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Insights China

Inside China’s Multi-layered Healthcare Industry

China’s healthcare industry faces a huge challenge. By 2020, the government plans to ensure that each of its 1.3 billion citizens has access to certified health services. With a rising standard of living and one of the world’s largest elderly populations, the domestic demand for care will only increase.

Since 2009, the Chinese central government has dedicated hundreds of billions of dollars to reforming its healthcare system, with the goal of providing affordable and accessible care to its citizens. This will be achieved by strengthening community health centers and rural health clinics, thus shifting the burden of care from top-tier, specialized hospitals to general care medical centers.

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Although more and more patients are seeking care in community healthcare centers and rural hospitals, access remains unequal and dissatisfaction runs high. The number of healthcare professionals and hospital beds is three times lower in rural centers than in their urban counterparts. More striking is the inefficiency of use in rural settings: only 30% of those hospital beds are used at any one time, compared to 90% in urban hospitals. Complaints of corruption, high costs, and poor service abound.1

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The government is encouraging private investment to fill gaps in the public system, and private money is pouring in at an impressive rate.2 China’s Ministry of health reported a year-on-year increase in private hospitals of 20.6% as of May 2012.2 The Chinese medical device market is expected to be worth over $25.7 billion by this year.3 Also in 2013, China’s pharmaceutical industry is projected to be the third largest in the world, and the largest by 2050.4, 5

There is an interesting undercurrent to the healthcare equation, and one that is uniquely Chinese. Yi liao bao jian (医疗保健), Mandarin for healthcare, describes a daily practice that is centered around keeping the body healthy with regular exercise and wise eating. For thousands of years, Chinese people have made no distinction between healthcare and wellness. To them, the expanding Western medicine health services are just one piece to a more complex, connected, and holistic view of health.

Other pieces include daily maintenance with food, exercise, and supplements. On average, Chinese people hold a certain level of knowledge of nutritional practices, eating the right food at the right time of day during the right season. Every morning, public parks are flooded with Tai Ji (Tai Chi) and exercise groups. At the same time, the number of gyms is steadily increasing: Deloitte found that, in 2009, there was a 35% year-over-year increase in the number of gyms operated by the top-five fitness chains in China. The health food market is proliferating—in the years between 2004 and 2009, for instance, sales of wellness-related foods and beverages grew 28%, according to a 2010 Euromonitor International report. A typical Chinese grocery store has an aisle dedicated to health food kits, each prepackaged with its own bag and handle, ready to be carried out of the store.

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Beyond their own health, most Chinese people are acutely aware of the health of those close to them. Giving supplements and health foods as gifts to close friends, family, or others with whom they share important personal relationships is a long-standing tradition. These health-related gifts signify the importance of these bonds. Recommending health supplements, for instance, is considered a sign of showing extra care. Health food packs are given in times of greater need—like when someone is coping with school exams or recovering from an illness—to show concern. The extra layer of meaning in a health-food gift even extends to business gestures; gifts of pricier health-foods like ginseng or cubilose (bird’s nest) heighten the significance of the relationship. While a typical gift of pastries or snacks costs 100RMB ($15.87) on Taobao, a popular Chinese online shopping site similar to Amazon.com, a comparable gift pack of keratin and cubilose costs twice as much at 230RMB ($36.50).

When they do become ill, just over half of Chinese people turn to traditional Chinese medicine1 (TCM), which views the body as a series of connected channels and addresses ailments in a holistic manner with prescribed herbal treatments. It is a respected institution, with formal TCM hospitals, certified health professionals, and prescribed treatment plans throughout the nation.

TCM treatment options are not without their complaints. TCM hospitals have complicated patient-registration procedures and long wait times, just like their Western medicine (WM) counterparts. Professionals can see three to four patients at a time, listening to often intimate descriptions of ailments in group diagnosis sessions. The number of TCM hospitals is increasing (by 11% between 2000 and 2009), though at a snail’s pace when compared to WM providers. In comparison, during the same period, China saw a 13% growth in general hospitals (1,492 hospitals created), and a 230% increase in the number of health service centers (over 19,000) created.

Neither is really seen as the “safer” option. TCM supplements, though believed to have minimal side effects, are considered an unnatural addition to the body. The old saying “No matter what you eat, medicine is 30% poison” (是药三分毒) is still widely accepted among patients in clinics and homes across China. Chinese people do not think TCM is 100% harmless to human bodies; just like WM, it is a calculated risk.

Choosing between the two often depends on timescale and treatment goals. WM is thought to directly address and control symptoms of a disease, leaving the body to heal itself. Though it is known for bringing efficacy and speed, it also has a reputation for causing side effects. Compare this to TCM, which is believed to restore and enhance the body so that it can better expel disease. TCM medication takes time to prepare properly, working on a timescale of months to years.

Though hybrid programs exist, true integration of the two remains questionable. TCM is used as a supplement to WM; after a targeted attack on a disease’s symptoms with Western tactics, Chinese medication is used to “clear the root of the disease” or “cut the tail of the illness,” as the popular sayings go. At their roots, TCM and WM are at odds with each other, requiring different health professionals with distinct thinking patterns, treatment models, and evaluation methods. One of the more rigorous analyses of integrated treatment programs is the World Health Organization’s (WHO) 2003 report on integrated treatment of SARS. As part of a multi-chapter analysis, WHO reported better outcomes for patients given integrated treatment in some cases, though evaluating integrated treatments using the standard WM approach proved challenging.7 For the patient, it is most often an either/or choice between the two treatment options.

The old saying “No matter what you eat, medicine is 30% poison” (是药三分毒) is still widely accepted among patients in clinics and homes across China.

Chinese people generally have a more nuanced view of health treatments because of their long history with TCM and its health practices. As the Chinese central government widens coverage of its healthcare system, the landscape of healthcare players in both TCM and WM will diversify; and as investment, both public and private, pours in, the competition to operate in this market will undoubtedly intensify. It’s important for healthcare companies doing business in China to realize that there is another layer to consider in China that’s nonexistent in other markets: TCM. When thinking about health opportunities, competition, etc., businesses and health organizations may miss a vital piece of the puzzle by failing to consider this layer. The real challenge—and opportunity—is to deliver products, services, and experiences that are as nuanced as the Chinese definition of health itself.

Azure Yang

Azure is a former senior interaction designer based in frog's Shanghai studio.

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