Pandemic accelerates China's shift to digital healthcare

China is set to undergo a medical industry transformation over the next decade with an accelerated shift to digital healthcare. That’s according to new research from Deloitte China. 

While the pandemic has certainly accelerated the shift to virtual care, Deloitte’s report, titled Internet Hospitals in China: The new step into digital healthcare, acknowledges that other conditions including greater public acceptance and favourable policies and sector reforms are contributing to the rapid development of China’s online hospital ecosystem. 

"As the online economy has developed, and with mindsets and business models changing due to COVID-19, new infrastructure construction and sharply growing demand for hospital transformation, it is now time for online hospitals to enter a development boom," says Jens Ewert, Deloitte China Life Sciences & Health Care Industry Leader. 

"In the next 10 years, the medical industry will undergo an unprecedented transformation with radical innovation and changes to the nature of services and processes, evolving from traditional medical services to smart health management."

As of 2020, investment and fundraising in the online hospital market hit RMB30 billion, far exceeding 2019 levels. 

Multiple factors fuelling China’s online hospitals

A number of factors are fuelling the expansion of China’s online hospitals and virtual care. 

With the emergence of the COVID-19 pandemic, over the last year or more, the Chinese public has gradually accepted online diagnosis and treatment, door-to-door medicine delivery, online payment and other services. In fact, data from the National Health Commission reveals that online consultations increased 20-fold YOY during the pandemic. 

Policies have also been introduced to promote online sales of prescription medicines and allow medical insurance payouts to online hospitals, both major moves in the opening up of the online hospital ecosystem and which form a complete closed online loop from consultation and prescription, to settlement and medicine delivery.

Implementation of further sector reforms is set to advance the establishment of level-to-level diagnosis and the overall health management system, while construction of new infrastructure, such as 5G networks, will create a conducive environment for industry development. 

"Online hospitals are set to create an internet-based closed loop covering medicine, drugs and insurance, or a Health Maintenance Organization (HMO) model,” says Yvonne Wu, Deloitte Asia Pacific and China Life Sciences & Health Care Risk Advisory Leader.

And an online HMO has plenty of advantages, from reducing medical expenses and resource waste due to the fact that it has no geographical limits and can reach more user groups. “It will also promote full-lifecycle medical services and gradually create an ecosystem that realizes the core value of smart healthcare, covering patient education, clinical service, treatment, payment and health management,” adds Wu. 

Medical services management in the spotlight

Deloitte China reveals that at the heart of online hospitals is medical services management, which covers four service types – remote consultation and treatment, remote diagnosis, after-hospital care and health management. 

Online hospitals have two main operating models - hospital + internet (online hospitals associated with offline medical institutions) and internet + hospital (separate online hospitals established by medical institutions).

And each model delivers both advantages and disadvantages in terms of resources, platform operation and technical capability, the depth and range of accessible medical information, integrity of government regulation, patient satisfaction, overall process management and medical insurance.

According to Wu, "Integration and cooperation between the two models is the ideal approach” as this not only strengthens the connection between online and offline medical institutions, but also “enables offline hospitals to leverage the internet for channel expansion”. 

She adds: “The amassment of medical resources will transform medical service processes and extend the medical ecosystem, thereby driving industry reform and innovation, as well as the equal distribution of medical resources and medical service efficiency."