CEGC Health: Backed by Two Central SOEs, Pioneering Out-of-Hospital Prescription Drug Operations to Enable Integration of Medical Services, Pharmaceuticals, and Insurance
“Hospital Prescription Outflow: The Road Is Long and Arduous, But Progress Will Be Made.”
“Separation of Prescribing from Dispensing” is one of the core components of the healthcare system reform (commonly referred to as the “New Healthcare Reform”) and represents a significant measure aimed at changing the status quo of hospitals relying on drug sales for revenue. With the successive implementation of measures such as controlling the drug-to-revenue ratio, enforcing zero markups on drugs in public medical institutions, and launching the national “4+7” centralized procurement model, pharmaceuticals have been gradually decoupled from medical institutions.
Prescription outflow has disrupted the original drug sales profit chain, prompting various players to compete in the same arena. Backed by two major central state-owned enterprises, CEC Guokang has entered the prescription circulation battlefield and begun aggressively expanding its market share.
CEC Guokang is a new type of comprehensive medical service operator specializing in healthcare big data and artificial intelligence. Established in 2016, it was jointly founded by Sinopharm Financial Leasing, a company in the medical and health industry, and CEC Data, the national team in healthcare big data.
Prior to the new healthcare reforms, the volume of outpatient prescription drug sales was relatively small, and the likelihood of prescriptions being filled outside hospitals was low. Zhang Yisheng, General Manager of GOHEALTH, stated that because terminal drug sales are integral to the design of the entire pharmaceutical profit chain, the pharmaceutical system remained largely hospital-centric with limited marketization. The healthcare reforms have focused on tiered diagnosis and treatment and the separation of prescribing from dispensing, aiming to decentralize medical resources, enhance the service capabilities of primary care institutions, and rationalize medical services.
Historically, healthcare institutions derived revenue from three primary sources: first, clinical services such as consultations and surgeries; second, pharmaceutical sales; and third, the provision of medical equipment and consumables for diagnostic tests and surgical procedures. The outflow of prescriptions has disrupted this traditional hospital revenue chain. It can be said that policy initiatives have given rise to an outpatient prescription market, a sector with no prior experience to draw upon.
Currently, three types of enterprises are tapping into this market. The first comprises traditional pharmaceutical distributors, as drug sales have shifted from hospitals to out-of-hospital channels, such as retail pharmacies, online marketplaces, drug distribution platforms, and primary healthcare institutions. Internet healthcare platforms are also making new inroads into the pharmaceutical sector. The third category consists of traditional healthcare IT companies seeking transformation, shifting their revenue model from project-based services to operational services. GOHEALTH is among this third group of enterprises.
From Zhang Yisheng’s perspective, each of these three types of enterprises has its own strengths. The uniqueness of the third type lies in its profound understanding of the informatization industry, with both conceptual insights and practical tools readily at hand. The founding team of GOHEALTH comprises talents from diverse fields, including big data, healthcare informatization, internet healthcare, and insurance cost control. With deep expertise in medical big data, pharmaceuticals, and health insurance, the team is well-positioned to identify development patterns amidst rapid industry changes.
How to rapidly navigate the integration phase when collaborating with traditional pharmaceutical companies and traditional pharmaceutical financial institutions is a critical issue for such enterprises to address. As a highly influential pharmaceutical distribution enterprise in China, Sinopharm Group is the largest shareholder of CEC Guokang, providing support in areas such as market resources and pharmaceutical supply chains. Leveraging the industry standing of CEC Data, CEC Guokang can participate in related medical data operations. Effective synergy can help CEC Guokang, as a growing enterprise, conserve resources and capital.
Zhang Yisheng told VCBeat that building a prescription circulation platform centered on prescription information sharing services is the main business focus of GOHEALTH at this stage.
Focusing on out-of-hospital application scenarios for prescription drugs, GOHEALTH has established multiple platforms—including a National Population Health Big Data Platform, an Internet Hospital SaaS Service Platform, a Medical Consortium SaaS Service Platform, and a Pharmaceutical Consortium Platform—through partnerships or self-funded development. These platforms enable the provision of services such as prescription circulation, drug supply, chronic disease management, family doctor services, pharmaceutical care, and medical/pharmaceutical data solutions.
The Population Health Big Data Platform is built upon a traditional data exchange and sharing platform for structured data. It supports data from conventional systems such as ERP, HIS, and HRP, while also enabling the retrieval and management of unstructured data, including medical imaging and pathology records. In addition to covering the existing functionalities of regional health information systems, the platform supports innovative “Internet + Healthcare” features designed to assist medical professionals, aid government administration, and benefit the public.
The Internet Hospital SaaS service platform can collaborate with physical medical institutions to form a modern healthcare service system that integrates online and offline (O2O) services; the Medical Consortium SaaS service platform features built-in artificial intelligence modules to facilitate intra-hospital business information coordination and extra-hospital medical resource sharing; the Pharmaceutical Consortium platform integrates high-quality resources within the regional pharmaceutical ecosystem, leveraging Sinopharm Group’s product advantages and collaborating with core regional pharmacy terminals to build a “Medical-Pharmaceutical Consortium Platform” centered on regional medical institutions and radiating through surrounding pharmacies.
Medical consortiums and internet hospitals are merely means to an end; GOHEALTH’s ultimate objective is to channel out-of-hospital prescriptions to these platforms, thereby optimizing the value system of the pharmaceutical supply chain, building a new medical service ecosystem, and realizing the commercial value of its platforms.
From the perspective of out-of-hospital pharmaceutical operations, platforms under China Electronics GOHEALTH—such as its medical consortium platform and internet hospital—constitute innovative business segments, ultimately serving the operation and management of out-of-hospital pharmaceuticals.
For prescription circulation platforms, data security and patient privacy protection must be prioritized. In January 2018, GOHEALTH leveraged blockchain technology to build a policy-compliant prescription circulation platform.
The application of blockchain technology can effectively prevent information from being tampered with. Zhang Yisheng introduced that improving technical standards can reduce the likelihood of information being tampered with.
To prevent unintended incidents, GOHEALTH has also implemented a smart contract. If prescription information is tampered with, notifications of such tampering will be sent to all relevant parties, including the hospital, the prescribing physician, the pharmacy or online marketplace fulfilling the prescription, the platform operator, the patient, and the regulatory authorities—namely, the Health Commission and the Market Supervision Administration. Upon issuance of the notification, the prescription is automatically deemed void, thereby preventing medical accidents.
In addition, GOHEALTH has established a point-based system. If the platform identifies non-compliant practices by retail pharmacy enterprises, such as substituting prescription medications or adding other auxiliary drugs, the enterprise will incur point deductions and receive a notice to rectify the issues. Should the accumulated deductions reach a specified threshold or if serious prohibited violations occur, GOHEALTH will terminate its cooperation with the offending enterprise.
The role of the drug traceability system is not limited to identifying counterfeit medications. The platform directly interfaces with the inventory management systems of off-site pharmaceutical distributors, enabling traceability of prescription drugs dispensed to patients back to their suppliers and distributors, as well as the specific transaction timestamps, via batch numbers. In the event of an issue, the erroneous step and its cause can be immediately identified to facilitate appropriate corrective actions.
Establishing a benchmark is the current goal of CEC Guokang. The company is addressing gaps in its understanding of out-of-hospital pharmaceutical operational processes that it has not yet engaged with, eliminating blind spots to lay a solid foundation for future development. In the future, CEC Guokang will integrate medical practice data, pharmaceutical distribution and regulatory data, as well as medical insurance and mobile payment data, to achieve coordinated linkage among healthcare services, pharmaceuticals, and medical insurance—the “Three Medicals.” Zhang Yisheng revealed that CEC Guokang is considering fundraising. Interested institutions should contact the financing assistant, Xiao Yun, at DongMai_Investent.