Ping An Good Doctor: What's the Next Move? | Review and Outlook

Last year, as competitive barriers and entry thresholds in the mobile health sector continued to rise, many mobile health companies found themselves mired in development challenges. For Ping An Good Doctor, however, backed by a prestigious parent company, the year unfolded like a grand “data spectacle.” Not only did its user base double from 50 million to surpass 100 million, but it also successfully completed a $500 million Series A financing round, reaching a valuation of $3 billion. This marks another addition to the roster of unicorns under China Ping An, following Lufax.

Compiled from publicly available data on Ping An Good Doctor

This string of figures, which sparked envy among peers, was Ping An Good Doctor’s report card for 2016. While the results were impressive, the healthcare sector is simply too vast for any single company to fully contain, even one as formidable as Ping An.

Haodaifu, Juyi160, Ali Health, WeDoctor, and Ping An Good Doctor—these numerous competitors have jointly driven the development of mobile healthcare and consumer education. Low-barrier appointment registration and lightweight consultations are now things of the past; deeper and more grassroots-oriented medical resources have become the “standard requirement” for participants in the new round of elimination competitions.

With massive financing, over 100 million members, and the backing of its insurance “parent” company, Ping An Good Doctor certainly started from a high vantage point. However, how to effectively leverage these advantages remains a significant challenge for the company.

In a previous interview with the media, Wang Tao, Chairman and CEO of Ping An Health, stated: “We aim to connect users, insurance companies, medical insurance providers, hospitals, clinics, testing and inspection institutions, emerging smart devices, and various health service providers through Ping An Good Doctor, thereby building an internet-based health management and medical ecosystem. This will integrate all stages of disease prevention, medical treatment, payment, and post-illness care, thus broadening revenue streams in the mobile healthcare sector.”

The term “connection” is not unfamiliar; as early as 2014,TencentIt has already made this its core strategy. Ant Financial, under Alibaba, also launched a similar open healthcare platform last November, determined to become the infrastructure of the internet healthcare sector. Among tech giants, there is no shortage of similarities on key issues. The era of platform-based mobile healthcare has arrived, with Tencent, Alibaba, and Ping An each commanding their own strongholds, leveraging their massive user bases and investment portfolios.

Looking back at 2016, it is evident that Ping An Good Doctor was shifting its service focus from online to offline, offering paid products that cater to multi-tiered and segmented needs. It has evolved into a comprehensive platform integrating a range of innovative healthcare services, including personalized medicine, overseas health check-ups, live-streamed consultations, internet hospitals, pharmaceutical e-commerce, and general practice clinics. Ping An Good Doctor has left no stone unturned in covering virtually all medical and consumer scenarios that patients may encounter.

For offline, asset-heavy medical institutions such as hospitals, clinics, and health check-up centers, Ping An Good Doctor has opted for strategic partnerships with strong players, including Hainan R&F, Southern Medical University Shenzhen Hospital, and overseas health examination providers. In contrast, online, asset-light services—such as personalized medicine, health management, live health streaming, and health e-commerce—are primarily self-developed by Ping An Good Doctor.

From a product perspective, if market entry is attempted by focusing solely on one or two isolated features, the utilization frequency of medical applications will inevitably remain low, making it difficult for enterprises to survive without external support. Without a viable business model, there is no capacity for self-sustaining revenue generation. It is for this reason that Ping An Good Doctor has chosen to collaborate with partners in specialized fields to provide diversified services that meet user needs. This strategy enables the company to acquire user data, integrate its products into users’ service ecosystems, and enhance user stickiness to the platform, thereby creating more opportunities for interaction.

In Wang Tao’s own words: “The traditional closed-loop service model may not be able to meet every user’s online healthcare needs. Connecting multiple stakeholders—including hospitals, users, insurance payers, and service providers—to create an open internet-based healthcare service ecosystem is what Ping An Good Doctor aims to achieve in its next phase.”

In the U.S. healthcare payment system, fee-for-service (FFS) was the earliest model and remains the predominant mode of healthcare reimbursement in China. Later, health maintenance organizations (HMOs) emerged in response to the heavy financial burden placed on the U.S. insurance system by healthcare providers’ excessive profit-seeking behavior.

HMOs, built upon insurance institutions, provide preventive health management to members through annual or monthly subscription models. Under this model, regardless of the treatment methods employed by physicians, the primary objective is to control healthcare costs and avoid waste and overtreatment.

Ping An Good Doctor’s ambition to build an HMO is hardly new. In 2015, Wang Tao, upon returning from a study trip to the United States, resolved to emulate Kaiser Permanente and develop a “Chinese-style HMO.” This led to the subsequent establishment of an in-house medical team of over 1,000 physicians and the contracting of nearly 50,000 community-based doctors.

For HMOs to develop in China, there are several major challenges, the most critical of which is the payer landscape. In the United States, commercial health insurance serves as the primary payer for HMOs, whereas in China, it is the basic medical insurance system. In recent years, cost containment within the basic medical insurance system has become the core of healthcare reform, while commercial health insurance has encountered new opportunities for growth.

According to the data from Ping An Insurance’s 2016 semi-annual report, the premium scale of health insurance still lags far behind that of life insurance. Calculated based on the insurance density development targets outlined in the “Ten New National Guidelines,” China’s health insurance market is projected to reach RMB 1.5 trillion by 2020, marking just the beginning of its growth phase.

Specific Performance of Ping An Life Insurance Business (Data Source: Ping An 2016 Semi-Annual Report)

"As commercial health insurance has yet to achieve widespread adoption, the dominant position of basic medical insurance as the oligopolistic payer in healthcare remains difficult to challenge."Moreover, at present, the hospital's diagnosis certificate is the most critical factor in health insurance claims adjudication; whether cost-containment measures are involved is of little significance to insurers.

Under this overarching premise, it is difficult for domestic healthcare enterprises to penetrate deeply into the core of medical practice, let alone constrain the clinical behaviors of healthcare institutions from the payer’s perspective. To maximize the effectiveness of Health Maintenance Organizations (HMOs), concerted efforts from policymakers, enterprises, and healthcare institutions are required.

On one hand, the payer ecosystem has yet to fully take shape; on the other, companies such as Ping An Good Doctor, WeDoctor, and Haodaifu are striving to establish deeper collaborations with healthcare institutions. New healthcare models, including internet hospitals and cloud hospitals, have emerged during this phase. As the saying goes, “Rome was not built in a day.” Without incremental contributions from all stakeholders, achieving immediate success is far from easy.

At the 2016 Ping An Good Doctor financing conference, Wang Tao outlined the four strategic directions for Ping An Good Doctor in 2016:

1. Smart Hospitals: Leveraging Technology to Link Resources and Create Shared Value for Governments, Hospitals, and Patients;

2. Tiered Diagnosis and Treatment: Collaborating with emergency departments of major hospitals to build China’s largest tiered diagnosis and treatment system;

3. Medical Insurance Collaboration: Enhancing Insured Patients’ Service Experience and Controlling Medical Insurance Costs;

4. Insurance Collaboration: Combining Commercial Insurance, Family Doctors, and Health Management to Create a HMO Model with Chinese Characteristics.

Looking back at 2016, Ping An Good Doctor had already achieved substantial results in the first two areas, but still faced a long and arduous journey in the latter two. Today, the trend of healthcare reform is unstoppable, and the influx of policies has opened up more opportunities for enterprises. For Ping An Good Doctor and many other mobile health companies, 2017 may well be the true turning point. To succeed inOf the Starsstand out from the crowd; capital, strategic vision, and opportunities—each element is crucial.