DingXiang Clinic's Yang Zefang on New Clinic Regulations: 'Half Ocean, Half Flame'

On May 13, five departments, including the National Health Commission, the National Development and Reform Commission, and the Ministry of Finance, formulated the “Opinions on Launching Pilot Programs to Promote the Development of Clinics,” encouraging physicians who have practiced in medical institutions for at least five years and hold intermediate or higher professional titles to establish specialty clinics on either a full-time or part-time basis.

Since the national government relaxed restrictions on private medical practice in 2000, it has not been uncommon for physicians to leave the public healthcare system. In the following years, policy support continued to intensify. Beginning in 2009, the state successively issued multiple policies with clear orientations and specific provisions aimed at guiding the development of privately run medical institutions.

Despite the introduction of a series of policies favorable to private medical practice, an indisputable fact remains that public hospitals still dominate China’s current healthcare system. This dominance is reflected not only in their 90% market share but also in the fact that over 80% of physicians choose to work in public hospitals.

Are the New Clinic Policies Truly an Unprecedented Boon? To Address These Questions, VCBeat Recently Interviewed Mr. Yang Zefang, Vice President of DXY and Head of DXY Clinics.

Yang Zefang’s thought-provoking remark during an interview, “The healthcare industry is not short of policies,” allowed many to catch a glimpse of the tip of the iceberg in clinic development.

According to data from the *China Health and Health Statistical Yearbook*, from 2010 to 2018, the number of clinics in non-public primary healthcare institutions increased annually from 173,434 to 211,572, representing an increase of approximately 22%. The number of outpatient departments rose annually from 8,291 to 17,649, an increase of approximately 113%. The proportion of clinics and outpatient departments in the total number of non-public primary healthcare institutions increased from 41% to 54%.

Yang Zefang maintains a relatively rational and calm perspective on the growing number of clinics driven by policy deregulation: “The biggest challenge in the current clinic landscape is not regulatory approval, but rather the clinical expertise and service value provided by physicians, as well as the team’s awareness and philosophy. While opportunities exist, the challenges are significant.”

In the face of the touted significant benefits of the new policies, Yang Zefang candidly stated, “The new policies hold no surprises. However, beyond the policies themselves, we frontline practitioners must engage with the government based on various policy frameworks, which requires wisdom, imagination, and communication and coordination skills.”
 

Despite policy encouragement, the healthcare industry’s weak foundation and low entry barriers have posed obstacles to clinic development. Moreover, the “Opinions” impose stricter requirements on physicians: they must not only have practiced for at least five years but also hold an intermediate or senior professional title, making physician qualifications a key criterion in the review process.

“An intermediate professional title serves as a watershed moment. After reaching this level, you can choose to follow the traditional career path within the public healthcare system, advancing through research and grant projects, or adopt alternative values, such as leaving to open a private clinic,” Yang Zefang offered his perspective.

In 2013, Yu Ying, the “Superwoman of Emergency Medicine,” resigned from Peking Union Medical College Hospital with the aim of establishing a clinic that offers compassionate, patient-centered care.

Coincidentally, Yang Zefang is also a typical example of a clinician who transitioned into an entrepreneur. He can more deeply empathize with the heavy sense of oppression that doctors feel within the established system. “If doctors find the structures within the system unfulfilling, then at Dingxiang Clinic, we hope to create a brand-new professional ranking system for these physicians, aiming to fully realize their professional value.”

For clinics, the three primary payment methods are patient out-of-pocket payments, medical insurance reimbursements, and commercial insurance payments. In response to the healthcare reforms outlined in the “Opinions,” Yang Zefang argued that substantive progress remains distant, as the reforms fail to recognize the greater value of physicians’ services.

From Yang Zefang’s perspective, advanced medical insurance policies will guide healthcare institutions to provide preventive health guidance. In fact, for clinics like Dingxiang Clinic, which place greater emphasis on physicians’ clinical recommendations and interventions in healthy lifestyles, they are unlikely to gain additional revenue from medical insurance at present and may even incur higher costs.

Under the consultation fee model implemented by DXY Clinic, 70% of the consultation fee is recognized as service revenue, reflecting the equivalent value of physicians’ time and services. Costs for medications and diagnostic tests are kept extremely low, with the drug proportion controlled to within 15%. DXY Clinic even provides loose, small-portion medications to minimize the potential for waste due to expiration.

“Health insurance pricing is a complex system, and hospitals have already maximized the utility of health insurance. If physicians who leave to establish clinics still focus only on the meager profits from health insurance—relying on high patient volume, drug markups, and diagnostic tests to generate revenue—why did you choose to start a clinic in the first place? Where does your personal value lie?” Yang Zefang spoke candidly on the issue of health insurance.

While policy support is beneficial, clinics may leverage policies for growth but must never become dependent on them. The road ahead remains fraught with challenges; it is precisely this dichotomy—half seawater, half flame—that can spur the entire industry to revitalize and forge ahead with determination. A crisis, by its very nature, embodies both peril and opportunity.

As the British poet Walter Scott said, “He who would see the sunrise must wait till dawn.”