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Parkway bets big on China's health reform plan

By Xiao Wang (China Daily)
Updated: 2009-05-15 08:04

The government's decision to reform the nation's healthcare system to provide basic health coverage to all citizens is expected to help private and foreign hospital chains, according to a top executive from a foreign hospital.

"I think the Chinese government has clearly recognized the needs of healthcare reform, and part of the reform seems to be opening up the sector for foreign investment," Jeffrey Staples, president of China & North Asia Operations at the Singapore-based hospital chain Parkway Healthcare Group, told China Daily.

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"The move will help domestic hospitals enhance their services and capabilities through their partnerships with foreign rivals," he said. Domestic hospitals can also help their foreign rivals in better understanding the market and local patients' demands, said Staples.

According to the reform plan announced in April, China will encourage public hospitals to reform their ownership structures, and widen the scope of foreign and private capital.

So far, foreign hospitals were only allowed to launch joint venture clinics with Chinese hospitals, with the foreign holding not exceeding the 70-percent cap, according to the Ministry of Health.

Parkway Health now has seven JV clinics in China, including the Chengdu Medical Center in Sichuan it opened last year, the only one outside Shanghai.

Staples said the company is closely following the government's reform pace in the hospital sector, and is actively involved in discussions with local health authorities in Wuxi, Ningbo and Hangzhou to further penetrate the second-tier cities in the Yangtze River Delta area.

The company is also in discussions with the local Huashan Hospital to launch an international clinic in the Pudong New Area to cater to growing medical needs for expatriates, but no details are available so far.

Parkway Health registers 120,000 outpatient consultations annually, and the average cost for each visit is around 1,200 yuan, far higher than the 100-200 yuan among domestic hospitals.

Jean Liu, senior consultant from Beijing-based Mingyuan Consultancy, said that more Chinese, especially the emerging rich class, are nowadays willing to pay for premium healthcare services, providing a huge opportunity for foreign hospitals like Parkway Health.

According to Euromonitor, Chinese citizens spent 275 billion yuan on medical services and health goods last year, a 155 percent increase from the nearly 108 billion yuan spent in 2003.

Parkway Health inked its first joint venture Gleneagles International Medical Center in Shanghai in 2005. It acquired the domestic private hospital chain World Link in 2007, becoming Shanghai's largest foreign owned medical network.

China has more than 30 joint venture clinics and medical centers, mostly in Beijing, Shanghai and Guangzhou.