China to allow wholly foreign-owned hospitals in several cities

BEIJING: China has announced plans to allow the establishment of wholly foreign-owned hospitals in certain cities and regions across the country, including in the capital Beijing, a move that could evince interest in major Indian corporate hospitals.

According to an official document unveiled on Sunday, the foreign-owned hospitals will be permitted to open in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen and throughout the island of Hainan.

A circular jointly issued by the Ministry of Commerce, the National Health Commission and the National Medical Products Administration on further expanding pilot programmes for opening up in the medical field noted that the conditions, requirements and procedures for establishing these hospitals will be specified later.

Foreign-invested enterprises are also allowed to carry out the development and application of technologies relating to human stem cells and gene diagnosis and treatment in the pilot free-trade zones in Beijing, Shanghai and Guangdong, as well as in the Hainan Free Trade Port, for the registration, launch and production of relevant products, the document said.

It added that relevant enterprises must comply with China's laws and regulations, and observe the requirements regarding human genetic resource management, drug clinical trials, drug registration and production and ethical review. They are also asked to follow the relevant management procedures.

This is not the first time that China has made such an announcement. A similar announcement in 2014 evinced interests in some of the Indian corporate hospitals.

Many Indian health professionals representing the country's top corporate hospitals visited China after that and expressed an interest in extending their networks to China but nothing concrete has emerged after initial discussions.

Analysts say inviting more private players into the sector in China would also ease bottlenecks in medical resources, which are causing rising conflict between doctors and patients.

In the Indian context, they said the current round of bilateral tensions could weigh in on India’s corporate hospitals. India and China are engaged in addressing the border tensions, especially in Eastern Ladakh.

Commenting on Sunday’s announcement by China, Sridhar Subramanian, vice president and regional head of Cipla (China) pharmaceuticals, said it is a positive development.

“This was piloted in Shanghai several years ago, then reversed and now being opened again. India has several corporate hospitals and previously Fortis was aggressively expanding its global footprint before getting into financial issues”, he told PTI here.

Apollo, Max, Narayana Hrudayalaya are other well-known chains who have the expertise in setting up world class hospitals and also getting JCI certification which is considered a gold standard for best clinical practices in quality and patient safety, he said. 

“The key challenges I see are Chinese healthcare and hospital ecosystem and management are very different from the ones overseas”, he said.

"It wouldn’t make sense for foreign hospitals to invest for foreign clientele in China, which is a small number. The main interest would be to cater to the local populace. For that, bringing the best practices from overseas but ensuring a system which is suitable to local situations, local reimbursement policies and with strong local management," he said.

“Key for any hospital is infrastructure, management and clinical expertise. Clinical expertise needs to be local to be sustainable and it’s not easy to find as best Chinese doctors are all in large public hospitals catering to 70 per cent of all hospital visits.

“Another challenge is China’s strict policy in access and handling of Chinese genetic material by foreign entities and access to Chinese patient information by foreign entities. So while the policy of opening up is good, whether it will actually result in a lot of inflow of foreign investment in healthcare needs to be seen”, he said.

The Indian pharma sector has made a significant impact in the Chinese health sector, dominated by the government-owned hospitals in recent years, though China has not yet fully opened for the import of Indian drugs.

A Chinese film on the plight of a leukaemia patient a few years ago has highlighted the pressing need for China to pave the way for import of Indian cancer drugs, which were far cheaper than their western counterparts.

India has been pressing China to allow the Indian pharma products, especially the cancer curing medicines, which are cheaper than the multinational drugs to address over USD 100 billion deficit in bilateral trade.