China is considering ways to revamp its healthcare system
Of all the challenges facing the PRC government, few are as important—or daunting—as fixing the national healthcare system. Not only do the health and welfare of the nation's 1.3 billion people depend on it, but in very real and direct ways, the rest of the world's health depends on it too.
Identifying problems—and solutions
With admirable openness and frankness, Chinese policymakers have acknowledged the shortcomings of the current healthcare system and the acute challenges they face in improving it. In the Ministry of Health (MOH) and in other departments of the PRC government, there is widespread agreement on the need for reform and forthright acknowledgement of problems in medical services that include inefficiency, high costs, corruption, lack of a complete and fully implemented quality standard, and poor service. There is also broad consensus among these officials that private investment—both domestic and foreign—can play a key role in solving these problems. But officials have not yet reached consensus on how to implement a privatization process without abandoning China's public healthcare obligations under its socialist system.
Higher standards
China desperately needs to move away from its old system of evaluating and rating hospitals, which was based primarily on an institution's physical plant and hardware, toward a quality-based accreditation system that takes into account all the "software" that makes a fully equipped hospital run well. To China's credit, it has signaled a move in this direction with new, experimental standards.
Challenges for private investors
Even if the necessary regulatory reforms take place, private investors in Chinese healthcare services will face their own fair share of challenges. Again, some of these issues are common to all sectors of the PRC economy, such as the burdens of bloated staffs and huge pension obligations that plague many Chinese state-owned enterprises. Investors will also need to untangle decades worth of reporting and accounting histories in order to produce reliable financial statements.
More specific to the medical sector will be the need to overcome China's deeply ingrained service style, in which patient-centered care is a new and alien concept. Investors will have to cope with the shortage of hospital administration expertise as they look for managers capable of integrating modern management methods with existing institutional cultures. In many of China's hospitals, top administrators are senior physicians who, despite their distinguished and accomplished careers, lack the necessary management training to run modern hospitals.