Shortcomings in China's hospitals create opportunities for foreign investors
The scene in a foreign-invested hospital contrasted sharply with that often seen in Chinese hospitals, most of which are state-run and notorious for their long lines, dirtiness and ill-tempered staff.
"We come here because the conditions are good," said the woman at the Beijing United Family Hospital who gave her surname as Yang.
"I have many Chinese friends who come here for check-ups during pregnancy. There's no need to line up and the attitude of the staff is nicer."
Foreign investors are putting their money into turning around existing hospitals or opening new facilities and are banking on middle-class people like Yang and her friends.
Since the Chinese government began allowing foreign investment in hospitals in 2000, interest has steadily grown, with more and more foreign-funded outpatient clinics in operation and speciality and general hospitals also starting to open.
Previously targeting expatriates, the facilities now also lure the increasing number of well-to-do Chinese willing to pay more for better care.
"The interest is rising at a steep rate," said David Wood, president of investment consultancy firm The ChinaCare Group.
"Our survey shows people are willing to pay two to three times more for a higher standard of care."
In the past two decades of economic reform, government and state-run companies' share of total health expenditure, including financial support for hospitals, drastically fell from 78 percent of the total in 1980 to 41 percent in 2002, according to official figures.
Out-of-pocket spending by patients, meanwhile, increased from 21 percent in 1980 to 58 percent -- or 40 billion US dollars out of a total national health expenditure of 68 billion dollars -- in 2002.
The government is hoping investors will become a new source of funding for the beleaguered healthcare system by giving the hospitals an injection of funding to pay for renovations, new equipment and expertise.
On a scale of one to 10, some 8,500 Beijingers who participated in a recent Beijing health bureau survey of 49 hospitals in the city gave the facilities an average satisfaction rating of just five.
"The number one reason for dissatisfaction is the attitude of the staff and doctors. Patients thought they didn't treat them like human beings, or respect their privacy or confidentiality," Wood said.
Chinese patients are also frequently charged unnecessary fees from over-prescription of medicine -- a common way for state-owned hospitals to make money as prices for services are largely government-mandated.
Patients have no choice but pay overworked, underpaid and disgruntled doctors additional money stuffed in red envelopes to ensure quality care.
Long lines are often seen outside the few reputable facilities.
"The number of patients exceeds the number of hospitals in Beijing," said Kevin MacDonald, chairman of the Beijing International Heart Hospital Co. Ltd., a US-invested 98-bed specialty hospital that will open in July in Beijing.
MacDonald said the company was investing in China because it saw a need.
"Chinese people are repeating the unhealthy lifestyle of the West. I believe the need for cardiovascular services are going to expand tremendously in the next several years," he said.
Most of the foreign investment so far has been in outpatient clinics, with investments averaging in the several millions of US dollars, with investment in speciality and general hospitals reaching the tens of millions.
Two weeks ago, US-based Chindex International Inc., which owns Beijing United, opened the Shanghai United Family Hospital, a 10-million-dollar project which is the first foreign-managed private hospital in the eastern metropolis.
The Beijing United hospital, which Chindex opened in Beijing in 1998, has seen its Chinese patient load increase to about 14 percent of the total.
"The local portion of the market is steadily increasing, especially in certain departments such as ob/gyn (obstetrics/gynecology)," said Beijing United spokeswoman Lily Sun.
"Our prices are on average more than 10 times higher than that of Chinese hospitals, but for middle-class families, they feel they can afford it."
It costs about 6,000 dollars to deliver a baby at the facility, several year's income for the average wage earner.
With falling government spending, privatization of some of the country's 17,700 mostly non-profit hospitals, is seen by some experts as the only way to go, but it's unclear how much control the government will relinquish.
China currently requires investors to find a Chinese partner and own no more than 70 percent of the joint ventures.
Investors are leaning towards opening their own hospitals as few who choose to take over management of Chinese hospitals have proven successful, encountering difficulties trying to turn around years of bad management.
Projects in the pipeline include ones pursued by a British cardiology center, a German gynecological firm, an American cancer center and an ambulatory surgery company, and a Canadian eye surgery center, Wood said.
Despite the enthusiasm by investors, foreign hospitals will not take the place of Chinese hospitals and they do not set out to do so, experts said.
"We only target a certain niche market," said Sun.
So far foreign-invested medical facilities are not full-service general hospitals. Beijing United, for example, deals with less acute problems.
Chinese hospitals, meanwhile, have invested in "luxury" wards to draw foreigners and rich Chinese and imported the latest equipment.
Beijing's state-run Xiehe Hospital said the demand for state-run hospitals would remain strong despite the foreign competition.
"Foreign investors' goals are different from ours," said a spokeswoman surnamed Duan. "We serve the general population. They're just trying to attract rich people."
- AFP
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