Abstract:Driven by policies and demand, the reception capacity and medical level of private hospitals in mainland China have been continuously improved, which plays an important role in alleviating the pressure of social medical treatment. From January to August 2023, the number of visits to private hospitals in mainland China was 450 million, accounting for 16.36% of the total number of visits in hospitals in the same period, indicating that the market development potential of private hospitals is huge. The mainland comprehensive private hospital market still presents a relatively scattered competition pattern, and has not yet formed an absolute leading enterprise, but in the specialized private hospital market, there are some leading enterprises with strong competitiveness.
1. Definitions and Classification
Private hospitals refer to hospitals that are not public by the government and have a private nature. Depending on the nature of the hospital, private hospitals can be divided into for-profit hospitals and non-profit hospitals. Most of the private hospitals are health institutions funded by the society and led by for-profit institutions, and a few are non-profit institutions that enjoy government subsidies. In addition, private hospitals can also be divided into general hospitals, specialized hospitals, and traditional Chinese medicine hospitals according to their professional nature.
Second, industry policies
With the acceleration of the aging of the population in mainland China, the demand for medical services is growing, and the number of diagnosis and treatment is increasing year by year. In order to alleviate the pressure of social medical treatment and improve the quality and safety of residents' medical treatment, the mainland government has actively introduced relevant policies. On the one hand, it is necessary to deepen the reform of the medical and public health system and improve the quality of medical care; on the other hand, it is necessary to encourage the introduction of social capital to run medical institutions and enhance the mainland's ability to receive medical treatment. In February 2023, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Further Deepening Reform and Promoting the Healthy Development of the Rural Medical and Health System", which clearly encourages social forces to set up clinics, outpatient departments, private hospitals, etc. In May 2023, the National Health Commission issued the Notice on Carrying out Actions to Comprehensively Improve Medical Quality (2023-2025), proposing 28 tasks from three aspects to comprehensively improve the level of medical quality and safety. In December 2023, the National Health Commission and other departments also issued the "Guiding Opinions on Comprehensively Promoting the Construction of a Close-knit County-level Medical and Health Community", which clearly encourages and guides social forces-run medical institutions to join the county-level medical community. With the support and guidance of national policies, private hospitals in mainland China will usher in a broader space for development.
3. Industry barriers
1. Talent barriers
The medical service industry has a high talent barrier. On the one hand, the relevant diagnosis and treatment activities must be carried out by qualified practitioners, especially some surgeries are difficult and have high requirements for surgeons. Due to the particularity of the medical industry, the talent training cycle is long and the cost is high, and private hospitals often lack a perfect training system, which makes talent training a major problem. Compared with public hospitals, private hospitals have disadvantages in terms of talent introduction, scientific research policies, and professional title promotion, which makes the medical talent resources of private hospitals more scarce, and human resources have become one of the important barriers for new entrants.
2. Qualification barriers
According to laws and regulations, the establishment of medical institutions in mainland China must comply with the "Medical Institution Establishment Plan", and meet the standards of medical institutions in terms of fire protection, environmental protection, personnel, equipment, etc., in order to have the opportunity to obtain the "Medical Institution Practice License". After obtaining the "Medical Institution Practice License", it is also necessary to accept the regular verification and irregular inspection of the basic conditions and occupational conditions by the health administrative department.
3. Financial barriers
Opening a hospital requires a significant initial investment, including land acquisition, facility construction, equipment acquisition, and the formation of a medical team. In addition, many medical services have high requirements for high-end medical equipment and venues such as MRI, CT, and DSA, and require long-term accumulation of medical technology and patient reputation to obtain returns, so they require long-term support from a large amount of funds. In addition, in order to improve service quality and competitiveness, private hospitals also need to invest in scientific research, technological innovation and talent training.
Fourth, the industrial chain
1. Analysis of the industry chain
The upstream of the industrial chain of private hospitals is dominated by pharmaceutical manufacturing, medical equipment, and medical consumables. The quality and price of upstream products directly affect the operating costs and service quality of private hospitals. High-quality pharmaceutical manufacturing, medical devices, and medical consumables can improve treatment outcomes and patient trust in private hospitals, while reasonable pricing can help control hospital operating costs and remain competitive. The midstream is the operation and management of private hospitals. Downstream are patients, whose needs and expectations are an important driving force for the improvement and optimization of private hospital services.
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