China’s Medical Reform Opens Arms to Foreign Investors

The private investors and foreign institutions may have the opportunity to take part in the medical reform in the future.

Where to go to the doctor? If a Chinese is asked about this question, he/she may quickly replies with a public-funded hospital. The answer may be different several years later the Chinese people will make a choice between the public hospitals, private hospitals and foreign hospitals.

Recently China issued several rules about encouraging the foreign investors to found hospitals, which may break the monopoly of public hospitals in China. The experts point out that the introduction of private and foreign hospitals may relieve the Chinese people from the problem of difficulty in getting medical service. It may also force the public hospitals to improve their service and lower their charges.

The National Development and Reform Commission and the Ministry of Health issued the “Advices about Further Encouraging and Guiding Social Capital in Found Health Institutions” in the early December 2010. The document encourages and supports the social capital, including private capital and foreign investment, to found the health institutions and take part in the medical reform. The foreign investors are allowed to found the health institutions in China.

“China is still haunted by the insufficient supply of the medical service. The root lies in the systematic guarantee that stops the resources from entering into the medical service field,” says Zhou Qiren, head of the National Development Institute, Beijing University.

Zhou has been attaching great importance to China’s medical reform. He spends a lot of time calling for the permission of founding private and public hospitals. He said: “If China’s medic field could open to the foreign and private investors, the medical resources in the society could be fully used to meet the increasing demand for the modern medical service brought by the faster industrialization and urbanization.

He points out that this measure could boost the reform to public hospitals, which is a hard point of the medical reform. “Allowing the foreign investors to found the hospitals can help to increase the versatility of the medical institutions, accelerate the reform to the public hospitals in competition and improve China’s medical service level,” says Zhou Qiren.

The new document eliminates the restrictions about foreign investors’ founding hospitals in China. The permission means that foreign capital has got bigger development space in China’s medical field.

“We should cheer for this measure,” says Li Bijing, director of Beijing Concord Family Hospital. “For foreign investors, this measure means a big opportunity. Now we are planning to build more medical institutions in China.”

Beijing Concord Family Hospital was founded by Li Bijing 13 years ago. It is the first foreign-funded hospitals in China. It nearly copies the US hospitals in design, decoration, management and services. Its bilingual working environment makes it the primary destination for the foreigners working in Beijing to get the medical services.

Xiamen Changgeng Hospital is the first hospital founded by the Taiwanese investors in mainland China. In these two years, the hospital established a good image in Xiamen and had its own advantages to compete with the public hospitals.

He Guohao, special assistant to the director of Xiamen Changgeng Hospital, says that he has studied the new document and found 23 differences from the previous policy. “This shows the government’s resolution to finish this reform.”

Here he gives an example: the government previously had strict limitations over the private hospitals in buying large medical devices. Now the restriction is gone. “So the private companies can buy their medical devices according to their business demand,” says He Guohao.

Meanwhile, the foreign and private hospitals are given the same treatment with the public hospitals in using land, tax reduction and scientific research.

He Guohao thinks that new policy creates a “win-win” situation. For the ordinary people, they have more choices to get the medical services. For the investors, the new policy gives them more opportunities of investment.

Beijing Friendship Hospital, which has 58 years’ experience of providing medical services for the foreigners, also welcomes the new policies. Li Ang, deputy director of this hospital, says that the excellent private and foreign hospitals, if included into the system of medical insurance, could release the redundancy of the patients in the public hospitals and shortage in the beds.

But Li Ang also expresses his worries: “The high-quality medical staff will be attracted by the foreign hospitals’ high salaries and good welfare, which may lead to the loss of talents for public hospitals.”

Though the permission for foreign and private hospitals can help the reasonable distribution of the medical resources, some experts point out that opening the medical system is a two-edge sword. He recommends necessary government control along with the permission.

Yu Zonghe from the China Hospital Association says that the private hospitals in China are still infested with many problems. Some of the private hospitals can not provide high-quality services and even some of them are infamous for their bad services and fake drugs. These problems need solving.

According to the statistics, 90% of the medical disputes happened in the private hospitals in 2009.

Therefore, founding a hospital should not be based on making profits. The hospital directors’ ability and the medical staff’s virtue should be put into consideration.