Is China Still a Good Opportunity for Your Healthcare Business?

For the last decade international investors and entrepreneurs have considered the Chinese healthcare marketplace an enticing opportunity poised for rapid growth and eager for the application of international advances.  After all, what wasn’t there to like?

You have an undeveloped marketplace with limited private healthcare; a huge population representing the largest potential market in the world; and by most accounts a marketplace 25 or more years behind the international community both in terms of clinical care as well as patient service.  Most of the healthcare in the country was being delivered in huge healthcare ‘factories’ of 1,000-bed public hospitals where the focus was on delivering minimal amounts of care in the shortest possible time.  Clinicians who saw 200 or more patients a day were praised and respected.  While this approach was a realistic response for a country with limited resources and a large demanding patient population, the obvious casualty in this approach was patient service with resultant long lines, impersonal and questionable quality of care and an over-reliance on drugs.

To the international healthcare community this environment represented an ideal opportunity for the application of the approaches that have been developed internationally in response to market demands for greater emphasis on service, efficiency and quality of care.  Over the last decade major providers of care and international healthcare businesses made aggressive efforts at entering this market. And yet, what has happened over this last decade?  What has been the impact of this intensive interest in China? How many of these efforts have actually added value and efficiency to the existing system?

The simple answer to this question is ‘not much’ and ‘not many’.  Yes, there have been a number of international efforts initiated but very few have reached the point of actually impacting the system on a day-to-day basis. And why has this occurred?

  1. Many of the efforts have been over-reaching and unrealistically ambitious failing to recognize the magnitude of the effort necessary to make even modest changes in a huge cumbersome system like China’s.
  2. There has been a failure to recognize that many of the international community’s advances have come about as a result of pressures from third-party payers and not from the delivery of care perspective. These advances addressed length of stay, appropriateness of care, peer review, nursing ratios and other similar efforts.  There is a limited market appeal in China for such efforts.  There are no third parties demanding that these issues be addressed. China is still a country where the consumer pays the majority of costs.  International projects often fail to recognize this key point.
  3. Many of the efforts that have failed involved overly sophisticated technology and operational activities that are based upon an assumption that the basic systems underlying these advancements exist in China when, in fact, they do not.
  4. Despite strenuous efforts on the part of the national ministry to emphasize that foreign investment in healthcare projects is both encouraged and welcomed, the day-to-day reality is the government officials at the local level have minimal motivation for encouraging foreign projects.

To return to the question asked at the beginning of this blog – Is China Still a Good Opportunity for Your Healthcare Business? – the answer is a qualified ‘yes’.

  1. You must ask yourself is my company’s product a true benefit to China’s system as it exists today; not to a system that exists in your more sophisticated international marketplace.
  2. Does your product advance an existing system, improving it and making it more efficient or does it require a wholesale replacement of what exists in China today? If the answer is the latter, your path will be difficult.
  3. Are you prepared for an extended, realistic path to profitability? Unrealistic financial goals have doomed many efforts in China.  This is an essential element in a successful healthcare project in China.

If you can answer these questions affirmatively, then China represents a sound opportunity for success.

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