U.S. Hospital Owner, Singapore Investment Firm Bet on Medical-Care-Hungry China
The U.S. health care industry’s latest foray into China’s lucrative market is a planned hospital by a joint venture of Seattle-based Columbia Pacific Management and the Singaporean investment company Temasek Holdings.
A new $150-million multi-specialty hospital by JV Columbia China broke ground on Tuesday in Jiaxing, a city of 4.5 million in eastern Zhejiang province.
Set to open in 2019, the hospital will have 500 beds and 10 operating theaters, with a floor area of 120,000 square meters, Columbia China announced Wednesday.http://www.caixinglobal.com/2017-04-17/101079473.html
For years, Chinese mainland patients, dissatisfied with overcrowded facilities and lack of access to the latest medicines and treatments, have headed overseas in search of top-notch health services.
The Chinese medical tourism market grew five-fold to reach 500,000 outbound medical trips in 2016, with each patient spending 50,000 yuan ($7,200) on average per trip, according to a report by online travel company Ctrip.com.
But now, the clamor for more health care options by China’s rising middle-class is bringing foreign players onto Chinese shores.
Recent examples include Massachusetts General Hospital, which has partnered with China’s Jiahui Health Network to open a cancer hospital in Shanghai in October, and New Jersey-based Children’s Specialized Hospital, which inked a partnership with health care investment firm LIH Investment & Management Co. Ltd. to open a rehabilitation center in Shenzhen.
Columbia China currently operates an orthopedic hospital, two multi-specialty clinics, and three senior-living facilities in Shanghai and Beijing.
Since 1989, China has given foreign industry players access to the domestic health care market, allowing them to jointly set up clinics with Chinese partners. Earlier this decade, the government eased restrictions to allow clinics to be wholly owned by foreign capital.
However, such hospitals remain an insignificant part of the market in China, given the bureaucracy involved with getting approval. The country’s first non-Chinese-mainland hospital — Landseed International Hospital in Shanghai — was established by Taiwan’s Landseed International Medical Group in 2012. It had to obtain 150 government-sealed documents for approval, Hanson H. Li, executive director of Huatone China Strategic Investment Solutions Inc., said in an opinion piece in The New York Times.
Most foreign clinics are also not covered by the state-backed insurance system, which most Chinese patients are enrolled in, given that there are no clear policies to include them in the program. In 2015, Chinese policyholders paid 241 billion yuan ($35 billion) for private medical insurance, according to a report by Boston Consulting Group and insurer Munich Reinsurance Company.
But the government-backed medical insurance program collected four times as much in premiums, or 1.1 trillion yuan, in 2015, according to the Ministry of Human Resources and Social Security.
Even so, the market for private hospitals, including both domestic and foreign-backed ones, is still huge, as residents have been more willing to pay for quality consultation and services.
The number of patients going to private hospitals has increased by 21% annually since 2010, while patient growth at public hospitals has risen at a slower 11% a year, according to a 2014 report by consultancy Deloitte, citing the National Health and Family Planning Commission.
There is a large opportunity for health care providers in China. Medical expenditures accounted for only 5.5% of gross domestic product (GDP) in China in 2014, far behind the world’s average of 9.9%, according to the World Bank.
Contact reporter Coco Feng (firstname.lastname@example.org)
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