. Though access to drugs
increased significantly when China opened its
economy, the steady decrease of government
subsidies has left hospitals reliant on drug sales as
a main source of income. As a result, hospitals
have over-priced and over-prescribed
pharmaceuticals to increase revenue, making
drugs unaffordable for much of the population. To
address this problem, the central government in
2009 created the National Essential Drug System
(NEDS).
Under NEDS, China released the national
Essential Drugs List (EDL), a catalogue of drugs
with capped prices that government-funded
hospitals, grassroots clinics, and other health
institutions must use and keep fully in stock. The
current list contains 307 drugs49
, including 205
chemical and biological drugs and 102 traditional
Chinese medicines. China plans to update the list
every three years, or as needed, according to the
country’s economic growth, disease trends, and
scientific developments. The new pricing system
covers more than 30% of state-run grass-roots
hospitals and clinics, and about 50% of primary
healthcare institutions have implemented the
system since august 2009. The government plans
to implement the list nationwide by 2020.
Provincial governments conduct centralized,
public, and online procurement for national
essential drugs and coordinate distribution and
allocation to government-run healthcare
institutions, which can purchase only
pharmaceuticals that win their bids. To clarify
processes, the PRC State Food and Drug
Administration in June 2009 and the Ministry of
Commerce in February 2010 released opinions on
pharmaceuticals procurement and a circular on
drug distribution, respectively.
The government is also improving its
oversight of essential drugs by establishing a
digital network that assigns each medicine
49
“China’s New Essential Medicines List”, Intelligent Solutions, Apr. 2013
package a unique code and monitors the drug’s
transportation, storage, and sale. According to
state media reports, the digital monitoring
network will cover all companies that produce
essential drugs, and state-run hospitals may not
purchase essential drugs outside the network.
NEDS centrally controls overall drug pricing.
Under the system, the central government sets
maximum essential drug prices, and
provincial-level governments may set unified
prices under that ceiling, according to local
conditions. Institutions that have implemented
NEDS have faced a deficit from lost drug sales
profits, however the government promises to
support these institutions.
All listed essential drugs are included in
China’s national Reimbursement Drug list (RDL)
and enjoy higher reimbursement rates than
non-essential drugs. The national RDL sets the
percentage of drug costs reimbursed under
national insurance. The list, which currently
includes 2,127 drugs 50
, was last revised in
November 2009 and is set to be updated every two
years. Provincial authorities then draft local RDLs,
which adjust the national list based on local
conditions to determine reimbursement levels for
the region. Twenty-three recently released
provincial RDLs include all drugs on the national
RDL along with various additional drugs.
Pharmaceutical companies that want to
penetrate the China market should take into
account national and provincial RDLs. Selling a
product that cannot be reimbursed increases risks
because most Chinese cannot afford these drugs
out of pocket. The process for placing a product on
a provincial RDL varies depending on the product
type and targeted province,
NEDS has driven pharmaceutical bidding to
focus on low costs, and will likely polarize China’s
pharmaceutical industry, with a basic medical
market determined by the NEDL and a high-end
medical market of drugs not on the
reimbursement list. As demand for NEDL drugs
50
“The 2009 Revision of the National Reimbursement Drug List (NRDL)”,
IMS Health
12. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page12
increases with fuller implementation of healthcare
reform, manufacturers that can meet government
price requirements may see more business.
Whether companies can make up in volume what
they lose in price reductions remains unclear,
however.
IVD (Outlook)
The Chinese in vitro diagnostic (IVD) market
just passed the $5 billion mark, becoming the
second largest market in the world. However,
China still spends less than $451
per person per
year on IVD products at the moment, which is still
far from the standard of developed countries
around $25-$30 per capita.
Since 2012, the ban on drug markups makes
its way into the public hospitals, but this activity
generates currently a large portion of the hospital
revenue (around 50% of the public hospital
operating revenues). If this source of funding is at
risk, then hospitals will likely turn to in-house IVD
and diagnostics labs to offset a part of the lost
revenues.
China’s medical device sector is expected to
have robust growth with a CAGR of 19.7%52 from
2011 to 2016, mainly fueled by construction of
new hospitals, upgrades of grassroots health
institutions, and rising patient demand for IVD
testing.
Most hospitals in China are evaluated as three
major levels (I, II, and III). Each of these levels is
further divided into A, B and C. With this
classification, class III A is the best. Most testing is
done in hospital laboratories. There is virtually no
physician office laboratory testing in China, and
51
“China – An Opportunity and a Challenge for Immunoassay
Manufacturers”, The Immunoassay Handbook, Apr. 2014
52
“Medical Devices in China”, New Zealand Trade & Enterprise”, Jul. 2012
commercial laboratories only share less than 2%53
of the IVD market.
The IVD market in China is dominated by
foreign medical device firms, which generate more
than 65% of all sales revenue. Roche has the
greatest IVD market share, followed by Abbott,
Beckman Coulter/Danaher and Siemens.
Diagnostics products sold by foreign firms include
reagents, diagnostic test kits, instruments and
other testing products. However, most sales come
from instruments like immuno-chemistry
analyzers. Chinese companies control the
remaining 35% of the IVD market. Leading firms
include Mindray, Da An and Fosun. China has more
than 400 manufacturers of IVD instruments and
reagents. Previously, these manufacturers focused
on reagents and inexpensive test kits. Now, they
are starting to move into the integrated
instrument/reagent sector, specifically in the area
of chemiluminescence immunoassay (CLIA).
Product registration is among the highest
barriers of entry for foreign IVD medical device
manufacturers. IVD reagents must be registered
separately from IVD instruments, and both must
be registered with the medical device division of
the China Food and Drug Administration (CFDA).
China is steadily expanding its regulatory regime
for the medical device sector; causing foreign
companies to worry that tighter regulation will
make business operations more challenging. For
example, the 2009-11 National Class II
Large-Scale Medical Device Allocation Plan aims to
regulate the number of medical devices each
province can purchase in the procurement process.
China has been shifting toward a centralized
procurement process that requires hospitals to go
through MOH or a provincial or municipal
procurement center, depending on the device’s
price.
MOH in May 2009 released a list of essential
medical equipment54
that community centers and
rural clinics must carry, similar to the NEDS.
53
“China Independent Clinical Laboratory Market Outlook to 2018 –
Escalating Significance of Diagnostic Tests to Impel Growth”, Ken Research,
Jun. 2014
54
“Market Analysis Report: China’s Medical Device and Healthcare IT
Industries”, APCO, Apr. 2010
13. East Wind – Business Note No.2 – The Chinese Healthcare Challenge December 2014
Page13
Essential equipment on provincial government
medical device insurance lists are reimbursable.
More often, the devices are reimbursed as an
expense of a medical procedure, making cheaper
devices more attractive. Imported products, on
the other hand, usually require some
out-of-pocket expenses as they often are not
reimbursed through medical procedures. Although,
China is changing its reimbursement policy, which
will not allow for differentiation based on the
methodology of testing.
China also aims to improve medical devices’
safety and quality, including by issuing a series of
trial regulations on medical device good
manufacturing practices in December 2009 and a
draft of revised Administrative Regulations for
Medical Devices in September 2010 that govern
safety standards and product registration. Though
when China will release the final medical device
regulations remains unclear, the rules will be
critical for understanding new companies should
track changes in China’s healthcare reform and
medical system going forward and take measures
to understand how their products will fit in the
market: product monitoring requirements,
product recall mechanisms, registration processes,
medical devices advertising rules, and safety
requirements. Foreign companies are particularly
interested in whether the regulations will follow
through on China’s promise to adopt a risk-based
approach that uses results from clinical trials
conducted outside of China, rather than
automatically requiring in-country clinical trials for
all medical devices55
.
CONCLUSION
China’s Healthcare market is growing faster
than the market of any country in Asia. With an
aging population, a rapidly growing middle class
and a government encouraging preventive care,
China has the potential for more dramatic growth
in the future.
55
“Legal and Ethical Risks of Healthcare Businesses in China”, JDSUPRA, Apr.
2014
China likely will adopt a tiered approach to
meet the diverse health care demands of different
regions and economic levels. For top-tier cities,
the government is anticipated to allow health care
offerings to improve to reduce the gap with more
developed countries. Simultaneously, the
government is developing a basic care
environment for lower-tier markets. A wide range
of pilot programs have already began to take place
in various regions and localities; some may be
adopted nationally while others remain regional
due to political, economic, and demographic
differences.
With the ongoing reform of the hospital sector,
private hospitals will accelerate their growth.
There is great disparity between public and private
hospitals in terms of size, resources, and
capabilities. In 2013, only 10% of the healthcare
services provided were at private hospitals, still
quite a long way from the goal of 20% by 2015
described in Document No. 40. Given the favorable
current policy environment, private hospitals
should define their value propositions,
differentiate their services, pricing, and quality of
care, and create sustainable competitive
advantage through efficient management.
However, Chinese competitors are
increasingly competitive, especially in IVD market
such as the areas of instrumentation and
advanced molecular testing. Therefore, foreign
IVD firms should focus on disease areas where few
Chinese companies have a strong foothold,
exploring new delivery methods that are just now
entering the Chinese market, such as
Point-Of-Care (POC) and home based rapid testing.
China’s MOH is shifting its healthcare focus to
preventative care, largely as a cost containing
measure. Along with that will come support for
more diagnostic testing products. Companies with
a focus on POC systems and the oncology market
will benefit the most from any future changes to
national reimbursement policies
Contact
Some subjects that you interested to know more about?
Email: stephane.phetsinorath@biomerieux.com