Strongson Healthcare: Operating 20 Community Clinics with Monthly Patient Visits Exceeding 3,000 per Clinic, Annual Revenue of RMB 6 Million, and Growth Over 30% — A Grassroots Healthcare Case Study

Johnson & Johnson CEO He Haiyang

Johnson Community Clinic: Like Having a Clinic Right at Your Doorstep“Grade A Tertiary” hospitals offer comprehensive treatment for common and frequently occurring diseases, and are fully equipped with all the medical devices available in such institutions.

“We aim to attract one-third of the outpatient volume from Grade 3A hospitals to Johnson Community Clinics, and establish China’s first Accountable Care Organization (ACO).”He Haiyang told the reporter.

Spanning 500 square meters and staffed by 12 medical professionals, this community-adjacent facility integrates departments including internal medicine, surgery, gynecology, pediatrics, dentistry, traditional Chinese medicine, ultrasound imaging, and clinical laboratory services. Located within a 15-minute walk, it represents the standard configuration for Johnson Medical’s chain of community clinics.。

Compared with other medical entrepreneurs, for whom establishing a single clinic often requires tens of millions in investment, He Haiyang and his Johnson Chain Clinics offer a much more cost-effective model. The initial construction cost for each clinic is approximately RMB 2 million. These clinics are strategically located in new urban districts, development zones, ecological conservation areas, and regions with limited access to medical care, thereby minimizing upfront capital expenditure.

What draws community patients to Johnson is the medical service provided by He Haiyang. All physicians at Johnson are renowned experts who focus on the community, center their care around families, and prioritize the diagnosis and treatment of elderly individuals, children, and women. They provide management of common, frequently occurring, and chronic diseases, as well as family physician services.

In other words, it means being close to the community, understanding the local community's healthcare needs, and providing the necessary medical services.

Currently, due to factors such as heavy asset investment, low service frequency, and challenges in customer acquisition, the industry and investors maintain a paradoxical stance toward primary healthcare: while universally applauded, it is met with widespread skepticism. However, Johnson & Johnson has become a company in the primary healthcare sector that attracts significant investor attention, thanks to its two core strengths: convenience and high-quality care.In April 2015, the company secured Pre-A round financing from Dehui Capital, with a market valuation of RMB 300 million at the time. On June 2, 2016, it raised tens of millions of RMB in Series A financing, led by Legend Capital and participated in by Dehui Capital.

The Third Entrepreneurial Venture.

He Haiyang’s first entrepreneurial venture was in corporate consulting services. After a decade of navigating the consulting industry, he amassed an extensive professional network and gained a thorough mastery of corporate operational practices. His connections spanned numerous pharmaceutical companies and health checkup providers, enabling him to build a foundational understanding of the healthcare industry. Additionally, he accumulated valuable insights into business models and experience in brand promotion.

Due to the consulting industry's heavy reliance on human capital and intense competition, he embarked on his second entrepreneurial venture.

However, his second entrepreneurial venture was in the health checkup sector. He established a chain of three large-scale health examination centers in Xi’an. As he gained deeper industry insights, he realized that the health checkup industry is both capital-intensive and labor-intensive. Moreover, it is a highly mature market with well-established service categories and brands, resulting in fierce competition. Ultimately, he sold his health checkup centers to other companies.

These two entrepreneurial experiences deepened He Haiyang’s understanding of the healthcare industry. At this point, he began to ponder: What should his third venture be?

He sketched a diagram in his notebook, categorizing the healthcare industry into three segments: medical devices, hardware products, and healthcare services. He then listed the institutions involved in this sector: specialized hospitals, general hospitals, and professional health examination centers.

At that time, the state introduced a series of policies to encourage social capital to invest in healthcare. The main components of the healthcare reform included initial diagnosis at primary care institutions, triage between acute and chronic conditions, two-way referral systems, and coordinated collaboration between different levels of healthcare providers.

He Haiyang identified three entrepreneurial opportunities through his research. For instance, the implementation of initial consultations at primary care levels presents opportunities in rebuilding primary healthcare, establishing chain networks of community clinics, and delivering basic medical services. The separation of treatment for acute and chronic conditions has created opportunities in chronic disease management, emergency centers, and third-party imaging centers. Furthermore, there are hidden opportunities in leveraging IT tools to construct a two-way referral system.

“Every entrepreneurial opportunity is premised on primary care at the grassroots level.” It is evident that while medical resources in Beijing, Shanghai, Guangzhou, and Shenzhen are abundant, public community health service centers in second-tier cities like Xi’an, and even third-tier cities, are essentially paralyzed. In terms of demand, there is a substantial need for robust grassroots healthcare to handle initial consultations for common diseases, long-term care, and chronic disease management. 

The original intention behind founding Johnson was to organically connect communities, clinics, and families. Therefore, He Haiyang proposed the “Three Goods” model: “Good Community, Good Family, and Good Healthcare.”

Therefore, the community clinics established by He Haiyang were built with this original intention in mind, from site selection and staffing to renovation. The first community medical clinic opened in September 2014, located in the Vanke City residential complex in Xi'an, serving the surrounding areas of Agile Properties, Guose Tianxiang, Yuemei International Community, and the University Town. The main departments include Internal Medicine, Pediatrics, Gynecology, Traditional Chinese Medicine (TCM), Dentistry, Laboratory Services, Ultrasound, Electrocardiography (ECG), and Digital Radiography (DR).

Consultation fees are approximately 20% higher than those at public hospitals, with a minimum per-visit charge of RMB 160–180 per patient; furthermore, consultation fees are subject to fluctuation during holidays.

During the initial phase of its launch, Johnson’s biggest challenge was customer acquisition. “Many patients do not trust the quality of care provided by community physicians.”

At that time, Johnson adopted a bold customer acquisition strategy: on one hand, it partnered with community property management companies to invite families for health experiences; on the other hand, it collaborated with enterprises, whereby companies purchased employee medical services from Johnson for each staff member. Each employee received vouchers of equivalent value to spend on Johnson’s consumer healthcare services and free comprehensive health checkups, effectively getting two services for the price of one.

In addition, to better acquire customers, Johnson should first prioritize collaborating with residential communities that have relatively high occupancy rates.

After six to seven months, the clinic reached its break-even point. Subsequently, Johnson Medical opened four additional community clinics. To date, Johnson operates 20 community clinics, with each clinic serving approximately 2,000 patients per month. Among these, single clinics established for more than two years serve up to 3,000 patients and generate annual revenues exceeding RMB 6.5 million; newly opened community clinics serve around 800 patients, with annual revenues ranging from RMB 1 million to RMB 2 million.

By the end of 2017, Johnson is expected to operate 35 community clinics, with a medical team of over 400 professionals and more than 15,000 family members.

Meanwhile, it has partnered with multiple renowned developers—including Tianlang Real Estate, Xi’an Vanke, China Railway Property, China Overseas Land & Investment, Evergrande Real Estate, China Resources Land, and Ronghua Real Estate—to develop community-based healthcare facilities, creating a “15-minute community convenient care ecosystem.” 

“When multiple small community entry points coalesce into a platform, they generate a platform effect. ‘When people perceive visiting Johnson for medical care as akin to grabbing coffee at Starbucks, the Johnson brand is firmly established. At that stage, the community can host multiple interfaces, effectively channeling patients from the community platform to specialized hospitals with precise expertise,’ said He Haiyang.”

Whoever can seize the community first, leveraging such a powerful entry point to rapidly achieve scale within a region, will likely create a highly significant consumer scenario: scenario-based healthcare.

The prerequisite is to standardize the entire medical service system by leveraging IT technology. Therefore, Johnson has consistently pursued two strategies: one is to continuously deepen its presence in offline community clinics; the other is to develop the SaaS-based “Medical Assistant Cloud Manager” system for online use. In addition to strengthening its foothold in Xi’an, the company will simultaneously expand its services across China, providing more communities and families with convenient, high-quality community diagnosis and treatment as well as family doctor services.

By leveraging the development and application of the SaaS-based Medical Assistant Information Management System, we enable comprehensive functionalities including clinic management, operations, inventory control, financial management, statistical analysis, customer relationship management (CRM), electronic medical records (EMR), health records, and remote collaboration. This will provide more professional and efficient clinic management solutions for community private practices, establishing an open, interconnected platform for community healthcare chains.

He Haiyang once pondered this question: “If institutions like United Family Healthcare and Amcare were readily available, would individuals with the willingness and ability to pay still endure long queues and overcrowding at Grade 3A hospitals?” 

When it comes to community healthcare, people often associate it with community health service centers and low-end hospitals. So, what should community healthcare look like? What is the future direction of community healthcare?

In He Haiyang’s view, a likely future trend is that tertiary hospitals will focus on managing critical cases and conducting research, while all outpatient services will be shifted to primary care institutions. These primary care institutions include community health service centers and chain medical facilities operated by private capital. However, there are currently few medical institutions capable of meeting the demand for high-quality medical services, leading to a significant influx of patients into tertiary hospitals and exacerbating the difficulty of accessing medical care.

So, what should community services look like? He Haiyang summarized the following points:

First, new-type clinics are becoming community-oriented through partnerships with urban developers. Simply put, this involves shifting the general outpatient services of Grade 3A hospitals forward to the “last mile,” where healthcare issues can be effectively addressed. While Johnson & Johnson lacks the capacity to renovate all clinics, it is able to provide services in new development zones, thereby positioning itself as a supporting service provider for developers of new-type urbanizations. To date, collaborations have been established with more than ten developers, including Vanke, Greenland Group, Huayuan Group, China Resources Land, Evergrande Group, Longfor Properties, Tianlang Property, and Ronghua Group.

Second, transform traditional medical services into productized offerings. He Haiyang believes that clinics should not focus on the existing patient base—that is, they should not merely concentrate on treating sick individuals—but rather provide appropriate medical services to those who are not yet ill. For instance, Johnson has launched the “Family Health” family physician plan for households; introduced the “Corporate Health Protection” employee medical coverage service for businesses; and developed initiatives such as the “Worry-Free Prenatal Care” program for expectant mothers and the “Baby Growth Protection” medical plan tailored for children aged 0–14.

Third, value-based payment. In other words, it means productizing medical insurance products and shifting from the traditional fee-for-service and volume-based payment models to value-based payment.

Take the New Rural Cooperative Medical Scheme (NRCMS) as an example. In the past, people in rural areas would either endure illnesses or simply consult village doctors for basic medications. However, with the introduction of the NRCMS, individuals pay a premium of just tens of yuan, and 70% of expenses for major diseases are reimbursable. This process has gradually stimulated healthcare demand.

This can also be referred to as diverting outpatient volume from Grade A tertiary hospitals, which involves redirecting outpatient services from several Grade A tertiary hospitals through a new model and condensing them into premium community medical services. By creating new insurance products, healthcare becomes more affordable and accessible.

He Haiyang believes that integrating primary care as an entry point with insurance holds immense potential for the future. There is significant promise in leveraging an insurance-oriented mindset to connect and drive payment reforms.