To address China's aging population issue as well as its
need to improve access to healthcare in rural areas, healthcare
reform has become a priority for the Chinese government.
A key mechanism to improve access is through the promotion of
private healthcare. While current exit restrictions exist in
relation to private medical institutions, recent policy
developments which have liberalized investment in the healthcare
sector demonstrate China's progress toward improving
healthcare. It is likely that these policies may stimulate greater
PE investment opportunities, in particular within the private
Key legal developments
Recently enacted policies including the Opinions on Further
Encouraging and Guiding Social Capital towards Medical Institutions
("No.58 Policy"), information contained in China's
12th Five Year Plan and the "New 36 Article" have removed
some of the barriers which existed in relation to foreign
investment in the medical sector, and now permit wholly-foreign
owned medical institutions to be established in China.
Similarly, the State Council recently promulgated the Pilot
Opinion on Comprehensive Reform of County Level Public Hospitals
("Pilot Opinion"), which encourages the integration,
reorganization and restructuring of medical resources, and in turn
promotes investment within the healthcare sector.
Key challenges and opportunities
Currently private healthcare is subjected to more proscriptive
requirements when compared with the public healthcare sector. The
Implementation Rules for the Classification Management of Urban
Medical Institutions regulate the management of profit and
non-profit medical institutions in China, and public and private
healthcare facilities are subject to different tax, pricing and
Additionally, challenges for private hospitals including
restricted access to medical resources (such as access to
high-quality doctors, staff and equipment), the developing nature
or China's medical institutions, China's capital market
exit restrictions as well as the small investment returns, are
currently a disincentive to invest within the sector.
Despite this however, the current legal and policy developments,
which liberalize investment in the healthcare sector, demonstrate
China's progress in improving access to medical treatment.
Consequently, investors should watch this space' as it is
likely that China will continue to promote healthcare investment,
in particular within the private healthcare sector. Attractive
investment opportunities which may exist in the private healthcare
Emerging healthcare industries- such as senior care facilities,
psychological treatment facilities, and palliative care
Specialist medical treatment- including cardiovascular,
oncology,gynecology services, obstetrics, dentistry and other
special medical services.
Specialty private hospital chains-such as hospitals which
deliver care for particular medical conditions.
Medical devices- including medical devices and equipment that
is used in hospitals.
Investment opportunities in private healthcare in China will
make impact on the current healthcare market and will probably lead
to a new landscape for China's healthcare.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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