By The economist
Wednesday, April 11, 2012
The good midwife of Sichuan
Private health providers, won’t make a killing
The scene at the
women’s and children’s hospital in Chengdu could be in any well-appointed
modern maternity unit. Doting fathers stare at newborns dozing on crisp bedding
as masked cleaners keep the corridors spotless. The Angel hospital in Sichuan’s
capital is part of a wave of privately owned hospitals, catering to patients
fleeing crowded state clinics.
The patients
here are well-off locals, paying from 20,000 yuan ($3,200) for a Caesarean
delivery and the latest drugs. Rooms cost extra, including suites for families
to host postnatal banquets.
The roots of
private health care in Communist China go back to clinics that treated venereal
disease. In other respects, the taint of private care has gone, and foreign
investment is encouraged. Over 30 joint ventures have been approved; many more
are in the pipeline. The country’s new five-year plan endorses private-sector
investors as part of the solution to the country’s shortage of affordable
health care. Health spending has soared in recent years and is set to top 700
billion yuan by 2015.
The authorities
also think the private sector can serve as a model for public hospitals dogged
by poor administration, demands for patients to pay cash up front, and bribes
by pharmaceutical companies to prescribe their drugs. Liu Shuyan, the Angel’s
chief doctor, talks of “patient pathways” and “mother-centred care”: the kind
of jargon that accompanied the drive for health reform in Britain a decade ago.
Political
sensitivities meant private care began only slowly in China. An early crop of
joint-venture hospitals sprouted at the start of the 1990s. But the number of
beds was restricted, and pioneers such as Chindex International (whose chief
executive is the wife of one of The Economist’s Beijing correspondents)
served mainly expat patients. Now, two-fifths of Chindex patients are Chinese.
The new openness
to private care is attracting fresh interest. An American group, CHC
Healthcare, holds the controlling stake in a general hospital being built in
Cixi in coastal Zhejiang province. Tim Perry, its legal adviser, is not taken
by the new commitment to allow full foreign ownership. Better, he thinks, to
have the assurance of a trusted Chinese partner holding a minority stake.
Local
authorities hold sway over how joint ventures fare. For instance,
state-insurance payments for treatments are modest, though being knitted into
the Chinese system of payments can give operators greater stability. John
Porter, who runs SinoCare, with four hospitals in China, has just been allowed
to expand his hospital in Chengdu’s high-tech belt to 500 beds. He says the
authorities are keen on outside providers, if profit margins are not excessive
(ie, about half those in the West).
The scene at the
women’s and children’s hospital in Chengdu could be in any well-appointed
modern maternity unit. Doting fathers stare at newborns dozing on crisp bedding
as masked cleaners keep the corridors spotless. The Angel hospital in Sichuan’s
capital is part of a wave of privately owned hospitals, catering to patients
fleeing crowded state clinics.
The patients
here are well-off locals, paying from 20,000 yuan ($3,200) for a Caesarean
delivery and the latest drugs. Rooms cost extra, including suites for families
to host postnatal banquets.
The roots of
private health care in Communist China go back to clinics that treated venereal
disease. In other respects, the taint of private care has gone, and foreign
investment is encouraged. Over 30 joint ventures have been approved; many more
are in the pipeline. The country’s new five-year plan endorses private-sector
investors as part of the solution to the country’s shortage of affordable
health care. Health spending has soared in recent years and is set to top 700
billion yuan by 2015.
The authorities
also think the private sector can serve as a model for public hospitals dogged
by poor administration, demands for patients to pay cash up front, and bribes
by pharmaceutical companies to prescribe their drugs. Liu Shuyan, the Angel’s
chief doctor, talks of “patient pathways” and “mother-centred care”: the kind
of jargon that accompanied the drive for health reform in Britain a decade ago.
Political
sensitivities meant private care began only slowly in China. An early crop of
joint-venture hospitals sprouted at the start of the 1990s. But the number of
beds was restricted, and pioneers such as Chindex International (whose chief
executive is the wife of one of The Economist’s Beijing correspondents)
served mainly expat patients. Now, two-fifths of Chindex patients are Chinese.
The new openness
to private care is attracting fresh interest. An American group, CHC
Healthcare, holds the controlling stake in a general hospital being built in
Cixi in coastal Zhejiang province. Tim Perry, its legal adviser, is not taken
by the new commitment to allow full foreign ownership. Better, he thinks, to
have the assurance of a trusted Chinese partner holding a minority stake.
Local
authorities hold sway over how joint ventures fare. For instance,
state-insurance payments for treatments are modest, though being knitted into
the Chinese system of payments can give operators greater stability. John
Porter, who runs SinoCare, with four hospitals in China, has just been allowed
to expand his hospital in Chengdu’s high-tech belt to 500 beds. He says the
authorities are keen on outside providers, if profit margins are not excessive
(ie, about half those in the West).
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