On April 21, 2016, China's highest executive body, the State Council of People's Republic of China ("PRC"), circulated a Key Work Plan for Deepening the Medical and Health Care System Reform in 2016 ("2016 Work Plan") to highlight key tasks for its ministries and departments as well as provincial-level governments to deepen medical reform in 2016. Such key tasks include speeding up the establishment of a hierarchical medical treatment system and promoting the use of health care and medical big data in certain mature regions and industries as pilots.

To establish a hierarchical medical treatment system, patients with different needs will be directed to hospitals at different levels as opposed to one prestigious hospital. This preliminary ranking process in the 2016 Work Plan is widely viewed as a win for the digital health and telemedicine industry. The 2016 Work Plan is also expressly aimed at driving online medical appointment payment systems and developing telemedicine and telepharmaceutical services.

Chinese local governments are anticipated to provide follow-up guidance to implement the 2016 Work Plan. On May 16, 2016, the Shanghai government held a meeting regarding further medical and health care system reform, and Yang Xiong, the mayor of Shanghai, pointed out at this meeting that the government will embrace the "internet plus medical treatment" modalities promoted by the 2016 Work Plan.

Some pioneering industrial players have already made movements in this regard. For example, on December 7, 2015, the first online hospital in China was incorporated in Wuzhen, Zhejiang Province, and its services include making appointments with a doctor online, providing telemedical treatment, and issuing e-prescriptions. On January 18, 2016, Ali Health (a subsidiary of the Alibaba Group) entered into a cooperation agreement with a hospital in Wuhan, Hubei Province, under which they will establish a virtual hospital to conduct medical treatment, prescribe medicines, and sell and even deliver drugs and therapies. Additionally, Tencent, a leading Chinese internet service company, is also working on an online platform that provides integrated physician information to assist patients in making well-informed decisions when choosing doctors.

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