Posted by Damjan DeNoble
Came across that talks about the changing private health care market in China. It is written by HTH, a company ” helping world travelers gain access to quality healthcare services all around the globe.” It was written by Laura Hilton, director of global health and safety resources at global health worldwide. Below, in regular black type, are excerpts from Laura Hilton’s article. In green type, is how those excerpts could be interpreted between the lines by anyone looking to get involved with insurers or health providers in China as a direct billing provider.
The excerpt starts below;
In the past few years, the increasing number of private health care options in Shanghai and Beijing has begun to change the landscape. Start-up clinics are actively reaching out to international insurers to create direct billing relationships and are often willing to offer lower rates of contract in creative ways.
How to read this: Private clinics are disorganized and there is an opportunity here to help them out.
While, in general, they do not offer the scope of services the more established players provide and have not established a strong brand among foreign patients, they are evidence that the market is expanding and the competition will continue to heat up.
How to read this: Anyone wishing to provide direct billing help to clinics will have to offer brand building support
Although the newer clinics may not yet pose a direct threat to the early entrants whose brands continue to have a certain cache among patients, there are indications that the established providers are becoming more open to negotiation with their biggest customers, and in some cases modest discounts are available.
How to read this: Big hospital players, like United Health Systems, are very aware of the shifting terrain. They will want a direct billing organization that will maximize their profits. The big guys will also force you to make a choice between them and the competition.
Both insurers and providers interviewed for this article expect healthcare costs in China to continue to rise – one insurer cited China as the market where their spend is increasing the fastest worldwide, due to a combination of increased membership and claims costs.
What is the future then for cost containment in China? There seems to be buzz in two major areas: Third Party Administrators (TPAs) and Network Selectivity.
How to read this: The word “buzz” indicates that a lot of people are eying the TPA prize.
Although the Chinese Insurance Regulatory Commission (CIRC) has reportedly only officially licensed one small TPA in China to date, the mergence of the TPA market in China seems to be of interest to both insurers and providers. According to local sources, the CIRC seems to be stepping back from this market for the moment to study it and develop methods to regulate it.
How to read this: the CIRC is important to your business prospects if you have dreams of becoming a TPA
Although there are plenty of ‘consulting’ relationships being developed in this grey TPA space, insurers are cautious about linking to local claims paying operations before a formal licensure process is in place.
How to read this: Actually, CIRC approval is absolutely critical if you want to be a TPA, because major insurers are not willing to jeopardize their relationship with the Chinese government. A CONSULTANCY OR REP OFFICE BASED MODEL IS NOT VIABLE.
Where the TPA market does open in China, the major private medical facilities know that they will need to negotiate and select networks carefully to ensure their business prospers.
The second trend is the fine-tuning of networks by international insurers – are there ways for them to reduce the number of facilities so they can more effectively channel their members to certain clinics and hospitals in order to negotiate more desirable pricing arrangements?
How to read this: The insurers are looking for China experts, not health care system experts. They want to work with companies that can tell them things that they can’t see themselves. Players that can do this are, in the very least, going to need an “in” with the MOHs insurance and hospital governing divisions, and all relevant insurance regulators in China.
As their membership in China changes to include more Key Local Nationals, will the nature of their network in China need to develop accordingly? The answer seems to be yes on both counts, and international insurers are currently working on plans in these areas. Although cost containment in China is in the early stages, international insurers are using both case management and provider contracting to control their spending. In this fast-changing landscape, there will be more opportunities as the number of high-quality provider options increases and the regulatory environment liberalizes to allow development of local TPAs and new insurance products geared specifically for distribution to local Chinese citizens.
How to read this: As the market opens, the insurers are going to hit the ground running with their own pet projects. If you want in to the market, then you better have one of the heavies backing you, or make it so that they want to come and seek you out.
In the meantime, however, international insurers are doing their best to adapt traditional managed care techniques to the Chinese market.
How to read this: in the meantime, international insurers are putting up with the shenanigans of hospital chains that have monopolized foreigner health care. But the insurers are not stupid. They know they are being cheated out of a lot of money. The long term profits in China, however, are just to tempting to make a fuss over the comparatively small change being lost now.
End of article…
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About the Author
[...] It is tempting to see the creation of some sort of cost containment entity which could act as a go between China’s private health care providers and large health insurance companies as an ‘easy play’ in the Chinese health care market for several reasons. But the bottom line is that the current regulatory environment in China will not allow that to happen without a lot of preparatory work (the timeline is in years not months), and for a fuller explanation go here, and here. [...]