China to Encourage Development of Private Hospitals

The State Council of the People’s Republic of China (Beijing) decided on Thursday, June 11, 2015, to integrate private-capital-invested hospitals into the medical insurance system, a move designed to encourage the development of new medical institutions. Among other measures, the approval process to set up a hospital or clinic will be streamlined, and preconditions, including the number of beds, will be canceled. Raising capital for such institutions through equity financing and project financing will also be supported.

Local governments will be encouraged to subsidize the private hospitals through investment funds, and to explore cooperation between private and public facilities. Nonprofit private-capital-invested medical institutions that provide basic healthcare service will get subsidies from the government, and hospitals invested with private capital will see other favorable policies, such as tax cuts. The State Council also ordered that private-capital-invested medical institutions be covered in regional development plans for medical resources.

The State Council announcement also stipulated that public health insurance will extend healthcare coverage to qualified private facilities, and will not be able to reject them for reasons other than their medical service abilities. Pilot programs will be set up to simplify preconditions for doctors to work at different hospitals, facilitating staff recruitment, and the government will concomitantly establish a supervisory system for these hospitals and crack down on illegal medical practices and excessive medical treatment.

“Many hospitals run by private capital, especially those at the high end, have met great difficulties, as they can neither get government subsidies nor join the national medical insurance system,” said Prof. Hu Shanlian, MD, MSc, of the School of Public Health at Fudan University (Shanghai, China). “There are two possible ways for the government to give subsidies—to give the hospitals money or buy their services.”

China has begun encouraging the private sector to invest in hospitals to help ease the burden placed on the public health-care system, which is grappling with surging rates of chronic conditions such as diabetes and heart disease. Chinese patients are often reluctant to choose private hospitals, as they can rarely get government reimbursements for medical treatments.

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State Council of the People’s Republic of China
Fudan University