Innovating the 'Payment + Service' Model: How Taikang Bestcare Oral Healthcare is Redefining China's Dental Care Future

For dental institutions in China, after experiencing a phase of rapid expansion, they are all in a stage of seeking new models and directions.

In June 2018, Taikang Insurance Group made a strategic investment in ByBo Dental, comprehensively empowering the company through talent development, discipline construction, insurance product development, and resource integration, with the aim of building a closed-loop dental ecosystem centered on “Payment + Services.” The “Payment + Services” model represents one viable direction for growth, addressing a market that had previously remained largely underserved.

The latest development is that in late August this year, Taikang Pension launched the “Tai Ai Ya” group medical insurance product, which corporate entities can purchase for their employees. From E-Chi Kang and Pediatric Dental Insurance to its recent entry into the group dental insurance market, ByBo Oral Medical Group has made a strong start with its “payment + service” model.

Oral health has been designated as a key objective of the “Healthy China” strategy, aiming to help the public establish oral healthcare habits, thereby improving the nation’s overall oral health and achieving inclusive, comprehensive well-being. How is Taikang ByBo Oral Care crafting its new service ecosystem? During the 31st National Love Your Teeth Day, a reporter from VCBeat (WeChat ID: vcbeat) interviewed Zhu Zhenghong, Vice President of Taikang Health Industry Investment Holdings Co., Ltd. and CEO of Taikang ByBo Oral Care. Mr. Zhu provided insights into the logic behind the “Payment + Service” model and the brand upgrades undertaken by Taikang ByBo over the past year. The full interview follows below.

Zhu Zhenghong, Vice President of Taikang Health Industry Investment Holdings Co., Ltd. and CEO of Taikang ByBo Dental

Zhu Zhenghong, CEO of Taikang ByBo Oral Care, stated, “We are committed to building a new model in China. As an insurer and payer with a chain of physical clinics, Taikang also serves as a service provider. This new model can be summarized as the ‘payment + service’ integrated healthcare model, which significantly enhances efficiency and reduces costs.”

In 2019, Taikang enhanced overall efficiency and service levels through a linkage mechanism between payers and providers within its closed-loop ecosystem. This includes the elderly care loop integrating life insurance with senior living services, the health loop combining health insurance with medical services, and the wealth loop linking pension plans with asset management. These initiatives provide customers with comprehensive health protection spanning prevention, treatment, rehabilitation, and elderly care. Specifically applied to Taikang ByBo Dental’s business model, the advantages of the “Insurance + Healthcare” integration can be summarized as follows:

First, integrated healthcare. Integrate service providers with payers to achieve seamless alignment between medical services and insurance payments;

Second, business synergy. Integrate resources along the life insurance industry chain, allowing virtual finance and real industries to complement each other.

Zhu Zhenghong noted that the state has successively introduced favorable policies for commercial health insurance, significantly promoting its development. Furthermore, compared with the broader healthcare sector, dental specialties are characterized by the smallest technological gap with international standards, high treatment costs, and minimal or no coverage by basic medical insurance. “Under these circumstances, as China develops its commercial health insurance market, dental specialties will undoubtedly enjoy a first-mover advantage.”

From the perspective of the broader healthcare industry classification, the dental sector belongs to consumer healthcare with a relatively high level of market maturity. In particular, following the influx of capital, the dental industry has entered a phase of rapid development. In dental chain practices and certain popular regions, service supply has increased rapidly; however, overall dental visitation rates remain sluggish.

Zhu Zhenghong shared, “I have led my team on study tours and inspections around the world, and found that Chinese consumers are relatively reluctant to visit dentists. There is a large patient base, yet many suffer from dental anxiety, pay insufficient attention to oral health, and lack trust in private healthcare providers. In addition, medical insurance reimbursement in China is limited, covering only a few dental procedures with low coverage caps, while commercial insurance remains underdeveloped.”

A cross-country comparison with other regions, such as the United States, Japan, and Europe, reveals significant disparities. According to 2017 dental care data from China and the United States, per capita dental expenditure in China was $5.8, merely 1.5% of the U.S. average of $345. In terms of adult dental treatment success rates, 65% of patients in the United States achieved successful outcomes, compared to only 8% in China. The most critical difference lies in the market structure: the U.S. dental care market, valued at $110 billion, sees approximately 55% of payments covered by insurance.

“The decisive factor in improving oral health for all Americans is dental insurance. Over the past decade, the number of individuals enrolled in dental insurance plans in the United States has increased year by year, with an enrollment rate exceeding 50%. As coverage has gradually expanded and out-of-pocket costs have decreased, the visitation rate among commercially insured patients is twice that of uninsured patients. Thanks to the widespread adoption of dental insurance, more Americans have received treatment.”

Japan is the country with the most extensive coverage of dental treatments under its national social insurance system, with an insurance reimbursement rate of 70%. This robust social security framework has significantly improved the oral health of the Japanese population. Notably, the average number of decayed teeth among 12-year-old children has shown a downward trend over the past three decades, highlighting Japan’s distinctive approach to preventive oral care on a global scale. Similarly, Bupa in Europe has adopted a comprehensive strategy combining dental insurance with a network of offline clinics, operating nearly 1,000 dental facilities.

Based on the development experience of dental insurance and the oral health industry abroad, it is evident that the growth of dental insurance is a key catalyst for igniting the oral care market: on one hand, dental insurance facilitates payment mechanisms and boosts consumer willingness to spend; on the other hand, it promotes the chain-based expansion of oral healthcare providers.

“Many commercial health insurance companies have made attempts in China, but few have succeeded. Taikang is likely the first in China to enter the commercial dental health insurance sector on a large scale.”

In terms of insurance categories, Taikang has successively launched six dental insurance products, primarily covering preventive care, accidental dental treatment, and comprehensive treatment. With a strong emphasis on basic and preventive treatments, these products help customers maintain long-term oral health.

“Our current goal is to cultivate patients’ awareness of dental care, leverage insurance to change Chinese consumers’ oral health spending habits, foster sound dental hygiene practices starting with prevention, and thereby reduce treatment costs.”

After establishing the product system and acquiring customers, how to deliver services? Taikang ByBo Dental leverages the Jianbaotong Medical Network.

Reporters have learned that there are currently two types of dental institutions cooperating with Taikang: one type belongs to its own system, such as Taikang ByBo Dental; the other is covered by Jianbaotong. “In the future, we will need a large number of dental medical institutions to serve our insurance customers, which is beyond the capacity of ByBo alone. The Jianbaotong Medical Network is a medical-insurance cooperation system established by Taikang Insurance and selected domestic medical institutions. It is positioned as a direct billing and settlement platform for commercial health insurance, and also serves as the foundational platform for medical-insurance collaboration.”

As of now, Jianbaotong has partnered with over 1,000 hospitals, 40% of which are tertiary hospitals, covering 31 provinces and more than 230 cities across China. It supports over 100 insurance products, with a total network of more than 2,000 medical institutions, including 2,000 contracted dental clinics.

“Beyond the scale of ByBo Oral, we will need more dental institutions in the future to support the successful implementation of the ‘payment + service’ model. We have requirements not only for the number of institutions but also for service quality; we will strictly audit whether the medical quality and services provided by participating clinics meet the expectations of insurance customers. Once patients purchase our insurance products and visit these clinics for care, they will find that their dental health issues can be resolved at a minimal cost. This is the future of China’s dental healthcare service model.”

Based on the experience of broader healthcare development, the growth of dental insurance will drive an explosive expansion in the oral care services industry. Furthermore, “the dental market is closely correlated with economic growth; some experts believe that the dental market will surge once per capita GDP exceeds $10,000. In 2018, China’s per capita GDP stood at $9,780, placing it precisely at this critical threshold.”

In terms of store scale, Taikang ByBo Oral is the largest in China. Over the past year, reporters learned that its core strategy focused on optimizing existing assets. This year, it has been steadily expanding in key cities while ensuring continued profit improvement. Currently, the Shanghai region has already become profitable.

To gain insights into leading global dental care development models, Zhu Zhenghong visited the top five DSO chains in the United States. VCBeat has previously provided an analysis of the leading U.S. DSO model (see:900 Clinics, KKR’s Heavy Investment: Has the Dental Chain Model Proven Successful in the US?）。

“DSOs have arguably gained significant momentum. The largest DSO in the United States, Heartland, already operates more than 900 practices and continues to grow at an annual rate of 15%–20%.”

Data indicates that the DSO model swept across the United States due to the increasing proportion of payments covered by dental insurance. Dentists are required not only to master clinical skills and undergo frequent training but also to engage with insurance companies. As the dental industry became more industrialized, management tasks grew increasingly complex. After acquiring private dental practices through mergers and acquisitions, DSO chains help dentists handle complicated non-clinical affairs, allowing them to focus on clinical care while the original dentists continue to manage their clinics. This is a highly strategic approach. In short, insurance has actually facilitated the growth of chain organizations.

Zhu Zhenghong believes that there is still a significant gap between China’s overall medical service and quality control systems and those of the United States, and he shared some specific details:

“Dental training in the United States is highly rigorous, resulting in relatively standardized clinical technical standards among dentists. This is why we are promoting TKD internally first,” stated Zhu Zhenghong.

Regarding the difficulties in implementing models such as U.S. Dental Support Organizations (DSOs) in China, Zhu Zhenghong believes that the overall challenges remain significant. The primary hurdle is “cultivating Chinese consumers’ awareness of commercial health insurance. Many people calculate costs by thinking, ‘Is buying insurance cost-effective? It’s better to just pay for medical care directly.’ Changing this mindset requires early adopters to experience tangible benefits from insurance, thereby fostering word-of-mouth promotion and broader acceptance. Customer education is the most difficult aspect, demanding considerable patience and effort.”

Secondly, there remains a mismatch between the entire system and commercial health insurance. “Commercial health insurance must focus on cost containment. The so-called ‘value-based healthcare’ defines value as clinical outcomes divided by costs. To promote value means spending less money to achieve better health outcomes with guaranteed quality—this is the fundamental logic of insurance. However, there is an urgent need and necessity to reform public insurance awareness, physicians’ cost-containment mindset, and even the entire payment system. Otherwise, over-treatment will persist.”

“As Liu Tingjun, Chairman of Taikang ByBo Oral Care, often states, when corporate financial interests conflict with medical quality and customer experience, priority must always be given to upholding medical quality and enhancing customer experience. Only when healthcare institutions incorporate cost-containment incentives into their revenue streams will overall costs truly decline. This business model benefits the company, insurers, and healthcare providers alike—a approach exemplified by Kaiser Permanente in the United States.”

In summary, Taikang aims to build a commercial dental health brand while establishing a comprehensive offline physical network. Regarding the core logic of its offline expansion, how will Taikang ByBo Dental drive store openings in the future? Zhu Zhenghong stated that the company will simultaneously promote a model combining specialized care with basic treatments. In recent years, Bupa has established dozens of clinics dedicated exclusively to orthodontics. Similarly, Taikang ByBo Dental plans to open centers focused solely on dental implants and orthodontics in key cities. Furthermore, professional committees will be substantively involved in chain management, achieving true expert-led oversight and professional governance, rather than having non-specialists manage professionals.

Over the past year, Taikang ByBo Oral has adopted a slightly more conservative strategy. “We aim to optimize our existing assets and improve operational efficiency. Retracting the fist before striking delivers a more powerful blow. Within three years, Taikang ByBo Oral is poised to become the largest and premier dental chain in China.” In the United States, Heartland Dental and Bupa each operate nearly 1,000 clinics, indicating substantial room for future growth.

How Can the “Payment + Service” Model Empower the Dental Industry and What Changes Can It Bring? Zhu Zhenghong Believes That:

First, it will bring more customers and payments to more dental institutions;

Second, it will help dental institutions improve operational efficiency and reduce customer acquisition costs;

Third, it generates additional revenue.

Currently, major dental chains are competing for the existing stock of patients in the oral care market. Amidst this intense competition, customer acquisition costs are rising steadily, while promotional advertisements for discounts on dental implants and orthodontics are becoming increasingly exaggerated. “In the future oral care market, Taikang will promote the development of dental insurance, which can bring both customers and payment solutions to major dental chains. Dental insurance will unlock the dormant potential of the oral care market. Under the ‘payment + service’ model, Taikang will require tens of thousands of dental institutions to provide services to its clients. It is projected that China’s dental visitation rate will increase from 10% to 50%, making the total market size five times larger than it is today.”

How can dental institutions generate additional revenue? First, by providing oral health education, annual cleanings, and check-ups, dental institutions reduce the incidence of oral diseases. By offering the most appropriate treatment plans during care, they help insurers lower claim payouts. Second, insurance companies share a portion of their underwriting profits with these dental institutions. The ultimate outcome is that patients receive optimal dental care, total societal spending on oral healthcare decreases, and both dental institutions and insurance companies achieve a win-win scenario.

Zhu Zhenghong stated that a new line item for insurance-based cost-control revenue will appear on the financial statements of future dental institutions. “Following Taikang’s strategic investment in ByBo Dental, we aim to achieve substantial growth. We need to attract a large number of outstanding dentists to join us, even as partners, to truly implement the ‘payment + service’ model.”

As for concerns within the industry that chain organizations may threaten the survival of individual dentists, Zhu Zhenghong believes, “The oral care market is substantial. There are few dental chains in China with a scale of 100 clinics or more; most are still in the development stage. Our common goal is to tap into the 90% of the Chinese population who currently do not seek dental care. I firmly believe that the introduction of commercial health insurance for oral care will ignite growth in the sector, a trend that will become evident to all in the near future.”

“The Endgame of the ‘Payment + Service’ Model”: Zhu Zhenghong believes that “ultimately, everyone will adopt the ‘Payment + Service’ model. In the future, dental clinics that do not contract with insurance providers will have no patients. The current awkward situation is that customer acquisition costs are too high.”

It has been reported that many dental chains remain afloat by continuously performing high-value procedures such as dental implants and orthodontics. Yet, how reliable are the specialists leading these major treatment teams?

Chen Dongsheng, Chairman and CEO of Taikang Insurance Group, stated that the company aims to enhance efficiency and reduce costs through a “payment + service” model, ultimately lowering the price of dental medical services so that the general public can truly benefit from affordable care.