Sunday, 17 April 2016

Heathcare privatisation: China adopts the US model


Prepare for the Mayo Clinic with Chinese Characteristics. This year China is taking the first steps towards creating the equivalent of US group medical practices such as Permanente and the Cleveland Clinic.

The so-called "Doctor Groups" (Yisheng Jituan, 医生集团) are springing up around the country -  mostly in major cities of the affluent Eastern provinces. They are being set up in response to the loosening of the government's rules on how and where doctors can operate - clinicians are no longer tied to the tertiary hospitals and are now being encouraged to be 'fluid' and 'open'. In response, at least fifteen doctor groups have been set up in 2015 and 2016, usually based around one location and with one specialty.

These are not socialist collectives nor are they not-for-profit groups. Instead they are privately financed businesses that are being set up with large investments from major industrial players such as pharmaceutical companies. These are groups that are seeking profits and market share as a return for their investment. Not sure how PRC's Marxist theorists will explain this away.

A typical example is the Yibai Pharmaceutical Anhui Oncology Group. This covers ten leading cancer specialists and their staff, as well as specialist treatment facilities in the Anhui and Shanghai area - services that include diagnostic imaging, radiotherapy, microsurgery and chemotherapy. The pharmaceutical backer has invested hundreds of millions of dollars already and is hoping to use its industry experience and connections to package other services such as pharmacy, supply chain and IT services. According to an investment analyst, the Yibai group is hoping to make 500 million RMB profits within two years.

Yibai is just one example: others include the Medical Imaging Group - an alliance of imaging facilities covering 27 hospitals including the Beijing Union Medical College Hospital, and Beijing PLA General Hospital.

Another doctor group is United Lige, which has a looser structure covering many cities and provinces including Beijing, Tianjin, Shanghai, Chongqing, Jiangsu and Zhejiang. It aims to bring smaller groups of doctors together in private clinics under the Lige banner.

Others Doctor Groups include
  • Sanjia (Mobile phone referral, liaison etc services)
  • Mingyi Hui (a multi-speciaity consortium that aims to offer family care from children to the elderly, with an online/telehealth emphasis)
  • Song Dong Lei Neurosurgery Group (Shanghai)
  • Pumai Doctors Group (collaboration with Chow Tai Fook to set up polyclinics in Shanghai)
  • Yongchun Male PLastic Surgery Group ( Shanghai Woxin Hospital)
  • Fenlan/Huaxia Pathology Group (Set up with more than 120 pathologists in conjunction with the China Medical Association Pathology Society, this group has received 30 million investment and will provide specialist pathology services via a network of 60 hospitals).
  • Famous Doctor Fertility Group (Shenzhen based, set up by veteran Obstetrics and Gynaecology specialist Gong Xiaoming)
Most of the private doctor groups are financed by domestic companies, many with little healthcare experience. But rather than doing joint ventures with western healthcare companies to get foreign know-how, Chinese newcomers to private healthcare are simply buying up foreign healthcare providers. The Luye Medical Group recently bought the Australian private hospital consortium Healthe Care for $938 million. Luye's Charles Wang says the new doctor groups aiming to do business outside the big hospital environment lack operational expertise, and they are hoping to transfer such skills from the Australian outfit to the Chinese market.

This is what he told the Australian Financial Review:

"When things change in China, they tend to happen very fast. Doctors and practitioners forming their own doctor groups is something that never would have happened until last year. They are now leaving the public sector and forming their own groups, and once that gains momentum, you will see it rapidly become more westernised."

According to the AFR, the idea is not to parachute Australian executives into China, but to export the way Australians manage their hospitals, including finances, procurement, risk and clinical control.

"I expect you'll see, in time, structured medical programs, and we'll go up to China and do training and bring middle managers down here in Australia. In clinical areas there will be doctor mentoring and nursing programs,"  says Healthe Care's CEO Steve Atkins.

My own view is that it will take a lot to break up the power of the big hospitals. There are a lot of vested interests involved. The move to private doctor groups also raises the question of what impact this will have on the capacity of the existing public hospital system. If the most talented doctors can work outside the system, who will replace them? If top surgeons take two-three days a week doing private work, who will fill their positions in the public hospitals for clinical work and training?

There are many unknowns, but with official backing from the health minister and the Premier, expect to hear a lot more about Doctor Groups from 2016 onwards.

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