Ping An Healthcare Technology Files IPO Prospectus: Empowering Dual Insurance and Tri-Medical Sectors with Annual Savings of Nearly RMB 40 Billion for Public Health Insurance

Author: Liu Chang

Internet healthcare has been developing in China for many years, yet it has still not yielded an ideal business narrative.

Many believe that there is an inherent conflict between the internet and healthcare. The former has sparked a new industrial revolution, driving digitalization across industries and capitalizing on favorable timing to reap significant dividends, thus becoming the trendsetter of this era. However, even the tech giants that have defined the underlying ecosystem of the internet cannot rapidly transform the healthcare industry. If the internet was born in the “cloud,” healthcare must remain grounded in reality.

To date, the potential of internet healthcare has remained confined to areas such as payment processing, e-commerce, and online promotion. However, with policy liberalization over the past two years and the continuous emergence of successful pilot programs across various regions, the future value of internet healthcare has been increasingly validated. For companies rooted in this sector, breaking through and thriving requires sufficiently fertile soil, a pure original intent, and focused determination. So, how did Ping An Medical Insurance Technology, grounded in real public health needs and honed through practical experience, “grow” into what it is today?

China began establishing its basic social medical security system in the 1990s. It has now achieved a stable enrollment rate of approximately 95%, thereby fulfilling its phased mission. In the next stage, the primary challenge facing the medical insurance fund is the rapid growth of expenditures. Under the combined pressures of an accelerating aging population structure, continuous innovation in medical technologies, and the gradual integration of the Chinese market with international standards, it is imperative to improve the operational efficiency of the medical insurance fund and establish a multi-tiered medical security system.

In 2012, six ministries and commissions of the State Council jointly issued the “Guiding Opinions on Launching Critical Illness Insurance for Urban and Rural Residents,” marking the entry of commercial insurance companies into the administration of critical illness insurance. At that time, Ping An Pension Insurance participated in this initiative, undertaking the audit of social security funds in more than 100 cities across China.

With the rising enrollment rate of urban and rural residents in medical insurance and the rapid release of healthcare demands, China’s total health expenditure has maintained a double-digit growth rate for two decades, far exceeding the growth rates of both GDP and medical insurance fund contributions. Meanwhile, frequent incidents of insurance fraud have further strained the medical insurance fund. In late 2018, CCTV’s “Focus Interview” exposed two hospitals involved in insurance fraud, shocking the nation.

By 2016, Ping An had gradually distilled from its years of experience in administering critical illness insurance a suite of IT-based solutions to effectively control fraud, abuse, and waste. Leveraging Ping An’s market-oriented operational mechanisms, resource allocation capabilities, and actuarial expertise in commercial insurance, the company incubated Ping An Medical Health Management Co., Ltd. (hereinafter referred to as “Ping An Healthcare Technology”).

In March 2018, the National Healthcare Security Administration was established, integrating the three major social medical insurance schemes for urban employees, urban residents, and the New Rural Cooperative Medical Scheme. It consolidated the previously fragmented functions of medical insurance financing, pricing, procurement, and management across various departments, assuming new historical missions such as enhancing coverage and achieving refined management.

Faced with insurance modules that historically belonged to disparate systems and the data silos prevalent across various medical institutions, refined management efforts must begin with foundational infrastructure. In 2019, the National Healthcare Security Administration approved the “Implementation Plan for the Construction of the National Healthcare Security Information Platform,” officially launching this massive project to build a unified healthcare security information platform.

The project comprises nine major application systems, two cloud platforms, and other procurement items. Ping An Medical Insurance Technology successfully won the bid for Package 7 of the nine major application systems, which includes the Macro-Decision Big Data Application Subsystem and the Operational Monitoring Subsystem.

Ping An Health Insurance Technology, established less than three years ago, has joined established health IT vendors such as Neusoft Group, Jiuyuan Yinhai, and E-Lianzhong in participating in the first national-level initiative for medical insurance informatization and standardization. By empowering provincial and local governments, it is driving the development of medical insurance platforms at all levels from the top down, thereby laying a solid foundation for achieving future data interoperability across these platforms.

Ping An HealthCloud’s cloud technology does not target the consumer end; backed by Ping An Group, it adheres to high standards of security, availability, and reliability. Tracing its origins further, Ping An Group’s initial two shareholders were China Merchants Group and the Shenzhen Branch of Industrial and Commercial Bank of China (ICBC). Consequently, Ping An has a deeper understanding of how to share social responsibilities with the government.

A sense of social responsibility has been continuously upheld and passed down within Ping An Group. In April 2018, Ping An Health (Screening) Centers, a subsidiary of Ping An Insurance, responded to the group’s “Three Villages Construction Project” by deploying mobile health screening vehicles and teams of expert medical professionals. To date, more than 400 “Mobile Screening + Renowned Physician Clinic” events have been held in impoverished villages across China, providing free health screenings to over 70,000 residents.

By staying close to the people and serving public livelihoods, Ping An HealthCare Technology has distinguished itself among tech companies. While there are four companies in China that possess full-industry-chain capabilities and comprehensive data, Ping An is the only one focused exclusively on the entire healthcare industry chain.

Choosing the healthcare sector means committing several times more time and energy than other industries to systematically organize massive, heterogeneous, and non-standardized medical data from scratch. Only in this way can valuable insights and algorithms be distilled to guide health insurance pricing and services. From the perspective of initial return on investment, this may appear to be a “loss-making” venture; without a sufficiently pure original aspiration, one would lack the focused determination required for such an endeavor.

From smart medical insurance and smart commercial insurance empowering the payment side, to medical leasing empowering the industry side, and further to smart healthcare and health (testing) centers empowering the service side, Ping An Medical Insurance Technology has steadily expanded its business. Each step has been driven by the goal of building more comprehensive healthcare scenarios and better serving every link and participant in the healthcare value chain.

As Ping An Healthcare and Technology Company focuses on key areas of healthcare reform, it is building a new ecosystem for the “Three-Medical Linkage” (hospitals, physicians, and pharmaceuticals) through efficient connectivity and effective collaboration with all stakeholders in healthcare services. In this process, various “cutting-edge technologies” have emerged in specific scenarios, with five major medical knowledge bases continuously accumulating and iterating, thereby inspiring Ping An Healthcare and Technology’s scientists to propose more innovative solutions.

At the 2019 World Artificial Intelligence Conference held recently, Ping An Health Insurance Technology showcased its new-generation big data and AI-based health insurance risk control platform—Ping An Health Insurance “Eagle Eye.” This platform is capable of identifying dozens of typical health insurance fraud scenarios, including fraudulent hospitalizations, service code swapping, fragmented hospitalizations, and organized group hospitalizations, among other common insurance fraud schemes.

Shortly after the establishment of the National Healthcare Security Administration, China began to promote the reform of DRG-based payment methods nationwide, driving medical cost containment and transforming pharmaceutical care models from top to bottom. To facilitate policy implementation, Ping An Health Insurance Technology launched an Intelligent Prescription Review Cloud Platform, also known as “AI Pharmacist.” Currently operational in 130 hospitals, the platform reviews over 65 million prescriptions annually, thereby ensuring safe, effective, and economical medication use for patients. It supports the achievement of “one reduction and two improvements,” namely reducing healthcare costs while improving healthcare quality and service experience.

Behind the new technologies lies continuously optimized big data mining and analytical capabilities. The smart technology revolution is beginning to generate value-added benefits in the healthcare sector. According to Fang Weihao, Co-Chairman and CEO of Ping An Health Insurance Technology, “By the end of 2018, we had provided smart health insurance services to more than 200 cities, reviewing over RMB 300 billion in health insurance funds annually and saving nearly RMB 40 billion in health insurance expenditures each year.”

Leveraging a comprehensive healthcare ecosystem, Ping An Health Insurance Technology has been able to advance iteratively within its proprietary systems, continuously self-correcting and forging a path that is both internally actionable and externally replicable.

This year marks the seventh year of commercial insurance participation in the administration of critical illness insurance. Yet, the out-of-pocket share of medical expenses in China remains at approximately 30%, significantly higher than the 10% average among OECD countries. Meanwhile, the scale of China’s commercial health insurance market is still under RMB 500 billion, indicating that the goal of building a multi-tiered healthcare security network remains distant. From this perspective, the core value proposition of Ping An HealthTech lies in serving as a bridge between social insurance and commercial insurance. Only through deep engagement can mutual understanding be achieved; and only on the basis of such understanding can collaborative co-insurance models be established to deliver inclusive healthcare benefits to the public.

Fang Weihao, Co-Chairman and CEO of Ping An Health Insurance Technology, concluded by stating that the healthcare value chain is extensive, requiring solid efforts at every stage to achieve seamless integration. “Once this integration is achieved, the resulting power will be amplified by several orders of magnitude,” enabling continuous data-driven empowerment services for social health insurance on one end and commercial health insurance on the other. “In the future, we aim to further integrate commercial health insurance with basic medical insurance to provide multi-tiered healthcare coverage for insured individuals.”