WeDoctor Files for Hong Kong IPO: Pioneering the Future of Digital Healthcare with an Integrated HMO Model

Over the past few years, Liao Jieyuan has undoubtedly been one of the most prominent figures in the field of medical innovation. This short-statured, stubborn middle-aged man, a Taurus by birth sign, has led WeDoctor from an unassuming appointment-registration website to rapidly become a frontrunner in new healthcare business models.

Since 2014, both the business metrics and valuation of WeDoctor have been accelerating: its valuation has grown rapidly in recent years, reaching $1.5 billion in 2015, $3 billion in 2016, and rising to $5.5 billion after completing a $500 million financing round in early May 2018.

As the founder of WeDoctor, Liao Jieyuan seems to be constantly on the move, with his time scheduled down to the hour. After attending a closed-door discussion in Xi’an following the announcement of a new round of financing, he flew directly to Beijing, where he spent more than two hours speaking with over ten media outlets, including VCBeat, before immediately returning to Hangzhou to prepare for the next day’s meetings.

Since 2014, VCBeat has focused on reporting the technology-driven transformation of the healthcare industry, witnessing nearly every step of WeDoctor’s efforts. By revisiting more than 350 articles published about WeDoctor, we aim to outline its development trajectory and key growth drivers.

In 2010, when Liao Jieyuan and his team decided to pivot into the healthcare sector, the entrenched structure of the medical industry had already begun to shift, though no one knew where this transformation would lead.

Christensen once described this state as follows: “Perhaps the most disheartening aspect is the absence of a strategic blueprint that commands the unanimous agreement and trust of all reformers. They possess extensive historical data and are accustomed to relying on robust evidence to build consensus for action. However, due to the lack of data on the future, there is no compelling guide to inform reformers which paths lead to dead ends and which offer promising avenues for reform. Few people truly understand the interconnections among these different pathways.”

At the time, Liao Jieyuan, then a speech recognition expert, was unclear about the future profitability model. The direct catalyst for his pivot to healthcare was his young nephew, who developed a lump on his foot due to tuberculosis but was misdiagnosed with a synovial hernia. Driven by empathy, he sought to leverage internet technology to address the difficulties ordinary people faced in accessing medical care and finding appropriately specialized physicians.

In Liao Jieyuan’s view, internet healthcare will serve as an efficient pathway to address the issues of inefficient matching of existing resources and the information gap, reallocating key production factors to a certain extent and partially breaking down and lowering previous thresholds and barriers. They aim to reduce the cost of medical services and improve their quality and coverage through technological innovation.

“In most internet industries, traffic is king and demand dictates supply; however, the healthcare industry is precisely the opposite, with supply dictating demand.” Liao Jieyuan believes that in the healthcare sector, mere traffic holds little value. The essence lies in creating supply capacity, which constitutes the sole core value of this industry.

Under given constraints, there is an inherent logical inconsistency among the cost, accessibility, and quality of medical services. The only way to resolve this “impossible trinity” of healthcare is by introducing new technological and model-based increments. Various startups have chosen different paths; WeDoctor opted to integrate offline medical service capabilities through appointment registration. Efforts from 2010 to 2015 subsequently proved the feasibility and correctness of this approach. Grasping this point is akin to seizing the critical lever of innovative medical services. “The only thing we have been doing over these years is the integration of offline medical services. The reason why the scale of health insurance has remained stagnant is that no domestic insurance company yet possesses genuine capability in integrating medical supply.”

In the interview, Liao Jieyuan stated that once innovative enterprises possess this supply capability, they will find that the scale of demand and the payment capacity of the general public far exceed expectations. The true challenge for internet healthcare lies in effectively helping the general public address three major needs:

First, to provide effective medical care, true clinical efficacy necessarily requires close synergy between online and offline services, as well as collaboration across various general practice and specialty disciplines.

Second, it is not enough to merely provide effective clinical care; we must truly prioritize the health of the general public by helping them establish healthy lifestyle habits and adopt proper ways of living, thereby enabling early detection of serious diseases and effective management of chronic conditions.

Third, the payment leverage. In the event of a serious illness, one can receive substantial compensation and high-level coverage.

“Consumers will only pay for supply capabilities that actually solve their problems. Building the above three capabilities is extremely difficult; we are fortunate that WeDoctor has already developed the core competencies to address these three issues,” said Liao Jieyuan.

Almost all innovation originates from the fringes of the prevailing system. Meanwhile, a company’s founding premise determines its growth trajectory; over time, companies with similar starting points diverge increasingly.

Due to the scarcity of appointment slots at tertiary hospitals, the market was rife with profit-driven appointment-booking websites and scalpers reselling appointments.

When Liao Jieyuan led his team to penetrate the rigid and closed healthcare system, they chose the most peripheral service within the sector—appointment registration—and established a rule: appointment registration, as a public service, would remain free forever. This policy not only aligned with the regulations of the Ministry of Health at the time but also compelled a group of appointment-booking websites that profited from slot allocations to either be acquired by WeDoctor or exit the market. Meanwhile, WeDoctor’s appointment registration business gradually evolved into the core foundational component of what is now known as WeDoctor Cloud.

Starting with the initial 5% of appointment slots at Huashan Hospital, Guahaowang (WeDoctor) established connectivity between internal and external networks by deploying front-end servers. This architecture enabled data exchange between the hospital’s intranet and the external network within milliseconds, while avoiding direct connections to mitigate security risks and system pressure. Following the Huashan Hospital model, Guahaowang configured one or even two front-end servers for each large Grade A tertiary hospital it onboarded. By the end of 2011, WeDoctor had partnered with 267 hospitals. Subsequently, it gradually deployed over 1,700 sets of front-end servers across more than 2,400 hospitals in 27 provinces and municipalities.

In 2012, Guahao.com had 30 million real-name registered users. By August 2015, it had over 100 million real-name registered users and 190,000 specialists from key hospitals, delivering 272 million patient visits and creating more than 87 million electronic health records. In 2016, the number of real-name registered users reached 150 million, with 200,000 doctors, accumulating a total of 850 million patient visits.

WeDoctor has become the largest online healthcare service platform in China. Today, WeDoctor’s services cover every stage of the patient journey, including waiting for consultations, retrieving test reports, and paying registration and treatment fees. A seemingly simple feature, such as point-of-care settlement, has reduced the number of times patients need to queue at hospital windows from 4–6 times to just once, cutting their original waiting time from 2–3 hours down to 30 minutes. In hospitals that have completed payment system upgrades, 80% of window-based services have been migrated to mobile platforms, leading to the closure of more than half of all service windows.

This is the core business pillar of WeDoctor today—WeDoctor Cloud. Its primary objective is to help the industry improve efficiency, and its core customers fall into three categories: hospitals, government entities, and pharmaceutical and insurance companies. Services for all three customer segments are now showing significant revenue growth.

“What we do to help hospitals is optimize the patient care journey, synergize the capabilities of large tertiary hospitals with those of primary care institutions, and enhance the service capacity of primary care providers. As hospitals establish internet hospitals, they require infrastructure and operational systems, leading to substantial procurement of our foundational services.”

“We assist the government in two key areas: one is facilitating data sharing through a big-data platform for healthcare; the other is helping local governments establish genuine family doctor contract service platforms to ensure continuous care. The government purchases these services on a capitation basis, yielding results far exceeding our expectations.”

"In terms of the industry, we have established the largest prescription-sharing platform in China. This platform is poised to become the central execution engine for the separation of prescribing and dispensing in China’s pharmaceutical sector. We are also deeply integrating with both basic medical insurance and commercial health insurance providers, offering data support to insurers in areas such as data analytics and underwriting."

Leveraging its massive appointment-registration portal, WeDoctor began to demonstrate network synergy effects, extending from mere appointment scheduling and optimization of the care journey to a full-service chain. After four years of initial accumulation, it started in 2014 to build an integrated service chain, evolving from team-based care to internet hospitals, and then upgrading to the ACO/HMO model. It has established business lines including internet hospitals, general practice clinics, pharmacy-clinics, health e-commerce platforms, WeDoctor Cloud, and commercial insurance, thereby forming a comprehensive business ecosystem encompassing “Cloud, Medical Care, Pharmaceuticals, and Insurance.”

Liao Jieyuan summarizes WeDoctor’s current model into two categories, encapsulated in eight Chinese characters: “Cloud + HMO” and “Online + Offline, General Practice + Specialty Care.” By organizing medical resources through its platform, integrating the capabilities of general practice and specialty care, and establishing a comprehensive online and offline service system, WeDoctor has progressively deepened its offerings from superficial services to form a complete HMO service system.

The second phase of WeDoctor’s development involved exploring the realization of “micro-healthcare” via the internet, comprising a three-tier service system of “bases, outlets, and terminals,” to provide users with medical services that integrate “online + offline” and “general practice + specialty care.”

“Bases” refer to the more than 2,700 key hospitals and over 7,400 expert teams connected by WeDoctor across 30 provinces and municipalities in China, encompassing more than 100 regional medical service bases including internet hospitals and medical consortia. WeDoctor Group also boasts a chronic disease management and triage team of 15,000 members. Its app can match a physician with a precise patient within just one to two minutes, increasing the doctor-patient matching rate from an initial 72% to over 96%.

Established on December 7, 2015, Wuzhen Internet Hospital is a core component in the construction of WeDoctor’s business model. It represents a new breakthrough in the field of internet healthcare. On April 28 this year, the General Office of the State Council issued the “Opinions on Promoting the Development of ‘Internet + Medical Health’.” After 858 days and nights of exploration, the business model of Wuzhen Internet Hospital has undergone a journey from the “Xiaogang Village” pilot stage to receiving the definitive endorsement akin to the “gavel” from Zhongnanhai.

Wuzhen Internet Hospital provides only triage and free consultations for initial visits, then matches these patients with over 2,700 offline medical institutions, transmitting patient data via electronic health records. As of October 2016, the daily online consultation volume at Wuzhen Internet Hospital had reached 31,000, nearly twice that of a large Grade 3A hospital.

Starting with the Wuzhen Internet Hospital, WeDoctor’s internet hospitals have been deployed across 17 provinces and municipalities, initiating the development of internet-based medical consortiums for primary healthcare institutions. Since 2016, it has successively established 10 specialized disease remote consultation centers, including a Pancreatic Cancer Remote Consultation Center and a Liver Transplantation Consultation Center.

After nearly three years of practice, WeDoctor has developed three core capabilities in system infrastructure, user traffic, and operations within the “Internet + Medical Consortium” framework, and has built eight major platform systems, including remote diagnosis and treatment, remote consultation, remote referral, remote training, cloud-based electronic medical records, cloud-based laboratory and imaging services, payment and settlement, and cloud pharmacy.

Building on the Wuzhen Internet Hospital, WeDoctor has established its “WeDoctor Pharmacy” segment, which encompasses services such as integrated pharmacy-clinic models and prescription sharing. This initiative scales up connectivity among hospital information systems, retail pharmacy drug distribution and logistics systems, and medical insurance settlement systems, thereby enabling multi-party information sharing and application across healthcare delivery, medical insurance, and pharmaceutical services.

In March 2016, WeDoctor launched the “Internet Hospital + Pharmacy Partnership Program.” By logging into the Wuzhen Internet Hospital Pharmacy System, partner pharmacies can provide members with services such as precise appointment scheduling, remote consultations, and electronic prescriptions. This initiative allows pharmacies to be upgraded free of charge into virtual clinics, establishing a new internet-based “Pharmacy-Clinic” business model. Consequently, these entities have evolved from simple drug retailers into integrated hubs for appointment registration, remote medical consultations, diagnostic testing, and electronic prescription management. The Wuzhen Internet Hospital’s Pharmacy-Clinic network has become China’s largest pharmacy-plus-clinic platform, helping nearly 20,000 pharmacies across the country upgrade into accessible healthcare service and health management centers located close to residents’ homes, with an average daily service volume exceeding 46,000 visits.

In February this year, WeDoctor built the National Prescription Sharing Platform. The platform has been successively launched in provinces and cities such as Hainan, Heilongjiang, Shandong, Henan, and Sichuan, with daily prescription circulation exceeding 70,000.

The prescription sharing process is as follows: The physician issues a prescription and uploads it to the prescription sharing platform, where it undergoes rigorous review by a prescription audit team. After the patient settles the medication costs online, the medications are delivered to the patient’s home by a nearby designated pharmacy. Alternatively, the patient may choose to pick up the medications in person at a nearby designated pharmacy.

WeDoctor aims to comprehensively promote the integration of hospital systems nationwide and enable prescription circulation, explore connections with medical insurance systems in three to five provinces, cultivate 100 blockbuster products each generating RMB 100 million in revenue, help 10,000 designated pharmacies upgrade into “Community HMOs (Health Maintenance Organizations),” and integrate resources across the entire industry chain to empower healthcare, pharmaceuticals, and insurance.

“WeMedi Insurance” leverages the big data accumulated by WeDoctor to provide users with precise, intelligent recommendations across various scenarios, offering one-stop services for online purchase, healthcare, and claims processing. It focuses primarily on health management, medical services, and insurance underwriting and claims handling, with insurance e-commerce as a supplementary component. The platform encompasses six core products: the Health Insurance Portal, Health E-Office, Insurance Underwriting and Claims Services, WeMedi Pay, Telesales Cloud, and Health Account.

We are living in an era of profound transformation, one that is fostering a data-driven, participatory cultural model characterized by deeper consumer engagement. The creative force of this new ecosystem is reshaping everything we know with greater breadth and deeper impact.

If we subscribe to the growth logic that has driven WeDoctor’s success thus far, it is worth carefully considering Liao Jieyuan’s assertion: in the future, 50% of chronic disease management, treatment of common illnesses, and health maintenance will be conducted at home; 35% will be handled by primary care institutions; and the remaining 15% will take place in large hospitals. This shift will truly realize the transition from passive medical care to proactive health management.

Harvard Business School professor Clayton Christensen posits that, with advancements in medical technology and the evolution of healthcare delivery models, specialists are increasingly being replaced by general practitioners, who in turn are being supplanted by physician assistants and nurse practitioners. As technology continues to advance, the demand for specialized physicians will gradually decline.

The general practice and specialty care service system described in Liao Jieyuan’s “Eight-Character Canon,” combined with the online–offline collaboration enabled by the platform, makes an efficient healthcare supply network the core component of the HMO model. In Liao Jieyuan’s view, the integration of medical insurance with HMOs represents the ultimate direction of China’s healthcare reform. Internet hospitals are merely a service modality; the cornerstone of this system is the general practitioner acting as the health gatekeeper. Given the generally low level of primary care in China, WeDoctor has made substantial investments to address shortcomings in general practice. Starting with education, it aims to enhance physicians’ knowledge and, by forming general practitioner teams, improve the overall weakness of domestic primary healthcare.

First, provide standardized general practice training to a large number of internists, pediatricians, and gynecologists to qualify them as general practitioners;

Second, WeDoctor is establishing general practice centers nationwide. Centers in Beijing, Nanjing, and Hangzhou are already operational, with plans to open 100 such facilities in the future. As WeDoctor’s internet hospital does not provide initial consultations, the establishment of these general practice centers effectively addresses this limitation by enabling the continuous delivery of comprehensive medical services, thereby serving as a critical component of WeDoctor’s closed-loop internet healthcare ecosystem.

WeDoctor’s first General Practice Center was established in Hangzhou in 2016, with a total investment of RMB 20 million. The physical hospital covers an area of 2,400 square meters and provides services including online consultations, remote specialist consultations, and offline medical care. It houses departments such as General Practice, Obstetrics and Gynecology, Pediatrics, Dentistry, Traditional Chinese Medicine, Dermatology, Psychology, Clinical Laboratory, and Medical Imaging, delivering comprehensive, continuous, and family-oriented medical services and health management.

Third, WeDoctor established the Hainan College of Health Management with the goal of making it a national cradle for training general practitioners. WeDoctor invited He Chao, former president of Sir Run Run Shaw Hospital, to serve as the head of its General Practice Medical Center, and also collaborated with Professor Zhu Shanzhu, Chair of the Department of General Practice at Fudan University Shanghai Medical College, to jointly launch the “WeDoctor Academy of General Practice” initiative.

Liao Jieyuan said, “On May 27 last year, during the Human-Machine Go Tournament in Wuzhen, Google CEO Eric Schmidt stated that the most significant application scenario for AI lies in healthcare, and the greatest opportunities in healthcare are in China. I would add this: In China, the greatest value lies at the primary care level.”

Micro Medical Group, in collaboration with the Zhejiang University Ruiyi Artificial Intelligence Research Center, has developed the Ruiyi Intelligent Doctor and Huatuo AI Diagnosis and Treatment applications. These solutions help reduce physicians’ workload at large hospitals and effectively enhance the quality and efficiency of primary healthcare.

After more than a year of deep learning on millions of high-quality data sets, Ruiyi Intelligent Doctor has achieved key breakthroughs in over ten specialty areas, including pulmonary nodule detection, diabetic retinopathy screening, cervical cancer screening, bone age assessment, and general practice auxiliary diagnosis. Notably, its accuracy and sensitivity in cervical cancer screening surpass those of clinical physicians. For AI-based binary classification of diabetic retinopathy, the specificity reaches 99% and sensitivity 95% across most data sets, outperforming tech giant Google and reaching an internationally leading level.

Huatuo Intelligent Doctor is an AI-powered diagnostic and treatment application for Traditional Chinese Medicine (TCM), centered on TCM syndrome differentiation and treatment. It consolidates the clinical experience of renowned TCM practitioners and their classic prescriptions. Currently, Huatuo Intelligent Doctor has been deployed in 400 TCM clinics across 11 prefecture-level cities in Zhejiang Province, assisting in the issuance of over 2 million prescriptions. It has become the most widely applied “Cloud-Based TCM Brain” internationally.

“When Chinese citizens choose their own healthcare security services in the future, they will have two options: basic medical insurance and HMOs.” Liao Jieyuan believes that the HMO market will exceed one trillion yuan in the next 20 years.

In WeDoctor’s strategic layout, HMOs and ACOs represent the final link in realizing the monetization of internet healthcare value. WeDoctor’s HMO offers targeted health and medical service plans for different population groups, helping them control disease risk and reduce medical expenses. The annual fee is RMB 365, equivalent to just RMB 1 per day. WeDoctor’s ACO charges a monthly base fee of RMB 500. Building upon the HMO model, it adds comprehensive full-coverage health insurance, enabling full reimbursement of medical costs beyond those covered by social security, with maximum coverage of up to RMB 1 million for over 60 critical illnesses. In comparison, Kaiser Permanente, the most efficient ACO provider in the United States, charges USD 500 per month for its ACO services.

HMOs operate on a bundled payment model, integrating the annual costs of medical and health coverage with insurance leverage into a single package. This constitutes the true HMO payment structure and represents health insurance payment in its substantive sense. HMO services comprise three components: first, a medical supply system, wherein all contracted family medical services are delivered within this framework; second, health maintenance and protection; and third, payment leverage. Eighty-five percent of HMO costs are attributed to medical expenses and health protection, while the remaining 15% account for critical illness insurance leverage.

“The families we serve entrust their health and medical care entirely to our system, which delivers end-to-end services. Our task is to thoroughly optimize these two service dimensions. We aim to expand our reach from local areas to serve the entire population of China,” Liao Jieyuan told reporters. “We initially planned to serve 800,000 households; to date, we have served at least 1 million households. These 1 million households will become contracted HMO members, generating revenue of no less than RMB 2.5 billion from the HMO segment.”

“For the past eight years, we have kept our heads down and worked hard, leveraging our unique insights to build a medical supply network and capabilities. By harnessing technology, we have established integrated service systems for both general practice and specialized care, forming an online-offline service network. This is what sets WeDoctor apart from other companies,” said Liao Jieyuan. As a healthcare technology platform, WeDoctor has been fundamentally focused on two core initiatives: using technology to create the WeDoctor Cloud services industry, and building an HMO (Health Maintenance Organization) system to serve the public. Despite the challenges, WeDoctor has remained steadfast in its commitment to these goals.

In Liao Jieyuan’s view, the most challenging aspect of building an HMO system is establishing a healthcare supply network that integrates offline and online services, as well as general practice and specialty care. As this healthcare supply network gradually takes shape and gains supportive capacity, the HMO service model will emerge. “Once supply capability is in place, demand can be ignited with minimal effort; our revenue growth last year and this year has both exceeded expectations.” He hopes that, with AIA’s investment, WeDoctor can become one of China’s largest HMO service providers.

"The question whether objective truth can be attributed to human thinking is not a question of theory but is a practical question. Man must prove the truth, i.e., the reality and power, the this-sidedness of his thinking in practice. The dispute over the reality or non-reality of thinking that is isolated from practice is a purely scholastic question."

Just as when Xu Qian, now a partner at DT Capital Partners, led the RMB 394 million financing round for WeDoctor in 2015, many critics poured cold water on WeDoctor’s business model. Yet Xu remained full of confidence in Liao Jieyuan and WeDoctor, stating, “While the healthcare innovation sector is riddled with pitfalls in business models and various policy constraints, Mr. Liao demonstrates exceptional capabilities in resource integration and organizational structuring.”

Online appointment registration may appear to be a minor innovation in the short term, but it represents a significant variable capable of transforming the industry in the long run. Innovation is essentially a restructuring of production relations, which inevitably requires breaking through many established rules—this is the most challenging aspect.

“Over the past eight years of exploration, WeDoctor and other projects in the field of medical innovation have begun to achieve ‘scale in operations, value creation, revenue, and profits, ultimately leading to scaled market share within the industry.’ The entire market is starting to believe that technology can revolutionize the healthcare sector,” said Liao Jieyuan. “Policy responses to technological advancements are now rapid; barriers once seen as impenetrable have been broken down, which will accelerate the formation of a health-centric healthcare security system.”