Ping An Healthcare Pioneers China's Managed Care Model with Strategic Focus on F-End and B-End Markets

Recently, medical insurance enrollees in Dongguan and Guangzhou have discovered that when purchasing medications on the Ping An Healthcare APP, they can choose to pay using their medical insurance fund simply by linking their electronic medical insurance card.

Moreover, Guangzhou’s online medical insurance pharmacy service not only supports payments from both the pooled fund and personal accounts but also offers access to thousands of medications listed in the local medical insurance directory. This is merely the beginning of Ping An Healthcare’s rollout of online medical insurance pharmacy services in an increasing number of cities across China.

For insured residents, Ping An Healthcare’s initiative not only further enhances the convenience of purchasing medications online but also alleviates their financial burden to a certain extent. For Ping An Healthcare, the successive launch of online medication purchase services covered by basic medical insurance reflects, on one hand, its active implementation of national policies regarding internet-based healthcare and medical insurance payments; on the other hand, it serves as a microcosm of its continued advancement of a “user-centric” managed care model.

In recent years, as the basic medical insurance fund has faced mounting pressure and demand for multi-tiered healthcare services has continued to expand, managed care—which optimizes clinical outcomes while keeping medical costs controllable—has emerged in the view of many industry experts as the future trend for health insurance and even the broader healthcare sector, attracting numerous enterprises to enter this field.

Ping An Healthcare is one of the earliest companies in China to explore the localization of managed care.

In 2016, Ping An Group proposed the “Ping An 3.0 Era” development strategy, emphasizing its goal to become an “internationally leading provider of personal financial and lifestyle services” and focusing on strategic layout in “major financial assets” and “the major health and medical industry.” As the primary executor of Ping An Group’s “Major Health Industry” strategy, Ping An Healthcare is mainly positioned to connect multiple stakeholders, including hospitals, users, insurance payers, and service providers, thereby forming an open internet-based healthcare service ecosystem. This marks the nascent stage of Ping An Healthcare’s managed care model.

In October 2021, Ping An Healthcare launched its Managed Care 2.0 strategy, establishing a new model of “managed care + family doctor membership + O2O medical and health services” to continuously promote the localization of the managed care model in China.

More than two years on, Ping An Healthcare’s 2023 annual report reveals that its 2.0 strategy has yielded initial results—not only did the full-year gross profit margin reach a five-year high, but the net loss also narrowed significantly by 47.6% year-on-year—bringing Ping An Healthcare closer to profitability than ever before.

This inevitably sparks curiosity: although managed care has a long history and represents a developmental consensus within the health insurance industry and even the broader healthcare sector, it has frankly struggled to take root in China. Not only is consumer awareness limited, but the financial performance of related companies has also been underwhelming. So, what exactly has Ping An Healthcare done right to achieve substantial progress—and even impressive phased results—in implementing managed care?

Before answering this question, we need to clarify another issue—what exactly is managed care?

According to the American Health Insurance Association, managed care is a “system that integrates financing and the delivery of appropriate medical services”; the Congressional Budget Office defines it as “service and financing methods used to reduce unnecessary and inappropriate medical services.”

Although there is no unified definition of managed care within the industry, the key elements it reveals are largely the same: “financing mechanisms” and “medical resources.”

Among these, “financing methods” mainly refer to government medical insurance and commercial health insurance. Specifically in China, since basic medical insurance has a strong characteristic of "providing fundamental coverage," the financing methods for domestic managed care are mostly commercial health insurance. The commercial health insurance market can be further divided into critical illness insurance, million-yuan medical insurance, individual insurance, group insurance, etc., according to different classification criteria.

However, within the context of managed care models, discussing the “financing mechanism” essentially aims to identify the optimal payer. In the early stages of implementing managed care, a significant number of companies chose to directly target the consumer market, treating end-users as the payers.

However, due to the Chinese public’s limited understanding of and lack of trust in managed care services, end-users currently do not exhibit a strong willingness to pay. Coupled with the high customer acquisition costs in the consumer market, end-users are not the optimal payers for the managed care model.

This has led Ping An Healthcare to ponder: Is there a way to both accelerate the implementation of the managed care model in the Chinese market and cultivate C-end users’ usage habits, thereby establishing trust?

The answer lies in Ping An Healthcare’s adjusted strategy since 2021—prioritizing the F-end and B-end markets at the current stage.

The primary underlying reason is the sustained growth in health management demand within the B2B market, coupled with a strong willingness to pay. According to the “2023 White Paper on Corporate Medical Health Management in China,” “demand for corporate health management is on the rise, particularly among central state-owned enterprises, local state-owned enterprises, foreign-funded enterprises, and large private enterprises, where employee health benefits have become a critical component of human resource management.”

Moreover, Ping An Healthcare possesses inherent genetic advantages in developing managed care solutions for the F-end market. Leveraging Ping An Group’s extensive client base in the financial and corporate sectors, Ping An Healthcare can rapidly penetrate both the F-end and B-end markets.

However, it is important to emphasize that this does not mean Ping An Group is the sole customer acquisition channel for Ping An Healthcare, nor does it imply that Ping An Group’s empowerment of Ping An Healthcare is a one-way provision. On the contrary, Ping An Healthcare has been continuously accumulating experience and expanding its independent channels. “Part of the performance demonstrated in 2023 is precisely the result of independent expansion efforts undertaken in 2022.”

Furthermore, the professional and high-quality healthcare services provided by Ping An Healthcare not only further enhance user stickiness and brand recognition for Ping An Group’s financial and insurance products, but also transform low-frequency financial services into high-frequency healthcare services, thereby increasing customer repurchase rates. This signifies a mutual empowerment between Ping An Healthcare and Ping An Group.

For Ping An Healthcare’s own development, shifting its service target (i.e., the choice of payers) has also helped it identify a direction for implementing managed care in China. Moreover, bolstered by its numerous distinctive strengths, Ping An Healthcare has achieved phased results in the local implementation of its managed care model.

Customer-centricity, by delivering the healthcare management services that clients truly desire, is another hallmark of Ping An’s managed care model and a key factor behind its phased achievements.

Specifically, for F-end clients, Ping An Healthcare not only provides online and offline one-stop, 7×24-hour proactive medical and health management services to customers of Ping An Group’s integrated financial businesses, such as commercial insurance and banking, but also engages in innovative business activities—including product integration, rights and benefits procurement, and value-added services—through collaborations with life insurance, property and casualty insurance, health insurance, and banking sectors, tailored to the user profiles and medical health needs of different financial business lines.

As a result, the number of paying corporate clients (B-end) for Ping An Healthcare increased to 26.3 million in 2023, representing a year-on-year growth of 6.7%, while the average revenue per user (ARPU) rose by 7.5% year on year.

As for the B2B market, by the end of the reporting period in 2023, Ping An Healthcare had served 1,508 corporate clients, an increase of 530 from the same period last year; the number of paying users for its B2B strategic business exceeded 5.1 million, representing a year-on-year growth of 75.0%. Further breakdown shows that there were 895 corporate clients for the “Health Checkup+” service, with a cumulative year-on-year increase of 53.3%; and 696 corporate clients for the “Health Management+” service, with a cumulative year-on-year increase of 49.7%. In addition, the number of dual-service clients subscribing to both “Health Management+” and “Health Checkup+” reached 147, reflecting a cumulative year-on-year growth of 28.9%.

The significant growth in Ping An Healthcare’s corporate health management business is inseparable from the strategic development plan formulated by the company. Overall, Ping An Healthcare broadly categorizes corporate health management needs into two segments: medical checkups and health management, thereby iteratively developing two major solutions: “Checkup+” and “Health Management+.”

Among these, “Health Checkup+” primarily creates an innovative model for employee health screenings by offering value-added services such as customized checkup packages, corporate group examination reports, and end-to-end consultation and guidance from health physicians. “Health Management+” provides employees with multi-channel medical access, including online consultations, offline medical visits, and services from renowned specialists, while also customizing products such as psychological Employee Assistance Programs (EAP) and corporate infirmaries to meet enterprise needs, thereby comprehensively safeguarding corporate health.

Meanwhile, Ping An Healthcare provides tailored health management solutions for corporate clients of varying scales. According to Li Dou, CEO of Ping An Healthcare, “Large enterprises often span multiple cities and have a substantial employee base; therefore, our strength lies in delivering comprehensive health management services to such organizations. In contrast, local small businesses typically operate with more limited budgets, requiring more concrete and targeted services. This demands strong product synergy and accumulated service resources, enabling us to rapidly and adequately meet the diverse health service needs of different enterprises.”

Li Dou’s remarks highlight two key factors behind the phased achievements of Ping An Healthcare’s managed care model: the accumulation of service resources and collaborative capabilities. These correspond precisely to one of the critical elements for implementing managed care mentioned earlier—“medical resources”—which happens to be one of Ping An Healthcare’s core strengths.

Nearly 4,000 partner hospitals, over 2,000 partner physical examination institutions, 226,000 partner pharmacies, and 103,000 partner health service providers; the one-hour medication delivery network has covered 271 cities...

From medical care to health checkups, and from health management to pharmaceutical services, Ping An Healthcare has accumulated substantial medical resources. This has laid the foundation for Ping An Healthcare to fully meet customers’ healthcare needs.

However, the sheer scale of resources only signifies the capacity to meet diversified market demands; it does not guarantee the efficient fulfillment of customer needs. In other words, within the extensive resource network required by a managed care system, a mechanism must be established to ensure its efficient operation.

In response, Ping An Healthcare has established two key roles—family doctors and elderly care managers—and positioned them as the two core hubs of its medium- to long-term development strategy.

Specifically, Ping An Healthcare launched its flagship medical and health service brand, “Ping An Family Doctor,” which integrates resources for “family doctors, renowned specialists, specialized physicians, and hospital care” through a single family doctor portal. This model enables “rapid consultation for minor ailments, standardized management of chronic diseases, and precise referral for serious conditions,” delivering high-quality, convenient healthcare experiences to users.

As for the elderly care steward, it is a role established by Ping An Healthcare based on its judgment of industry trends in recent years. In the view of Ping An Healthcare, the elderly care industry is becoming the focus of attention from all sectors of society and is expected to become a new business growth pole for the company in the future.

In response, Ping An Healthcare has joined forces with Ping An Life Insurance to create a “comprehensive oversight system” centered on ten key scenarios: “medical care, diet, housing, transportation, finance, wellness, elderly care, recreation, protection, and safety.” By integrating this system with a “triune” model comprising an intelligent assistant, a lifestyle manager, and a physician concierge, the companies provide elderly individuals with a one-stop, high-quality home-based elderly care solution.

Whether it is the significant move into the elderly care industry or the incremental service of launching online medical insurance drug purchasing services across China, as mentioned earlier, these efforts demonstrate that Ping An Healthcare has not halted its exploration of implementing a localized managed care model in China. Ping An Healthcare’s journey to establish the managed care model in China will not stagnate due to the achievement of phased results.

In contrast, for Ping An Healthcare, which has navigated the managed care landscape for many years, repeated positive market feedback and numerous cases of customer benefit have been motivating the company to move forward with greater determination, clarifying its development direction and strategy. In 2024 and beyond, we believe that not only will Ping An Healthcare continue to deliver pleasant surprises, but managed care will ultimately benefit a broader population, achieving true localization in China.