As China opens its doors to fully foreign -owned hospitals, what does this mean for your healthcare choices?
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Coming to you live from Beijing, this is Roundtable.
I'm He Yang. For today's program, I'm joined by Steve Hatherly and Yuxian in the studio.
First on today's show, on September 8th, a notice from the Ministry of Commerce and other national -level departments opened the door for fully foreign -owned hospitals in nine locations, including Beijing, Tianjin, Shanghai, and the Hainan Island.
This news has sparked widespread discussion.
Why is this policy creating such a buzz?
Is it the potential for improved healthcare quality or underlying concerns about the impact on domestic providers?
Let's explore the implications of this potentially significant shift in the medical sector.
Well, let's go to you first, Yuxian.
What's new about this proposed policy?
Well, this year, unlike previous efforts, the new policy covers a broader scope, allowing for foreign hospitals not only in major cities but also in places such as Nanjing and Suzhou in southern China and also Hainan.
It specifies investment areas, including stem cell research and gene therapy, particularly in the free trade zones.
And this isn't really the first time foreign -founded hospitals have been opened in China because back in, I think it was in 2015, there was one hospital named Shanghai Yuanxing Gynecology Hospital opened in the Shanghai Free Trade Zone as well.
And that was China's first wholly foreign -owned hospital.
And around 2014, the former National Health and Family Planning Commission and the Ministry of Commerce initiated pilot projects for foreign -owned hospitals in seven provinces.
But the policy later shifted towards, you know, just joint ventures and collaborations between public hospitals and foreign -invested hospitals.
And it was reported that back in 2021, the number of foreign -invested medical institutions in China had risen to 302 and showing a trend of steady growth.
But most of these institutions are joint ventures, like we mentioned, with foreign ownership not exceeding 70%.
Partner projects. Yeah.
So I guess this year we see that the open of the door for full foreign -owned hospitals in nine locations, marking like a great progress, I'll say.
This is definitely a signal that's been interpreted in many ways.
You can see that the stock price going up for some of these medical companies and also basically a lot of discussion about what this would mean for China's medical services in the future.
And Steve, you're from Canada and you've lived in different countries as a truly international citizen, I suppose.
When you look at other countries, I mean, what's your knee -jerk reaction when you hear, oh, foreign -invested hospitals in a country?
Is this something that would raise eyebrows?
Raise eyebrows not in a bad way.
It's just a foreign concept, I guess, being Canadian.
I tried to find if there were any foreign -owned hospitals in Canada and I couldn't find evidence of any.
So this is kind of the first I'm hearing about this type of story.
In Canada, we have universal health care.
So all Canadian citizens are covered when we go to the hospital.
That includes surgeries.
I had surgery twice and I didn't pay a penny out of my own pocket.
But in the United States, I've never lived in the United States.
But it's always in the news there, the big debate between private and public health care.
And for Americans, they need to pay into an insurance, public or sometimes commercial as if you pay more into a more expensive insurance policy, then you would get yourself covered in a wider range, I suppose.
There are plenty of Hollywood movies that cover, and documentaries too, that cover that topic.
The dark side of it, if you will.
Yes, interesting. Public versus private in different countries when we talk about hospitals.
And here in China, when we introduced the concept of fully foreign, invested, funded hospitals, then this would go into the category of the private medical sector.
Or at least at the moment, because everything is just so new and we're still sort of contemplating talking about possibilities.
But by the sound of it, it's highly possible that most of your medical bills from these foreign owned hospitals in the future will come out of your own pocket.
Not covered by any ...
The national insurance scheme.
But if you've paid for expensive commercial and business insurance plans, then that could get you covered, but you'll need to read the fine print to know better about that.
And that's why there's such a big debate between privatized health care and public health care.
Privatized health care is more expensive.
They say that the quality of health care might be better, but that is bad news for low income families who might not be able to afford it.
Well, definitely, let's get into that a little bit more.
And what are the characteristics of wholly foreign owned hospitals compared to the public ones, which for most Chinese people we're most familiar with?
Well, this is according to Professor Tao Hongbing from Hangzhou University of Science and Technology.
And he notes that these wholly foreign owned hospitals often require substantial investment that have longer return period and face higher risks as well.
And they typically employ foreign doctors and offer advanced technology and a relatively more patient -centered medical experience.
However, like we mentioned earlier, it also features higher costs and many of the costs may not be covered by the public insurance and the patients that attend these hospitals will need to pay out of pocket or through private insurance.
And I was actually just reading a piece of news from CCTV earlier that they sent reporters to visit such foreign founded hospitals in Beijing and in Shanghai to see what they really look like from an insider's point of view.
And apparently, the service features the convenience and comfort that it provides to the patients because you don't need to queue, you just need to book an appointment and just get in.
There's no queue. There's very like person to person services.
Like you can be there and talk to the doctor for half an hour in detail.
And also, they also offer like the doctor's WeChat account for you to add afterwards just so that there's like feedback on the treatment, etc.
Yeah. And these are the advantages of private hospitals.
You get that extra level of care that you might not get by going to a public health care facility.
Big news here in China in the first half of this year, we saw the health care sector begin to take shape in June.
It was on the 22nd when the world's largest private hospital, the Mayo Clinic, officially opened an international representative office.
It's not here in Beijing.
It's in Shanghai. But this Mayo Clinic, have you heard of it before, the Mayo Clinic?
Well, this is funny.
When we're doing research for the show on numerous occasions about medical or psychological issues, this Mayo Clinic does come up on the internet a lot.
Yeah, because it's known as the top hospital globally all around the world.
They've established multiple multinational hospitals in Europe.
They are also represented in the Middle East, and they have really significant expertise in cancer treatment.
And they have more top rankings for high -quality patient care than any other health care organization.
And the Mayo Clinic has more number one rankings than any other hospital.
That's according to US News and World Report.
So this is the hospital in the world if we're only going to choose just one.
Oh, interesting. I learned something new here.
And when you look at the China hospital landscape, could you provide us with a little bit more on the numbers of a breakdown in terms of public hospitals and private hospitals and where we stand these days?
Because for an average Chinese person like myself, what immediately comes to mind whenever an ailment comes up, big or small, I think about getting a spot in a public hospital.
And sometimes it's very difficult.
It can take maybe at least two weeks ahead of time to book a spot to get registered or whatnot.
But for most average people, we feel this is the most trustworthy option.
And Yuxian, I know you come to the discussion equipped with figures and facts.
Just tell us a bit more about this general landscape.
Yes. And this data is provided by the National Health Commission, and they released the 2021 statistical bulletin on the development of health and health services in China.
So back in 2021, there were 11 ,800 public hospitals that accounts for about 32 percent of the overall number of hospitals and 24 ,766 private hospitals accounting for more than 60 percent of the overall number of hospitals in China.
Back in 2021, we might be a bit shocked by the differentiations in the numbers.
But as a matter of fact, the number of public hospitals have been declining for six consecutive years as well, with 66 public hospitals being merged or reconstructed in 2021.
And although we see that public hospitals account for only 32 percent of the total, they still hold 70 percent of the beds and bear the majority of the medical responsibilities.
And that explains why as Chinese citizens like you and me, we have this sort of an instinct to seek help from public hospitals when anything comes to us that's health related, I think.
And this is interesting to have as information in our back pocket, sort of to better understand today's development, I suppose, in this area.
That is, in China, we've gone through this a couple of decades of medical reform, I suppose.
Initially, it was all like public.
And gradually, we saw that, OK, some Chinese private hospitals and clinics are allowed to open having to go through the necessary procedures.
And then now we're seeing, oh, yeah, and about 10 years ago, we saw gradually there's been a steady growth of joint ventures of foreign and Chinese hospitals opening doors and really offering a different perspective as well as choice for Chinese patients who can foot the bill.
And now we're seeing, OK, we're pushing this even further.
Fully foreign owned hospitals are going to open doors in this country.
And this is exciting as well as presenting some challenges.
Could fully foreign owned hospitals stimulate competition?
Again, to the catfish or nian yu xiao yin, catfish effect by encouraging innovation and efficiency in local health care, will foreign owned hospitals drive competition in China's medical sector?
It's a great, a great time to bring up that term.
And when we think medicine, we don't necessarily think the catfish effect because we generally think about business dealings when we use that term for our listeners who are not familiar with what the catfish effect is.
It's not catfishing like you'll hear in the dating world.
This is a different term.
The catfish effect is when you introduce new competition to stimulate innovation or to stimulate improvement among existing players in the market.
This term comes from you know what a catfish is?
It's one of the uglier fish.
I think we can agree they've got the little whiskers.
They look like a cat.
But what they do is they put the they put the catfish and actual catfish in an area with other smaller fish to kind of stimulate their activity.
That's where this term comes from.
I'm reminded of Tesla coming to China.
Right. That's a good example of the catfish effect.
Maybe we'll get to that in a couple of minutes.
Yes indeed. And this is the part that if the success of the EV market can be emulated.
Captured by the catfish effect then it could be a major shake up in the medical care industry.
But is that going to happen?
I mean there are many many factors we can go through.
I mean price wise I would say it's well at least for the initial starting point.
It's it could be hard for such foreign for wholly foreign invested hospitals to really compete with public hospitals in the fact that they cost higher.
It costs higher for people to get treatments from them because here's well here's more detailed comparisons.
So according to the reporter who actually visited the foreign founded hospitals they discovered that the first treatment fee for the very for the initial treatment will cost around 800 yuan which equals one hundred and thirteen US dollars.
And for a follow up treatment the fee will go as a bit more than 500 yuan which is 70 US dollars.
So that's almost like 200 US dollars for just two treatments.
And in comparison for attending public hospitals we probably just paid a few dozens of yuan or less than say 20 30 ish US dollars to get the treatments or to see the doctor.
So I think for the mass majority of the Chinese citizens out there this could be a main hurdle for them to remain in the public sector and not really pay more for something that could be treated in public hospitals.
Right. But in reference to the catfish effect there could be positive effects on the public health care system here in China.
For example talent acquisition.
It's known that private hospitals attract the top doctors right and the top nurses because they have an opportunity to make more money perhaps.
But that could have a trickle down effect into the local hospitals.
They might respond right by enhancing their own recruitment.
Perhaps their own retention strategies as well.
That could lead to better staff quality across the sector which would be beneficial for patients who use the public health care system and also service quality.
You gave examples you son of how when when they went to the private hospital they met with the doctor immediately.
They got to sit for a long time.
They exchanged wechat information.
That level of service quality catfish effect could trickle down to the public health care system as well where they're aware that you get a better quality service at those private hospitals.
Hey we should be doing that for our patients as well.
So to answer your question before he young how could this have an effect in the medical industry.
That's exactly how it could happen.
Also could we compare a little bit closer with the Tesla example because when Tesla established its gigafactory in Shanghai in 2019 I remember we talked about it on the show and it was a grand opening that the Shanghai local government made the world know that we're having Tesla in our municipality.
And then a lot of preferential policies did come accordingly.
And then Tesla really succeeded.
Of course before it entering China it's a global well known brand already.
But in China in 2020 alone Tesla's Model S became the best selling electric car in China selling over one hundred and thirty seven thousand units.
And the biggest impact that Tesla had in the Chinese EV market is that it stimulated competition that so many other Chinese EV companies at the time which were still in its probably early development stage sort of had a chance to acquire like how to do business better how to develop and research better
in this EV market. And then today look at the Chinese EV market.
But one thing I would like to highlight here is that the EV market is different from the medical health market because back then first of all you're seeing that these Chinese EV companies they're competing in the great wild west and they were all just newcomers and they were trying to establish themselves.
But when it comes to the medical industry it is fully established.
Of course there's still room for growth and development but people kind of have this preconceived notion of what kind of hospitals you could go to you could afford and what kind of service you expect.
So to break that I think is kind of a different picture as opposed to you know Tesla.
Yeah I think that's a that's a fair argument.
And you're right Tesla was brought into China because of the catfish effect right to stimulate growth innovation creativity ideas among the the local car producers and it worked didn't it.
We know that China is a leader in terms of EV production around the world and the reputation is really quite good as well.
Is it a fair comparison pardon me to compare the car industry to the health industry.
Probably not because if we're talking about privatized health care or these foreign owned hospitals being a lot more expensive we don't have any specific numbers because treatments vary right depending on what you're there for.
But if it's yeah if it's known that one's more much more expensive than the other then maybe it's not a fair comparison from from the the Tesla Web site today.
Their model three just to use a car example their model three their base model sells for about two hundred and thirty one thousand two three hundred and thirty five thousand you want that's about thirty three thousand American dollars to forty seven thousand.
The BYD a Chinese producer from their Web site there about one hundred and seventy five thousand two hundred and thirty nine thousand you want for their mid to high end sedan.
Those prices my point is those prices are pretty comparable.
Right. So if you're comparing the car industry where Tesla was brought in to inspire competition and to inspire innovation and growth but you still have a relatively similar price point.
Maybe that's not a fair competition because you might not have a relatively similar price point when you're comparing visiting a Chinese hospital public hospital versus a foreign foreign owned hospital.
The Tesla example is so fascinating because you could also argue that given the growth of Chinese EV market and the EV makers in this country Tesla possibly felt the pressure to lower its price as well.
I remember when Tesla first hit the Chinese market about a decade ago.
It was seen as the luxury car that rich people had alongside their gasoline guzzling cars as a sort of the flashy status trophy.
But look at now. Yeah it's price had to go down a bit if it wants to remain competitive in this global EV market I suppose.
But for the folks who are looking or observers that are looking at this possible shift in the Chinese medical care service sector one key concern is that will the top doctors get snatched up by these foreign hospitals because it's natural you know people go for where it is better paid and have better
treatment as such. If things go well or maybe it doesn't what do you see is likely to happen.
I think well this may stimulate the competition in a relatively negative way because it's already shown cases in real scenarios because well according to the report there are about 10 percent of the doctors or medical professionals in the Shanghai in the hospital in Shanghai that's fully invested by the foreign
investment that only 10 percent of their employees are well medical professionals are foreign doctors or like surgeons that has experience working in other countries outside of China.
And then we look at the foreign owned the hospital in Beijing.
That one is led by a team of doctors that's hired from various other public hospitals hospitals and you know just dragging the talents into one center and give them higher payment so that they can you know stay in the foreign hospitals.
And there were this argument among citizens and also the reporters as well that you know in a lot of public hospitals people queue up for weeks just to get one opportunity to visit a certain expert or a certain really experienced doctor.
And sometimes they could the opportunities may run out very quickly so that people have to keep on waiting for more weeks.
And now such talents are all gathered up in one foreign invested hospital so that people can maybe pay more to acquire such opportunities from from other hospitals other than public resources.
I think it may stir up a bit more competition in that realm as well.
And you know it's it's I'm not sure that's going to last a very long time.
Lack of motivation to write lack of motivation if you're not paid based on your performance.
Right. If you're a doctor in the public health care system then you might not feel as motivated as you would be if you were working at a privatized center where you're going to make more money if you're doing if you're popular and you get that reputation.
And here in China right now after more than a decade of having a foreign investment coming into the medical sector despite being the fact of you know maybe setting up joint ventures that we've already seen changes.
One thing is that maybe a lot of the Chinese doctors they still acquired their key knowledge and ample experience from the top or the public hospitals.
But when you retire you or maybe when you want sort of not moonlight but they're allowed to go to other hospitals to work and then they go to these private or slash foreign joint venture hospitals and more choices more competition for talent for the service receivers.
I think that's a pretty good thing.
