DXY Founder Li Tiantian: Internet Hospital Monetization Relies Neither on Commercial Insurance, Pharmaceuticals, nor Public Health Insurance

Li Tiantian, Founder of DXY

Li Tiantian has long been closely watching the monetization of internet hospitals. He is the founder and chairman of DXY, and holds a Ph.D. from Peking Union Medical College.

In his view, monetization for internet hospitals should occupy a relatively downstream or back-end position within the overall business model. He is more inclined to build an ecosystem or promote a trustworthy business model. His logical approach begins by considering what services the product will offer, why they are offered, and how they will be delivered. It also examines the relationship between internet hospitals and online consultations, as well as the available revenue models.

The optimal use case for internet hospitals lies in primary care. Primary healthcare in China remains relatively underdeveloped. In contrast, abroad, wearable devices are employed to manage chronic, common, and frequently occurring diseases in primary care settings, addressing a continuous demand. Even for complex and refractory conditions, the internet plays a role—primarily by facilitating communication and enhancing efficiency, rather than directly treating the diseases themselves.

Even for complex and refractory diseases, despite employing remote consultations and prioritizing patient safety—with two specialists or five chief physicians jointly discussing the case—it remains difficult to directly resolve patients’ issues solely through mobile internet platforms.

To give an example (a personal experience of Li Tiantian), my son suddenly said to me this morning after getting up, “Dad, I’m dizzy.”

Upon my examination, my son’s dizziness was position-dependent: he experienced no symptoms when lying down, but felt a spinning sensation upon standing. At the time, I searched for the keyword “vertigo” on the Dingxiang Doctor app. Although numerous results appeared, only one condition closely matched his symptoms—benign paroxysmal positional vertigo (BPPV), commonly known as otolithiasis.

"As a clinician, I searched online for how to treat benign paroxysmal positional vertigo (BPPV). According to online videos, the condition resolved within 30 minutes."

Therefore, when patients use simple symptom keywords as entry points for search, the resulting conclusions may only provide information rather than solutions, failing to address their pain points.. Therefore, to determine whether a product meets patients’ needs, it must be evaluated within the context of their daily lives. It becomes evident that patients desire far more than just disease entries, brief drug descriptions, or simple introductions to hospitals; they may need comprehensive solutions.

APP platforms that have not obtained qualifications for online diagnosis and treatment are prohibited from disclosing patients’ diagnoses or prescribed medications, even if such information is known. This is because national policies forbid non-medical institutions from providing medical consultations or issuing prescriptions. Consequently, when national policies began permitting the establishment of internet hospitals, Li Tiantian applied for an internet hospital license in Yinchuan, aiming to build a new internet hospital with proper medical credentials and thereby complete the final step required for conducting online diagnosis and treatment through internet hospitals.

Li Tiantian believes that internet hospitals are an extension or upgrade of online consultation services, but he does not consider them to be a killer app capable of disrupting or fundamentally transforming the industry.

So, do internet hospitals integrate with pharmaceuticals or insurance, thereby giving rise to a new business model?

In fact, the conversion rate of this online consultation model is very low;Even with e-prescriptions, the conversion rate for users purchasing medications remains low. Therefore, in his view, the current pathway of selling drugs through internet hospitals is not an easy one to pursue.Based on the current conversion data, most users are still paying out-of-pocket, as insurance settlement has not yet been enabled.

There are also numerous restrictions on cross-regional settlement of medical insurance, making it unfeasible for users to navigate the system through an online-to-offline workflow within the medical insurance framework.Some may argue: “If each province establishes an internet hospital, the medical insurance issues will be resolved.”

Certainly not. Establishing one internet hospital in each province would not resolve the issue either, as all public hospitals are constrained by the overall medical insurance system. In other words, even if you have a partnered public hospital in every province, these hospitals are still subject to medical insurance cost-containment requirements. Each public hospital operates under a medical insurance expenditure cap. Consider this: is it likely that a public hospital would allocate its drug budget within this cap to your platform, let alone dedicate a significant proportion of it to you?

“I find it very difficult. Most hospitals are already operating under tight medical insurance quotas, so trying to carve out an additional share from them is extremely challenging.”

The product portfolio is dominated by out-of-pocket medications, resulting in a relatively low target audience penetration. Coupled with the high density of retail pharmacies—where one may find a pharmacy just 50 meters to the right outside the door—and the availability of medical insurance reimbursement, users in urgent need will undoubtedly opt for immediate purchase at a nearby pharmacy.

For patients with chronic diseases who are not in urgent need of medication and either lack health insurance or have insufficient coverage, thereby requiring out-of-pocket payment, purchasing medications online with home delivery is an acceptable option.

“If one truly aims to disrupt the existing sales model of pharmaceutical e-commerce, I believe it remains quite challenging.”

Turning to commercial health insurance, it is currently in its nascent stage, making it difficult to establish a large-scale business model in the short term. Li Tiantian believes that the development of commercial health insurance will also require a considerable period. Therefore, internet hospitals are still in an early incubation phase, and their development is influenced by national policies, including factors related to medical insurance reimbursement, pharmaceutical sales, and regulatory oversight.

Li Tiantian believes that, first and foremost, Yinchuan Dingxiang Internet Hospital is positioned as a medical platform institution. Therefore, its routine management frameworks are designed in accordance with those for physical medical institutions. It differs from conventional or ordinary hospitals, as it lacks medical equipment, imaging diagnostic capabilities, inpatient beds, and surgical facilities. Consequently, the operational systems typical of standard Grade 3A hospitals are not applicable.

Therefore, in the process of design management, “I feel it is more like the management of a general practice clinic.”

When DXY Clinic was established, it was positioned as a general practice clinic. Its medication guidelines, designed for the diagnosis and treatment process, were based on extensive clinical experience.

Clinical observations have revealed that patients continue to have needs for physician interaction even after leaving our clinic. Approximately three days post-visit, many patients provide feedback with various questions. It is essential to deliver high-quality service to these patients and assist them in resolving health-related issues encountered in their daily lives.

To address this user need, we have developed our own standardized protocols for remotely assisting patients in resolving their issues. These protocols are applied to the management of internet hospitals, helping to standardize medical consultation processes and control healthcare quality.

How Does Dingxiang Doctor Ensure Medical Quality Control?

First, strictly control physician quality and assess physician competence in three steps. Online consultations are not within the capabilities of all physicians.

Step 1: Extend targeted invitations to physicians for onboarding.Most doctor-patient communication platforms are eager to onboard as many physicians as possible, allowing any licensed doctor to register.

“We believe that not all doctors are capable of providing remote consultations or diagnoses. Therefore, we only invite doctors whom we have vetted to serve patients,” said Li Tiantian.

Step 2: After the invitation, an examination must be completed before the physician provides services.We assess the quality of physicians' responses by posing simulated questions and evaluating their answers.

Step 3: After passing the examination, close attention will be paid to the physician’s responses to user inquiries during the provision of medical services.

“For instance, if a patient asks a series of questions and the specialist responds, ‘Your issue is quite complex. I hold outpatient clinics on Thursdays; please come to my clinic,’ we remove such specialists from our platform.” These specialists are not genuinely committed to helping users resolve their health concerns but instead seek to divert patients to their own hospital’s outpatient services, which contradicts Dingxiang Doctor’s original mission of assisting users in solving their medical problems.

For the sake of fairness, Li Tiantian also designed a “peer review” system, inviting physicians in his specialty to evaluate his responses to users, thereby helping the platform jointly identify and control medical quality.

Therefore, it is unfair to physicians to assess their professional competence solely based on patient reviews derived from online consultations.Since patient satisfaction is a subjective perception and users lack professional medical backgrounds, physicians’ competencies must be evaluated by professionals. This includes determining who qualifies to join, assessing the quality of their responses, and establishing criteria for removal.

Although the profit model for internet hospitals is still in an exploratory phase, there are already some cases that have achieved initial success. Overall, there are three main aspects: commercial insurance, pharmaceuticals, and medical service fees.

According to Li Tiantian, Yinchuan Dingxiang Internet Hospital achieves commercialization by focusing on chronic disease management. Meanwhile, it adopts a paid model for consultation services.

Regarding internet hospitals, Li Tiantian believes that their core competitiveness lies in DXY’s 17-year track record as China’s largest professional platform for physicians. Prior to 2014, the company focused exclusively on serving physicians; since 2014, it has gradually expanded its services to patients.

“So when patients go to the hospital and ask their doctors, as long as those doctors have internet access, they all know about DXY.” This is not an exaggeration at all.

Leveraging a vast physician base, we curate high-quality medical talent to ensure superior healthcare services and clinical quality for users.

“As a newcomer to the field of internet hospitals, I am still in the process of continuous trial and exploration. Inevitably, I will encounter various pitfalls and obstacles, but these experiences will also help me accumulate valuable insights. I hope that through our collective efforts, this industry can continue to improve, enabling people to enjoy better health and suffer less from disease,” said Li Tiantian.