• Sat
  • Aug 30, 2014
  • Updated: 6:07pm
NewsChina
HEALTH CARE

Private health care tipped for growth after state backs investment

Investors willing to spend after boost from Beijing but say obstacles remain at local level

PUBLISHED : Tuesday, 04 February, 2014, 5:27am
UPDATED : Tuesday, 04 February, 2014, 5:27am

Investment in private hospitals on the mainland is rising and backers say there is room for further growth.

They were buoyed by the Communist Party's recent endorsement for private capital to play a greater role in the economy and say going through the approval channels at the local level, while still a headache in some respects, is getting easier.

"China has a huge population and fast economic development," said William Zhan, from the Maria Medical Investment Group, which runs about a dozen maternity hospitals on the mainland. "But the health care industry has lagged behind and there is a lot of room for growth. The cake is huge."

There were about 5,400 private hospitals on the mainland in 2008 and nearly 9,800 last year, according to official figures. They currently account for about 42 per cent of all hospitals.

Last month, the National Health and Family Planning Commission urged local governments to step up support for private health care investment, including by inviting doctors from Hong Kong, Macau and Taiwan to establish clinics in their city. This follows an earlier push for health care development by Communist Party leaders at the third plenum in November.

Li Guoxing, vice-president of investment at Jiuding Capital, said there were now more details on developing private health care, including covering doctors practising at several medical centres and support for the inclusion of private hospitals in the public medical insurance scheme.

"Compared with the past policies, these are very important points that favour private capital and can be implemented locally," Li said.

Investment group Warburg Pincus has put about US$100 million into the Amcare Women's and Children's Hospital Group, which runs three hospitals and one care centre in Beijing. The group has recently announced plans to expand.

"For the past two to three years, private capital has been moving in slower than expected, partly because the implementation rules were not yet fully in place at a local level," said Feng Dai, managing director of Warburg Pincus Asia. "But in November we saw a major change in attitude by the local regulation authorities. They were more open," Feng said.

But that enthusiasm doesn't always translate into workable polices. For instance, most mainlanders have state medical insurance. Private facilities can apply to join the scheme but it is never a guarantee.

"We have heard a lot about equal treatment for public and private hospitals, but in reality it is very difficult to get covered by the public insurance scheme," Zhan said.

Getting key equipment can also be difficult for private medical centres. Acquisitions of sophisticated machines like MRI and CAT scanners must be approved by the relevant municipal department, and although Beijing has mandated that a fifth of the quota be reserved for private medical centres, some operators find that is not always the case.

Another challenge is hiring and keeping top staff. Leading doctors prefer to stay at public medical centres and hospitals where they can receive academic titles approved by the government to advance their careers.

Despite these challenges, private hospitals could thrive if they found their niche, Feng said.

Treating wealthier people is one option. Private hospitals give patients more individual attention and better service, but they are more expensive. For example a pregnancy check-up and a three-day stay involving a natural delivery in a public hospital in Beijing costs more than 10,000 yuan (HK$12,700), while a private hospital will charge five times that amount.

"Private capital must find its niche, perhaps by meeting the demand for high-end service, or working in remote areas where medical resources are badly needed," Feng said.

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