Challenges, Opportunities Abound in Chinese Health Care Sector

Challenges Abound in Chinese Health Care: China is a growing country of 1.3 billion people that faces major challenges in its health care delivery system as millions of citizens demand better access to high-quality care from both Western and Traditional Chinese practitioners. These challenges include: over-taxed urban hospitals; quality and equity gaps between rural and urban regions; upward pressure on utilization and health expenditures because of ageing populations and rapid privatization of services; and the threat of emerging infectious and chronic diseases. After several decades of rapid economic growth, the Chinese health care system must grow and improve to meet the demands of the population. In this milieu foreign governments and industry have ample opportunity for growth and profit—and crucially, the support of the Chinese central government—in both health care delivery and the life sciences industry.

Hospitals: In urban China, most health care delivery occurs in hospitals without primary care triage in clinics or other outpatient settings. This lack of a gatekeeper role means individuals can seek care directly from higher-cost specialists and leads to long wait times and lines in major urban hospitals as cities continue to swell with migrants from rural areas of the country. Through new insurance schemes the Chinese government encourages care delivery in dedicated primary care settings and other outpatient clinics, but progress remains slow given the size of the population involved.

Quality: The quality chasm in Chinese healthcare mostly relates to geography: rural citizens have poorer access to care, less generous insurance coverage, and receive care from providers with less training or are practicing at lower licenses. New insurance systems for rural areas seek to provide a basic level of coverage and access, but urban hospitals generally provide higher-quality care. A new health care quality metrics system is currently in development to track care outcomes nationally.

Rising Costs and Utilization: Quality disparities are intimately connected to increases in costs and utilization of services. Increasing access to care and improving quality means China covers more lives and spends more on health care delivery every year. The influence of privately owned hospitals, fee-for-service payments, and rising prescription drug sales combined to further increase costs over the last decade. An attempt to control the rise in prescription drug spending, long a mainstay of hospital profits, is a “no-profit” policy on drug sales; however, the effect of this policy may be mitigated by a 2015 decision to end price ceilings on prescription drugs as part of an effort to increase the role of market forces in the Chinese health care economy. The growing number of foreign-owned and jointly operated hospitals may further increase utilization in a for-profit delivery setting.

Emerging Diseases: Infectious disease epidemics are hardly a modern phenomenon in China, but population growth and increasing international travel mean that epidemics originating in China can have rapid global consequences. Due to China’s vast landmass, its location along bird migration routes, and many hubs for international travel and commerce, influenza epidemics such as the 2009 H1N1 pandemic and 2017 H7N9 outbreak are a constant threat. The rapid spread of Severe Acute Respiratory Distress Syndrome (SARS) in 2003 highlighted the hazards of emerging infectious disease in the country and forced the Chinese government to improve its communicable diseases response systems. In coming decades China will face epidemics of a different kind: chronic diseases such as obesity, hypertension, and cancer, all associated with Westernized lifestyles and ageing populations.

Andrew Lawrence Wickerham, MPH

April 17, 2017