Prognosis good for China health industry

China’s health care industry is poised for a growth spurt as expanding insurance coverage and an increasingly ageing population fuel an increase in patient numbers, according to HSBC analysts.

Total industry revenue, based on reported revenue of A-share-listed health care companies, has grown in double digits every year since 2009. But the growth rate has increased only twice during that time: in 2009 and 2012, when inpatient and outpatient numbers both jumped by more than 10 per cent.

“Patient numbers is a coincident indicator of industry growth,” HSBC analyst Zhijie Zhao wrote in an October 16 report drawing on data from the National Bureau of Statistics, the Ministry of Human Resources and Social Security and the National Health and Family Planning Commission.

Medical expense reimbursement outflow from government-sponsored medical insurance has been a major driver of patient numbers since its introduction in 2007. The Urban Basic Medical Insurance scheme has taken the urban coverage rate to around 80 per cent from sub-30 per cent in 2006, while the New Rural Cooperative Medical Insurance scheme has lifted the rural coverage rate to 95 per cent. The two schemes accounted for around 30 per cent of the country’s health care spending last year.

With the basic schemes approaching saturation, they have little more growth to yield. But in August the government announced the supplementary Medical Insurance for Severe Disease Scheme, which it says will provide at least 50 per cent additional expenses coverage on top of the basic schemes by the end of the year.

“This new scheme is essentially a secondary reimbursement and should drive the growth of reimbursement outflow in 2016,” Zhao wrote.

The HSBC report also identifies China’s ageing population as a past driver of patient numbers and health care revenue, noting that demographic data shows the current aged growth rate at a five-year high and moving towards a 10-year high by the end of the decade.