Internet healthcare for patients
Internet healthcare for patients
Business Model Description
Scale-up investment in internet solutions that could provide patients with the following services: online diagnosis and treatment, scheduling appointments with doctors, providing medical advice and chronic disease management, as well as pharmaceutical e-commerce.
Profits can be generated through: basic service to users using basic functions and value-added premium services to users with a higher willingness to pay; precision marketing for commercial medical insurance companies.
Expected Impact
Improve access to healthcare and reduce pressure on healthcare facilities, minimize the risk for patients and healthcare workers during viral outbreaks
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Anhui
- China: Jiangxi
- China: Fujian
- China: Yunnan
- China: Guangdong
- China: Ningxia
Sector Classification
Health Care
Development need
China’s health sector currently faces many challenges, including the weak capacity of grass-roots service providers, imbalanced development and resources distribution between rural and urban areas in the health sector, and accelerated the aging trend.
The Action Plan for Promoting the Quality of Health Industry Development (2019-2022) focused on leveraging digital technology in the health care sector. On the back of COVID-19, the National Health Commission published a notice requiring the Health Commissions in all provinces to build Internet-based platforms for controlling and preventing COVID-19 as well as general healthcare.
Gender inequalities and marginalization issues
(1) Medical Financial Assistance (MFA) scheme in China did not offer adequate financial protection for marginalized people. (2) Women may be at risk or at greater risk of infection due to occupational gender segregation.
Investment opportunities introduction
The tageted subregions have low economic input in the healthcare sector, yet policy focus in this area is relatively strong. This indicates that the demand for better healthcare services and the need for further investment is high.
Key bottlenecks introduction
The shortage of medical talents in quantity and poor quality structure is the bottleneck that restricts the development of China's healthcare industry.
Health Care Providers
Development need
the rapid aging trend challenges healthcare delivery; access to nursing homes remains limited; there are significant regional disparities in the distribution of health resources; around 75% of older people suffer from non-communicable chronic diseases; the demand gap of radiologists is increasing; the cure rate of early detection of cancer is low.
Policy priority
China has made significant policy efforts to improve healthcare delivery. A national action plan (2018) was issued by the National Health and Family Planning Commission, planing to make diagnosis and treatment more convenient; gradually form a new system of medical services based on regional coordination, information sharing and service integration,.
Investment opportunities introduction
the 6 IOAs with the highest growth potential were shortlisted:internet healthcare, smart information systems in hospitals, Independent Clinical Laboratories (ICL),Medical imaging based on Artificial Intelligence technology, Smart home-use medical devices for chronic disease management,Senior care.
Health Care Delivery
Pipeline Opportunity
Internet healthcare for patients
Scale-up investment in internet solutions that could provide patients with the following services: online diagnosis and treatment, scheduling appointments with doctors, providing medical advice and chronic disease management, as well as pharmaceutical e-commerce.
Profits can be generated through: basic service to users using basic functions and value-added premium services to users with a higher willingness to pay; precision marketing for commercial medical insurance companies.
Business Case
Market Size and Environment
> USD 1 billion
> 25%
In 2020 the size of the market was USD 30 Bn.
source: Analysys, 2020, "Annual analysis of Internet healthcare in China 2020" (《中国互联网医疗年度分析2020》) , analysys.cn/article/detail/20019817
Indicative Return
15% - 20%
Interviewer stats: Vision Fund I invested 400 million USD in Ping An Health Cloud in 2017 and exited through IPO in 2018. Multipile of capital (MOC) is 1.17x and Internal Rate of Return (IRR) is 57.59%.
Leishi Ruifeng invested 540 million RMB in Heren Health in 2010 and exited through IPO in 2016. Multipile of capital (MOC) is 1.19x and Internal Rate of Return (IRR) is 6.03%.
Jinshi Haorui invested 300 million RMB in Heren Health in 2010 and exited through IPO in 2016. Multipile of capital (MOC) is 1.25x and Internal Rate of Return (IRR) is 7.88%.
Investment Timeframe
Medium Term (5–10 years)
7 experts estimated that it would take 5-10 years to see positive cash flow for investors.
Other stats: Two Internet listed healthcare giants, Ping An Health Cloud (founded in 2015 and listed in Hong Kong in 2018) and Ali Health (reformed and listed in Hong Kong in 2014) are still operating in a loss.
Ticket Size
Vision Fund I invested USD 400 M in Ping An Health Cloud in 2017. Leishi Ruifeng invested USD 540 M RMB in Heren Health in 2010. Jinshi Haorui invested USD 300 M RMB in Heren Health in 2010. Kunling Capital invested USD 520 M RMB in Miaoshou in Apr 2018.
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Market- Incomplete Requlation
Impact Case
Sustainable Development Need
Reserch found significant regional disparities in the distribution, in particular the geographic distribution of health resources. The eastern developed region has a higher level of resources than the other two regions.
The provision of healthcare is extremely unbalanced with around 2,300 top tier public hospitals are at capacity, while 950,000 lower-tier hospitals, community health centres and clinics struggling to attract patients.
The need for remote health care delivery is more prominent during COVID-19 pandemic.
Gender & Marginalisation
Most people have this stereotype that male doctors are more professional than female doctors. People in remote areas cannot get high-quality medical services.
Expected Development Outcome
The development of Internet healthcare helps make up for the geographically uneven distribution of medical resources and meet the growing demand for healthcare in China.
Accessibility will be improved. Even people living in the rural area will be able to receive diagnosis and treatment by doctors from top tiered hospitals in other cities.
Gender & Marginalisation
Internet healthcare can undermine the gender bias of doctors, and can also enable people in remote and poor areas to obtain high-quality medical services.
Primary SDGs addressed
3.b.3 Proportion of health facilities that have a core set of relevant essential medicines available and affordable on a sustainable basis
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Corporates
Indirectly impacted stakeholders
People
Planet
Public sector
Outcome Risks
Advertisement has been involved in Internet healthcare. People may get cheated by informal businesses if the regulation is not strict.
There is a risk of data leakage for Internet healthcare.
Impact Risks
With the lack of regulation, patients may easily get prescription through Internet healthcare platforms without doctors' justifed diagnosis.
Impact Classification
What
The outcome is very likely to be positive, important, long-term and large-scale because the investment can help enhance the accessiblity of healthcare services for the general public.
Who
Underserved people living in rural or less developed areas will be able to accept higher qualified medical services from doctors in Grade 3A hospitals.
Risk
With the lack of regulation, patients may easily get prescription through Internet healthcare platforms without doctors' justifed diagnosis.
Impact Thesis
Improve access to healthcare and reduce pressure on healthcare facilities, minimize the risk for patients and healthcare workers during viral outbreaks
Enabling Environment
Policy Environment
(Policy document):The Ministry of Health first published a policy document promoting Internet healthcare services in 2009.(3) However, there were no major policy developments in the sector until 2018, when the central government again identified Internet healthcare as a strategic focus area.
(Policy document):The Ministry of Health first published a policy document promoting Internet healthcare services in 2009.(3) However, there were no major policy developments in the sector until 2018, when the central government again identified Internet healthcare as a strategic focus area.
In August 2019, the payment system of Internet healthcare service was made clearer by a guidance document from the National Healthcare Security Administration. This document included guidelines for the pricing and medical insurance coverage of Internet healthcare services.
In 2020, the COVID-19 pandemic accelerated the development of Internet healthcare in China. In February, the National Health Commission published a notice requiring the Health Commissions in all provinces to build Internet-based platforms for controlling and preventing COVID-19 as well as general healthcare.(6)
The notice also urged provincial Health Commissions to reinforce the regulation of Internet healthcare, online prescriptions, and data security. In July, the State Council announced that eligible Internet healthcare services are now covered by social health insurance.(7)
Financial Environment
In July 2020, the State Council announced that public insurance reimbursements will be available for eligible Internet healthcare services. This can be expected to increase people’s willingness to pay for Internet healthcare services, thereby providing a significant financial incentive to the further development of the sector.
Regulatory Environment
Although expert interviewees have expressed concerns over the weak reinforcement of regulations, the existing regulatory framework for Internet healthcare in China is strict .
Internet healthcare platforms are required to back up their data to regional health platforms at regular intervals.
A system of supervision ports has been implemented, allowing administrative health departments to dynamically monitor the regulatory compliance and medical quality of Internet healthcare providers. The identity and qualifications of healthcare professionals and institutions are also monitored.
Marketplace Participants
Private Sector
significant investors include Qiming Venture Partners, Northern Light Venture Capital, ShenZhen GTJA Investment Group Co., Ltd. and Huagai Capital; internet companies like Tencent, JD, Alibab and Xiaomi; insurance companies like Sinochem Insurance
Government
Local government guidance funds have started co-investing in Internet healthcare, particularly in Tier 1 cities including Beijing, Shanghai, Guangzhou and Shenzhen.
Target Locations
China: Anhui
China: Jiangxi
China: Fujian
China: Yunnan
China: Guangdong
China: Ningxia
References
- (1) Ministry of Foreign Affairs,2019 https://www.fmprc.gov.cn/mfa_eng/topics_665678/2030kcxfzyc/P020190924780823323749.pdf
- (2) UNDP.2019 https://www.cn.undp.org/content/china/en/home/library/human_development/national-human-development-report-special-edition.html
- (3)UN Women. (2020). Policy Brief: The Impact of Covid-19 on Women and Girls. UN Women.
- ("21) International Journal for Equity in Health,2017 https://equityhealthj.biomedcentral.com/articles/10.1186/s12939-017-0543-9"
- (22) Analysys, 2020, "Annual analysis of Internet healthcare in China 2020" (《中国互联网医疗年度分析2020》) , analysys.cn/article/detail/20019817
- (23) the Ministry of Health, "Administrative measures for Internet health care information service" (《互联网医疗保健信息服务管理办法》), http://www.gov.cn/flfg/2009-06/23/content_1347818.htm
- (24) State Council, "Opinions on promoting the development of Internet healthcare" (《关于促进“互联网+医疗健康”发展的意见》), http://www.gov.cn/zhengce/content/2018-04/28/content_5286645.htm
- (25) (National Healthcare Security Administration, 2019,"Guidance on improving the Internet healthcare service price and medical insurance payment" (《关于完善“互联网+医疗服务价格和医保支付政策的指导意见”》) , http://www.nhsa.gov.cn/art/2019/8/30/art_37_1707.html
- (26) National Health Commission, 2020, "Notice on Internet consultation service in epidemic prevention and control" (《关于在疫情防控中做好互联网诊疗咨询服务工作的通知》), http://www.nhc.gov.cn/yzygj/s7653p/202002/ec5e345814e744398c2adef17b657fb8.shtml
- (27) State Department, 2020, "Implementation Opinions on further optimizing business environment and better serving market entities" (《关于进一步优化营商环境更好服务市场主体的实施意见》) , http://www.gov.cn/zhengce/content/2020-07/21/content_5528615.htm
- (28) Sohu, 2018, https://www.sohu.com/a/285146956_120044667 "29) South China Morning Post, 2019 https://www.scmp.com/economy/china-economy/article/3013976/chinas-fragmented-health-care-system-under-increasing"