China’s Prescription for Overburdened Hospitals — Medical Malls
China is expected to see a slew of openings of medical malls vying for shares in a market largely dominated by public hospitals, as investors seek to capitalize on the liberalization of the country’s health care sector to private investments.
The latest project in Guangzhou city, planned by the Guangzhou International Medicine Port and a Chinese unit of the International Hospitals Group, involves an investment of 1 billion yuan ($157 million).
Medical malls, which emerged in the U.S. in the 1980s, are a collection of independent clinics that share space, equipment, operating theaters and other resources. They can also accept some retailers so that customers can have diversified experiences under one roof.
China currently has about a dozen “health malls,” said William Zhang, consultant from Strategy&, a subsidiary of PricewaterhouseCoopers. These health malls contain pharmacies, offer spa, massage or beauty treatments, and a limited number of major medical treatments.
However, China’s first bona fide medical mall opened last year, when Quancheng International Medical Center in Hangzhou, Zhejiang province, won approval from the provincial Health and Family Planning Commission, which was the first regulator to officially recognize such a project as a medical mall.
Huge demand has grown for privately run health care services as the Chinese population ages and public hospitals struggle to keep up with the growing need, Zhang said.
Since 1989, China has allowed foreign providers access to the domestic health care market, letting 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 investors.
Although the medical mall concept is not new, the projects are of interest to the health care community because they lower the regulatory threshold for privately run health care facilities, said Eric Chong, director of consultancy Hong Kong Institute of Asclepius Hospital Management.
Medical malls have gained some success in the U.S., where residents largely rely on commercial medical insurance and private health care institutions. However, because China runs a different system in which most people rely on government-backed insurance that only covers public hospital visits, some experts have questioned the sustainability of medical malls in China.
There are several clinics in the medical mall in Hangzhou, including a dental clinic and a beauty clinic.
One of the problems for medical malls is that they have limited their services to ones not offered by traditional hospitals. But this niche strategy prevents them from attracting patients in large numbers. One of the reasons for the success of such facilities in the U.S. is that hospitals were willing and able to relocate part of their operations to medical malls, according to consultancy Latitude Health.
Another disadvantage of medical malls in China is that commercial medical insurance is not fully developed, meaning many patients can’t afford to go, according to Latitude Health.
Asclepius Hospital Management’s Chong added that this type of shared-clinic model will not become a major force in health care in China due to gaps in know-how and potential communication barriers among tenant service providers.
“These kinds of medical malls must establish a highly efficient communication system to connect the tenant clinics,” Chong said.
Contact reporter Coco Feng (firstname.lastname@example.org)
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