Dual Constraints in Internet Hospital Licensing: Unfamiliar Procedures and Insufficient Resources

Another wave of enthusiasm for the development of internet hospitals has arrived.

On February 26, the Beijing Municipal Health Commission issued the “Administrative Measures for Licensing Internet Hospitals,” becoming the last provincial-level region in China to release detailed implementation rules for Internet hospital market access. This marks the full liberalization of Internet hospital applications across China.

On March 23, it was announced at a press conference held by the National Health Commission that there are now over 1,100 internet hospitals across China.

However, according to incomplete statistical data, more than two-thirds of the 1,100 internet hospitals are large public institutions such as Grade A tertiary hospitals.

For grassroots medical institutions, pharmaceutical companies, pharmaceutical retail outlets, health service providers, medical device technology firms, pharmaceutical e-commerce platforms, and internet technology companies—private enterprises with strong demand for such applications—obtaining an Internet Hospital license still requires overcoming numerous significant hurdles.

“The healthcare industry is, after all, a heavily regulated sector with high standards. Private enterprises applying to establish internet hospitals must be fully prepared. Unfamiliarity with policies and approval processes, coupled with limited internal resources, are the primary reasons for the difficulty in obtaining an internet hospital license,” analyzed an industry insider.

The National Health Commission’s “Notice on Issuing Three Documents, Including the Administrative Measures for Internet-Based Diagnosis and Treatment (Trial),” imposes numerous mandatory requirements for the application and approval of internet hospitals. For example:

1. It is mandatory to develop an internet hospital operation system that complies with policy regulations. For institutions with insufficient technical R&D capabilities, this entails development costs ranging from hundreds of thousands to millions of yuan, along with a protracted development cycle.

2. Compliance with Level 3 of the Classified Protection of Cybersecurity (MLPS 2.0) is mandatory, involving multiple high-standard procedures such as security classification, filing, system construction and rectification, assessment by qualified third-party agencies, and supervisory inspections, thereby posing significant challenges to both technical development capabilities and financial resources.

3. Difficulty in integrating with provincial internet medical service supervision platforms. Taking the integration with the Guangdong Provincial Internet Medical Service Supervision Platform as an example, it requires the scheduled upload of data across four major categories comprising 44 sub-items, including information on physicians’ multi-site practice, online prescriptions, and electronic medical records. The system demands 120 consecutive hours of error-free and complete data transmission, leaving minimal room for error; any mistake necessitates a lengthy re-application process for integration.

4. Departments applying for establishment on internet hospitals must have physicians with senior or associate senior professional titles practicing within them. Compared to offline physical institutions, the standards are significantly higher, and it is particularly challenging to find qualified specialists for certain niche departments.

5. A corresponding physical medical institution must be identified as the supporting entity, and each physical medical institution is permitted to apply for the establishment of only one internet hospital; however, in practice, many physical medical institutions are often concerned about additional risks and benefit distribution issues associated with internet hospitals, making it difficult to secure suitable institutional support.

Wan Yaohua, founder of Guangzhou Yuankangjian Information Technology Co., Ltd. (hereinafter referred to as “Yuankangjian”), possesses extensive experience in applying for internet hospital licenses and has successfully secured such qualifications for nearly one hundred private enterprises, giving him profound insight into the pain points these companies face during the application process.

Regarding how private enterprises can quickly obtain approval for internet hospitals, he offered the following suggestions to VCBeat.

To quickly enter the internet hospital market and save time and capital costs, Wan Yaohua suggests that applicant enterprises with limited technical capabilities directly purchase a standardized internet hospital operation system. For instance, Yuan Kangjian invested 50 million yuan over three years to innovatively develop a general-purpose internet hospital operation system compliant with national policy regulations, which is now open for shared use in the market, aiming to collaborate with all sectors of society to promote the sustainable development of internet hospitals.

“To achieve compliance, efficiency, and security in passing the Level 3 Classified Protection of Cybersecurity, Wan Yaohua does not recommend the self-built data center model, which involves numerous assessment items, prolonged assessment periods, and high costs. ‘Applying through online cloud platforms is the preferred approach for most applicant enterprises,’ stated Wan Yaohua.”

VCBeat has learned that Yuan Kangjian, in collaboration with Huawei Technologies Co., Ltd.’s Cloud Business Unit and multiple professional MLPS (Multi-Level Protection Scheme) assessment agencies, has established the national “Huawei Cloud Internet Hospital Level 3 MLPS Service Platform.” The platform provides clients with an end-to-end service package covering classification, filing, rectification, assessment, and certification. To date, numerous clients have used this platform to reduce average assessment time by 45 days, cut the number of assessment items by 47, and lower costs by more than 40% on average.

To address the challenges of integrating with provincial internet medical service supervision platforms, Yuan Kangjian has innovatively developed a standardized compliance plugin for seamless connection to these platforms, leveraging its extensive experience in building multiple internet hospitals and under the technical guidance and coordination of the regulatory center. “This plugin is also openly shared with the market, enabling our clients to quickly and efficiently connect to the supervision platform,” said Wan Yaohua.

To address challenges such as the scarcity of high-quality physician resources and the difficulties faced by physical medical institutions, Yuankangjian has creatively developed an innovative business model based on the principles of promoting resource sharing and interoperability in the internet healthcare sector, thereby achieving a win-win outcome for all stakeholders.

Among the tens of thousands of physicians registered on the Yuankangjian platform, many senior and associate senior specialists have experience in online consultations, recognize the development prospects of internet hospitals, and demonstrate a strong willingness to engage in multi-site practice. Additionally, leveraging its extensive offline ground promotion team, Yuankangjian has identified numerous physical medical institutions willing to co-establish internet hospitals, successfully facilitating the cooperation, joint construction, and regulatory approval for the launch of multiple internet hospitals.

It is reported that Yuan Kangjian currently has a professional team of over 300 members and is assisting more than 120 institutions in applying for internet hospital licenses.