China's healthcare provider market
Riding the waves of reform
"China's healthcare provider market: Riding the waves of reform" is jointly developed by Deloitte China Life Sciences and Health Care Industry and Deloitte Research. China’s enormous healthcare market continues to expand rapidly, driven by aging population, economic growth and expanding basic health insurance. Deepening reform efforts bring new opportunities to invest in the healthcare market and profound changes to the healthcare landscape. This report delves into the current status as well as future trends of healthcare industry, and offers strategies that both private and public hospitals can employ to adapt to the changing industry dynamics.
The viewpoints / key findings
By leveraging the power of both industrial and institutional capital, private hospitals will realize accelerating integration and market expansion, and improving management capabilities, technical expertise, service quality and scale-oriented operation. Nevertheless, the rapid market expansion will bring greater risks for which careful decision-making is essential. We believe that private hospitals should carefully consider the local economic context and competitive landscape, as well as healthcare and tax policies, to determine the appropriate strategic plan. We identify four promising growth areas.
- Premium Health Care: The high-end healthcare market will extend into lower-tier cities, while main customer groups, on which key specialties focus, will shift from middle-class to high-end customers. At the same time, services that integrate medical services with tourism are also expected to grow.
- Chain Specialty Hospitals with higher replicability and service quality are expected to be hot spots for investment. Meanwhile, with hospital reform, particularly with increased medical professional mobility, private hospitals will be able to enter specialty areas that previously held high technical barriers.
- General Hospitals have high barriers to entry given its greater requirement for funds, talent and management. This also means that these hospitals with high public standing will be hard to duplicate with an apparent first-mover advantage.
- Health Services: Increased emphasis on quality of life and health services will accelerate the development of the health sector; the rapid development of health capital markets, and the interest of traditional medical institutions towards telemedicine, mobile health and wearable devices is evidence of this change.
Public hospitals are expected to hold a dominant role in China’s healthcare system, retaining a strong pool of talent and medical resources. However, national health reform is forcing public hospitals to overhaul their revenue streams, improve their service efficiency and cut costs, while painting a new reality where both patients and clinical talent flows towards private hospitals. In the face of this brand new world, we suggest that the public hospitals work on the following five aspects: construct better performance management systems, improve the patient experience, introduce marketing management systems and establish a solid relationship of mutual trust with patients, encourage standardization of medical services and clinical processes, and optimize and integrate hospital information systems.