New Marketplace
China’s Health Care: Public Benefit, Enormous Scale (17:12)

“China is a country of remarkable asynchronies,” says David Cook, Chief Clinical Officer for Jiahui Health in Shanghai. “No country or people in human history has advanced so far, so fast. In banking, in mobile communication, in infrastructure, in transportation, and in many consumer services China leads the world. [But while] parts of its development have raced ahead, other parts lag significantly behind.”

About 95% of health care in China is delivered by the government, according to Cook, and development of health care in China has been constrained for many reasons. “Health information management lags, and if health information management lags it’s difficult to continuously improve,” Cook says. Many patients get their medical records on paper from vending machines in the public lobbies of large hospitals and carry them from doctor to doctor. Licensure requirements, which are complex and often ambiguous, are another barrier to improved health care. Because sources of income for physicians and hospitals are complex and potentially maladaptive, there are multiple layers of governmental decision-making at the national, provincial, city, and district levels.

Hospital governance is a mix of political government and health care administrators. State-controlled enterprises manage many aspects of the health care supply chain, and there are constraints on scope of practice. Incentives for providers to change are limited or there are few opportunities, and initiative may not receive reward or decision makers can be risk-averse. The governmental health care system carries the weight of bureaucracy and receives little benefit from the refining and evolutionary forces of competition.

“While the casual observer may find the operating conditions of Chinese health care incomprehensible, it’s important to realize that the operation of Chinese health care is a response to massive demand and limited resources, and the goal is to deliver public benefit at an enormous scale,” says Cook. “Understanding the regulatory environment requires appreciation of the Chinese context.”

Cook, from the U.S., came to Shanghai 3 years ago to help launch a private hospital system. Upon arrival, he saw the regulatory environment burdensome and obscure. Since then, he’s learned that modern China, since Deng Xiaoping, “is really very new” and that health system growth and demand for services have outpaced the development of internal and external management systems. “Under such conditions, to protect the public there is prudence in keeping one’s foot on the brake,” he says.

“For all its faults, health care in the West is dynamic, maturing, and changing due to the interplay of providers, of payers, of consumers, of government, of private enterprise, and competition,” says Cook. “By contrast, management and regulatory systems in China are often playing catch up and can be reactive, sometimes defraud, and public outrage. The immature state of management and regulation in China is exemplified in repeated scandals in consumer safety. From food products, like adulterated milk a number of years ago, to dangerous treatments, to counterfeit drugs, and most recently in vaccines.”

A 2018 article in the South China Morning Post reports that one of China’s biggest vaccine makers was found to have systemically manipulated data and produced substandard vaccines given to hundreds of thousands of babies. “What’s more notable about the story is not that it happened, but what the article identified as missing,” says Cook. In the wake of the scandal, a law was drafted for China’s National Medical Product Administration to require companies to build a sound quality management system, a product tracking system, and risk-reporting mechanisms including a process for inspection and approval of vaccines as safe and effective for use. “The systematic management of many aspects of health care delivery, which we in the West take for granted, are simply immature here,” he says.

At the same time, enormous demographic changes in China over the past couple of decades have destabilized its health care system. Aging, chronic disease, and rural to urban migration have added about 500 million individuals to an already stressed system. In a country of 1.4 billion, liberalization of the public health insurance benefit now provides basic coverage to 95% of the population, greatly exceeding benefits in the United States. And the Chinese experience in areas like banking, transportation, and consumer services is terrific, meaning that hundreds of millions of people who’ve moved into the middle class are becoming informed consumers and demanding more of health care. “All of this describes explosive increases in demand for services,” Cook says.

But there are also historic capacity limitations. According to Cook, China has about 40% fewer physicians per capita than in the West, and only about 15% of physicians have degrees that parallel the training of their Western counterparts. Primary care is poorly developed, and care is fragmented. Patients go directly to specialists and seek care at large academic teaching hospitals because that’s where the best doctors, equipment, and most advanced formularies are. There are also shortages of nurses, and paramedical providers — core assets for amplifying care delivery in the West — are practically nonexistent. Check-in queues at large public hospitals are overcrowded, as are waiting rooms after check-in. “The system is at its breaking point,” says Cook.

Between 2011 and 2016, visits at the top-ranked 3A hospitals increased 93%, and many of these 3A hospitals are seeing 5,000 to 10,000 patients per day, according to Cook. A general pediatrician commonly sees 130 patients per shift, about one every 3 minutes. A pediatric oncologist interviewed by Jiahui said that people travel across the country to bring a child with cancer to Shanghai, where they wait for many hours for the pediatric oncologist to spend only 5 or 6 minutes with the family.

“The system is designed for throughput to deliver the public benefit, not to deliver patient-centered care,” says Cook. “If you have a sick child or a sick wife, you’re afraid, you may be desperate, and frustration combined with fear has led to distrust and to violence.”

In 2008, the average large Chinese hospital experienced about 20 assaults on its physicians per year — that number rose to 27 in 2012. “It has been so bad that patient violence against providers even has its own word in Chinese,” Cook says.

Both patients and providers are protesting the conditions of care, and China is working to respond to the challenges in both supply and demand. “China’s policy and reform efforts of the last 2 decades dwarf what was done in the United States with the Accountable Care Act for its scope, its depth, and its commitment,” Cook says. The People’s Republic of China is addressing corruption and kickbacks, drug costs, and availability. It’s trying to develop a primary care system, including family medicine training, is increasing the duration of physician training, and is supporting the development of community health centers and tier 2 hospitals trying to move patients to lower-acuity environments. This parallels what the United States has been doing for 15 years.

The PRC is allowing for private hospitals, like Jiahui, as experiments and as examples. It’s promoting the development of private insurance, is increasingly introducing hospital performance measures, and is conducting provincial experiments in funding and care delivery that have some parallels to U.S. capitation models.

“Even in China, where change happens blazingly fast, some of this will take too long. It may take 15 years to completely implement a new generation of primary care doctors. It’ll take more than a decade to change how consumers utilize traditional health care services. And it’s enormously difficult to reform a delivery system that has to continually operate while delivering 8 billion visits a year,” says Cook. “This is like trying to rebuild a plane while it’s in the air.”

“However, this is China,” Cook adds. He explains that entrepreneurs are responding, creating, and testing technology solutions to help scale care for 8 billion visits, and that artificial intelligence (AI) and natural language processing (NLP) are evolving rapidly in China and now have more patent applications than the United States. In a February 2019 Nature Medicine article, for example, Chinese and American investigators report the successful diagnostic application of AI and NLP in a dataset of 1.4 million children. Additionally, mobile platforms have hundreds of millions of users and tens of thousands of doctors where patients can ask a question for only a few dollars.

“While AI and mobile health are presently superficial offerings, much of primary care is sore throats, rashes, routine follow-up, back pain, and headache,” explains Cook. “So, like mid-level providers in the U.S. and allied health professionals who have greatly expanded the capability to provide lower-acuity primary care, the tech solutions operating and evolving in China will function the next layer down offering the lowest-acuity care on an enormous scale.”

Still, as a single-payer health care system where health care is a public right and there are 1.4 billion people to care for, “China must proceed cautiously,” says Cook. “With ongoing demographic changes, health care costs will be explosive if there is too rapid a liberalization of expensive offerings.”

Perhaps China can take some lessons from the West. Cook notes that the U.S. has decades of experience addressing some of China’s challenges, including some progress in managing rural-urban care disparities. The U.S. is working to harness its cost growth, is introducing and constantly testing new payment models, has broadly implemented quality and performance measures, and has seen success in redistributing care from high-acuity to low-acuity environments.

Of course, the learning goes both ways. China will outpace the U.S. in large segments of health care innovation, has larger databases and lower privacy constraints, and is making enormous strategic investments in AI, med tech, and pharma. The country benefits from a well-capitalized private sector and entrepreneurial culture willing to risk in experiments, and from a stable, consistent political willingness.

“I expect the Chinese physician-patient online platforms will evolve into world-leading mobile health services,” says Cook. “A mother types into her phone, ‘My baby has a cough. What should I do?’ NLP reads the question and initiates the first step in the diagnostic algorithm: ‘How old is your baby?’ In this scenario, there’s no physician.”

“After 3 years in this remarkable country, it’s evident that China has the goal, the means, and the commitment to change health care,” Cook concludes. The goal: to provide primary care for 1.4 billion people. The means: health care spending is 5% of the country’s GDP, about one-third that of the United States; there is room for rational, well-planned growth, along with consumer-driven mobile health technologies and other innovations that could potentially pick up 3 billion annual visits. The commitment: China policy and investment are set and executed strategically over decades.

“Combining these forces, I expect that China will disrupt the health care stack and teach the world how to offer primary care at scale.”

From the NEJM Catalyst event China’s Changing Health Care: Global Lessons at Scale, held at Jiahui Health in Shanghai, April 25, 2019.

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