Roberta Lipson: United Family wants to bring new concepts to China’s medical care industry
Roberta Lipson  Photo: City Weekend
 
The Chinese government has enthusiastically called on private sector to play more active role in lightening the heavy load on the public medical care, although the policy may prove to be ineffective if it is not accompanied by concrete incentives. Some industry insiders have expressed such concerns, among whom is Roberta Lipson, a leading figure in the country’s private medical care sector.

Over years, China’s government has long advocated for more involvement of private capital in the country’s medical care industry, as public hospitals could no longer accommodate the needs of a population exceeding 1.3 billion. Under the circumstances, the number of private hospitals has climbed to 16,000, accounting for 56 percent of the total 29,000 hospitals in the country by the end of 2016, according to data from the National Bureau of Statistics (NBS).

Besides the government, China’s ever-growing middle class is also demanding more customized and better medical services, which is stimulating the boom. However, private hospitals still face challenges in winning over clientele from their public competitors, industry insiders said. Although the number of private hospitals has outnumbered that of public ones, the share of the market occupied by the former is merely 22 percent, the NBS data shows.

Lipson, the CEO of the United Family Healthcare, the biggest and most reputable private hospital group based in China, concurs. “The government has been saying for a long time that they encourage private health care—but actually to just say that isn’t a lot of encouragement,” she said in a recent interview with Sino-US.com, adding “there needs to be something practical behind it.”

Lipson is known as one of the most successful foreign entrepreneurs in the country since it opened up to the outside world decades ago. She co-founded the United Family Hospital, the first foreign-backed hospital in the country with Elyse Beth, her friend and partner 20 years ago in Beijing. From then till now, she has been working as the Chairman and CEO of the group, even after Fosun International, a Chinese international conglomerate acquired a controlling stake of the Chindex International Inc., the parent company of United Family Healthcare and hospitals in 2014.

It is reported by yicaiglobal.com that Guo Guangchang, chairman of Fosun International, had “fallen in love with” with United Family for its well-established brand name and accumulation of unparalleled experience in managing and operating hospitals. That’s believed to be the reason for Fosun International to finally close the deal at more than double the initial market price. “If there is something special about United Family, it is the story of the three Jewish girls behind it,” Guo was quoted as saying. Lipson is one of the girls who have gained Guo’s respect.

After engaging herself in China’s medical care industry for over 30 years, Lipson knows clearly what private hospitals like the United Family really need and what have prevented more prospective consumers from going forward. One of the biggest complaints about private medical care is high cost—for similar treatment or services, private hospitals tend to charge higher prices compared with those in the public system. In this respect, she urged for the government to level the playing field between private and public players.

“One simple way of making private health care more affordable is to reduce the tax burden. The currently applicable income tax rate for the health care sector is known to be 25 percent, well above the 15 percent for those industries encouraged by the government,” she said. “This would be an easy way to help reduce the cost of private hospitals.”

Another key factor is medical insurance. Lipson strongly suggested opening the medical insurance repayment to more private hospitals. “Right now, in most cities in China, medical insurance is only available to hospitals that are willing to charge the same prices as public hospitals. It’s very hard, because they have a lot of expenses that public ones don’t have,” she said. In her view, with no government subsidies, and burdened by heavy income tax and expenses like property rental, the private players could barely survive if they charge the same price as their public counterparts.

Lipson claimed the solution is to set the reimbursement rate no matter it’s for public or private ones and then let the individual consumers decide whether they want to pay a higher price. She believes that with rising wealth and discernment, many Chinese people could afford better services and would rather pay higher prices than “getting up at five in the morning, standing in line, and then not necessarily getting to see the doctor they were hoping to see.”

In cities like Qingdao and Guangzhou, local governments have already approved for patients to take their medical care entitlement to private health care. Lipson hopes Beijing and Shanghai can follow suit soon.
 
Lipson noted that since 20 years ago when she and her colleagues started the United Family, they have aimed to bring new concepts to China’s health care industry. The entrepreneur, who had built the first international hospital in China and made it a true legend, is respected as a facilitator of China’s medical care transformation. Along the path, she never stopped the efforts to make United Family a better medical services provider.

The hospital group is now laying down stepping stones on the road to a more innovative and efficient system for China’s middle class. According to Lipson, all United Family hospitals and clinics would embark on a new model soon. “As medical service providers, our ultimate goal is to help our patients lead a healthy life. We never expect to build our business on opportunities to make money when people suffer from disease,” Lipson said. Her hospitals are adopting a “per capita” approach, in which a hospital will get a certain amount of money for a certain population.

For both public and private hospitals, the prevailing model has been the “pay-for-service” model, meaning the consumers would be charged based on the medical care services they receive. There is an inherent problem with it—patients may be persuaded to pay for tests, treatment and medicines they don’t really need when hospitals just want to make money.

And the per capita model seems to be designed to address the problem. “Our patients would pay us once for a year. They could consider it as a premium. And then we would get them physical examinations to find out potential problems with their health. We would discuss with them about the problems, and help them take preventative measures or do early intervention. We hope in this way, critical diseases could be avoided. But if they really contracted a serious disease, it is our responsibility to cure them in the most efficient way,” she explained.

United Family is now experimenting with the approach and partnering with insurance companies. At the end of the day, if hospitals are capable of keeping the insured person healthy, everyone would be happy.

Lipson disclosed that the program would charge depending on people’ age, although for most people of different ages, the annual expense would range between Rmb 10,000 to 20,000. She is confident that the middle class people they target as consumers would find that affordable. So far, over 2000 customers have participated in the “per capita” program.

Lipson hopes more people could accept the model and that in the near future, even public hospitals would think about adopting it. “The government is now making medical insurance in a per capita way; while for public hospitals, they ask people to pay for services. In this way, the hospitals do not shoulder responsibilities to help their consumers take preventative measures and keep healthy,” she said. “If public hospitals could use the model, it would be for the best.”

Lipson once said in an interview with supchina.com, “United Family has done a lot of various kinds of innovations and the government has taken a great interest.”


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