China’s Online Healthcare Industry [PT 2]: Solutions to Address Medical Resource Imbalances

Online healthcare companies utilize the internet to offer various medical services, including diagnosis and treatment, telemedicine, health e-commerce, medical insurance, information sharing, etc. The rapidly expanded industry has offered solutions to address China’s medical supply and sourcing dilemma and contribute to reducing the spread of COVID-19.

Online healthcare development helps solve the problem of imbalanced medical resources in China

Chinese regulators have taken measures to improve medical infrastructure, facilitate patients’ access to non-local hospitals, and train healthcare professionals, in order to correct medical resources imbalances between well-developed and under-developed areas. Despite the efforts, the country has yet to fully remove the inequality among different regions. Deloitte indicated that China’s medical resources including healthcare institutions and staff are mainly concentrated in eastern cities, and tertiary hospitals, which have the highest rating in terms of ability to provide medical care services, meet the majority of medical demands in the country. Relatively, central and western regions and rural areas do not have as well-recognized skills in diagnosing and treating patients. Specifically, news agency 21st Century Business Herald reported that China had 1,442 tertiary hospitals in 2018, with 45% located in eastern areas and less than one third in central and western cities. Moreover, while China has an increasingly aging population, the country will have to face surging healthcare demand. Citing Eastmoney, China will have 371m people aged over 60 by 2035. As of June 2019, the number of people in poverty and suffering from serious and chronic diseases hit 14.35m.

The current situation in the medical sector increases the need for online healthcare services, which could utilize advanced technologies to improve the efficiency of medical services, relieve the pressure of areas with limited medical resources and thus optimize the structure of medical supply and demand. In detail, online data-sharing platforms such as DXY.cn could help solve information asymmetry between patients and doctors. Online consultation allows patients to know more about their health conditions and choose appropriate medical institutions. The online diagnosis and treatment of small diseases also saves medical resources in offline hospitals. Telemedicine can integrate medical resources across regions and hospitals of different levels, which not only improves resource utilization efficiency but also enables patients to access more comprehensive services.

Take Ping An Good Doctor as an example, the Ping An Insurance Group [2318:HK] backed internet healthcare firm has expanded its businesses covering offline and online healthcare services. It also operates an e-commerce mall, selling Chinese and Western medicine, nutrition and healthcare products, medical equipment, etc. Launched in April 2015, its online business unit, known as Private Doctor services, offers 24/7 online consultation, hospital appointments, residential arrangements, etc. As of year-end 2019, the number of newly registered users on Ping An Good Doctor’s online platform reached 315m, up 18.9% YoY, and monthly active users hit 66.9m, up 22.3% YoY.

Online healthcare services providers play active roles in fighting against the COVID-19 pandemic

While most offline activities in China experienced disruptions in business because of the global crisis at the beginning of 2020, the internet-based medical industry experienced rapid development. In view of the substantial increase in the number of people seeking health advice online amid the pandemic and the nationwide lockdown to prevent infections, internet medical platforms were well positioned in connecting patients and medical professionals. Some state-run hospitals, as well as internet healthcare companies, have also launched free consultation and diagnoses services and started online sales of certain drugs. These efforts also helped expand patient access to medical resources during the epidemic.

For instance, Alibaba Health Information Technology [0241:HK] began offering free consultation services to residents in Hubei province, the epidemic center, through its mobile payment platform Alipay. The channel recorded 1.6m visits within four days after its launch. Also, as of June 4, Tencent [0700:HK] backed WeDoctor invited over 60,000 healthcare professionals to offer medical consultation services, giving advice to nearly 2m people. Some provinces have also built internet hospital platforms to integrate local medical resources. For instance, the one launched by Zhejiang province has connected over 50 medical institutions.

Meanwhile, Chinese top leaders also encouraged online healthcare providers to take on social responsibility in fighting against the crisis by issuing a series of policies. For instance, in March, National Health Commission (NHC) and Nation Healthcare Security Administration (NHSA) issued guidelines, allowing patients to use their medical insurance fund under the national social health scheme to pay for online diagnosis and treatment for common and chronic diseases. The move expects to increase the number of patients, who originally would have been concerned about a higher medical expense not covered under insurance, to turn to online healthcare platforms.

Conclusion

The online healthcare industry has maintained rapid growth in recent years. Surging medical demand from the COVID-19 pandemic further boosted the sector, creating business opportunities for major market players. In order to reduce the negative impact on the environment from improper management of medical waste, internet-based procedures and platforms are gradually moving to digital monitoring for the majority of the disposal process. From a social perspective, powered by big data, AI, and other emerging technologies, online healthcare platforms could be more effective in collecting and utilizing medical information, and addressing the imbalance of medical resources across China. Related market players have also performed in a socially responsible manner in the prevention and control of the COVID-19 pandemic.

However, as online diagnoses and treatments do not necessarily require face-to-face communication at physical sites, problems such as not up to standard healthcare services and hiring unqualified medical staff might arise. Hence, the sector still requires stricter regulations. For instance, earlier in September 2018, NHC and the National Administration of Traditional Chinese Medicine jointly released three documents, aiming to strengthen governance regarding online diagnosis services, internet hospitals, and telemedicine. The three documents not only clarify the business scope of the online healthcare industry but also specify rules for governing the sector.

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