China Simplifies TCM Clinic Setup with Immediate Filing System: Prospectus Highlights Regulatory Shift and Market Opportunity

Recently, the National Health and Family Planning Commission issued Order No. 14, promulgating the Interim Measures for the Record-filing Administration of Traditional Chinese Medicine (TCM) Clinics (hereinafter referred to as the “Interim Measures”), which clearly shifts the regulatory approach for TCM clinics from a licensing system to a record-filing system. The Interim Measures officially came into effect on December 1, 2017.

It is reported that the National Health and Family Planning Commission and the State Administration of Traditional Chinese Medicine are about to promulgate relevant documents, including the "Basic Standards for TCM Clinics," to facilitate the smooth implementation of the "Interim Measures for the Record-filing Management of TCM Clinics."

The Interim Measures provide the definition of a traditional Chinese medicine clinic, andSpecifies the scope of diagnosis and treatment for TCM clinics：

Traditional Chinese Medicine (TCM) Clinics are medical facilities that provide diagnostic and therapeutic services under the guidance of TCM theory, utilizing herbal medicines and non-pharmacological therapies such as acupuncture, cupping, and tuina massage, as well as offering pharmaceutical services including herbal dispensing and decoction preparation.

Meanwhile, the conditions for filing a record to obtain a Traditional Chinese Medicine (TCM) Clinic Practice Certificate are also specified. These requirements are not overly stringent:

1. Individuals establishing a traditional Chinese medicine (TCM) clinic shall hold either the "Physician Qualification Certificate" in the TCM category or the "TCM (Specialty) Physician Qualification Certificate."

The person in charge of the TCM clinic holds a "Physician Qualification Certificate" in the category of Traditional Chinese Medicine and has practiced in medical, preventive, and healthcare institutions after registration.Changed from 5 years to 3 years in the “Interim Measures for the Record-filing Administration of Traditional Chinese Medicine Clinics (Draft for Comments).”

2. The establishment of TCM clinics shall comply with the "Basic Standards for TCM Clinics" issued by the National Health and Family Planning Commission and the State Administration of Traditional Chinese Medicine in 2017.

3. The name of a traditional Chinese medicine clinic shall comply with the requirements of the Regulations on the Administration of Medical Institutions and its Detailed Implementation Rules.

4. Fire safety shall be ensured in compliance with the provisions and requirements of relevant laws and regulations.

The clear message from the administrative process is that, provided all required documents are complete, the “TCM Clinic Filing Certificate” can be obtained on the spot, allowing the clinic to commence operations immediately, thereby significantly shortening the time needed to open a clinic.

The Interim Measures stipulate that applicants meeting the conditions for establishing a Traditional Chinese Medicine (TCM) clinic shall submit the required filing materials to the county-level administrative department of traditional Chinese medicine in the locality where the clinic is proposed to be established. Upon receipt of the materials, if they are complete and meet the filing requirements, the county-level administrative department of traditional Chinese medicine shall record the filing and issue the TCM Clinic Filing Certificate on the spot. If the materials are incomplete or fail to meet the filing requirements, the applicant shall be informed, either on the spot or within five days, of all the corrections needed in a single notification. The filer may commence practice activities upon obtaining the TCM Clinic Filing Certificate.

Compared with the relatively lenient requirements and administrative procedures for obtaining the “TCM Clinic Filing Certificate,” supervision and constraints under the filing system are stricter.

The Measures stipulate that the county-level department in charge of traditional Chinese medicine shall conduct an on-site inspection of a TCM clinic within 30 days from the date of its filing. The inspection shall verify the authenticity of the clinic’s address, layout, scope of diagnosis and treatment, practicing personnel, and equipment, as well as their consistency with the filed information.

Meanwhile, the county-level administrative departments of traditional Chinese medicine shall establish a system for recording adverse professional conduct by TCM clinics, documenting violations such as irregular operational practices, unreasonable fees, and false advertising, which shall serve as an important basis for the supervision and administration of TCM clinics.

Furthermore, where a traditional Chinese medicine (TCM) clinic conducts medical activities beyond the scope filed for record, the county-level TCM administrative department in its locality shall order it to make corrections, confiscate its illegal gains, and impose a fine of not less than RMB 10,000 but not more than RMB 30,000; if harm is caused to patients, it shall be ordered to cease practice activities, and its “TCM Clinic Filing Certificate” shall be revoked. The directly responsible supervisors shall be prohibited from engaging in management work in medical institutions for five years.

According to data from the National Bureau of Statistics, traditional Chinese medicine (TCM) clinics accounted for nearly one-fifth of all clinics in China, with a growth rate exceeding 20% in 2016.

Based on the major traditional Chinese medicine (TCM) policies of the past two years, relaxing the approval requirements for TCM clinics has long been a clear trend.

Driven by favorable policies and profit incentives, an increasing number of individuals and private capital investors will enter the TCM clinic industry, leading to a surge in the number of TCM clinics.