Innovative Policies Accelerate Socially-Run Healthcare: Shenyang Cuts Approval to 7 Days, Guangdong and Xiamen Introduce Bold Incentives

On June 11, 2015, the General Office of the State Council issued the “Several Policy Measures on Promoting the Accelerated Development of Socially Operated Medical Institutions,” urging all localities to conscientiously implement them.

The measures explicitly stipulate that private medical practice is to be encouraged primarily by reducing operational approval restrictions, controlling the scale of public hospitals, strengthening fiscal financial support, diversifying financing channels, promoting the flow and sharing of resources, and optimizing the development environment.

What policies have been introduced across China regarding privately run medical institutions over the past year? What challenges did entrepreneurs encounter during this period?

According to media reports, Li Yongming, the founder of Danggui Chinese Medicine Academy, began preparations in July 2012 and finally obtained the business license on December 25, 2013. After one year and five months, the TCM clinic was finally able to operate legitimately.

According to his recollection, establishing a traditional Chinese medicine (TCM) clinic requires permits from numerous departments, including health, fire safety, environmental protection, and industry and commerce. To open a clinic in a residential property, the health department’s approval process took two months, the fire department’s review lasted over two months, the environmental impact assessment took more than three months, and the urban management bureau’s approval required several weeks. When combined with approvals from the industry and commerce and tax authorities, the entire process took nearly a year to complete.

If you fail to complete the previous step, you cannot proceed to the next stage. Each department holds veto power, so establishing a clinic is effectively equivalent to navigating a complex licensing process. Failure at any single checkpoint will render all prior efforts futile.

“Before you apply for the license, you’re completely in the dark; no one tells you anything, and halfway through, you never know which step might get stuck.”

In his view, the policy on privately run medical institutions resembles a “spring-loaded door” that swings back shut as soon as it is pushed open. Li Yongming said with a wry smile that, in accordance with government transparency requirements, each department has established time limits for handling administrative matters. However, these time limits apply only to the acceptance of applications. If the submitted materials are incomplete, staff will neither accept the application nor affix their official seal, leaving the documents in the applicant’s possession. The processing clock starts ticking only from the date of acceptance; if an application is not accepted, the timer never begins. Consequently, all the time is consumed by completing and resubmitting the required materials.

Li Yongming finds his experience of opening a traditional Chinese medicine clinic too painful to recall. He stated that establishing private medical practices is exceedingly difficult, and he urged the government to streamline administration, delegate authority, reduce unnecessary approvals, and ease regulatory burdens on entrepreneurs.

Li Yongming is just one of the many entrepreneurs in the private healthcare sector. His personal experience is, in fact, a microcosm of that of countless other founders. So, what new and innovative policy measures have been introduced across various regions over the past year to help entrepreneurs achieve greater stability and success on their journey in private healthcare?

On February 23, it was reported that the Shenyang Municipal Health and Family Planning Commission introduced a package of policies to create an internationalized business environment, further lower the “threshold” for privately run medical institutions, and promote their healthy development. Under these measures, registration and changes of physician practice licenses can be completed on the same day; the maximum statutory approval period has been reduced from the original 80 days to just 7 days, with the shortest processing time being immediate, thereby launching a “one-visit completion” model. Shenyang is also the first in the province to clearly specify the approval basis for privately run medical institutions, thus “loosening restrictions” on such entities.

The newly launched policy has greatly benefited Wang Ying, who has been engaged in family planning work for over a decade. As she recently plans to change hospitals, she needs to complete multiple procedures, including physician practice registration and changes. “I heard it would take more than 30 days to process, so I kept putting it off. But when I came to apply today, I was told it could be completed on the same day. That’s incredibly fast!”

According to Wu Ji, Director of the Administrative Approval Office of the Municipal Health and Family Planning Commission, physician practice registration and changes can be completed on the same day. Through reengineering of the approval process, the maximum statutory approval period has been reduced from the original 80 days to the current 7 days, with the shortest processing time being immediate. This represents a reduction in approval time by more than 85%, significantly improving approval efficiency.

Furthermore, Shenyang took the lead in the province by formulating the Basic Standards for Shenyang Nephrology Hospital, the Basic Standards for Medical Imaging Institutions in Shenyang, the Basic Standards for Shenyang Geriatric Hospital, and the Basic Standards for Ophthalmology Outpatient Departments in Shenyang. These measures clarified the approval basis for privately operated medical institutions, further lowered market entry barriers, and “deregulated” the private healthcare sector.

To date, Shenyang has completed the approval process for the establishment of over 300 medical institutions funded by social capital in areas with scarce medical resources, including Dadong District, Hunnan District, Yuhong District, and Shenbei New District, with a planned addition of more than 7,000 hospital beds. Furthermore, the city is further opening up its healthcare services market by encouraging social capital to establish both for-profit and non-profit medical institutions. It supports social investment in specialized and high-end medical institutions at the secondary level or above, particularly those offering premium services. Priority is given to the development of specialized institutions of a certain scale in fields such as premium care, rehabilitation, nursing, geriatrics, mental health, medical aesthetics, traditional Chinese medicine, and ethnic medicine.

Guangdong Province has also made significant contributions to encouraging private medical practice by comprehensively relaxing restrictions, simplifying administrative approval procedures, and promoting multi-site practice for physicians.

On June 15, 2016, the General Office of the People’s Government of Guangdong Province issued the Implementation Plan for Accelerating the Development of Socially Run Medical Institutions in Guangdong Province. Measures such as comprehensively relaxing restrictions on socially run medical institutions, simplifying administrative approval procedures, and promoting multi-site practice by physicians were adopted, with the aim of ensuring that by 2018, the number of hospital beds and the volume of diagnosis and treatment services provided by socially run medical institutions would each account for approximately 30% of the total. Improvements will be made primarily through the following four aspects:

First, administrative approval procedures have been streamlined: in accordance with the principle of “market entry is permitted unless explicitly prohibited,” all unreasonable pre-approval requirements have been comprehensively reviewed and abolished, and approval processes have been simplified. Second, approval authority has been delegated: except for the establishment approvals of privately funded medical institutions involving foreign capital (including capital from Hong Kong, Macao, and Taiwan), which remain under the jurisdiction of provincial-level health and family planning (and traditional Chinese medicine) authorities as required by regulations, all other privately funded medical institutions are subject to localized approval management. Third, the requirement for hierarchical application and approval has been eliminated; applicants now submit their applications directly to the approving authority.

Second: Physicians are permitted to establish clinics within pharmacies, as the regulatory framework further relaxes institutional access requirements. Priority support is given to non-profit medical institutions established by private entities, and physicians are allowed to open clinics in qualified pharmacies.

Third, physicians engaging in multi-site practice are subject to a “filing-only, no-approval-required” policy. The Plan explicitly states that medical institutions are actively encouraged to establish full-time and part-time employment systems; part-time licensed physicians are encouraged to open clinics, traditional Chinese medicine (TCM) halls, and TCM consultation clinics; and part-time licensed nurses are encouraged to establish nursing care institutions. A filing system for the primary practice location, provincial-level registration, and online filing for multi-site practice registration shall be implemented for all categories of physicians and nurses throughout the province.

Fourth, preferential policies will be applied to land designated for medical use. Social forces are permitted to establish medical institutions by utilizing existing construction land and vacant premises in accordance with relevant regulations. For social capital investing in healthcare using existing construction land, where the transfer (lease) or assignment of allocated construction land use rights is involved, agreements for land grant or lease may be executed upon payment of the supplementary land premium (rent), provided that urban and rural planning requirements are met.

Xiamen’s favorable policies were issued in September 2015, three months after the General Office of the State Council released its guidelines. These policies incorporate privately run medical institutions into planning frameworks, requiring all regions across the province to allocate sufficient space for social capital investment in healthcare when formulating regional health plans and adjusting medical institution setup plans, with priority given to meeting the needs of non-profit medical institutions.

Certainly, as the development of private healthcare institutions is accelerated, oversight of medical service practices will be simultaneously strengthened to effectively maintain medical order and promote industry self-regulation as well as the cultivation of professional ethics and conduct.

To address the difficulty of market entry for privately run medical institutions, Fujian Province has introduced new policies to “loosen restrictions.” According to the Guidelines, the province has further expanded the scope of access for private healthcare providers, relaxing requirements regarding the entities establishing hospitals, service areas, and the allocation of large-scale medical equipment. The government also gives priority support to the establishment of non-profit medical institutions.

According to Lai Shiqing, Director of the Fujian Provincial Healthcare Reform Office, healthcare institution planning across the province will be adjusted. Private medical practice will be formally incorporated into the planning framework and made publicly accessible, with specific restrictions on the number, location, and spacing of private medical facilities abolished to further lower entry barriers. Social capital is encouraged to participate in the restructuring of public hospitals, while the expansion scale of public hospitals will be controlled.

Meanwhile, health administrative authorities will delegate approval authority for various types of medical institutions. Specifically, the authority to approve the establishment of medical institutions with fewer than 499 beds will be delegated to municipal and county (city, district) health administrative departments. This measure aims to further shorten approval timelines and eliminate or remove unreasonable pre-approval conditions.

A shortage of talent is the primary constraint on the expansion, development, and improvement of service quality in privately run medical institutions. Reporters learned that, as a next step, our province will support non-public medical institutions in recruiting and cultivating talent, permit physicians to practice at multiple locations, and facilitate talent mobility for non-public medical institutions. Furthermore, social medical institutions will be encouraged to introduce new technologies and launch new projects, and they will receive equal treatment with public hospitals in areas such as professional title evaluation, research grants, key specialty development, and participation in industry associations.

In June 2015, Xiamen Municipality issued policies to support the establishment of medical institutions by social capital, explicitly providing financial subsidies in the form of bed subsidies, operational subsidies, special-purpose grants, and loan interest discounts for such institutions located in Xiamen. The policy was effective for five years. Additionally, Xiamen planned to develop medical industrial parks in areas outside Xiamen Island, including the Eastern Sea Bay Area and Haicang District, to attract high-end medical institutions.

As of March 2016, privately operated medical institutions in the city accounted for 18% of the total number of open beds, 16.53% of the total outpatient and emergency visits, and 20.72% of the total hospital discharges. This has fostered a landscape characterized by diverse ownership structures, differentiated development between public hospitals and private medical institutions, and strong specialized services.

Although favorable policies from various regions are not listed individually, it is conceivable that applying to establish private medical institutions will become more convenient than it is today. Entrepreneurs will continue their unwavering efforts to contribute to the Healthy China initiative and improve healthcare standards.