The Key Innovation of China's New Healthcare Reform: How Digital Health Eases Access and Affordability
Renowned historian Harold Evans summarized in his book They Made America: “Scientists explore and discover, inventors seek solutions, and innovators work to popularize those solutions.”
With the widespread adoption of the internet, a growing number of entrepreneurs have leveraged technological and business model innovations to drive significant improvements in people’s daily experiences across clothing, food, housing, and transportation. As one commentary noted, if a sector is ripe for profound transformation by the internet yet remains unchanged for various reasons, that sector represents a prime opportunity for internet-based enterprises.
Internet Healthcare Gains Momentum AgainRecently, internet healthcare has once again become a hot topic. Since China launched a new round of healthcare reform in 2009 with the goal of addressing the problems of “high medical costs and difficulty in accessing care,” many entrepreneurs and innovators have turned their attention to this field. Faced with thorny challenges such as uneven distribution of medical resources, limited payment options, and risks associated with chronic disease management, the development goals of internet healthcare are clear: by connecting and empowering the supply side of medical resources, it aims to reduce the need for patients to make multiple trips for medical care, enhance convenience, and enable broader public access to high-quality medical resources. Although this is an extremely serious and closed industry, the past decade has seen a “spark” ignite: innovative approaches such as internet hospitals, online diagnosis and treatment, and artificial intelligence have rapidly iterated, upgraded, and been widely implemented.
After more than a decade of development, an increasing number of enterprises have accurately identified user pain points and value through innovation. In the same year that China’s new healthcare reform was launched, Taobao’s “Double 11” shopping festival made its debut on the internet stage. Today, online shopping has become an indispensable part of daily life, with the online penetration rate of consumer retail exceeding 25%. Although the digitalization of healthcare has progressed more slowly, internet healthcare companies have never ceased their innovative explorations. Particularly accelerated by the pandemic in 2020, the general public has become increasingly accustomed to consulting physicians, receiving diagnoses, and purchasing medications through internet hospitals. The business models of industry pioneers and explorers such as Alibaba, JD.com, and WeDoctor have been gradually validated, and these companies have either already entered or are poised to enter the capital markets.
In 2005, Xinhua News Agency published an article titled “The Whole Nation Flocks to Peking Union Medical College Hospital,” exposing the reality of overcrowding at major hospitals. Years later, the situation has shown no significant improvement. According to Frost & Sullivan, among China’s 34,000 hospitals, tertiary hospitals account for only 8%, yet these institutions handle more than 50% of all outpatient visits nationwide, further exacerbating the already uneven distribution of medical resources. Despite years of healthcare reform, many citizens still find medical care expensive and difficult to access; it remains common for patients to wait three hours in line at large hospitals only to have a three-minute consultation. Residents in remote areas face even greater challenges in accessing high-quality medical resources.
In 2010, spurred by internet technology, numerous companies entered the healthcare sector, addressing users’ most basic needs: shorter wait times and more convenient access to medical care.
Now, when patients know which department to visit, they can directly check doctors’ consultation schedules online and book appointments. If they are unsure about which department or doctor to see, they can input a description of their symptoms on the platform to receive matched recommendations. They can then choose either an online consultation with a doctor or schedule an in-person visit, thereby avoiding the pitfall of “seeking medical help in desperation without proper guidance.”
This precise matching and recommendation capability is underpinned by big data and artificial intelligence. Taking WeDoctor, a pioneer in online appointment registration, as an example, the platform primarily provides appointment services by connecting to hospitals’ Hospital Information Systems (HIS) or public appointment pools. To achieve precise recommendations, WeDoctor has developed a tagging system encompassing more than 840,000 labels covering diseases, medications, symptoms, hospitals, and other categories. Leveraging an AI-assisted triage system, it accurately matches user needs with appropriate physicians. Upon user authorization, electronic health records can be generated to help monitor and improve users’ health status. Publicly available information shows that as of December 31, 2020, WeDoctor had connected with more than 7,800 hospitals across China and provided approximately 90 million appointment registration services.
In 2015, the new business model of internet hospitals emerged. The establishment of Wuzhen Internet Hospital, the first internet hospital in China, set off a wave of internet hospital development. Since then, China’s digital healthcare has penetrated into the core of medical services, integrating multiple service loops and evolving into a comprehensive suite of services that includes online appointment scheduling, follow-up consultations, electronic prescriptions, medication dispensing, and health insurance payment.
The aforementioned innovative services played a significant role during the pandemic. Faced with the sudden outbreak, most offline medical institutions shouldered the critical responsibility of epidemic prevention and control, while users’ daily healthcare needs urgently required attention. In response, companies such as WeDoctor and AliHealth stepped forward to provide “aerial support.”
During the pandemic, users could consult doctors online for free through various professional platforms. In addition to seeking medical advice for symptoms such as nasal congestion and coughing, individuals experiencing anxiety or stress related to the pandemic could also consult psychologists online. In Wuhan, the epicenter of the outbreak at its most severe stage, WeDoctor integrated internet hospital services with medical insurance coverage to ensure that patients with chronic diseases requiring long-term, regular medication could obtain their prescriptions. This enabled some chronic disease patients to complete follow-up consultations, receive prescriptions, and make payments online, with medications delivered directly to their homes.
According to data from the National Health Commission, the volume of online diagnosis and treatment services provided by third-party platforms in 2020 during the pandemic increased approximately 20-fold compared to the same period in 2019.
To meet users’ daily medication needs, Dingdang Medicine Delivery, Meituan Medicine Delivery, and large pharmacy chains have leveraged their delivery advantages to provide home delivery services for over-the-counter (OTC) drugs within 30 minutes, rapidly accelerating the digitalization of pharmaceutical retail.
Under the pressures of population aging and rapid urbanization, chronic diseases such as cardiovascular disease, cancer, and mental disorders have become the primary health threats to the Chinese population. Public expectations for healthcare services have gradually evolved from single-disease treatment to comprehensive health management. The Healthy China Strategy also proposes a shift from being “disease-centered” to “health-centered,” aiming to strengthen chronic disease prevention and control, reduce the disease burden, and increase residents’ healthy life expectancy.
"In fact, despite universal health insurance coverage, there remains a lack of long-term proactive management for the rapidly growing population of patients with chronic diseases."
Some companies have attempted to enter the market through smart hardware. Taking Zhiyun Health as an example, users are required to regularly upload blood glucose readings to receive health guidance. To facilitate medication purchases for patients with chronic diseases, Alibaba Health and JD Health also provide e-commerce channels for certain chronic disease medications and health supplements, which has, to some extent, addressed the medication needs of some patients.
However, chronic diseases are lifelong conditions that require specialized management. Relying solely on medications and data monitoring is insufficient to achieve the goals of health management. The effectiveness of out-of-hospital chronic disease management will directly impact patients' disease progression and quality of life.
Breaking New Ground: Digital healthcare has targeted the vast population of patients with chronic diseases, as well as the complexity and long-term nature of these conditions, and has begun to employ digital tools for full-cycle disease management. In just the past two years, China’s first digital chronic disease management service model—enabled by an internet hospital and featuring direct medical insurance settlement—has been successfully implemented in Tai’an, Shandong Province.
On one hand, users can access a range of digital chronic disease management services through internet hospitals, including personalized treatment and rehabilitation plans, follow-up consultations, e-prescriptions, medication dispensing, monitoring of key health indicators for members, and customized guidance on diet and exercise. On the other hand, thanks to their designation as local medical insurance providers, some of these services can be paid for directly via online medical insurance reimbursement.
Public information indicates that in Tai’an, Shandong Province, Weiyi achieved, in just over a year, a approximately 12.7% reduction in the average cost per prescription for chronic disease patients in 2020 compared with 2019, while cutting the average patient visit time from the original 2–3 hours down to 30 minutes.
As interpreted by industry insiders, internet healthcare has truly begun to undertake tasks that large hospitals lack the bandwidth to address and primary care institutions lack the capacity to handle, thereby serving as an effective complement to the traditional medical service system.
The greatest value of innovation lies in solving difficult problems for users, and the ability to scale and replicate it in other regions is an important criterion for validating innovation.
After more than a decade of development, the accessibility and affordability of healthcare for users have both improved. In the broader future, if the digital health industry can delve into user pain points and focus on innovation and service upgrades, it will not only solve users’ health challenges but also achieve rapid growth for itself.