Haodf Online Files IPO Prospectus Highlighting Its Internet Hospital as the Core of Internet Healthcare 2.0

Internet hospitals have already become a phenomenal model. Recently, Yinchuan Smart Internet Hospital has drawn significant attention. Many people are puzzled: Why have internet hospitals been able to progress so smoothly? What exactly is the business model of Haodf Online’s internet hospital? To address these questions, we are honored tonight to have Mr. Wang Hang, Founder and CEO of Haodf Online and Chairman of Yinchuan Smart Internet Hospital, join us for an interview in the VCBeat VB Group. He will share insights on various aspects of internet hospitals. Co-hosting with me is Mr. Liu Zongyu, a senior reporter specializing in internet hospitals at VCBeat. Now, let’s welcome Mr. Wang Hang to share his perspectives.

Wang Hang:Hello everyone, I am Wang Hang from Haodf Online. Thank you very much to VCBeat for this arrangement. Next, I will introduce the general situation of Haodf Online Yinchuan Smart Internet Hospital.

At the beginning of last year, we met with the Yinchuan Municipal People’s Government to discuss this issue, specifically how to establish medical cooperation under the broader framework of Yinchuan’s Smart City initiative. Yinchuan is a national pilot city for smart city development and one of the second batch of pilot cities for healthcare reform. The city’s smart city construction is at the forefront nationwide.

Yinchuan City aimed to make smart healthcare a new highlight of its smart city initiative in 2016, and thus approached Haodf Online to discuss collaboration in this area. We hope to leverage our online expert resources to support the smart healthcare component of the smart city.

We engaged in discussions with the Yinchuan Municipal Government on the topic, “What Is Truly Lacking in Yinchuan’s Smart Healthcare Development?” Following our analysis, both parties reached a consensus: As a representative city in Northwest China, Yinchuan does not lack funding, medical institutions, or medical equipment; what it lacks most is access to high-end medical expertise. Such specialized resources are predominantly concentrated in major healthcare hubs like Beijing and Shanghai. Since these experts have settled in these large metropolitan areas, it is difficult for them to frequently travel to northwest cities like Yinchuan to provide consultations and assist local patients.

Although we cannot relocate experts’ homes to Yinchuan, we can leverage the internet to deliver their expertise to the city—this is our proposed solution.

Haodf.com and the Yinchuan Municipal People’s Government quickly reached a consensus, aiming to establish an internet hospital in Yinchuan. By leveraging the latest internet technologies, they seek to extend the expertise of specialists from major cities to Yinchuan, a remote area in western China, thereby effectively addressing healthcare access and consultation challenges for patients in Yinchuan, the western region, and across China.

We formally signed an agreement with the Yinchuan Municipal People’s Government in April 2016. From May to July, we recruited numerous experts, including specialists in medical administration, health law, and clinical medicine. Together, we deliberated on the management protocols and regulatory frameworks for this new hospital. By the end of 2016, the Yinchuan Municipal People’s Government and the Yinchuan Municipal Health and Family Planning Commission issued policy documents such as the “Yinchuan Internet Hospital Management Work System,” the “Yinchuan Internet Medical Institution Supervision and Administration System,” and the “Yinchuan Internet Hospital Management Measures.” These three documents served as guiding frameworks for the internet hospital pilot program in Yinchuan. Haodafu Internet Hospital officially opened its doors on December 10, 2016, embarking on this pioneering initiative.

VCBeat’s Liu Zongyu:Haodf Online refers to the internet hospital model as the 2.0 version of internet healthcare. Mr. Wang Hang, could you please explain what constitutes the 1.0 and 2.0 models of internet healthcare, and outline the differences between online consultations offered by internet hospitals and general online medical consultations?

Wang Hang:I proposed such an idea last year: if the medical peripheral consultation services previously engaged in by internet healthcare are termed 1.0, then online diagnosis and treatment should be called 2.0.

Previously, internet healthcare primarily focused on information dissemination and communication, such as providing health information and facilitating doctor-patient interactions. The core content of these doctor-patient exchanges remained largely consultative in nature, excluding diagnosis and treatment; thus, it constituted a consultation service classified as an ancillary healthcare business.

The core business of healthcare is patient care, which can be intuitively understood as diagnosis plus treatment. National regulations stipulate that only medical institutions are permitted to engage in medical procedures such as diagnosis and treatment. Companies or organizations that have not obtained a medical institution license are prohibited from entering the healthcare business.

First, to engage in medical services, one must first apply for a medical institution license, and the state will regulate it in accordance with the administrative measures for medical institutions. In the 1.0 era, internet healthcare companies were not permitted to perform diagnosis and treatment. Only after obtaining the qualifications of a medical institution in the 2.0 era could they engage in online consultation services involving diagnosis and treatment, and issue diagnoses and prescriptions. These electronic prescriptions can also be integrated with online and offline pharmaceutical distribution partners, thereby forming a closed-loop internet diagnosis and treatment service.

Thus, the 1.0 era was primarily characterized by peripheral medical services such as consultations, whereas the 2.0 era enables online diagnosis and treatment and the issuance of electronic prescriptions.

VCBeat's Liu Zongyu:What measures does Haodafu Internet Hospital take to ensure the safety of medical practices during online consultations? How does the Yinchuan Municipal Health and Family Planning Commission ensure the safety of medical practices?

Wang Hang:First, Haodaifu Online and the Yinchuan Municipal Health and Family Planning Commission control medical risks and ensure safety by strictly defining the scope of services. In other words, high-risk procedures are strictly prohibited from being conducted online. For instance, we do not provide online diagnosis or treatment for complex conditions or diseases that cannot be accurately assessed via the internet. However, follow-up visits, particularly for chronic diseases with stable conditions, are suitable for online management. This approach saves patients the time and effort of traveling to hospitals, reduces overcrowding in outpatient departments, and alleviates the burden on healthcare facilities. Therefore, services such as follow-up visits are permitted in online consultations and were among the first services offered by internet hospitals. In addition to follow-up visits, medical consultations are another highly suitable service for online platforms. As consultations involve interactions between physicians—often with one specialist at a tertiary care institution and another at a primary care facility—they facilitate the transfer of expertise and diagnostic capabilities from higher-level institutions to grassroots levels. This collaboration significantly improves medical efficiency and enhances the diagnostic and treatment capacities of primary healthcare institutions.

Second, strictly control physicians’ qualifications. Not all physicians are permitted to provide online consultations; only those who have obtained the Physician Qualification Certificate, possess at least five years of offline clinical experience, and hold the attending physician title may engage in multi-site practice on internet platforms. Physicians who have just received their medical license are prohibited from conducting online consultations due to insufficient experience, thereby reducing medical risks by enforcing stringent entry requirements for practitioners.

Third, stringent process oversight. We engaged a team of medical administration experts, clinical medicine specialists, health law scholars, and hospital management professionals to collaborate with the Yinchuan Municipal Health and Family Planning Commission in developing a comprehensive regulatory framework for internet hospitals. This framework provides detailed guidelines on key operational aspects, such as standardized consultation procedures, permissible medical interventions, and prohibited practices. Only by establishing such rigorous operational protocols can we fundamentally mitigate the risks associated with online healthcare delivery.

Fourth, we have established a comprehensive insurance system. In collaboration with insurance companies, we purchase individual professional liability insurance for physicians. In the event of any unforeseen incidents, as a medical institution, we will provide advance compensation to ensure that patients’ interests are not compromised. The aforementioned aspects constitute the four primary measures and approaches we employ to mitigate medical risks and control healthcare quality.

In addition, we have actively collaborated with the academic community. On February 11, in Shanghai, we co-hosted China’s First Online Diagnosis and Treatment Competition together with the Dermatology Branch of the Chinese Medical Association. Through this competition, we aim to enhance physicians’ awareness of standardized online consultation practices. Dermatology was selected because it is the leading specialty in internet-based medical consultations; approximately 20% to 25% of our cases originate from dermatology. Moreover, as dermatological conditions primarily manifest on the skin surface, they are more amenable to photographic documentation, which facilitates remote diagnosis by physicians. Over this period, our overall business development has remained stable, yielding favorable outcomes.

VCBeat’s Liu Zongyu:"Could Chairman Wang Hang please give us an update? Haodaifu Internet Hospital has been operational for over 100 days now; how has it been performing?"

Wang Hang:Regarding our physician network, our internet hospital has officially completed multi-site practice registration for 11,500 doctors. More than 90% of them are from Grade A tertiary hospitals, and 88% hold the titles of Chief Physician or Associate Chief Physician, covering all regions across China. These physicians have submitted their medical practice licenses and professional title certificates to Yinchuan, where they completed the filing for multi-site practice registration.

On the patient side, we have served 985,000 patients, including 6,500 local patients in Yinchuan, of whom 10% were cases of complex and refractory diseases. Among them, more than 1,500 patients received assistance from medical experts in Beijing and Shanghai. We have addressed numerous disease-related challenges for patients in Yinchuan and across China.

In addition, medical assistance teams have been established among experts, yielding significant operational benefits. For instance, remote collaboration groups have been formed between physicians in Beijing and Shanghai and local doctors in Yinchuan. When encountering complex cases that cannot be resolved locally, Yinchuan-based physicians can promptly consult specialists in Beijing and Shanghai via the internet, conducting online multidisciplinary consultations.

We believe this business model is well-suited for regions in China that lack high-end specialist resources. In this regard, we have established an effective model for primary-care hospitals across the country. We have partnered with a local hospital in Yinchuan—the Yinchuan First People’s Hospital—which serves as our offline partner and patient reception center. Specialists from Beijing and Shanghai regularly support this hospital to enhance its professional capabilities and provide expert backup.

VCBeat’s Liu Zongyu:On March 19, the Yinchuan Municipal People's Government officially announced that Haodf Online Internet Hospital had been integrated into the medical insurance system. Chairman Wang Hang, could you please elaborate on the significant implications of this policy for internet hospitals?

Wang Hang:Yinchuan City has issued a new document, the “Yinchuan City Internet Hospital Medical Insurance Personal Account and Outpatient Pooling Management Measures (Trial),” which sets forth regulations on the integration of internet-based healthcare with medical insurance. In my view, the most significant highlight of this document is that, in addition to allowing patients’ medical insurance personal accounts to cover online consultations and medication purchases, it also stipulates that the outpatient pooling fund can be used for online medical consultations.

This represents a highly significant advancement nationwide. Its primary significance lies in the recognition and exploration of internet-based healthcare by the medical insurance system. Why is it considered an exploration? Because I believe the most critical aspect of internet-based healthcare is its focus on follow-up patients, particularly those with chronic diseases who receive long-term, standardized management via online platforms. If patients with chronic conditions lack such standardized management, their potential risks and risk of complications are substantially elevated. Internet-based solutions excel in managing chronic diseases; effective management can reduce disease-related risks, thereby lowering patient expenditures. This constitutes a highly promising initiative for controlling medical insurance fund expenditures.

This time, we also observed that the medical insurance fund aims to incorporate online diagnosis and treatment as well as web-based disease management. By leveraging the internet to provide patients with long-term disease management, this approach is being positioned as a strategic breakthrough for medical insurance to reduce overall expenditures.

Another point is that everyone knows China currently operates under a model where healthcare institutions rely on drug sales for revenue, resulting in an excessively high proportion of drug costs. Some argue that the Chinese public consumes too many unnecessary medications. I believe the core issue lies in the fact that domestic medical service fees are too low; doctors and hospitals cannot generate adequate income or sustain their operations through service fees alone. Consequently, drug prices have become inflated, as selling medications has become the primary means of generating profit.

The core business model of internet-based healthcare is service-based charging. By having physicians provide high-quality care and collecting appropriate medical service fees, the value of their professional services is recognized, enabling them to deliver quality care with peace of mind. Prescribing medication only when clinically indicated, and refraining from unnecessary prescriptions, represents a more sustainable and healthier approach to medical service delivery. Therefore, I believe that increasing medical service fees—particularly by leveraging internet platforms to allow physicians to earn reasonable income through their services—will inevitably reduce the proportion of pharmaceutical costs, lower overall drug expenditures, and decrease total health insurance spending.

VCBeat’s Liu Zongyu:What do you think are the reasons why numerous internet healthcare companies have flocked to Yinchuan? Does Haodaifu Online feel pressured by the competition?

Wang Hang:Yinchuan has a population of 3 million, while the entire Ningxia Hui Autonomous Region has only 6 million. Coupled with Ningxia’s compact geographic area and its mix of economically developed and impoverished regions, these characteristics make Ningxia particularly suitable as a pilot zone for internet healthcare innovation. Furthermore, Yinchuan innovatively implemented several pilot policies last year, including “One Measure and Two Systems,” which have placed it at the forefront of national exploratory pilots in internet healthcare.

I believe that internet healthcare is still in its very early stages. The dozen or so internet healthcare companies that have established themselves in Yinchuan are certainly more collaborative than competitive. By working together and discussing business development, they will create more opportunities for mutual growth.

Meanwhile, the Yinchuan Municipal Government also advocates for a centralized pilot model. Compared with enterprises conducting disparate pilots across various regions nationwide, this consolidated approach facilitates more effective management. When coordination is required, the government can intervene promptly, resulting in significantly higher efficiency.

VCBeat Reader:I am a medical entrepreneur in Yinchuan. Are there opportunities for grassroots clinics and outpatient departments to collaborate with Haodf Online?

Wang Hang:We are highly eager to collaborate with offline medical institutions, as our core competency lies in internet-based services. Without such partnerships, our business influence and scope would remain severely limited. We aim to leverage the internet to channel expert resources from major medical hubs like Beijing and Shanghai down to the grassroots level, establishing extensive collaborations with community health centers, township health centers, and clinics. This approach is essential for realizing tiered diagnosis and treatment, enabling patients at the grassroots level to access specialists nationwide.

VCBeat Community Member:Are Internet hospitals equivalent to specialist consultations plus tiered diagnosis and treatment? If so, how do they differ from existing medical consortium consultations?

Wang Hang:I find this issue quite intriguing. Currently, the state is promoting medical consortia, which indeed play a significant role in facilitating the downward allocation of expert resources. However, during the implementation of medical consortia, each consortium can only cover a limited area and is unable to mobilize high-end expert resources on a broader scale. Therefore, I believe that the internet will serve as a collaborative platform for medical consortia, effectively advancing their development. This will enable patients with complex and difficult cases at the primary care level, along with their physicians, to access top-tier experts across China through online medical consortium platforms.

VCBeat Community Member:What urgent issues remain to be addressed in the future development of internet hospitals?

Wang Hang:In the future development of internet hospitals, the most pressing issue remains how various internet healthcare enterprises can enhance quality and control service standards.

Finally, I would like to express my sincere gratitude to VCBeat for organizing this event, and thank you all for your attention. Thank you.