Written by Carine Milcent.
Image Credit: Wide Shanghai by Jakob Montrasio/Flickr, Licence CC by 2.0.

China is in the midst of a paradox. There has been a spectacular upward surge in health indicators, matching a similar increase in economic indicators. It is also a colossal market, with healthcare expenditures reaching RMB 4,634.5 billion (US$697.7 billion) in 2016, which is equivalent to 6 per cent of GDP in 2015.

On the other hand, the health system has officially been described as inefficient, and there is a toxic atmosphere between medical staff and patients. The system has been through several phases of development. Over the course of two decades, the State Council of the People’s Republic of China and the Central Committee of the Chinese Communist Party have announced a series of reforms as part of different Five-Year plans, all setting out new directions for the future but with mitigated results to date. Along with these healthcare reforms, demographic changes and an increase in wealth inequity have impacted on the demand for healthcare.

A new healthcare service ecosystem where AI technology is the first line and where physical healthcare services deal with more severe problems

To solve the problem of inefficiency, three main solutions imply that a digital health revolution is emerging. The first one has been heavily influenced by the international model inherited from the US Health Maintenance Organisation (HMO), where the healthcare system is dominated by private insurance companies. These companies integrate healthcare suppliers from basic primary healthcare up to high-quality secondary services, with in-patients admitted to hospitals run either publicly, privately or through a mixed environment.

Such packages usually include digital healthcare. This can be through the management of database sharing with multiple medical staff users, from doctor to paramedical staff, or between facilities with big data storage and advanced analytics. There can also be virtual guidance of less qualified staff by highly qualified doctors, or virtual medical consultations. In such a system, digital features appear to complement the existing healthcare services. This solution targets a specific sub-section of the population, namely, those who can afford to pay for private insurance premiums.

Another model aims at providing a solution for the less advantaged section of the population. This is a model where the public health authority at the local level integrates digital health services to improve the efficiency of the underused primary healthcare network. These community healthcare services are largely considered to be providing an insufficient level of quality. Different forms of digital healthcare currently associated with existing healthcare services are proposed by these community healthcare facilities to restore confidence in the system. For example, there is a proposal for virtual medical consultations with medical staff to help with diagnosis and drug provision.

The target audience is nationwide, aimed at financially disadvantaged patients. With this model, healthcare expenditure remains under control, as costs in community healthcare facilities are much lower than the prices in highly equipped hospitals. In addition, this model reduces transportation costs for those seeking adequate healthcare.

The final solution that is undergoing a tremendous boom is the rise of healthcare service providers on the internet. Between them, the ‘Big Three’ (Baidu, Alibaba and Tencent) propose a broad product range to serve different segments of healthcare services.

Initially, these companies started by offering services close to their core offerings, with Baidu providing platforms to share medical information and healthcare experiences while Alibaba had a virtual area where producers could sell products. This now includes some drugs and medical devices.  Tencent provided technical solutions for new channels of communication including healthcare, but also shopping and banking, thus solving the payment issue. From this, they have gradually broadened their offer.

Baidu is setting up a ‘health cloud’ that will bypass the role of insurance companies by providing health data for insurance premiums. In addition, Baidu gave a glimpse of the ultimate target stage with a presentation in November 2016 of its virtual medical assistant called ‘Melody’. This technology is designed to be the first port of call for a person feeling ill at home. A patient poses a health query to Melody, which responds in real time with further questions and compares responses with Baidu’s database of medical information. All of the data gets crunched, and Melody then poses a possible diagnosis to a doctor who can recommend the next steps.

Alibaba’s ‘Ali Health’ programme is evolving into a delivery system for pharmaceutical products and exists as a selling platform. It does this by combining a large pool of pharmaceutical product data (obtained by CITIC 21CN) with Alibaba’s knowledge of e-commerce, cloud computing and big data analysis. CITIC 21CN Company Limited changed its name to Alibaba Health Information Technology Limited in September 2014. This gives Ali Health a major role in regulating healthcare products and privileged information on those very same products. However, the regulation of this area is unstable. Ali Health is developing hospital information systems (including Electronic Health Records) and an integrated billing system. The goal is to support or drive the patient in the healthcare system by improving the entire workflow and by tracking and tracing drugs and internet health services.

Turning to the Tencent group, smartphones have totally transformed the way people communicate and consume – in China more than anywhere else. A vast majority of Chinese consumers use their mobile phone, and most often the WeChat app from Tencent. This app is both a messaging and social network platform. As it is widely used for all communication purposes, it finds itself at the heart of many e-health situations. So far, regulation is insufficient to guarantee complete personal data confidentiality or to prevent the use of this data for screening purposes.

Tencent invested in DXY in 2014. This investment was aimed at exploring possible services for integration. With DXY, Tencent gets access to drug information and a connection with millions of health professionals. WeDoctor is the Tencent-backed online healthcare platform. It operates from guahao.com. This is now the largest online health platform in China.

Founded in 2010, it is an information-sharing system and its well-designed, easy-to-use online platform allows patients to access their personal calendars, local hospitals and physicians, and it helps them make appointments within minutes. With four main units focused on healthcare, cloud services, insurance and pharmaceuticals, WeDoctor now connects more than 2,700 hospitals, 220,000 general practitioners and specialists, and 15,000 pharmacies across the country. It had 27 million monthly active users as of the end of 2017.

There is also an initiative to integrate China’s official electronic ID system into the WeChat app. It started as a pilot programme by the government of Guangzhou. Similarly to Baidu’s Melody, Tencent has developed an AI named Xiaoyi that can capture and analyse patient information and help make an initial diagnosis. In 2017, Xiaoyi (which can be translated as ‘little doctor’) passed China’s written national medical licensing examination.

From this overview of the rise of the ‘Big Three’ in healthcare services, a possible future emerges. These internet giants obtain information on health and healthcare at the individual level from patients and/or medical staff including doctors. On the other side, they provide technology that allows the storage of a massive amount of information. They also provide a network of communication between consumers and providers through the use of simple apps, including the ability to make payments.  This results in a highly integrated healthcare system that can provide AI chatbots associated with doctors, online medical consultations, online prescriptions, follow-up diagnosis for chronic diseases, online speciality physician appointments, and electronic medical records.

This is a new healthcare service ecosystem where AI technology is the first line and where physical healthcare services deal with more severe problems and provide a safeguard. The vast amount of healthcare information collected can be mobilised to ensure high-quality care. Patient information is available instantaneously with all the online physicians, in some cases simultaneously. Furthermore, the remote consultation appears to offer a solution to geographical disparities in healthcare access between urban and rural areas. Healthcare prices and the care provided can be tailored according to the patient’s characteristics and financial situation. In addition, historical medical information can also be used preventatively.

Of course, this is only one potential future. There are also multiple agreements between internet companies and big private insurance firms which could lead to a slightly different model in which IT companies would remain focused on data management, leaving the actual healthcare management to insurance companies. Another potential future is a segmentation of the market according to the patient’s health characteristics and wealth.

These models promise a more efficient healthcare model in a context where a series of reforms has not been able to solve the inefficiency of the existing system. A lax view on privacy is the one condition for the development of these healthcare models. However, this question is a crucial issue, whatever the scenario. If we believe, as I do, that policymakers have to protect confidentiality for patients and healthcare personnel, this necessarily implies that the central government has to intervene. The price may be to reduce the potential efficiency of these models. That is the potential trade-off.

Dr Carine Milcent is an Associate Professor at the Paris School of Economics and is Vice-President of the Scientific Council of the Technical Agency for Hospital Information.

*Articles published by The Asia Dialogue represent the views of the author(s) and not necessarily those of The Asia Dialogue or affiliated institutions.

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