CRHMS Empowers the Digital Transformation of China's Healthcare Ecosystem Through Smart Health Assurance Services

On August 28, 2021, Guoxin Health Guarantee Service Group Co., Ltd. (hereinafter referred to as “Guoxin Health”), a company listed on China’s A-share market, released its 2021 interim report, reporting a substantial year-on-year revenue increase of 32.01% and delivering an impressive performance. Notably, revenues from all three of its core business segments saw significant growth: digital medical insurance revenue rose by 34.23% year on year, digital healthcare revenue increased by 33.19%, and digital pharmaceutical revenue grew by 23.67%. Subsequently, on October 14, Guoxin Health disclosed its “Performance Forecast for the First Three Quarters of 2021,” indicating that the company’s operating revenue had risen year on year by approximately 48%.

These achievements were not accomplished overnight. In 2018, the restructured Guoxin Health unveiled its organizational architecture and formulated a strategic plan centered on “One Body, Two Wings; Dual-Wheel Drive; Digital Empowerment; and Health Ecosystem.” Current indications suggest that this development framework has gradually taken shape and begun to yield initial results.

How is this “young,” low-profile, central state-owned enterprise-controlled listed company strengthening its core engine through digital technology to empower the health service guarantee system, and what explorations will it undertake for the digital transformation of the medical and healthcare ecosystem? For the industry, exploring these questions is undoubtedly a valuable topic.

Originating in the field of medical security, Guoxin Health has built a strong reputation. However, it is, in fact, a rather low-profile enterprise. On one hand, Guoxin Health has been operating under its current name for just over three years. On the other hand, the diligent and hardworking ethos typical of a nascent enterprise has endowed Guoxin Health with its own distinct corporate spirit.

At this point, it is necessary to introduce the parent company of Guoxin Health—China Reform Holdings Corporation Ltd. (hereinafter referred to as “China Reform”), which was established in late December 2010. As a central state-owned enterprise supervised by the State-owned Assets Supervision and Administration Commission of the State Council, China Reform is the youngest among the 96 central state-owned enterprises in China.

As of the end of 2020, China Reform Holdings Corporation Ltd. had total assets of RMB 563.4 billion and net profit of RMB 16 billion, fully achieving its positioning and objectives. In 2021, in the performance assessment of central state-owned enterprises released by the State-owned Assets Supervision and Administration Commission (SASAC), China Reform received an A rating, ranking 33rd among all central SOEs.

As a core component of China Reform Holdings’ “5+1+X” business layout, Guoxin Health envisions becoming China’s leading builder of health security service systems. This ambitious goal is not merely a slogan but is grounded in decades of sustained accumulation and deep cultivation. The predecessor of Guoxin Health was Hainan Haihong Holdings, which was listed on the Main Board of the Shenzhen Stock Exchange in 1992. The company began exploring the healthcare industry at an early stage and developed and established a centralized procurement platform for pharmaceuticals and medical devices in 1999, once achieving transaction volumes amounting to hundreds of billions of yuan.

From 2009 to 2016, against the backdrop of China’s new healthcare reform, Neusoft Healthcare successively explored Pharmacy Benefit Management (PBM) and digital health insurance services. During this period, Neusoft Healthcare pioneered the “Intelligent Audit Platform for Medical Insurance Funds” and the “DRG Point System” in China. The latter was first implemented in Jinhua City, becoming the nationally renowned “Jinhua Point System,” and these achievements garnered significant attention from various stakeholders.

At the end of 2017, China Reform Holdings Corporation acquired Haihong Holdings, marking its transition from a privately owned enterprise to a state-controlled listed company. Subsequently, at the beginning of 2018, after completing adjustments to its management structure and business direction, Haihong Holdings was renamed Guoxin Health. Later, as the new leadership team formulated strategic plans, Guoxin Health advanced from its initial two stages—digital pharmaceuticals and digital medical insurance—to a third stage of development: digital health security, thereby laying the necessary groundwork for future business growth.

In 2019, the National Healthcare Security Administration officially released the CHS-DRG system. As one of the earliest pioneers in DRG-based payment reform, Guoxin Health naturally emerged as a undisputed industry leader. In the same year, Guoxin Health invested in Shenzhou Medical, which focuses on precision medicine, and acquired a stake in Pukang Health, a comprehensive professional health management enterprise, thereby further optimizing its industrial portfolio.

The sudden outbreak of the COVID-19 pandemic in 2020 highlighted certain weaknesses in China’s healthcare industry. To address these shortcomings, state-owned enterprises (SOEs), represented by Guoxin Health, began to strengthen the infrastructure for health services. In 2021, Guoxin Health invested in Yiyong Technology, a company renowned for its oncology big data and single-disease quality control, which undertook the construction of the National Oncology Database. Additionally, Guoxin Health acquired a stake in Zhongzi Medical, an enterprise guided and supported by five national ministries and commissions, tasked with the critical responsibility of building a national platform for emergency medical and pharmaceutical supply assurance.

Currently, Guoxin Health has become one of the core supporting enterprises for national comprehensive healthcare security management services, providing third-party information technology services to the National Healthcare Security Administration and the National Medical Products Administration. Its “National Healthcare Payment and Settlement (DRG) Big Data Supervision Service System” project was also selected as a pilot demonstration project for big data industry development by the Ministry of Industry and Information Technology in 2020.

To date, Guoxin Health’s business has covered 190 medical insurance pooling areas across China, serving more than 200,000 designated medical insurance institutions, managing medical insurance funds exceeding RMB 1 trillion, and providing services to over 620 million medical insurance enrollees, thereby achieving comprehensive refined management services for medical insurance. The 32.01% year-on-year revenue growth reported in its 2021 interim report further demonstrates that, at the outset of the 14th Five-Year Plan period and in a new stage of its own development, Guoxin Health is reaffirming its strategic goals and making substantial progress toward becoming a “leader in digital medical insurance, a pioneer in digital pharmaceuticals and digital healthcare, and an innovator in internet-based health security services.”

After years of development, Guoxin Health has established a “One Body, Two Wings” business layout: with digital medical insurance as the core, and digital healthcare and digital pharmaceuticals as the two wings. The company is building an internet-based health security service platform and ecosystem, exploring new business models driven by the coordinated linkage of healthcare, pharmaceuticals, and medical insurance (“Three Meds”), and creating a “comprehensive industrial chain complex for the greater health ecosystem,” striving to become a leading builder of health security service systems in China.

Digital health insurance is the core business of Guoxin Health. The 2021 interim report showed that this segment accounted for as much as 66.2% of Guoxin Health’s revenue during the same period. Behind this, the pivotal role of digital technology as a core engine cannot be overlooked.

Guoxin Health possesses a self-developed, millisecond-level intelligent audit engine for medical insurance. By leveraging its proprietary accumulation of China’s most comprehensive and largest clinical knowledge base in medicine and pharmacy, the system conducts rapid, standardized, and compliant automatic audits of medical expense details on a claim-by-claim and item-by-item basis, guided by digital audit rules. Furthermore, by integrating technologies such as biometric recognition, image analysis, big data analytics, and artificial intelligence, Guoxin Health facilitates the construction of an integrated regulatory information collection platform and establishes a credit evaluation system for medical security. This enables intelligent auditing, big data-driven anti-fraud measures, and credit-based supervision of medical insurance fund regulation, thereby providing synchronized empowerment for the National Medical Products Administration to deepen reforms in the review and approval system and drive regulatory innovation.

Technological applications rely on policy support. Under the top-level design of “healthcare insurance payment method reform,” Guoxin Health pioneered the implementation of a DRG/DIP healthcare insurance fund payment management platform in China, and has continuously optimized third-party services for precise payment and big data-driven intelligent monitoring. Currently, it serves over 620 million insured individuals across more than 190 pooling areas in 26 provinces throughout China, involving a total healthcare insurance fund pooling scale exceeding RMB 1 trillion.

Technological innovation knows no bounds. By continuously refining its product portfolio and shaping customer demand, Guoxin Health has strategically advanced in the field of medical insurance informatization. It pioneered a modular outpatient APG payment solution, becoming the only service provider in China capable of delivering a comprehensive solution that covers the entire spectrum from inpatient to outpatient care through “DRG + DIP + APG.” Furthermore, it has achieved dynamic big-data monitoring across the entire fund payment process, further solidifying its position as a leader in third-party medical insurance services.

In addition to the “One Core,” digital healthcare, as one of the “Two Wings,” is also gaining momentum and is becoming a key component of Guoxin Health’s business layout.

Under the goal of high-quality development in public hospitals, Guoxin Health’s digital healthcare business closely follows the National Health Commission’s implementation strategy focused on “strengthening hospital economic management.” Leveraging its robust medical data service capabilities accumulated in the field of health insurance DRG/DIP, the company has established a comprehensive smart operational management system encompassing service quality, refined operations, and lean management. It has achieved significant results in improving the quality of hospital medical record data, standardizing medical process management, and implementing refined management of in-hospital disease groups (DRG/DIP). By providing multidimensional and balanced technical support for the refined management and effective utilization of core resources—including personnel, finances, materials, and technology—it effectively enhances hospital operational efficiency and return on investment, thereby stimulating the internal drive for improving modern hospital management capabilities.

Currently, digital healthcare services have expanded to more than 70 cities across over 25 provincial-level administrative regions, serving more than 500 hospitals. Among these, over one-tenth of the hospitals have implemented refined management solutions based on Diagnosis-Related Groups (DRG).

In the future, Guoxin Health will further optimize the service functions of its regional medical service quality supervision platform and enhance its regulatory capabilities for internet hospitals to meet the growing demand for online healthcare services.

As the foundational business spanning the entire evolution from Haihong Holdings to Guoxin Health, the Digital Pharmaceutical Business is guided by “Digital Drug Regulation” and “Internet+ Drug Supervision.” Leveraging data on “two products and one device” (drugs, medical devices, and cosmetics), it integrates digital technologies with core regulatory frameworks such as the “Two Laws and Two Regulations” for drug supervision. This innovation has enabled service aggregation across the entire chain—from pharmaceutical manufacturers to pharmacies and patients—establishing a network covering over 200,000 designated institutions, characterized by “comprehensive coverage, end-to-end linkage, and full-process management.”

Meanwhile, by innovating service delivery through informatization, digitalization, and intelligence, it continues to explore the establishment of an online-offline integrated drug regulatory model characterized by comprehensive business coverage, in-depth application, interconnected perception, agile services, and open sharing, thereby serving as a key participant and strong driver in the digital transformation of drug regulation.

Currently, Guoxin Health has established strong partnerships with 23 provincial-level drug administrations. In support of the National Medical Products Administration’s deepening reforms of the review and approval system and regulatory innovation, the company has developed an intelligent engine based on key criteria for the review of drugs and medical devices. It has pioneered digital solutions for drug regulation, as well as for the supervision and traceability of vaccine and high-risk product manufacturing, achieving steady growth through a pragmatic and step-by-step approach.

Beyond its three core business segments, Guoxin Health continuously refines its innovative product design, focuses on industry and technological frontiers, accumulates data resources and technical capabilities, and accelerates the incubation, research, and development of innovative products and technologies. Through internal incubation (chronic disease management platform, prescription outflow platform, insurance service platform, and insurance payment and claims services) and external investment and equity participation (Shenzhou Medical, Pukang Health, Yiyong Technology, and Sinomed Healthcare), the company leverages the opportunities presented by 5G and big data to explore new scenarios empowered by innovation. By engaging in deep collaborations with enterprises and research institutions such as Huawei, Miao Health, and Tsinghua University, it establishes technology-driven connectivity points for the coordinated linkage of healthcare, medical insurance, and pharmaceuticals (“Three Medicals”), thereby promoting collaborative governance through digital capabilities.

In the areas of core knowledge systems, data management systems, and talent support systems, Guoxin Health has also established its own core competitiveness. In terms of a comprehensive and professional knowledge system covering healthcare, medical insurance, and pharmaceuticals (the "Three Medicals"), Guoxin Health has developed a specialized knowledge base containing over 2.9 million entries, while its database of regulatory rules for medical insurance fund supervision has reached a volume of 86.07 million records. Meanwhile, regarding its talent support system, Guoxin Health boasts a clinical professional team in which 74% hold titles of attending physician or above, and approximately 65% of its standard data team members are certified as licensed physicians or licensed pharmacists.

Since 2020, the sudden outbreak of the COVID-19 pandemic has swept across the globe, bringing unprecedented difficulties and challenges to China’s economic and social development as well as people’s lives. State-owned enterprises have become the “stabilizer” and “ballast stone” of the national economy.

Meanwhile, the United Nations’ Digital Economy Report 2019 points out that China has become one of the world’s largest digital economies, ushering in a golden age for both the industrialization of digital technologies and the digital transformation of traditional industries. On the other hand, during this transition, common bottlenecks persist, such as data silos that hinder the formation of synergistic capabilities for “one-network processing, multi-network integration, cross-network interoperability, and unified network management,” as well as significant deficiencies in security guarantees across the entire industrial and supply chains.

As the backbone and national team of China’s economic and social development, state-owned enterprises (SOEs) must unhesitatingly leverage their comparative advantages in tax contributions, GDP generation, employment, and their ability to drive the growth of other types of enterprises, continuing to serve as pioneers in high-quality, innovation-driven development.

Guoxin Health aligns itself with national and industry needs by following the main developmental trajectory. Leveraging digital, networked, and intelligent tools and engines, it refines data depth and strengthens the “data foundation” to provide the most competitive comprehensive solutions for medical insurance, healthcare, pharmaceuticals, and other sectors. Building on its vast accumulated data, cutting-edge technologies, and business models, the company continuously explores new formats of coordinated development among medical insurance, medical services, and pharmaceuticals (“Three-Medical” linkage), striving to be a pioneer in innovating internet-based health assurance services and committed to creating an “integrated comprehensive ecosystem for the broader health industry.”

According to publicly available information, at the 2021 Conference on Digital and Intelligent Development of Pharmaceuticals hosted by the Information Center of the National Medical Products Administration (China Food and Drug Regulatory Data Center) in late September, Li Yonghua, Assistant General Manager and General Counsel of China Reform Holdings Corporation, as well as Deputy Secretary of the Party Committee and General Manager of Guoxin Health, delivered a keynote speech. He provided a detailed introduction to Guoxin Health’s specific initiatives in developing a series of digital and intelligent application services for drug regulation. These initiatives include the continuous development, operation, and improvement of new capabilities; the establishment of informatized, standardized, and international registration and filing services; the creation of digital credit-based regulation; the construction of a broad-scope, multi-level “Big Data + Credit” service model; and the establishment of regulatory big data for the coordinated linkage among medical care, health insurance, and pharmaceuticals (“Three-Medical Linkage”), thereby promoting collaborative governance of drug safety.

One leaf heralds autumn; the small reveals the large. This traceable and quantifiable integrated service pathway for the coordinated development of healthcare, medical insurance, and pharmaceuticals enables Guoxin Health’s products and services to become as indispensable as utilities—water, electricity, and gas—within the entire healthcare sector. It continuously releases substantial momentum into the new medical ecosystem, energizing the iterative drive of industry development, with a commitment to building a “comprehensive industrial complex for the big health ecosystem.”

From 1992 to 2021, Guoxin Health, entrusted by the nation and its times, has cascaded strategic directives from the top down along the main framework of China Reform Holdings Corporation (CRHC), empowering the healthcare sector, radiating influence across the industry, and taking deep root in the fertile soil of social welfare and public livelihood. As a central state-owned enterprise tasked with serving as a mainstay in building comprehensive management services for medical insurance funds, medical quality and safety services, and drug and medical device regulatory services, Guoxin Health enhances data governance efficiency through integrated innovation and strengthens its core engine driven by digital technologies. Its data intelligence capabilities are widely applied in various scenarios, including regulatory governance by industry authorities, improvement of medical quality and safety and hospital operational efficiency, and industrial digitalization. In contributing to the digital transformation of China, Guoxin Health promotes the precise allocation and efficient matching of information, technology, and production capacity, while exploring the construction of a diversified and collaborative industrial ecosystem.