Posted By Damjan DeNoble
Third Party Administration (TPA) is something that every insurer working in China has thought about and pines for. In the best case they could do it themselves. What is preventing them from moving forward is a mix of reasons:
• Insufficient understanding of “China risk” associated with in country partners the insurers choose to work with;
• the MoH is hard to read and inflexible about its payment structure;
• insurance regulation is something the Chinese government does not fully understand yet, and so for the moment it does not trust foreign insurers;
• and, most importantly, the foreign insurers know that once the Chinese government figures out how to regulate them, and how to give less experienced China owned insurers a leg up, their companies are going to enjoy a profit windfall numbering in the hundred of billions of dollars.
So the insurers are thinking, “we better not do anything to mess this up. For the moment lets be content with just getting our feet wet by insuring the odd expat here and there, and use this time to collect as much information as possible.” And, while performing due diligence on the market, the insurers are getting approached, probably on a daily basis, by teams of consultants, some more organized, some less, offering to help them regulate their losses now. But the insurers don’t care about now – because now they aren’t making any money. They want someone to offer them a solution for when the market opens, and nobody knows when that is going to be. So, they don’t need someone to regulate their prices. They need someone to position their business so that when the market opens it hits the ground running, and gives them an advantage that the competition is not going to have.
On the flip side of the coin, private clinic operators want patients and insurance money now, NOT later. They want direct billing providers to come in and connect them to as many insurance companies as possible. It’s tempting to run around and sign up as many of these guys and call it a network, but that’s not a business model. It’s a temporary Band-Aid to help the insurance providers “make do” under current conditions until the real market opens.
About the Author
This would partly explain why Beijing United costs so much… no competition + no direct billing regulators = high costs. Does that about sum it up?
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@Chris
Hi Chris,
That pretty much sums it up, yes.
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