x Abu Dhabi, UAEMonday 24 July 2017

China looks abroad for a healthcare system fix

With a huge ageing population, China's healthcare system is creaking under the strain. Now, though, things appear set to change.

No more long queues: plans to allow foreign healthcare providers to open wholly owned facilities even on a trial basis in China should improve the efficiency and quality of care.
No more long queues: plans to allow foreign healthcare providers to open wholly owned facilities even on a trial basis in China should improve the efficiency and quality of care.

Falling sick is worrying anywhere in the world but in China the anxieties often extend beyond illness or injury.

Long waiting times to see doctors, expensive drugs and concerns about the quality of care can make medical treatment a minefield in terms of both health and finances.

The problems the sector faces, creaking as it does under the demands of a population of 1.3 billion who make 5.4 billion visits to the doctor annually and accumulate 130 million hospital stays each year, are no secret.

Even the government's Xinhua news agency readily reports on the failings, exemplified earlier this year by the experience of Wang Faxue, a farmer from north China's Hebei province, who accompanied his mother, 70, as she sought treatment for lung cancer.

"Why is it so difficult for ordinary people to see a doctor?" he told Xinhua. "The registration hall is like an asylum as many people slept on the ground overnight to grab registration opportunities."

In the end, Mr Wang had to pay 300 yuan (Dh165.56) to a "scalper" - someone who sits in a queue on behalf of someone else for cash. For a farmer on a modest wage, the money was a substantial sum. Sadly, Mr Wang's efforts were not enough to save his mother's life.

Between 1978 and 2005, the amount of money individuals in China had to shell out for health care increased 200 times, with hospitals often accused of issuing unnecessary prescriptions for expensive drugs in a bid to increase income. High cost and lack of availability of care have become acute problems.

In a health system so clearly in need of treatment itself, it is no wonder that this month China announced it was looking overseas for ways to reinvigorate the sector.

The country's cabinet, the State Council, is dismantling barriers restricting foreign investment in an effort to stimulate improvements in the quality and availability of treatment.

Up to now, foreign investors have only been able to set up joint ventures with local companies, with the share of overseas ownership of medical services set at a maximum of 70 per cent.

Such limits on existing joint ventures are gradually going to be scaled back and foreign companies will be eligible to apply to open wholly owned facilities, initially on a trial basis.

While fully owned foreign ventures will have to secure approval from the central authorities - in contrast to joint ventures which will have to get the nod only from provincial officials - the move is still expected to significantly increase foreign provision.

Industry analysts have broadly welcomed the government's move, with Ben Cavender, an associate principal at the China Market Research Group, describing it as "a positive step" that will improve the quality of care.

"It will place pressure on institutions to improve their operations and service, which will mean better treatment for patients," he says.

"China has made the modernisation of its healthcare system a big part of its economic development plans and allowing additional foreign capital to enter the market is one of many steps that have been taken to raise access to and the level of care."

Investment from Hong Kong, Macau and Taiwan will be particularly encouraged under the revised regulations. Also, foreign direct investment into China's central and western regions, which continue to lag a long way behind the eastern part of the country when it comes to interest from overseas, will also be targeted at health care.

In the pre-reform era up to 1978, people relied on their "work units" - the divisions of the state that employed them - for medical care as well as housing and pensions. There were even hospitals dedicated to those employed in a particular sector.

The industry remains dominated by the public sector, despite foreign investment dating back to the early 1990s. Although more than one third of medical institutions in China are private, they provide a mere 5 per cent of the total number of beds.

But public sector does not mean free at the point of delivery, and the problem of how migrant workers and farmers who may not be covered by medical insurance can afford medical care, especially when they have to pay upfront, is an acute concern.

Last year, the government pledged to encourage "diverse investors" into the sector with the aim of improving services by increasing competition and allowing for a greater influx of foreign management expertise. The state also launched a three-year reform programme involving investments of hundreds of billions of yuan designed to improve coverage for those at the lowest end of the income scale. As talk of a liberalised market has grown this year, major operators such as United Family Hospitals, a Sino-US venture, have indicated they are keen to open more facilities away from Shanghai and Beijing.

Pei Likun, a professor and executive director of the Centre of China Studies at La Trobe University in Australia who specialises in health policy and health system reform, suggests opening up to private capital will not be a miracle cure for the "many issues" China's healthcare sector faces.

"There is a lot of policy interdependency, which means a lot of issues are linked to each other. You cannot separate them," she says.

While introducing foreign resources could help improve the quality and efficiency of care, she says it will not solve key issues such as the lack of resources allocated to rural areas.

"Of course, private hospitals could help to provide some specific services to those who can afford it but how about the poor?"

What officials appear to be hoping for is that increased investment by the state in health insurance schemes will ensure a safety net so that even the poorest have at least some access to adequate medical provision, while the private sector will offer services to those who can afford top-quality care. Prof Pei cautions, though, that even foreign investment in "a big building and nice wards and very expensive equipment" may not always be enough.

"Will they have all the new drugs accessible?" she says.

But, with incomes increasing and China's population ageing, Mr Cavender believes there will be no shortage of demand for services from hospitals with up-to-date equipment.

"China is seeing 20 to 30 per cent annual growth in diseases like cardiovascular disease that will require increasingly advanced treatment," he says.