China is reforming its healthcare system to address issues like an aging population, rising incomes and healthcare demands, and physician shortages. Reforms include removing financial incentives from some medical areas, increasing spending to 8% of GDP, expanding education to train more nurses and doctors, easing restrictions on private investment, and increasing public-private partnerships between hospitals. Shanghai is also reforming to develop high-end medical services through international medical parks and encouraging collaboration between public and private hospitals.

1. Chinese Health Care Reform
January 2015

2. pag. 1
China
HealthCare
Environment
Policy
Aspect
Status Trend
Structure

3. 15 / 01 / 15
pag. 2
I. China Healthcare Environment
Overall Situation:
• Wholly Owned Foreign Enterprise model is welcomed.
Joint Public/Private Partnership is not mandatory
• Population is aging rapidly
• Population income and standards of living is rising faster than any
other country in the world
• Desire of more healthcare and better health care is rising
dramatically and will continue

4. pag. 3
I. China Healthcare Environment
Medical ‘financial’ Model Reforms :
Reimbursement in Public Sector
• Currently Removing Financial Incentives from Drugs
• Projected to Remove Financial Incentives from Imaging
• Physician and Nursing and Room Fees will continue to increase to compensate
for financial reductions in other areas.
• Financial Services Industry (Insurance) needs to expand to fund the private
healthcare industry. Government action to support is anticipated.
• Currently China spends only about 5% of GDP for Healthcare. Increased
spending is anticipated to continue up to a projected goal of least 8%.

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pag. 4
I. China Healthcare Environment
Medical ‘Operational’ Model Reforms:
Education and Training
1. Significant Shortage of Physicians and Nurses
•This shortage will get worse during next 5 to 10 years before it gets better
•Staff Recruiting from Outside of China is currently almost impossible for nursing, laboratory,
pharmacy and radiology.
•Goal is to increase education and scope of responsibilities of Nursing and Clinical Support Staff to
reduce over reliance on physicians
2. Creating and Implementing Residency Programs
•Priorities are Family Medicine and Emergency Medicine
•Reduce over utilization of Specialists and Top Hospitals
•Increase speed and safety of patient care in Emergency Rooms
Big opportunities for organizations who can educate, train and develop
both clinical, professional and customer service skills for the healthcare
industry.

6. pag. 5
II. Policy Aspect
Overall Situation:
Some New Policy Initiatives
• All cities in mainland of China can introduce single-ownership hospital from Hong
Kong, Macao, and Taiwan
• Capital resources from other countries could be used to establish single ownership
hospital in Chinese (Shanghai) experimental free trade zone, and will be gradually
expanded to other areas
• Reducing the public approval procedures and improve the efficiency of bureaucracy
process
• Contracting with social medical insurance, key discipline development, professional
titles, hospital accreditation, apply scientific research grant
• Supporting private capital running non-profit medical hospital as a priority
• Relief the restrictions on the number, scale and location of commercial hospital and
medical device and equipment
• Strengthening the administration and supervision system by law
Much investment potentiality lies in rural areas and public hospitals

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Five major milestones of the 3rd Plenum of the
18th Party Congress (Nov, 2013):
1. Improve urbanization of healthcare system
Incorporating city-dwelling farmers into urban social security system
Align rural pension and healthcare schemes with urban system
2. Ease the control on investment access
Promote investment access in healthcare service
3. Establish a more equal and sustainable social security system
Integrate basic pension and healthcare scheme of urban and rural populations
4. Deepen healthcare reform
Promote reforms in healthcare, medical services, public health, drug supply
and regulatory system in an integrated and balanced way
5. Public hospital reform
Define government responsibilities for public hospitals
Establish a medical performance evaluation system, and a talent cultivation
and compensation system

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pag. 7
The National Health Service System Plan (2015-2020)

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pag. 8
Shanghai
Regional Health Planning in 13th Five-Year Plan

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pag. 9
III. Status
The Status of High-end Medical Service in Shanghai
Shanghai high-end medical service institutions
Stock exchange:
Aier Eye Hospital Group Company Limited,
Zhejiang Dean diagnosis,
I-kang physical exam center,
Da An Gene
Others:
United Family, Shanghai redleaf women’s hospital, The Ciming
checkup, Meinian Onehealth, Fine Medical Club

11. pag. 10
Collaboration
between Public and Private Hospitals
• To support Hongqiao and Pudong international medical park and develop the
high-end medial services, a policy regarding to the cooperative role between
public hospital and private hospital is being designed.
• Public hospitals can set their branches in the International medical parks to
provide high-end medical service, meanwhile, encourage doctors to run
multiple-site practice under the policy support.
• To exploit different public-private partnership mode

12. pag. 11
The barriers for developing private sector
• The allocation in regional health planning
-Limitation to access the social medical insurance schemes
• The coverage of medical insurance system
• Pricing and taxation of medical services
-There is no taxation system to support the development of private sector, heavy
burden of taxation for commercial medical institutions (5.5% business tax plus 25%
enterprise income tax)
• Provision and purchasing of health services
• Lack of human resources
-The flow channel of talent is not smooth, doctor’s multiple–site medical practice has
not been implemented
• Quality, credibility and integrity
-The proportion of private medical institutions and the number of beds is too low
• Information and management

13. pag. 12
Besides hospitals, health and wellbeing services
are also developing rapidly
Health Check-up Chains
•The largest player in the market as a result of growing health awareness
•Share health check from overcrowded public hospital
Health Management Integrator
•Strong at maintaining relationships with providers and customers and other
intermediaries (e.g. banks)
•Offer differentiated customized solutions
Digitalization
•50% of Chinese Netizens use internet for Health & Medical Information
Source, though still nascent use of Social Media in health/insurance

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pag. 13
IV. Trend
Boosting demand and policy stimulation
drive the development of China healthcare service market

15. pag. 14
Private-owned institution market share is increasing,
and generally focus on specialty and / or premium
services hospitals

16. pag. 15
Privatizing public hospitals has been a key way
for private fund to invest in hospitals

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