WeDoctor: Pioneering the Integration of Healthcare, Pharma, and Insurance in China's Complex Digital Health Landscape

“Internet + Healthcare” is an industry that demands diligent effort and long-term dedication. There are no “fast-growth” companies in this sector; entrepreneurs must possess the endurance to run a marathon. Therefore, the companionship and encouragement of teammates along the entrepreneurial journey are invaluable.

The most fundamental vitality of a startup lies in its ability to evolve.Over the past eight years, WeDoctor has remained deeply immersed in the healthcare sector, carefully observing the currents and temperature of this vast industry river to identify breakthroughs and chart its ultimate path forward.

So how do they gauge the direction and temperature of the healthcare industry’s major river? And how do they identify breakthroughs within the sector?

At a recent internal sharing session, Liao Jieyuan, founder of WeDoctor—not only a veteran in the internet healthcare sector but also a seasoned entrepreneur—personally shared his reflections and insights from the past years.

Below is the full transcript of the speech:

Entrepreneurship is an ultimate challenge for each of us. From my own experience, the most fundamental vitality of entrepreneurship lies in self-evolution. Only by ensuring that one’s evolution outpaces industry changes can one identify opportunities amidst such shifts.

Time truly flies. WeDoctor has been in its entrepreneurial journey for over eight years now. In eight years, even the “Japanese invaders” could have been driven out, yet we are still crawling along the path. In the beginning, I constantly wondered whether we had made a mistake. Typically, internet startups begin by entering through the smallest possible niche and then prying open a crack in the industry. However, once we stepped in, we discovered that internet healthcare is not a single industry but rather N industries intricately intertwined. Two esteemed mentors from Alibaba, Mr. Guan Mingsheng and Mr. Wu Jiong, have consistently encouraged us throughout WeDoctor’s growth. They pointed out that the healthcare sector indeed comprises multiple interwoven industries, making the challenges of entrepreneurship many times greater than those faced by Alibaba or Tencent.

Furthermore, healthcare is a government-led industry, where entrepreneurship necessitates innovation. In market-driven sectors, the principle is “anything not prohibited by law is permitted,” whereas in the healthcare sector, “practicing without explicit legal basis constitutes illegal medical practice.” From 2015 to 2018, the internet healthcare industry remained in a precarious state akin to walking a tightrope. It was not until April 28, 2018, when the General Office of the State Council issued Document No. 26 (“Opinions on Promoting the Development of ‘Internet + Healthcare’”), that internet hospitals were officially legalized.

During this process, I gained a key insight: understanding what is right and what is wrong. Doing the right thing means always approaching issues from the user’s perspective and focusing on how to genuinely help them solve their problems. When the direction is correct, even if the ideas are ahead of their time, results will eventually follow.

At the same time, in these explorations, it is crucial not to exploit loopholes but instead to establish rules from day one. On its very first day of operation, WeDoctor’s Wuzhen Internet Hospital emphasized that it must rely on offline physical hospitals and strictly refrain from conducting initial consultations. Although this approach significantly increased operational complexity and costs, it ultimately served to protect the industry.

Internet healthcare is unlikely to follow the trajectory of traditional internet industries, where one can identify a niche entry point and rapidly scale up. There are no “fast-moving” companies in the healthcare sector. From day one of entering this industry, we must be prepared to run a marathon and commit ourselves to it for a lifetime.

Today, I’d like to share two insights with you: first, how does interconnection work? Second, how do you run a long-distance race?

We know that the essence of the Internet is connectivity. So, how exactly does the Internet integrate with healthcare? Initially, our online appointment scheduling services aimed to connect patients with hospitals. Later, through Internet hospitals, we sought to connect patients directly with doctors. Now, we are exploring how to leverage the “tri-partite coordination among medical care, pharmaceuticals, and health insurance” to link patients with healthcare providers, drug suppliers, and insurance payers.

This “integration” initially resembled the blind men touching an elephant—a process that was quite painful. The greatest pain lay in the fact that, while we firmly believed we were groping our way forward, our team members following us had no idea what we had actually discovered. For several years, my colleagues often remarked, “Lao Liao is synonymous with change; he changes every other day.” Recently, however, such comments have ceased, as everyone now understands the rationale behind these changes.

Initially, we spread our fingers wide to feel the elephant, exploring across various business lines. Once we had gotten a general sense of the whole picture—knowing roughly where the trunk was—we began to focus. To be precise, WeDoctor truly started to concentrate its efforts last year. Today, WeDoctor is engaged in many initiatives that differ from common public perception. In fact, WeDoctor is steadily pursuing a strategy of “encircling the cities from the countryside.”

Let’s look at rural China, which is home to over 500 million people. In rural areas, our work provides essential support where it is most needed; in urban areas, it serves as an added enhancement. Therefore, we have devoted considerable effort to delivering medical capabilities through innovation to the rural communities that need them most. We have developed this mobile cloud clinic vehicle. Do not underestimate this vehicle—it essentially consolidates the diagnostic and testing capabilities of a secondary hospital onto a single platform, even accommodating CT screening equipment.

This mobile unit is connected to two systems: the government’s primary healthcare information system and an internet hospital. Whenever the vehicle arrives in a village and opens its doors, long queues form immediately. Many elderly rural residents, who have never undergone such examinations in their entire lives, express heartfelt sentiments that are deeply moving, reflecting their profound gratitude toward the government.

These mobile cloud clinics have become the primary tool for township health centers, with each vehicle covering approximately a dozen villages. By simply scanning residents’ ID cards and medical insurance cards, all their medical and insurance information is instantly retrieved. All examination results are fully synchronized and distributed to four parties: the patients themselves, their migrant worker children, the government, and the attending physicians. Through this approach, we empower township health centers to function as mobile hospitals; by bringing these mobile services directly into villages, we can effectively address villagers’ health concerns.

We were pleasantly surprised that the Seventh Report of the Leading Group for Deepening Healthcare Reform under the State Council issued a special briefing dedicated to this model. As a policy-oriented report, it was submitted to the central government and disseminated to all provincial authorities. The Department of System Reform of the National Health Commission simultaneously distributed this special briefing to promote the model nationwide. The briefing described the model as “leveraging one network, establishing one platform, utilizing one line, and building one vehicle.” Through our approach, grassroots rural healthcare in China has found new solutions.

Nevertheless, we must return to the fundamental question of revenue generation; without profitability, survival is impossible, let alone securing government payments. Our approach is as follows: we bear all initial investments, including providing vehicles for each township, building the platform, and fully equipping primary care physicians’ workstations. The government then purchases these services. In essence, our revenue from primary care comes from “three streams.” The first stream is government-purchased services, paid on a per-capita basis. We expect to add more than 70 million paying users this year, bringing the total number of paying users to 100 million by year-end, all covered under government-purchased service programs.

I have identified a significant driving force: AI (artificial intelligence). During Christmas, Professor Ye from Harvard University led her team to work in rural villages, collaborating with our experts to guide local physicians. Together, we developed an AI system covering 38 common primary care conditions, enabling village doctors to use it as a reference for diagnosis. Currently, we already have hundreds of vehicles operating at full capacity in rural areas every day, and this number is projected to exceed 2,000 by the end of the year. This creates a market worth tens of billions of yuan in pharmaceuticals and medical consumables. After many years of implementing “Internet+” initiatives, securing continuous government procurement of services has been challenging; however, this is achievable in rural settings because the government is also eager to address these issues.

The second initiative we are undertaking is to extend our reach into county- and city-level hospitals.We have enhanced the specialty outpatient capabilities of hospitals in counties and cities. We organized experts to fully standardize the key specialties and major disease categories at these hospitals, covering every aspect from diagnostic protocols, surgical procedures, and medication regimens to follow-up care. After standardizing the entire clinical workflow, IT specialists transformed these standards into structured models, developing disease-specific clinical decision support systems. This approach provides tangible, sustained assistance to county- and city-level hospitals in strengthening their specialty care capabilities.

For county- and city-level hospitals, WeDoctor generates both online and offline traffic. By integrating offline rural patient flow, online user traffic, and standardized specialty services at the county and city levels, we have established a comprehensive system that develops standardized diagnosis and treatment protocols on a disease-by-disease basis. Meanwhile, we have conducted extensive data training; for instance, in collaboration with Zhejiang University and the PLA General Hospital (301 Hospital), we are developing an intelligent Diagnosis-Related Groups (DRGs) system to promote the structuring of electronic medical records.

In this process, we identified substantial demand at the primary care level, where many diagnoses rely heavily on medical equipment. This raised the question of how to enhance physicians’ clinical capabilities. Based on my experience, I would like to share an insight: in China, services and intangible assets are often undervalued. Therefore, we have adopted a strategy of “servitization through software, software integration into hardware, and hardware embodiment in medical devices.” I established a transparent medical device supply platform in Changting, Fujian Province, which has attracted numerous foreign companies seeking market entry into China but lacking clarity on regulatory certification processes. The local Food and Drug Administration also aimed to optimize its regulatory workflows but lacked a clear approach; thus, we collaborated with them to streamline and improve these processes.

For instance, some of our medical devices have already achieved large-scale production. Take fundus cameras as an example: currently, it is difficult to purchase one on the market for less than RMB 100,000. By integrating AI into these fundus cameras, our diagnostic accuracy for diabetic retinopathy is now 2 percentage points higher than that of Google. However, we aim to reduce the cost to around RMB 10,000–20,000. Traditional large-scale equipment heavily relies on specialists, which has limited its market penetration. We believe that connectivity, digitalization, and intelligence will drive a major upgrade across the entire medical device industry. This transition presents significant opportunities, with market adoption starting primarily at the primary care level.

Many people mistakenly believe that the Wuzhen Internet Hospital is merely an online consultation platform, but that is not the case. The hospital’s greatest strength lies in its specialized departments and disease-specific care. For instance, our IVF (assisted reproductive technology) services have ranked first in Asia. The hospital excels in medical technology per se; it simply leverages IT capabilities and data analytics to further enhance and standardize its clinical practices.

Therefore, if an internet hospital lacks its own proprietary medical technologies, has made no significant advancements in clinical practice, and holds no established reputation, can it truly operate a successful hospital? I find that hard to believe. This is precisely why our team includes so many senior experts from hospitals; five full-time members of our team are presidents or vice presidents of top-tier tertiary (Grade A Tertiary) hospitals. This is essential, as I do not possess this specialized expertise myself and must rely on those who do.

Next, let’s discuss our initiatives in urban areas. What is the most challenging aspect of urban healthcare? The primary issue in cities is poor service quality, so we are striving to improve it. How are we doing this? We have established our own general practice centers, which have been operating successfully in cities such as Hangzhou, Beijing, Chengdu, and Nanjing. I consider these general practice centers to serve as foundational hubs for primary care. In my view, the ideal future healthcare model should address 50% of patient needs at home, 35% within the community, and only 15% in hospitals.

What does this have to do with the internet? What was the primary challenge we faced in establishing our General Practice Center? It was the need to build a truly user-centric and member-centric Health Information System (HIS). We found that among the numerous system vendors in China, none could adequately meet the needs of general practice. Left with no other option, we were compelled to develop it ourselves. Currently, our cloud-based HIS for general practice supports all our business lines, and we hope to extend its support to more peers in the industry.

We are penetrating households with our “Weiyitong” smart terminal, particularly those with children, the elderly, and pregnant women. We are integrating portions of electronic health records, enabling online medical insurance payment and settlement, and facilitating direct prescription routing to pharmacies with home delivery services. Many insurance companies now leverage this device as a key tool for user acquisition and retention. The rationale is straightforward: whether it is health or life insurance, a five- or ten-year policy is merely an intangible contract. This tangible device allows users to visualize and actively manage their family’s health. This is how we are reaching into households.

This smart clinic is designed for use in industrial parks and enterprises. We have helped numerous industrial parks and government entities upgrade their traditional clinics into smart clinics, with our self-developed equipment showcased beside them.

Let’s talk about insurance. During our last gathering, everyone claimed that the profitability of internet healthcare hinges on insurance. I beg to differ. Why has China’s health insurance sector struggled to gain traction? Precisely because it lacks integrated medical services. What leverage does it have? In fact, it relies on you. Today, we can clearly see that insurers are actively seeking partnerships with you. Once you establish a comprehensive service system, they will purchase access to it, as this is exactly what consumers demand.

Within WeDoctor, there are three business units (BUs) dedicated to healthcare services: one focusing on grassroots rural areas, another on county-level cities, and the third on urban centers. Once deeply rooted and effectively implemented, their growth potential will be fully unleashed. Through continuous exploration, we have ultimately established a three-tiered hierarchical diagnosis and treatment system based on the “Internet Plus” model. This system integrates medical service capabilities, pharmaceutical supply capabilities, health insurance payment capabilities, and data-sharing capabilities. With such integration in place, hierarchical diagnosis and treatment becomes truly feasible; otherwise, it remains merely a concept in discussion.

“Encircling the cities from the countryside, we have connected healthcare providers. Yet we found this to be far from sufficient. If pharmaceutical supply and health insurance reimbursement cannot be effectively managed, the model will still fail. This is precisely what makes the healthcare industry so challenging. Nevertheless, we have no choice but to press forward with determination.”

The first is pharmaceuticals.The Haixi Pharmaceutical Center is currently the largest cross-provincial centralized pharmaceutical procurement platform in China, with transaction volumes exceeding RMB 48 billion last year and projected to surpass RMB 100 billion this year. The “4+7” volume-based procurement program reduced prices by 52%. As Xiamen’s citywide procurement is managed by the Haixi Pharmaceutical Center, which was among the first to support the “4+7” initiative, we have observed a dramatic drop in drug costs through this platform. When engaging with government authorities, we can demonstrate how we help address the issue of drug price differentials. Moreover, the substantial cash flow enables banks to extend credit facilities, allowing the Pharmaceutical Center to achieve same-day trading, settlement, and payment collection.

Second is health insurance; whether health insurance and payment systems can be integrated is critically important.We have also invested in Yilianzhong, a company that has specialized in medical insurance for 20 years and is the leading player in China’s medical insurance sector. This enables us to effectively integrate healthcare services, pharmaceuticals, and medical insurance.

The most critical function of health insurance is fund management. However, there are three major “leaks” in the funding pool. The first leak involves pharmaceuticals and medical consumables, which can be effectively plugged through centralized volume-based procurement of drugs. The second leak stems from overtreatment and excessive examinations; this must be addressed through intelligent Diagnosis-Related Groups (DRGs). The third leak arises from inadequate health maintenance, where minor illnesses progress into severe conditions and chronic diseases deteriorate into critical states. Fundamentally, the core challenge lies in safeguarding against these three leaks. Therefore, several key actions must be taken in the field of health insurance:

First is the integration of the three basic medical insurance schemes.A medical insurance platform aims to integrate three schemes—urban resident basic medical insurance, urban employee basic medical insurance, and the New Rural Cooperative Medical Scheme—into a single system. This company is the only one in China that has achieved province-wide enrollment coverage.

Second is intelligent DRGs.Smart DRGs are particularly critical. Today, the only way to effectively curb excessive examinations, tests, treatments, and medication prescriptions in hospitals is through the implementation of smart DRGs. Zhejiang University is leading this initiative. Why Zhejiang University? Because it possesses three core competencies: medical expertise, AI capabilities, and health economics proficiency.

At the center is our internet hospital, backed by a supply chain integrating pharmaceuticals and medical insurance, with diverse user application scenarios at the front end.This process has essentially established a supply-demand structure.

WeDoctor currently comprises four business units: WeMedical, WePharma, WeInsurance, and WeDoctor Cloud. Among these, WeDoctor Cloud leverages “AI + Big Data.” These four BUs are closely integrated. The central axis of China’s healthcare reform is known as the “Three-Medical Linkage” (integrating medical care, health insurance, and pharmaceuticals), which aligns naturally with our structure. Stakeholders aim to genuinely implement the Three-Medical Linkage through technology, achieving systemic coherence; once connectivity is established, efficiency will inevitably rise.

Discussing with peers: How to Run a Marathon? Stepping into this industry means committing to a lifelong journey; it is not easy without proper preparation. How to Run a Marathon?

First, one must have a strong physique.There are several conditions under which long-distance running is not advisable. First, one should not run while ill; any underlying illness must be fully treated first. In the case of a tumor, it must be addressed and managed before engaging in such activity.

Second, being overly bloated and obese is no longer viable. I have deep personal insight into this. In May, Jack Ma repeatedly urged many people in Gutian (the site of the Gutian Conference in Longyan, Fujian Province) to return and immediately take one critical action: streamline and downsize relentlessly, preparing for an unprecedentedly long winter in the market.

At the end of 2017 and the beginning of 2018, he advised many entrepreneurs to convert their best assets into cash, but his advice was not widely understood at the time. In retrospect, he indeed demonstrated foresight. Recently, Ren Zhengfei also told all Huawei employees to prepare for tough times. We must have the courage to face this reality. During our previous exploration of business models, we accumulated some “bloated” areas, as it was uncertain which business directions were correct and which were not. Looking back, some business lines proved less necessary, and it was difficult to evaluate performance during that exploratory phase. In a marathon-like long run, entrepreneurs must streamline and cut excess weight; otherwise, they risk sacrificing all the efforts invested in their venture.

Recent anti-corruption announcements from Meituan and DJI remind us that corruption is pervasive, and combating it is everyone’s responsibility. In truth, the core responsibility lies in building strong values and robust organizational systems. Yet, in our relentless focus on business operations, we have fallen short in many areas. Savio Kwan, President of Alibaba from 2001 to 2007, led our Internal Audit Committee. I sincerely state that any issues uncovered must be confronted directly; you must provide accountability to all stakeholders and offer clarity for the company’s future. Where there is sunlight, there are also shadows. It takes considerable courage to face these realities, a challenge every enterprise must navigate.

Second, the direction must be correct: look ten years ahead and act on a one-year plan.I have deep personal insights on this matter. We need to look ahead at what the next decade will bring, and then work backward to determine where to start this year. Frankly speaking, if our industry lacks innovation and breakthroughs, there will be few opportunities left. The sheer number of practitioners and the highly specialized division of labor have already solidified the rules and market structure. Whenever possible, we must pursue innovation and breakthroughs; the most critical factor is whether the direction is correct and aligned with prevailing trends.

Third, who you partner with.We are undertaking a Long March, not merely a marathon that lasts for a few hours; it may require a lifelong commitment. Therefore, what matters most are values, organizational systems, and performance management. Individuals who journey together share the same value orientations and behavioral norms. Consequently, when facing similar environments or situations, their responses and judgments align, reflecting a shared set of values. As a company grows to exceed one hundred employees, its values become increasingly critical.

Performance management requires clear standards, ensuring that everyone understands the consequences of both strong and poor performance. When all evaluations are conducted rationally, a mechanism for self-management naturally emerges. More importantly, a comprehensive organizational system—encompassing both soft and hard elements—is essential. Such a system facilitates the continuous upgrading and optimization of corporate values and performance objectives, ultimately driving the refinement of organizational capabilities.

The Communist Party’s Red Army began its true march toward success from Gutian, where the principles of building the Party through political work and strengthening the military through ideological education were first established. This place also holds a special significance for me, as the site of the Gutian Conference is our “Liao Family Ancestral Hall.” In 2018, I brought my entire team to Gutian. It was there that we formed our core value of “Practicing Medicine with Heart.” For anyone working in the healthcare industry—whether in technology, product development, or service delivery—lives are literally in your hands, and you bear responsibility for human life. What we strive for throughout our careers is to practice medicine with heartfelt dedication, bringing warmth to every life.

I was born in the Year of the Ox and am a Taurus, which makes me rather stubborn. Once I stepped into this industry, I resolved to press on, no matter how difficult the journey might be. Jack Ma once said, “Today is cruel, tomorrow is even more cruel, but the day after tomorrow will be beautiful.” I find this statement quite accurate; it offers us both comfort and encouragement. I look forward to joining hands with fellow colleagues, if fate allows, to navigate through the harsh realities of today and tomorrow, and most importantly, to embrace the promising future that lies ahead.

Thank you all!