International Providers Help to Satisfy China’s Growing Healthcare Appetite
During Tulane’s trip to China in March of 2017, we had two experiences that underscored large shifts in the Chinese healthcare market. First, we had the opportunity to visit the Institute of Health Sciences in Shanghai (described as the Chinese version of the NIH). A principle investigator was kind enough to explain some of the research happening at the institute. More importantly, he outlined large increases in funding meant to increase the competitiveness of Chinese biotech and the growing interest in translational biomedical research in China. Later, during a visit to the American Chamber of Commerce, we heard about an American startup that is offering wealthy Chinese citizens access to second opinions from leading U.S. cancer specialists regarding treatment options. Both anecdotes speak to the growing demand for state-of-the-art healthcare in China.
A Growing Middle Class Demands Quality Healthcare
As the Chinese middle class grows, the demand for quality healthcare in China will continue to increase, opening opportunities in China and abroad. Chinese healthcare spending per capita lags far below the majority of economically advanced countries according to the World Bank. A growing middle class will almost certainly boost this figure; however, the traditional, fragmented Chinese healthcare system will likely not be able to increase capacity or quality fast enough to satisfy increasingly sophisticated Chinese healthcare consumers. Foreign firms are attempting to fill the gap. Cedars-Sinai, for instance, opened a center in Shanghai in August 2015, and the University of Pittsburgh Medical Center has partnered with Xiangya hospital in Changsha, Hunan Province to provide care for private-pay patients.
Opportunities Extend Beyond Hospitals in China
Opportunities, however, will not be limited to operations in China. The oncology second opinion startup we heard about at the American Chamber of Commerce is illustrative of the fact that Chinese citizens with means have no problem traveling or using telecommunication to access quality care. One can easily imagine broadening telemedicine capabilities to China for a wide variety of conditions. Indeed, Forbes reports that China’s government has invested heavily in telemedicine to reduce the primary care burden in overcrowded urban hospitals. Western physicians may be able to capitalize on the increasing acceptance of telemedicine among the Chinese public. Enterprising U.S. physicians, facing flat or declining reimbursement domestically, may be wise to capitalize on the trend. For wealthier Chinese citizens, medical tourism is also projected to increase. Already, the United States is a popular destination for high earners in China, and China’s medical tourism market is expected to be the principle driver for a medical tourism industry Allied Market Research projects to grow at a compound annual rate of almost 16% through 2022.
Competition is Already Increasing
Increasing demand for quality healthcare in China will continue to create opportunities for medical providers in China and abroad. The U.S., with a number of flagship, internationally-recognized hospitals, is poised to capitalize on this trend. If the U.S. providers do not act quickly, however, there are a number of countries actively vying for the Chinese medical tourism and telemedicine market. Especially among middle class Chinese citizens, Southeast Asian destinations like Singapore and Thailand are increasingly popular. Our recent experiences in China speak to the opportunity presented by a large and growing Chinese middle class, but like any opportunity in a globalized world, it won’t last forever.