New high-end hospitals to open in China, but can they attract doctors?
Private companies continue to seek entry in the Chinese private hospital market. In the past two months, IHH announced the opening of two large hospitals in 2017, and Samsung Medical Oaks launched a 150-hospital network. But while it appears relaxing the regulatory environment is paying off, doctors are hard to get.
“For the next ten years at least, demand in China is effectively unlimited,” says Laura Nelson Carney, senior research analyst at Bernstein Asia-Pacific. “Infrastructure shortage and rising demand means big players have potentially a lot to gain.”
Malaysian hospital chain IHH is to open a 500-bed flagship hospital in Hong Kong in early 2017 and a multispeciality 350-bed hospital in Chengdu in the second-half of 2017. Meanwhile, private equity fund Samsung Medical Oaks is investing $30m (RMB 200m) into a 300-bed high-end hospital in Huzhou, a city near Shanghai. The group says it wants to develop a network of 150 hospitals in the next five years.
Yet doctors tend to stay away from private hospitals. And this is one of the biggest challenges facing operators. Public hospitals are just more prestigious, and newly qualified doctors would rather go into a small local public facility than a private one, even high-end.
“It’s very difficult to hire great doctors. Young doctors cannot risk going into some new private hospital when so much status is attached to a career in the public sector. This is an issue Thailand managed to resolve 15 years ago, and something China will need to address,” adds Nelson Carney.
Private operators in China have several ways to hire and retain doctors. First, there are financial incentives. According to Nelson Carney, only 3 out 6 medical students will actually go on to practice as a doctor, often for earnings barely higher than a taxi driver. The private sector could offer more attractive salaries.
The country also has a large pool of doctors abroad.
“Private providers can recruit among Chinese nationals in foreign medical schools. Growth in China means there are exciting opportunities to build high quality networks in comparison to the US or Europe,” says Nelson Carney. “In India, private hospitals are built around celebrity doctors, great clinicians able to create a brand name. This has the potential to work in China. It is surprising private hospitals have not tried any of those strategies.”
Building a hospital require a diverse range of skills involving doctors, nurses and technicians. But the private healthcare sector in China is still in its infancy, and medicine is still centred around the public sector. In our August feature on the hospital market in China, we said companies investing in the sector in China should exercise caution. It appears the advice is still valid today.
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