Analysis of investment and financing strategies for private hospitals

The Report

Although China's healthcare industry has been dominated by public medical institutions, with a series of policies encouraged by the State Council to encourage non-public economic development in 2005 and a series of suggestions on promoting the development of healthcare services in 2013, private hospitals gradually expand quickly in recent years. With the increasing proportion and position of private hospitals in China's healthcare service system, more and more private hospitals are facing the need of expansion and service upgrading. However in addition to their own efforts, needs for the injection of external funds can not be ignored. Therefore, investment financing is a very important issue in the current private hospital community.

"Analysis of investment and financing strategies for private hospitals" excerpts from the "The development report of China's private hospitals (2017)". This report is initiated by China Hospital Associate Private Hospital Branch and developed by Deloitte Research and Deloitte China Life Sciences and Healthcare Industry Team. This report provides a comprehensive analysis on present financial investment situations and future trends of China private hospitals.

Viewpoints / key findings

In order to better understand the financing status and future trend of private hospitals, this report combines sample survey data of 23 private hospitals to analyse the demand gap, challenges and financing purposes of private hospitals, hoping to provide valuable reference for the future financing strategy of private hospitals and improve their whole services capabilities. The ability of diagnosis and treatment of the body and the level of service. This report analyses the investment and financing strategies of private hospitals from below four aspects:

• The financing demand of private hospitals: the development of private hospitals is thriving, so as the demand for financing is increasing.
• Financing methods and risk assessment of private hospitals: with the increasing scale of private hospitals' financing, more and more financing methods are available for private hospitals to choose.
• The dilemma and suggestions for private hospitals' financing: as a typical high investment and long return cycle industry, the hospital's development is inseparable from the continuous investment of large amounts of funds. Financing is an important method to alleviate the lack of funds in private hospitals and to solve the dilemma of hospital development. However, the characteristics of private hospitals have led to the difficulty of obtaining the ideal financing that can meet all the conditions mentioned above.
• Private hospitals should seek diversified financing channels: PPP model/ ABS financing/ public listing/ investment fund and private equity/ insurance financing/ financing guarantee company.