Internet Hospitals in China: The new step into digital healthcare

Viewpoints / key findings

Internet Hospitals in China: The new step into digital healthcare was released by Deloitte China LSHC Team. This report examines how internet hospitals thrive under the 2030 Health China Planning Outline and COVID-19, and puts forward six issues and solutions for internet hospitals and with giving a panorama of it.

The internet is changing our lives irreversibly and integrating with every industry sector at a rapid pace. In October 2016, the 2030 Health China Planning Outline released by the Central Committee of the Communist Party of China stated that the goal is to raise the overall health level of the Chinese people. Within this, the Chinese medical industry is required to transform from offering "health care" to "health services" and move towards future smart health care. In 2015, the Chinese medical information system entered the internet era, forging a critical framework for further smart medical development.
 

Internet hospital service ecosystem and operating models

Internet hospitals are typically offshoots of offline medical organizations and the combination of the internet and healthcare. Online medical treatment mainly consists of four types of services: online consultation and treatment, online diagnosis, follow-up treatment and health management. At present, internet hospitals have two main operation modes: "Hospital + internet" (associated internet hospitals under the offline medical institutions); " Internet + hospital" (independent internet hospitals affiliated to medical institutions). "Hospital + internet" mode has become the most adopted one in China, with the exception of internet hospitals in Hainan and Ningxia.

Since the pandemic, policies have been introduced to promote online sales of prescription drug and realized medical insurance payouts to internet hospitals, a major move to open up the internet hospital ecosystem and form a complete closed online loop from consultation and prescription, to settlement and medicine delivery.

Issues and solutions for internet hospitals

• New internet hospitals increasingly homogenized with unclear core value
  Internet hospitals have to specify the core value that cooperate with various offline hospitals, and establish different operation strategies and service model according to the characteristics of different hospital types.
• The profit model is still immature. Although most of internet hospitals are still at a loss, the implementation of national health insurance (NHI) policy is conductive to building a stable and sustainable profit model
  Once then online healthcare NHI payment related polices are successfully implemented, it will bring considerable incremental market to the entire online healthcare market. Starting from the four sectors, the new closed loop of online healthcare operation will be completed.
• The "siphon effect" of large public 3A hospitals may aggravate imbalance in medical services; but a proper planning and arrangement will be crucial to promoting the construction of medical alliance and medical community
  With the release of the supportive policies of internet hospitals, the current limitation may be breakthrough, and the application of high-techs, such as big data analysis, AI, 5G, etc., will empower the establishment and optimization of regional medical information systems to form an efficient and safe information sharing mechanism among medical institutions under the alliance.
• Lack of unified, executable internet hospital management regulations
  Internet hospitals should establish a management systems based on their own characteristics to manage their business including medical service management, pharmacy administration management, hospital payment management, information security management, and quality management, which helps to the online and offline integration to achieve in-depth combination of medical ecosystem.
• The management of doctors and patients urgently needs to be optimized and to improve efficiency
  Formulating an effective online medical practitioner management mechanism is the core of the internet hospital medical service management. Meanwhile, the key to patient management is to online-offline matching and patient relationship maintenance.
• The development of internet hospitals still faces many other challenges
  Policy-related challenges including difficulty in defining chronic and common diseases, doctors practice at multiple institutions, NHI reimbursement connection, etc. Tech-related challenges including inability of the ecological chain to achieve interconnection; the low cross-regional coordination degree, the limited utilize efficiency of telemedicine, etc.

Trends and prospects for internet hospitals

Internet + healthcare is now a key national strategy, with more internet hospital regulations becoming clearer, local governments are starting to embrace internet hospitals. The internet hospitals are set to create an internet-based closed loop covering treatment, drugs and insurance, which is an online Health Maintenance Organization (HMO) model. Under a future smart city framework, we envision that the government will lead the formulation of medical security policies and regulatory systems, coordinate regional resources, establish regional disease prevention systems, upgrade the regional emergency medical and healthcare systems, and deepen the smart medical service systems to protect the medical health of the residents.

With the online economy development, mindsets and business models changing due to COVID-19, new infrastructure construction and sharply growing demand for hospital transformation, it is now the time for internet hospitals to enter a rapid growing. In the next 10 years, we foresee the health care industry will undergo an unprecedented transformation with radical innovation and changes to the nature of services and processes, evolving from traditional medical service to smart health management. We also look forward to the influx of more and more cross-industry leaders, not only pharmaceutical and healthcare enterprises, but also scientific and technological innovation players. With the support from government, all the players are expected to collaborate within the entire ecosystem, and together to build the future of health.