Why Pediatric Clinics Remain a Promising Business: Insights from Tian'ai Pediatrics, MamaKnows, DingDing Pediatrics, and Yuboshi Pediatrics

Is the Chain Clinic Model Still a Viable Business? This question has long plagued investors and even clinic entrepreneurs. However, in the pediatric clinic sector—where demand is most stable—capital infusion has given rise to a new generation of clinics that excel in brand operations, product design, service capabilities, and operational management.

After several years of rapid expansion, the development of pediatric clinics has entered a new phase of adjustment. Practitioners are reevaluating new business models, strategic objectives, and resource alignment for pediatric clinics. Particularly against the backdrop of national policies vigorously promoting tiered diagnosis and treatment and encouraging the development of non-public medical services, clinics are ushering in new opportunities for growth.

On May 13, the National Health Commission, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Human Resources and Social Security, and the National Healthcare Security Administration jointly formulated the “Guiding Opinions on Launching Pilot Programs to Promote the Development of Clinics” (hereinafter referred to as the “Opinions”). The “Opinions” propose that from 2019 to 2020, pilot programs to promote clinic development be carried out in ten cities, including Beijing, Shanghai, Shenyang, Nanjing, Hangzhou, Wuhan, Guangzhou, Shenzhen, Chengdu, and Xi’an. Based on the experience gained from these pilots, policies for clinic establishment and management will be refined and then promoted nationwide across China.

The “Opinions” propose a series of innovative reform measures, primarily focused on optimizing clinic practice licensing policies and improving the quality of medical services provided by clinics. These measures include removing restrictions imposed by healthcare institution setup plans on clinics, replacing the approval-based system for clinic establishment with a filing-based management system; encouraging qualified physicians to establish specialty or general practice clinics on either a full-time or part-time basis; requiring clinics to establish information systems to record diagnosis and treatment data and upload such data to the medical service supervision information system; encouraging the inclusion of clinics in the development of medical consortiums, supporting the scaled and group-based development of clinics to form standardized and normalized management and service models; and encouraging governments to incorporate eligible clinics into the pool of medical institutions authorized to provide family doctor contracted services through government purchase of services.

VCBeat has long focused on the clinic sector. As pediatric clinics represent the area with the strongest demand, what new opportunities will emerge in 2019? What strategic adjustments are needed, and how can previously encountered challenges be overcome? To gain insights from frontline experience of leading brands in the pediatric clinic space, VCBeat invited founders and executives from several prominent companies in this field to share their latest practical perspectives and interpretations of industry trends.

(The following guest speakers are listed in alphabetical order by surname, not by ranking. We thank the guests for their trust and support of VCBeat.)

He Yuanqiang, General Manager of Tian'ai Pediatrics:From our perspective, the development model of pediatric clinics has begun to shift over the past one to two years. Previously, the prevailing strategy emphasized rapid expansion through a multi-site network, with clinics positioned as community-based facilities that were relatively small in scale and offered limited, specialized services. Currently, the trend is shifting toward regional medical centers that provide one-stop solutions. These centers are expanding their range of pediatric subspecialties to address a broader spectrum of health issues and serve a larger geographic area.

Pediatric chain clinics remain, on the whole, a sound business. First, the inelastic demand for pediatric care persists, while consumption upgrading is driving greater demand for private mid-to-high-end pediatric clinics, thereby expanding market demand.

Secondly, pediatric patients exhibit exceptionally strong loyalty, with a high degree of trust and reliance on physicians. Therefore, once an outpatient clinic reaches a certain scale, the likelihood of successfully extending and operating upstream and downstream industrial services is very high, yielding greater returns. Additionally, the integration of peripheral products becomes feasible.

Furthermore, pediatric clinics themselves exhibit strong cash flow and stability. Although their net profit margins are not particularly high, the high stickiness of pediatric patients, coupled with the critical importance of brand reputation and word-of-mouth, ensures stable patient volumes. After the initial development phase, outpatient visits can continue to rise steadily.

Liang Liang, Founder and CEO of Mami Knows:First, the pediatric clinic industry is becoming more vertical and segmented, with increasingly comprehensive specialized pediatric services. Second, as healthcare reforms deepen, patient volume from hospital outpatient departments will gradually shift toward private medical institutions. Following the relaxation of the two-child policy, demand for high-quality pediatric medical services will continue to rise. The chain operation model in pediatrics facilitates the delivery of unified, standardized services and management, thereby reducing costs.

Wang Ga, Founder of Dingding Pediatrics:The overall trend has remained largely unchanged, with a gradual shift toward health management services focused primarily on healthy children. From a business model perspective, pediatric clinic chains are not inherently attractive ventures; they are complicated by the uncertainties inherent in clinical consultations and the diverse demands of parents. However, it is precisely parental anxiety and needs that serve as our entry point for diagnosis and treatment. Establishing trust to deliver long-term care is the prerequisite for a sustainable and profitable business—in other words, one must adhere to sound fundamental principles.

Dr. Yu Wang, Founder of Dr. Yu Pediatrics:Under the guidance of national policies in recent years, healthcare resources have been shifting toward primary care, leading to a surge in private pediatric chain clinics.

In the coming years, the decentralization of medical resources will be an inevitable trend. Pediatric clinic chains will remain a viable business sector, although many such clinics will undergo market consolidation. Through survival of the fittest, the market will filter out weaker players and retain high-quality pediatric chain operators.

He Yuanqiang, General Manager of Tian'ai Pediatrics:Since its inception in 2016, Tian’ai Pediatrics has maintained a consistent core strategy, focusing on offline mid-to-high-end chain pediatric clinics. Drawing on over two years of operational experience and market insights, we have made strategic adjustments to our layout by reinforcing the concept of one-stop solutions, deepening the development of key pediatric subspecialties, and enhancing the functional capabilities of each clinic.

The most significant event in 2018 was the opening of our Nanhai Clinic, the second offline clinic under Tian’ai Pediatrics and the first step in our chain expansion strategy. Thus far, this initial step has been taken steadily and successfully.

In 2019, Tianai Pediatrics will continue to open one additional branch, also located in the Guangzhou area. Another key focus will be to deepen service development in two to three subspecialties, further enhancing the functionality and service capacity of its existing clinics.

Liang Liang, Founder and CEO of Mami Knows:In 2016, Mami Zhidao expanded its services from purely online health consultations to offline pediatric clinic services. In early 2017, Mami Zhidao’s first flagship pediatric clinic officially opened in Tianli Central Plaza, Nanshan District, Shenzhen. This shift was driven by the realization that, in the aftermath of the mobile health boom, online services alone could not fully meet user needs.

In February 2018, Mommy Knows opened two pediatric clinics in Pudong and Minhang, Shanghai. In June, Mommy Knows completed a C-round financing of RMB 150 million, led by Fenxiang Investment, with participation from Chunshi Capital, SoftBank, and Hangzhou Yinzhang. In the same month, Mommy Knows Futian Pediatric Center commenced operations. In October, Mommy Knows Dental Center was launched, and simultaneously, Mommy Knows entered into a strategic cooperation agreement with Shanghai Jiao Tong University to jointly establish a talent base for healthcare management.

In 2019, regarding its offline clinics, Mami Zhidao will increase R&D efforts for products tailored to specialized market demands, such as height management services and lactation consulting, while placing greater emphasis on the development of pediatric specialty clinics, such as pediatric dental clinics. In terms of empowerment, the company will provide resources—including funding, systems, teams, and operational support—to pediatricians interested in entrepreneurship, helping them achieve maximum professional fulfillment. Additionally, Mami Zhidao will deploy its intelligent system, refined over five years, to empower its partners.

Wang Ga, Founder of Dingding Pediatrics:Over the past two years, Dingding has undergone a journey of establishing stores with its own capital, building medical teams, and engaging with investors. Its development strategy has shifted from a single-store model to a chain/clinic model, then to a platform/pure-medical-technology model, and finally to an integrated model of medical technology plus services. The company has established its development goals: steady expansion coupled with rapid team building.

In 2018, partial adjustments to consultation fees and service prices were implemented, pilot programs for selected services were launched and reviewed, thereby laying a solid foundation for the Growth and Development and Early Childhood Health Promotion Consultation Clinic established in 2019.

Dr. Wang Yu, Founder of Dr. Yu Pediatrics:From a pediatrician with 18 years of experience at a public Grade-A tertiary hospital, holding a Ph.D. in Pediatrics, and engaged in frontline clinical practice and teaching, to becoming the first Grade-A tertiary hospital physician to establish a pediatric chain institution in 2016, launching the first pediatric chain clinic located in a commercial district, and building the largest pediatric chain clinic in Western China.

Our overarching strategic goals have remained unchanged. We consistently adhere to the principle of “putting patients first” and deliver “warm, patient-centered healthcare services with a 5-degree forward lean,” because we firmly believe that “pediatrics” holds “grand aspirations.” The ever-evolving health needs of children and their parents continue to inspire and drive us forward.

In 2018, Dr. Yu Pediatrics opened three new clinics in Dashiba, Nanping, and University Town, successfully establishing its presence in the Nan’an District and University Town areas. Meanwhile, the team added seven outstanding pediatricians, including a master’s graduate in Traditional Chinese Medicine pediatrics and a graduate student currently studying in the United States.

In 2019, we will add three community stores in the main urban area of Chongqing and open one to two stores in Guiyang, thereby achieving our cross-regional development goals.

He Yuanqiang, General Manager of Tian'ai Pediatrics:In addition to outpatient consultation fees, outpatient-related revenue also includes laboratory testing, treatment, and medication fees. Furthermore, there is income generated from online and offline parenting training courses, online medical consultations, and an e-commerce platform. Currently, these latter segments account for approximately 10% of total revenue. As they represent a key area for future revenue growth, we aim to gradually increase their share to around 30%.

In terms of costs, labor and rent are the most significant components, accounting for approximately 70% in total, with additional expenses including pharmaceuticals and medical consumables.

Liang Liang, Founder and CEO of Mammy Knows:In addition to outpatient fees, there are also costs incurred from doctors’ online consultation services. Beyond rent and physicians’ salaries, costs include expenses for expanding offline clinics and employee wages. In the future, revenue streams will be expanded to include the provision of intelligent healthcare systems and agency services for advanced foreign medical equipment.

Wang Ga, Founder of Dingding Pediatrics:In addition to the relatively high proportion of consultation fees, revenue from treatments, laboratory tests, and pharmaceuticals also accounts for a significant share. Cost expenditures, apart from rent and medical staff labor costs, primarily consist of allocated management team expenses. Future revenue growth may be driven partly by in-house developed products or maternal and infant ancillary products.

Dr. Wang Yu, Founder of Yu Pediatrics:In addition to consultation fees, the revenue model encompasses pharmaceuticals, laboratory tests, therapeutic services, and specialized clinics (including child health care, height management, gait analysis, ophthalmology, dentistry, and Tui Na massage). Dr. Yu has also established a product trading company and an online maternal and infant e-commerce platform, featuring self-developed products for mothers and babies. These proprietary products serve as an incremental profit stream beyond core medical services.

Cost expenditures include rent, property utility and energy consumption costs, salaries and performance bonuses for medical, nursing, and technical staff, insurance, pharmaceutical costs, therapeutic drugs, consumable costs, laboratory testing costs, office expenses, employee training expenses, team-building expenses, marketing and promotional expenses, etc.

Specialized services (such as vision rehabilitation, psychology, sports rehabilitation, dentistry, and dermatology) will be added in the future to increase store revenue.

He Yuanqiang, General Manager of Tian'ai Pediatrics:We currently operate two clinics. The Guangzhou Zhujiang New Town Clinic handles approximately 40 outpatient visits per day, while the Nanhai Wanda Clinic sees around 20. Pediatric dentistry is a newly added department and one of our key areas for future development.

Liang Liang, Founder and CEO of Mami Knows:The clinics that have already opened are performing well, particularly the newly launched Dental Center and Futian Pediatric Center, which demonstrate strong momentum in patient acquisition and value-added services. New offerings include lactation consultation services and height promotion management programs.

I believe that health management and disease prevention represent important growth directions for private institutions that possess strong service awareness and adhere to evidence-based medical practices. With the deepening implementation of tiered diagnosis and treatment, public hospitals are increasingly focusing on scientific research and the management of complex and critical cases, while private medical institutions are concentrating more on health management and disease prevention, thereby serving as a vital complement to the public healthcare system.

Physicians are the most critical talent resource in any healthcare institution. We have both the responsibility and the capacity to provide systematic, professional training for physicians, continuously broadening career development pathways for pediatricians.

Wang Ga, Founder of Dingding Pediatrics:Currently, there are three clinics in Zhengzhou with steady growth. The daily patient volume is approximately 40 visits per physician, with an average transaction value exceeding RMB 200. No new departments have been added at present. The future development strategy will continue to focus on comprehensive medical services, primarily centered on children’s health management and the full-cycle diagnosis and treatment of diseases. All physicians hold the title of Chief Physician. Although formal training programs are not currently in place, establishing a consensus on clinical service standards during onboarding is considered essential.

Dr. Wang Yu, Founder of Dr. Yu Pediatrics:Currently, there are eight clinics. The established clinics have basically achieved an 80% profitability rate, while the new ones generally break even within one year. The network is expanding at a pace of three to five new clinics per year, and cross-regional development was realized in 2019.

The clinic’s maximum daily patient volume reaches 85, with an average transaction value ranging from approximately RMB 200 to RMB 500, varying by department. It offers services in general practice, child health maintenance, pediatric massage, height management, gait analysis, pediatric allergies, and pediatric asthma. This year, the clinic will strengthen the development of its specialized departments and launch a membership-based product for children’s health management.

He Yuanqiang, General Manager of Tian'ai Pediatrics:We believe that the implementation of standardized chain clinics is essential; otherwise, it will be impossible to establish a unified brand and customer experience. This approach is also feasible in practice. Standardization encompasses various aspects, including standardized clinical diagnosis and treatment protocols, standardized medical service processes, standardized quality control criteria and their implementation, standardized service offerings, standardized equipment and environmental conditions, and standardized visual identity (VI) imagery.

From the physician’s perspective, recruitment and selection must adhere to specific standards, with particular emphasis on clinical experience. Equally critical is training; only through standardized training can physicians rapidly achieve independent practice, integrate into the clinic and team, and promptly establish their personal brand.

Liang Liang, Founder and CEO of Mami Zhidao:Currently, Mami Knows Pediatric Clinics operates as a standardized chain. We have adopted international JCI standards to standardize medical services and utilize our proprietary SaaS system to embed these standards into operational workflows, thereby achieving standardized clinic management.

For new physician onboarding, we have a comprehensive training standard that provides thorough training in medical practice, patient service, communication, and other key areas.

Wang Ga, Founder of Ding Ding Pediatrics:Standardization is feasible in the clinic sector, not in terms of clinical diagnosis and treatment protocols, but rather in elements such as the care environment (software and hardware), professional training (nursing and administrative staff), and healthcare services (patient visit workflows and online follow-ups).

Currently, we have established multiple models for collaboration with physicians, with in-clinic consultations being just one component. Throughout the partnership process, physicians’ focus on returning to the essence of medical practice—concentrating solely on patients’ conditions and therapeutic factors—has enhanced their brand recognition of Dingding within the medical community, thereby facilitating diversified dissemination and conversion.

Dr. Wang Yu, Founder of Dr. Yu Pediatrics:The prerequisite for establishing a chain operation is the simplification and standardization of products and services. Only by achieving robust standardization can replicability be ensured; however, medical practices, particularly physicians’ diagnostic and treatment methods, are difficult to standardize. Our current standardization efforts are reflected in standardized site selection, decoration and design, reception services, training, and operational management.

Doctors undergo regular training and exchanges, gradually establishing a unified Dr. Yu Pediatric diagnosis and treatment style through knowledge updates and case discussions.

He Yuanqiang, General Manager of Tian'ai Pediatrics:The low level of chain integration stems from the standardization issues mentioned above; achieving true standardization is highly challenging. This is particularly difficult for the standardization of physician-delivered services, which represents the most formidable obstacle to successful chain expansion.

We do not consider the special-needs outpatient departments of public hospitals to be competitors of private clinics. As private clinics, we should be more client-centric, functioning more like family doctors by addressing issues related to preventive healthcare, diagnosis and treatment of common and frequently occurring diseases, and rehabilitative therapy for chronic conditions. These services do not require top-tier physicians or specialists in specific fields; rather, they demand doctors with general practice competencies, exceptional communication and service skills, and a greater degree of dedication and focus.

Public hospitals primarily address complex and rare conditions, requiring high technical expertise while offering limited service-oriented attributes. Consequently, the patient experience for services within the scope of clinic-based care is often suboptimal. Even in special-needs outpatient departments, apart from relatively longer consultation times, there is no fundamental difference in service workflows or in physicians’ communication awareness and approaches. Therefore, we believe that they are not in a relationship of direct competition.

The special-needs outpatient clinics at public hospitals, as you mentioned, have had a significant impact on physician groups and clinics like ours that hire physicians for multi-site practice. Since physicians can earn comparable income by seeing patients in these special-needs clinics at hospitals, there is little incentive for them to take on additional part-time roles elsewhere.

Liang Liang, Founder and CEO of Mami Knows:The challenge of scaling through chain operations lies in the lack of standardized operations and management, making physicians’ services difficult to replicate. I largely agree with the second point. In China, there is a deeply ingrained preference for public hospitals as the first choice for medical care. Furthermore, public hospitals are continuously improving their services, exerting significant competitive pressure on private healthcare providers.

Wang Ga, Founder of Dingding Pediatrics:The challenges in building a chain-scale operation lie in the unacceleratable “trust cycle” and the non-replicability of medical technology. Healthcare essentially sells “trust”; without sufficient time to build this foundation, rapid expansion is merely an illusion. The primary competitive focus for private clinics is not the premium specialty departments of public hospitals, but rather the patients themselves. This is because patients’ level of healthcare literacy determines their choice of diagnostic and treatment institutions. Alternatively, high-quality services provided by individual peers can more deeply address customer needs. Differentiation is the key to competition.

Dr. Wang Yu, Founder of Dr. Yu Pediatrics:The challenges lie in the medical sector, particularly the difficulty in standardizing clinical diagnostic and treatment protocols, the shortage of physician resources, and the process of obtaining qualifications for medical institutions.

Private clinics and public hospitals actually maintain a complementary and collaborative relationship. Private clinics offset the shortcomings of public hospitals in areas such as medical services and the care environment. However, private clinics must differentiate their development path from that of public hospitals by cultivating advanced technologies to establish core competitiveness. Only in this way will patients be willing to pay out-of-pocket for the premium associated with these services.

He Yuanqiang, General Manager of Tian'ai Pediatrics:In terms of new customer acquisition channels, online community management has seen the most rapid growth over the past two years. This approach has proven highly effective and is a key focus of our recent efforts. Offline, we primarily engage in cross-industry collaborations, such as partnerships with early childhood education institutions and postpartum care centers. We have limited experience with traditional ground promotion tactics—such as free clinic events at residential complexes or public squares—and hard advertising (e.g., stairwell ads and outdoor billboards), as these methods have yielded relatively poor results.

Liang Liang, Founder and CEO of Mami Knows:In 2019, we established a membership center to deeply explore customer acquisition through viral growth strategies. Offline, we meticulously developed new products and continuously launched specialized pediatric services. Online, we advanced the construction of internet hospitals, remote consultations, and integration with smart hardware, leveraging technological means to enhance healthcare efficiency.

Wang Ga, Founder of Dingding Pediatrics:There is no such thing as a so-called new patient acquisition channel. Although clinical practice has commercial attributes, it is ultimately premised on the essential nature of healthcare. Specifically, the most effective way to acquire patients in the medical field remains “word-of-mouth” propagation based on trust. From an operational perspective, new business models can continue to explore the creation of diversified medical services centered around communities.

Dr. Wang Yu, Founder of Yu Doctor Pediatrics:Online, Dr. Yu’s self-media matrix includes WeChat Official Accounts, Toutiao, Weibo, blogs, and several well-known forums in Chongqing; offline, we conduct science popularization and educational campaigns, cross-industry alliance events, and word-of-mouth referrals.

He Yuanqiang, General Manager of Tian'ai Pediatrics:We have considered this approach; however, to some extent, public medical consortia currently show limited willingness to collaborate with private clinics, particularly those belonging to start-up brands. Access to such resources would undoubtedly play a significant role in the development of these clinics. We have consistently aimed to provide one-stop solutions, which requires backing by resources such as specialists across various disciplines, surgical services, and inpatient care to truly realize this vision.

Liang Liang, Founder and CEO of Mami Knows:"Green referral channels have been established with public hospitals, and more than 30 physicians from public hospitals are practicing at the clinic under multi-site practice arrangements."

Wang Ga, Founder of Dingding Pediatrics:Currently, there is a basic collaboration with the Medical Consortium, and the specific content of the cooperation is still under exploration.

Dr. Wang Yu, Founder of Dr. Yu Pediatrics:It is still in the exploratory phase.

He Yuanqiang, General Manager of Tian'ai Pediatrics:Pediatric clinics, which were in their nascent stage in 2016 and 2017, experienced robust growth in 2018 with the support of capital investment. A significant number of new clinics were established, and several brands rapidly expanded by opening multiple chain locations within two to three years.

However, by 2018 and 2019, certain weaknesses in the industry gradually came to light, with operations encountering distinct bottlenecks or challenges. Consequently, stakeholders began to pursue diverse explorations and transformations.

At Tian’ai Pediatrics, we are likewise fine-tuning our development strategy during this period, striving to identify the optimal business model. This process presents both challenges and significant meaning, as we firmly believe in the strong prospects of this industry and are confident that we are already on a fundamentally correct path. Therefore, successfully charting this course would be a highly meaningful and rewarding achievement.

Liang Liang, Founder and CEO of Mami Knows:Having moved past 2018, a new cycle of structural opportunities has begun. From the perspective of the broader economic environment, the market economy remains the central theme of China’s reform and opening-up policy. In terms of market demand, the 300 million middle-class earners constitute the world’s largest growth engine. The innovative online-to-offline (O2O) pediatric healthcare model pioneered by Mami Zhidao aligns precisely with both market and user needs.

After five years of entrepreneurship, I still aspire to return to my original mission: leveraging technology and integrity to advance healthcare. I aim to devote more time to understanding our users, slowing down to tackle the most challenging issues, and delivering satisfactory products and exceptional services to our clients.

Wang Ga, Founder of Dingding Pediatrics:Since 2018, I would not describe my journey in the healthcare sector as “entrepreneurship” in the conventional sense. Healthcare is a technology-driven industry, where medical expertise must remain the paramount concern—a non-negotiable red line. True entrepreneurship in this field lies in translating advanced medical technologies into high-quality diagnostic and therapeutic services that are accessible and understandable to everyone. My vision is to build a communication platform bridging patients and physicians, empowering individuals to understand the etiology of their conditions, identify their current stage in the disease progression, and determine optimal treatment strategies, including prognostic care during recovery. This approach places both patients and physicians at the center of healthcare delivery.

Regarding industry expectations, the hope is naturally that national policy guidance will become increasingly “people-friendly,” enabling more people to correctly understand how standardized clinical practices affect patients, thereby helping to build a healthy physique for the next generation.

Dr. Wang Yu, Founder of Yu Doctor Pediatrics:Currently, the chain model for pediatric care in first-tier cities is still in its exploratory phase. Therefore, the challenges and dilemmas we encountered during our startup journey are predictable. We have been addressing issues such as the shortage of pediatricians, store location selection, and standardized management step by step.

Looking ahead, we remain committed to the integrated model of “medical care and education,” promoting child healthcare and developmental awareness. Going beyond clinical treatment, we are dedicated to popularizing children’s health knowledge and enhancing health management, working together to build a future where children can grow up healthy.