Enlisting Physician Support
Despite the promise of favorable regulatory treatment, private healthcare in China would likely remain hamstrung unless it
was able to offer patients high-quality local medical talent. Allowing top-level physicians to retain their positions and
standing in government hospitals while practicing part time in private settings is the key to the future of private healthcare
in China. Here, the signs are also positive.
Following its typical modus operandi, the MOH has put in place a number of pilot projects allowing physicians to practice
at multiple sites. These programs have built momentum over the past year and now include sites in Hainan, Henan, Guangdong,
Sichuan, and Yunnan. While a major aim of these pilot programs is to enable staffing of the rural and community clinics that
are a key component of the healthcare reforms, they also pave the way for the resuscitation of private healthcare. Going forward,
physicians will likely be required to spend a certain portion of their time in grassroots settings, but they may also be allowed
to enjoy some of their newfound freedom practicing in private clinics and hospitals. The most recent and significant development
in this vein comes from the Beijing Municipal Health Bureau, which since March has allowed licensed physicians to work simultaneously
at a maximum of three hospitals.
With a supportive regulatory framework, ownership/management of medical facilities by experienced parties, and permission
for elite doctors to practice in multiple settings, private healthcare may yet have a chance in China. Healthcare authorities
are no doubt hoping (even more fervently than before) that an upper-tier private health system will emerge to lure more affluent
medical consumers away from public institutions, thus freeing more resources for patients relying solely on basic government
insurance programs. The MOH and other government agencies have repeatedly mentioned their intention to encourage commercial
health insurance. This will also ease the burden on public/government medical institutions, and may well enable a larger population
to access private healthcare.
However, the devil is in the details. For pharmaceutical manufacturers, key issues will be the extent to which private facilities
will be allowed to fuel their profits from pharmacy sales—the current situation in public hospitals which the health reforms
mean to bring to an end—and whether products sold in private hospital settings will be subject to the same tightening price
controls as those in the public sector. A lure to private hospitals for doctors will be the ability to receive (above the
table) fair-market compensation for their services. If this is accomplished only via increases in medical service fees (and
if private hospitals are not allowed to enjoy significant profits from their pharmacies), then incentives to prescribe innovative
medications will be largely driven in ways similar to other markets—the potential for boosting innovation will have been largely
squandered. If, however, pharmacy sales are part of the compensation mixture for physicians, and hospitals in private settings,
then premium-priced products will likely enjoy increasingly brisk sales at these venues.