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China’s health care market still has much room to grow due to the country’s ongoing demographic shift, with the country’s elderly population above the age of 65 estimated to increase from 166 million in 2018 to 250 million by 2030. Photo: AFP

China’s fragmented health care system under increasing pressure as nation rapidly ages

  • Around 2,300 top tier public hospitals are at capacity, while 950,000 lower-tier hospitals, community health centres and clinics struggling to attract patients
  • Lack of general practitioners and training blamed for fractured system as private investors battle government red tape to open private hospitals

In April, scenes of a seasoned doctor from a large public hospital in Shanghai being taken away by police in handcuffs after a confrontation with the relative of a patient went viral, but also reignited the debate about the often fiery relationship between medical professionals and the public in China.

Thoracic surgeon Zhao Xiaojing had allowed one extra patient to be added to his already full schedule for the day, a common practice due to overwhelming demand, but that meant the patient had been waiting for five hours at Renji Hospital.

Stressed and outraged, the patient’s husband eventually ran into the consultation room to demand Zhao treat his wife immediately. Zhao was seeing another patient at the time and asked him to wait until his number was called, leading to a tussle between the two.

The case is one of many examples of a deadlocked health care system in China, where top-tier public hospitals that are home to the country’s best doctors and the most advanced equipment continue to expand, while complaints by patients about the difficulty of obtaining proper treatment from doctors never cease.

Zhao Xiaojing was handcuffed and taken away by police. Photo: Weibo

Beijing’s attempts to open up the sector to private foreign investors remain slow, but what is even more frustrating for policymakers is the need to train a sufficient number of doctors to provide quality service to meet ever increasing demand.

China’s health care market still has much room to grow due to the country’s ongoing demographic shift, with the country’s elderly population above the age of 65 estimated to increase from 166 million in 2018 to 250 million by 2030. And as more people move to urban areas, and the number of affluent families rises, health care costs will also increase.

However, China’s provision of health care is extremely unbalanced, with more than 2,300 top tier public hospitals running at capacity and struggling to attend to almost 20 per cent of total annual outpatient consultations every year, while the remaining low-tier hospitals, community health centres and clinics – close to 950,000 – are struggling to attract patients.

“If you have a child who has a fever at night, [the parents] have been raised to go directly to a top-tier hospital. That’s because you don’t have a primary health care system,” said Dr Loo Choon Yong, executive chairman of Raffles Medical Group, one of Singapore’s largest private hospital operators who also operate clinics in eight large Chinese cities including Shanghai and Beijing.

You don’t have [a general practitioners] system that other people have because over time, this has not been developed. So you cannot blame the population
Dr Loo Choon Yong

“You don’t have [a general practitioners] system that other people have because over time, this has not been developed. So you cannot blame the population. Then you get into a cycle where the bigger [the hospital] the better. You have a small clinic, nobody trusts it because there is no business model.”

China has around 14 doctors per 10,000 people, a higher rate than India but lower than the United States, but there were only 1.82 general practitioners per 10,000 people in 2017, according to data from the World Health Organisation and the Chinese government.

The fragmented system has forced the government to allow private providers to open clinics with more streamlined processes, while also loosening restrictions for doctors to see patients in multiple locations and offering incentives for patients to go to low-tier hospitals for minor or acute illnesses by providing more coverage through public insurance.

But the competition that private investors face from top public hospitals is fierce and has grown over the past decade, as the latter still monopolise the best doctors and research funding.

Research from the US consultancy firm McKinsey showed that 15 per cent of inpatients treated in private hospitals in China occupied 19 per cent of total hospital beds, while 75 per cent of inpatients occupied 67 per cent of hospital beds in privately run facilities in the US, suggesting China’s private hospital system is still in the early stages of development.

For foreign investors, Beijing’s attitude has been cautious and sometimes unclear with regards to policy. In 2014, the central government said it would open the doors to wholly-owned foreign invested hospitals in seven locations including Shanghai. But a year later, foreign hospital investment was still restricted to joint ventures and partnerships, according to official policy, with exclusively foreign-owned hospitals only approved on a case-by-case basis, Loo from Raffles Medical Group added.

After opening a hospital in Chongqing earlier this year, the Singaporean health provider’s latest venture is an international tertiary hospital in eastern Shanghai, which will have 400 beds when it opens next year. It is targeting close to 5 million upper middle class Chinese as well as expatriates living in the city, who are able afford its services through commercial insurance, according to the company’s research. Raffles expects the Chongqing and Shanghai hospitals to break even after three years, one year longer than the average for its hospitals in Singapore.

The venture is 70 per cent owned by Raffles Medical Group and 30 per cent by local developer Shanghai Lujiazui Group, although this could change to a 50-50 share arrangement over time. But ownership restrictions are not the biggest hurdle to navigating China’s health care market, according to Loo, as the lack of efficiency and a shortage of quality doctors is more problematic.

“Once, a senior official in Beijing asked me, ‘can you help us build hospitals?’ I said, ‘If I were you, I’d recommend, don’t build new hospitals.’ They were shocked,” Loo said.

“If I stayed in a Singaporean general hospital, the average stay was 2.88 days at that time, while in China it was 14 days on average [a few years ago]. Now it’s down to 10. One of my beds is as productive as five of your beds, so I need fewer beds, I need fewer hospitals. I treat them and I send them out because it’s costly [to keep them].”

For the staff of around 200 at the Shanghai hospital, Loo said he would be bringing in doctors from Singapore while also recruiting local specialists, who would be sent to Singapore to study in a developed private health care system focused on quality.

“In China’s top-tier hospitals, doctors are under so much pressure. How much time do they have to talk to you? If somebody gives you a bit of time, explain to you [your condition and the treatment], hold your hand, I’m sure you don’t mind you pay a bit more, right?” Loo added.

Raffles Hospital in Chongqing. Photo: Handout

The concern about bad service quality is also shared by Zhang Qiang, once a chief surgeon specialising in vein problems at a Chinese public hospital, who founded the Dr. Smile medical group in 2014 that now runs five private surgical clinics.

“I spent more than a decade in Sir Run Run Shaw Hospital [a public hospital in Hangzhou], no one taught me how to see a patient. Yet I was a chief surgeon,” Zhang said.

Among the three million licensed medial practitioners in China, only about 60 per cent have undergraduate degrees and only around 10 per cent have graduate degrees, according to official data. By contrast, in the US, most doctors have at least a masters degrees.

In 2014, the Chinese government introduced a residency programme, similar to that in the US, aimed at boosting the skills of its doctors. In the US, a medical school graduate needs to go through at least a three-year residency programme that involves intense training and surgeries in hospitals with experienced doctors before being allowed to see patients on their own. However, China’s system does not offer a new doctor the opportunity to gain much clinic experience, Zhang added.

“Our doctors [in public hospitals] are responsible to their bosses, not to their patients, so the level of health care quality is messy. In the past, we felt we were good because we reported to the head of the hospital, not to our patients. We didn’t care about how the patients viewed us,” said Zhang.

“If the Zhang Qiang from 2014 came to apply for a job in my clinic now, he would not be considered.”

This article appeared in the South China Morning Post print edition as: private health sector battles to make inroads
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