China Life Takes Control of Wanda Information to Build China's Version of Kaiser Permanente
Recently, Wanda Information, a company listed on the A-share market, is undergoing a series of significant changes.
First, Shanghai Wanhao, the company’s original largest shareholder, and its actual controller, Shi Yibing, filed for bankruptcy reorganization. Subsequently, China Life Insurance invested in Wanda Information, becoming its largest shareholder with a combined stake of 18.3%, and completed the appointment of management personnel to Wanda Information. Furthermore, China United Health Industry Group submitted an application to participate in the bankruptcy reorganization of Shanghai Wanhao, thereby making an indirect investment in Wanda Information.
Wanda Information is a well-established enterprise in the field of healthcare informatization. Over the past 24 years, it has helped governments at all levels establish business systems with data volumes exceeding 100 PB and health records for nearly 600 million people, achieving notable success in areas such as smart healthcare and smart hospitals.
Since China Life Insurance took control of Wonders Information and dispatched its management team last year, the two parties immediately initiated resource sharing and synergy. Currently, Wonders Information has established connections with 18 provincial branches of China Life Insurance, collaborating on businesses such as intelligent medical insurance audit, long-term care insurance, medical DRG cost control, and internal audit and control. Commercial health insurance and health management are identified as the key strategic directions for the future.
According to Kuang Tao, the newly appointed chairman of Wanda Information, China Life Insurance will further increase its stake in Wanda Information in the future.
China Life’s Takeover of Wanda Information Sparks Industry Speculation: Is China Life Aiming to Build a Chinese Version of Kaiser Permanente, with Wanda Information Serving as the Primary Vehicle for Its Health Management Business?
At this juncture, the industry is indeed full of possibilities.
China Life (hereinafter sometimes referred to as “Guoshou”) is China’s largest life insurance company, with a nationwide network spanning every province, city, county, township, and town, and employing nearly 2 million full-time insurance sales agents.
As a central state-owned financial enterprise listed on three stock exchanges, China Life Insurance can be described as a behemoth, with a latest market capitalization of RMB 1 trillion and three major business segments: insurance, banking, and investment. As the largest institutional investor in China, China Life manages over RMB 5 trillion in insurance funds and third-party assets (excluding the RMB 2.6 trillion in banking assets of China Guangfa Bank). Its investment platforms include China Life Asset Management Company, China Life Investment Company, and China Life Health Industry Investment Company.
Wonders Information, originally established as the Shanghai Computer Research Institute, was formally founded in 1995 and listed on the Shenzhen ChiNext market in 2011. Over the years, the company has assisted governments at all levels in building big data business systems with a data volume exceeding 100 PB and maintaining health records for nearly 600 million individuals. It boasts a workforce of over 5,000 multidisciplinary professionals integrating expertise in technology, management, and business operations. Furthermore, the company has undertaken numerous national-level key research projects, participated in the formulation of technical and operational standards for various ministries and commissions, and received numerous scientific and technological awards.
In the healthcare sector, Wonders Information excels in areas such as healthcare informatization and medical consortiums.
The story of their convergence begins with an announcement released on August 4, 2019. On the evening of that day, Wanda Information announced that it had received notification letters from its controlling shareholder, Shanghai Wanhao Investment Co., Ltd. (hereinafter referred to as “Wanhao Investment”), and its actual controller, Mr. Shi Yibing. Furthermore, through inquiries made via the system of China Securities Depository and Clearing Corporation Limited Shenzhen Branch, the company learned that the shares held by Wanhao Investment and Mr. Shi Yibing in the company had been judicially frozen.
Based on the shareholding ratio at that time, Wanhao Investment held a total of 18.29% of Wandao Information’s total share capital, with its pledged shares accounting for 17.35% of the company’s total share capital, resulting in a pledge ratio approaching 95%.
In 2019, China Life Insurance cumulatively increased its stake in Wonders Information through 25 transactions via centralized bidding and block trading on the stock exchange. Combined with its earlier investment through the “Phoenix” special-purpose vehicle for relief-oriented pledged share financing (holding a 5.0025% stake), China Life Insurance—together with its parties acting in concert, China Life Group and China Life Asset Management—officially replaced Wan Hao Investment and the actual controller, Shi Yibing, as the largest shareholder of Wonders Information by November, with a shareholding ratio of 18.3279%.
After becoming the controlling shareholder, China Life immediately appointed a new management team at Wanda Information to help address prior issues such as fund misappropriation by the former major shareholder and chaotic management, while fostering closer synergy between Wanda Information and China Life.
Kuang Tao has become the new Chairman of Wonders Information Co., Ltd. Born in 1973, Kuang is a seasoned veteran in the financial sector. He has previously worked at China National Software & Service Company Limited, Century 21 China Headquarters, Bank of America Merrill Lynch, and Bloomberg L.P. In June 2009, he joined China Life Insurance Company Limited, where he successively served as Assistant General Manager, Deputy General Manager, and General Manager of the Investment Management Department.
At Wonders Information’s strategic press conference in January this year, the company revealed the reasons behind China Life’s strong preference for Wonders Information:
First, China Life aims to establish itself as the largest commercial health insurer in China, enabling seamless integration with the national basic medical insurance system through medical and insurance data. However, these aspirations would be difficult to realize without robust health insurance information technology.
Next is Wonders Information’s technological advantage, which is precisely what China Life currently lacks and needs. Wonders Information and China Life possess strong complementarity and synergy, which can support the development of China Life’s core insurance and financial businesses, build a “Finance + Technology” ecosystem, and achieve complementary advantages, resource sharing, and business synergy with China Life. This collaboration can promote the transformation and upgrading of China Life’s marketing system, shifting from a labor-driven model to a dual-engine drive powered by both human resources and technology.
Kuang Tao stated, “We aim to leverage China Life’s resources to transform Wanda Information into a more robust and deeply integrated strategic technology platform for China Life, establishing it as a market-oriented listed company that serves as a model for mixed-ownership reform.”
The underlying message is the urgent need for China Life’s technological transformation. Its peer, Ping An Insurance—another insurance giant—has already built Ping An Healthcare Technology and Good Doctor Technology (Ping An Hao Yisheng), which boasts a market capitalization exceeding RMB 100 billion. In contrast, China Life’s core businesses, such as insurance, remain significantly under-digitized, still relying heavily on traditional agent and sales representative models. The incremental value brought to China Life by integrating technology will undoubtedly be substantial.
It was against this backdrop that China Life and Wanda Information joined forces. The timing may not have been early, but it was not late either.
Wonders Information's Shareholding Structure (Source: Wonders Information Financial Report)
Wonders Information’s two core business segments are Public Services and Smart Cities, with healthcare categorized under Public Services.
Since entering the healthcare sector in 1997, Wonders Information has, through over two decades of development and accumulation, established comprehensive software and data platform service capabilities across the “three medicals” domains—medical care, health insurance, and pharmaceuticals. This has laid a solid user foundation, enabling the provision of healthcare and health insurance services to more than 600 million people.
Wanda Information’s solutions for the healthcare sector are positioned to build an ecosystem in which government, healthcare institutions, and the market develop in a coordinated manner. By leveraging innovative technologies such as cloud computing, the internet, big data, blockchain, the Internet of Things (IoT), and artificial intelligence, these solutions aim to benefit the public, support medical professionals, and assist government administration.
According to the 2019 annual report, Wanda Information has established core advantages in two major areas: the “three medical” sectors (healthcare, medical insurance, and pharmaceuticals) and smart cities.
Three Medical Fields
In the healthcare sector, Wonders Information has achieved significant accomplishments in regional health informatics, serving a population of 600 million across China. Its business operations span 23 provinces and municipalities directly under the central government, nearly 200 prefecture-level cities, and over 1,000 counties and districts. The hospital systems developed by the company cover more than 50 tertiary hospitals, nearly 100 secondary hospitals, over 1,500 community health centers (including township health centers and nursing homes), and nearly 10,000 community health service stations (village clinics). The company continues to invest core resources in the ongoing development and deployment of its next-generation Hospital Information System (HIS), which has entered the pilot phase. This system encompasses applications such as hospital information platforms, platform-based HIS, structured electronic medical records (EMR), platform-based Hospital Resource Planning (HRP), data centers for multi-campus management, unified knowledge and access control management, and big data analytics for healthcare.
In the realm of medical insurance, Wonders Information has fully integrated with the National Healthcare Security Administration’s information system across five key areas: fund supervision, payment reform, pharmaceutical procurement, internet-based healthcare, and standardization/informatization. The company has leveraged grouping tools such as Diagnosis-Related Groups (DRG) and big data to implement and support payment reforms for medical insurance funds in Guangzhou, Shenzhen, Henan, Shandong, Shanghai, and other regions. It has developed a comprehensive suite of proprietary products, including a grouping engine, weight allocation mechanisms, and payment standards, capable of delivering tailored payment reform outcomes based on case mixes from diverse regions across China. Following the National Healthcare Security Administration’s release of new technical specifications for electronic medical insurance vouchers, Wonders Information has dedicated itself to building products that enable integrated online and offline payment of medical expenses. This initiative has partially transformed medical insurance payment models in Shanghai, Zhejiang, and other areas, thereby facilitating easier access to medical care for the public and reducing queue times for payments.
In the pharmaceutical sector, Wonders Information constructed the national-level National Drug Clinical Trial Management Platform, as well as the provincial core platform—the Shanghai Integrated Platform for Tendering, Procurement, Distribution, and Utilization (the “4+7” Volume-Based Procurement Platform). Shanghai’s Sunshine Procurement Platform connects with nearly 6,500 pharmaceutical companies nationwide and over 1,500 local medical institutions in Shanghai, effectively implementing the “Two-Invoice System” for drug procurement and reducing intermediate distribution links. Currently, the platform’s average monthly transaction volume exceeds RMB 5 billion, yielding significant economic and social benefits. Leveraging the successful experience of Shanghai’s drug procurement model, the company subsequently won bids for national and provincial pilot projects in pharmaceutical tendering and procurement in regions such as Hebei and Jiangsu, thereby supporting and advancing the nationwide implementation of centralized drug procurement across various provinces.
Health Cloud - City-Level "Internet + Healthcare" Service Platform
At the end of 2015, Wonders Information’s “Internet + Healthcare” service platform, “Health Cloud,” was officially launched for city-level operations. The platform has now been developed into a unified application portal for “Internet + Healthcare” public services, including public health services and medical health management services provided by the government. It serves as an online service management tool that effectively links service recipients (residents) with service providers (community physicians, medical institutions, public health agencies, etc.), thereby supporting the public in conducting self-health management. Furthermore, it has become a referral/linkage, application, and management platform through which the government integrates community health services and high-quality social health service resources across various relevant departments, such as health, education, sports, and environmental protection.
As the primary internet gateway for city-level medical and health services, the Health Cloud Platform connects the core businesses of healthcare, medical insurance, and pharmaceuticals. Leveraging the company’s cloud infrastructure, it has progressively built an “Internet + Medical Health & Big Data” service platform. In the field of public health management, by continuously enriching its offerings in “Internet +” medical services, public health services, and health management services—including mobile family doctor contracting, home hospital beds, chronic disease management, remote consultations, electronic prescriptions, and medication delivery—it provides comprehensive public health services to the entire population.
In terms of smart healthcare services, the Health Cloud Platform has achieved full-process coverage encompassing pre-consultation, during-consultation, post-consultation, and chronic disease management. It provides essential services such as unified authentication, unified payment, electronic prescriptions, online malls, and internet hospitals, while further demonstrating effectiveness in health assessment, disease screening, and intelligent medical assistance. Regarding the "Internet + Health Community" initiative, the construction of Smart Health Stations serves as a key vehicle for implementing community health services. This approach fully integrates resources from various sectors, including self-test equipment at community health service centers, physical fitness monitoring stations, and school health screenings. It establishes venues for resident self-testing, self-assessment, and self-management at the sub-district and town level, improves a multi-form network of Smart Health Hubs (Stations), and gradually extends from residential communities to functional communities such as schools, office buildings, and enterprises, ultimately reaching residents' homes through smart health devices.
According to the annual report, Wanda Information will continue to increase its investment in products and services and strengthen market expansion in areas such as “Three-Medical Linkage,” “Internet + Healthcare,” DRG payment, big data-based diagnosis-intervention packet (DIP) payment, and online medical insurance payment.
Affected by factors such as the misappropriation of funds by the company’s former actual controller and chaotic internal management, Wanda Information incurred substantial losses in 2019.
According to the annual report, Wanda Information achieved an annual operating revenue of RMB 2.126 billion, a year-on-year decrease of 3.64%. The company reported an annual operating loss of RMB 1.397 billion, representing a year-on-year increase in loss of 702.3%.
Upon the appointment of the new board of directors and management team dispatched by China Life, their immediate priority was to address the company’s legacy issues and challenges. The management team proactively engaged with major banks to stabilize and expand credit facilities, thereby mitigating short-term liquidity risks. They also conducted extensive visits to key corporate clients to alleviate concerns and doubts, ensuring business stability. By intensifying collection efforts and clearing outstanding receivables, the company enhanced its self-sustaining cash flow capabilities. Historical problematic investment projects were actively disposed of to plug risk loopholes and prevent further losses. Meanwhile, various measures were implemented to urge the former controlling shareholder to repay misappropriated funds. To stabilize the workforce, the company launched the “Kunpeng Expansion Plan,” introducing compensation incentives and internal entrepreneurship support.
Subsequently, China Life has engaged in close business integration and collaboration with Wanda Information, yielding tangible results.
I. Procurement Bidding of the R&D Center. For the on-site technical service procurement projects and desktop support on-site personnel procurement projects organized by China Life’s R&D Center in 2020 and 2021, Wonders Information has been determined as the winning bidder for support services;
II. Promoting In-Depth Cooperation. The "Cooperation Framework Agreement between China Life Insurance Company Limited Jiangsu Branch and Wanda Information Co., Ltd." was signed;
III. Fully Support Unannounced Inspections. Wonders Information dispatched technical personnel specializing in information technology and medical audit review for 14 batches, totaling 200 person-days, to fully support China Life Insurance in fulfilling its tasks related to the unannounced inspections conducted by the National Healthcare Security Administration.
4. Steadily advance project implementation. With the support of regional branches, we have successfully implemented and established cooperation on the China Life Smart Underwriting Project in Taiyuan, Shanxi; the Zhijiang Medical Insurance Intelligent Monitoring System Construction Project; and the Shijiazhuang Medical Insurance Bureau’s Long-Term Care Insurance Project. These initiatives have achieved deep integration of complementary resources from both parties, demonstrating strong exemplary and leading effects.
5. Explore Innovative Marketing Models. “Fei An Bao” has been launched on the “Suishenban Citizen Cloud” mobile app, part of Shanghai’s “One-Net Universal Service” platform. Leveraging government endorsement and online traffic to promote China Life’s health insurance products, it allows Shanghai residents to confidently purchase coverage using the accumulated balance in their employee basic medical insurance personal accounts. Within just half a month since its launch, 600 policies have been sold.
VI. Implementation of Commercial Insurance Claims Services. Both parties have implemented direct billing for commercial insurance at Shanghai Jinshan Hospital and Xuhui District Central Hospital, and have launched pilot collaborations on online expedited claims processing at Haikou People's Hospital and Haikou Third People's Hospital.
Beyond specific collaborative achievements, Wanda Information, under the control of China Life, has embarked on a comprehensive business transformation.
The new management team has streamlined the existing business portfolio, categorizing it into three major segments: Government Affairs, Healthcare and Hygiene, and Information Technology Innovation. These three segments will fully leverage China Life’s resources to further strengthen, expand, and deepen the existing business operations, thereby increasing market share.
For incremental businesses or existing businesses undergoing transformation and upgrading, the new management team has identified two key focus areas for future business development: the Health Management segment and the Smart City segment.
These sectors will be rapidly incubated and scaled up through focused development and capital operations.
Beyond valuing Wonders Information’s technological strengths, China Life may be targeting the vast untapped potential of the health insurance and health management markets, as well as the industry prospects arising from their close synergy or integrated convergence.
In 2019, China’s original premium income from health insurance reached RMB 706.6 billion, a year-on-year increase of 29.7%. In the first quarter of 2020, despite the impact of the pandemic, health insurance premiums still totaled RMB 264.1 billion, representing a year-on-year growth of 21.6%. Over the past five years, the industry’s compound annual growth rate (CAGR) has approached 30%. Based on this growth trajectory, China’s health insurance market is projected to reach the trillion-yuan level this year.
According to Analysys data, the health management market grew from RMB 221.6 billion in 2014 to RMB 501 billion in 2019 over the past five years. In the newly revised “Administrative Measures for Health Insurance” issued by the China Banking and Insurance Regulatory Commission (CBIRC) at the end of last year, it was stipulated that up to 20% of net premiums may be allocated to health management services.
More importantly, the managed care model resulting from the close synergy between health insurance and health management inevitably brings to mind the pioneer of managed care across the ocean—Kaiser Permanente.
Is China Life Insurance aiming to build a Chinese version of Kaiser Permanente?
It is indeed true.
At Wanda Information’s strategy press conference in January this year, Chairman Kuang Tao revealed that the current 20,000 to 30,000 health management companies in China are basically fragmented, regionalized, and small-scale.
“We are eager to integrate these resources and pool efforts from all sides to build China’s largest insurance company. This is what we truly aim to achieve, and it aligns with the goals of the Healthy China 2030 strategy,” said Kuang Tao.“Once the health management platform is fully integrated in the future, we aim to adopt the Kaiser Permanente model or a similar approach from the United States, with the goal of improving the health of the Chinese population. I believe that the Healthy China strategy is designed to encourage citizens to place greater emphasis on their own health.”
He further revealed that Wonders Information will make a comprehensive layout in the field of health management in the future,It is divided into a 6-layer architecture and 2 positioning orientations.
In the six-layer architecture, the first layer is lifecycle-wide screening; the second layer is lifecycle-wide disease intervention based on screening results; the third layer provides medical services—including diagnosis and treatment, clinical care, consultations, lightweight consultations, and hospital visits—under the premise of interventional management; the fourth layer offers financial and insurance services; the fifth layer handles pharmaceutical distribution services; and the sixth layer delivers testing and inspection services.
In terms of its two strategic positions, the first is as a health management platform, whereby Wonders Information will assist commercial enterprises, particularly China Life Insurance, in building an ecosystem-based health management platform; the second is as an incubation platform, leveraging China Life’s strong user-acquisition and traffic-driving capabilities to transform Wonders Information into an incubation platform for small and medium-sized unicorn companies.
The managed care model, driven by the synergy between health insurance and health management, boasts an exceptionally promising future and may well serve as a potent remedy for transforming China’s healthcare system.
However, given the different context—“oranges grown south of the Huai River remain oranges, but those grown north become trifoliate oranges”—managed care may not take root in China.
However, the path to healthcare is often fraught with obstacles and twists and turns;
However, it is often the process, rather than the outcome, that sparks the most discussion.
Just as with Xuanzang’s journey to the West and Columbus’s voyages across the sea, the moment of arrival was merely the epilogue; the most compelling chapters were actually written while they were on their journeys.