Wang Hang, CEO of Haodf Online: Embracing Full Commercialization in Internet Healthcare

On December 23, at the VCBeat Future Healthcare 100 Forum, Wang Hang, CEO of Haodf Online, was invited to deliver a presentation titled “Internet Healthcare in 2016”

—Embracing Full-Scale Commercialization,” delivered an inspiring speech. The following is the content of the speech:

This year, many people are discussing the direction of transformation in the internet industry. To date, Haodf Online’s primary focus has been on commercialization. As is well known, over the past two to three years, the capital market has shown strong favor toward internet healthcare. This has also led to the existence of an industry bubble. What are the manifestations of this bubble?In principle, every company should pursue its commercial value. However, as capital influx imposes high demands on enterprises’ capabilities for market expansion, greater emphasis is placed on user base, traffic, and foundational data, while attention to business operational metrics has diminished.

Although we have always maintained that the healthcare industry knows no winter, the internet healthcare and mobile health sectors still faced significant challenges during this year’s capital market winter.

In a tightening capital market, all startups grapple with the same question: how to realize their commercial value and generate profits?Therefore, I believe that the overarching goal of corporate transformation this year is commercialization.At the end of 2016, the internet healthcare industry was discussing its transition from the 1.0 era to the 2.0 era, with the core change being the pursuit of commercialization and the search for business solutions.

In the 1.0 era, internet healthcare focused on peripheral services. Essentially, “healthcare” served as a modifier, while the core noun was “internet,” meaning that players were engaged in internet-based businesses with a healthcare theme. Examples include providing information, offering lightweight online consultations, and facilitating registration and appointment scheduling. These services did not, in essence, penetrate the core operations of healthcare. What are the core operations of healthcare? Diagnosis and treatment. Therefore, diagnosis and treatment constitute the primary demands of patients within the healthcare industry, which revolves around medical visits and clinical care.

In the past, we frequently encountered an awkward situation: many patients expressed deep gratitude to the Haodf.com platform for the extensive services they received. However, when we introduced fees for consultations, patients resisted paying, arguing that these interactions did not constitute formal medical diagnosis and treatment. This highlights the limited commercial potential of Internet healthcare in its 1.0 era, which explains why many internet healthcare companies are now aggressively expanding into online diagnosis and treatment this year. It is imperative that we penetrate the core of healthcare—diagnosis and treatment. Only by addressing patients’ actual medical needs in this domain can the commercial value be realized on a scalable level.

The core issue of commercialization is the imperative to demonstrate value. In China, the healthcare sector remains a seller’s market, characterized by a relative scarcity of supply-side resources. With population aging and rising public expectations for quality of life and health, demand for medical resources will continue to grow.

First, medical resources in China are unevenly distributed overall. Major medical hubs such as Beijing and Shanghai concentrate abundant resources, whereas tier-3, tier-4, and tier-5 cities suffer from relative scarcity and poor accessibility. Second, disordered utilization has led to significant waste of medical resources; patients with minor ailments often flock to top-tier hospitals like the PLA General Hospital (301 Hospital), thereby depriving critically ill patients who truly require tertiary care of access to these resources. Third, the efficiency of healthcare services is remarkably low.

How Does Internet Healthcare Address These Issues?

First, in terms of allocating medical resources and addressing the issue of inaccessibility, we have a saying: “Either bring doctors to the patients, or extend their expertise to the grassroots level.” Cities like Beijing and Shanghai concentrate China’s top-tier expert resources, but it is impractical to deploy them to third-, fourth-, and fifth-tier cities. Consultation has long been discussed as a vital service model within the industry, yet its coverage remains limited to date, primarily due to inconvenience. With the widespread adoption of mobile internet and smartphones, we are witnessing an increasing number of consultations taking place on mobile platforms and at patients’ bedsides, rather than in traditional consultation rooms.Therefore, delivering medical resources to the grassroots level through internet healthcare is the focus of our efforts, representing a highly significant and commercially viable sector for the future.

Second, by helping medical institutions at all levels identify suitable patients, or by assisting patients in finding appropriate specialists, we can revitalize a significant amount of primary care medical equipment and resources.A significant amount of primary healthcare resources remain underutilized and wasted within the current system. By optimizing triage and referral processes and leveraging the capabilities of the internet, we can revitalize these grassroots medical resources. Initial consultations conducted online carry inherent risks. For instance, when a patient reports abdominal pain upon waking to an online physician, it presents a complex clinical scenario. Even with extensive data, it is difficult to determine whether the issue stems from the digestive, gynecological, or urinary system. Therefore, the primary role of online platforms in initial consultations is effectively limited to triage and referral functions.

Third, improve the efficiency of medical services.Two-thirds of the patients gathered in the hospital’s outpatient lobby are follow-up visitors, while one-third are new patients. This presents a significant opportunity: in fact, half of these patients do not need to visit the hospital for every follow-up appointment. Follow-up consultations can be moved online. By assessing patients’ conditions remotely and issuing electronic prescriptions, we can conserve healthcare resources across society. This approach spares patients from traveling to outpatient clinics and saves physicians at least 5 to 10 minutes per patient encounter.

In terms of product form, the entire industry is discussing Internet hospitals as the product form of Internet Healthcare 2.0 this year.Since the Guangdong Second Provincial General Hospital pioneered the concept of internet hospitals the year before last, the sector has entered a phase of explosive growth this year, with 30 to 40 internet hospitals now established. Internet hospitals have legalized the two pathways we previously discussed: online follow-up consultations and remote specialist consultations.

On December 10, Haodaifu Online’s internet hospital officially opened. Some have commented that we moved too slowly, noting that it took more than eight months from the signing of our agreement with the Yinchuan Municipal Government in April to the hospital’s launch. Was it really that difficult? I believe that delivering medical services online is far from simple; it presents numerous challenges that must be addressed one by one.

We have summarized five key issues for internet hospitals, which are the core problems to be resolved during the preparation and trial operation phases.

The first factor is physician resources. For any hospital, regardless of how many buildings are constructed or how much equipment is purchased, the most critical issue remains whether it has branded, high-caliber physicians practicing within its walls. In this regard, Haodf Online has laid a substantial foundation through ten years of accumulation. We have a community of 130,000 real-name verified physicians, 86% of whom hold the title of attending physician or higher. Relying on this platform to establish an internet hospital offers distinctive advantages.

Which physicians are permitted to practice medicine online? We have defined a specific scope: only attending physicians with more than five years of experience, associate chief physicians, and chief physicians are eligible. This threshold is higher than that required for merely responding to consultations on internet platforms. Sufficient professional experience is necessary to determine which medical activities can be conducted online and which cannot—even if relevant data are available online—such as making definitive diagnoses.

Second, in establishing an internet hospital, beyond physician resources, it is essential to consider the extent of patient coverage. From the patient perspective, I believe there are two key points. First, as an internet hospital, patient coverage is our foundation. However, whether among BAT (Baidu, Alibaba, Tencent) or other internet giants, user penetration remains insufficient in the deeply vertical healthcare sector; true patients are held by physicians. Therefore, an active online physician can attract their patients to their online practice. By leveraging these physicians, we can secure a continuous stream of patient resources.

Third, there are significant differences between online consultations and traditional face-to-face visits, necessitating a comprehensive new set of online medical service management protocols. Starting around June, we convened numerous domestic medical experts, clinical specialists, healthcare administration professionals, and health law scholars to jointly deliberate and establish future regulatory standards for online healthcare in China.

Fourth, let us return to the core theme of my presentation: commercialization. Why do many patients hold the view that previous light consultation services provided limited value, perceiving that neither doctors nor platforms offered substantial assistance? The underlying reason is that physicians often cannot respond promptly to urgent patient inquiries. What does this indicate? It demonstrates that non-paid services are inherently difficult to guarantee in terms of service commitment. In contrast, commercialized services operate under defined standards and must fulfill contractual obligations. Only by steadfastly pursuing a path of commercialization can the healthcare industry deliver medical services with assured quality and quantity.

During the trial operation of Haodf Online, our test data showed that the average cost of a single online consultation was 100 yuan. The highest average consultation fee was charged by experts in Beijing, at 147 yuan, while experts in Shanghai charged an average of 138 yuan. These fees are relatively higher compared to those charged in physical hospitals. However, in two-thirds of the consultations, patients and doctors were not located in the same city. In the context of remote healthcare, when this 100-yuan consultation fee is weighed against travel costs and time expenses, internet-based medical services undoubtedly help patients save money.

Fifth, firmly pursue an open path. China does not lack basic medical resources; first-class MRI equipment is ubiquitous in prefecture-level and county-level cities, yet much of it remains significantly underutilized. Therefore, there is no need for redundant investment. Instead, we are establishing an online open platform to channel patient volume to grassroots facilities with idle medical resources. By directing patients to physicians at the prefecture, city, and even township levels, and integrating their equipment into our network, we provide critical support to China’s overall healthcare system. Consequently, we are making every effort to connect with medical institutions at all levels, diagnostic and testing centers, online pharmacies, special-needs outpatient clinics, and VIP wards in private hospitals. Collaborating with these entities also facilitates our commercialization efforts.

We believe that by enabling every physician to establish their own private and online clinics through internet hospitals, we will usher in a new era for doctors across China. We make the dream of opening a private practice easily attainable: no need to lease physical space or handle regulatory filings ourselves. We have already set up all necessary procedures and built the online platform. On this platform, every physician can serve their existing patients, offer transparent pricing, earn legitimate income, and build their personal brand. We believe this is the dream of every physician.

To conclude, I would like to share a thought with my peers: Do not complain about your current lack of profitability; instead, examine the value you are delivering to your customers. The acquisition of commercial value always begins with the provision of substantial social value. Once social value is established, it will inevitably be translated into commercial value over time.

1. VCBeat: What is the biggest difference between internet hospitals established by internet companies and those upgraded from traditional hospitals?

Wang Hang: Both models of internet hospitals have their own characteristics; they simply follow different development paths. With different starting points, each model leverages its respective strengths and possesses distinct advantages. For instance, the internet hospital affiliated with The First Affiliated Hospital, Zhejiang University School of Medicine—a top-tier (Grade A tertiary) hospital—can easily transition its doctors and patients to online platforms. It is poised to mobilize its entire physician workforce to provide online consultations, primarily serving local patients. However, internet hospitals operated by offline medical institutions are less open than those run by internet companies. Due to competitive relationships with offline hospitals, physicians in these settings do not practice across multiple locations. In contrast, internet companies excel in online operations. Their internet hospital platforms offer greater openness, integrating all actively practicing online expert resources across China, and maintain collaborative relationships with offline hospitals.

2. VCBeat: The focus of Haodf Online in 2016 was transformation. What was the purpose of this transformation, and how was its effectiveness measured?

Wang Hang: The purpose of Haodf Online’s business transformation is to achieve commercialization and financial self-sufficiency. Only by establishing a virtuous commercial cycle can we continue to explore further development. If the platform fails to generate revenue, it cannot form a sustainable commercial loop. Consequently, doctors would be unable to earn income on the platform, and patients would not receive committed, commercially viable services, making it difficult for the platform to sustain its operations. Therefore, the essence of this transformation is to complete commercialization, achieve financial self-sufficiency, and build a larger-scale platform. If Haodf Online can break even in 2017, this transformation will be deemed successful.

3. VCBeat: What external environmental changes have facilitated the transformation of internet healthcare companies?

Wang Hang: The transformation of internet healthcare enterprises over the past two years can be described as a golden opportunity, with the entire internet healthcare and internet hospital ecosystem gradually maturing. A few years ago, the legal and regulatory framework for online diagnosis and treatment was not in place. In April last year, the National Health and Family Planning Commission clarified that medical institutions could provide lawful online diagnosis and treatment, prompting the industry to actively establish various types of internet hospitals. Therefore, the broader context behind the establishment of internet hospitals has benefited from the opening up of national laws and regulations.

Another supporting factor stems from the branding of physicians. In the past, patients remembered which hospital to visit, not individual doctors. However, after several years of mobile internet development, when we pull out our smartphones to search for information, we can now look up specific physicians, making it feasible for them to build personal brands. In recent years, many doctors have launched their own ventures because their personal brands have matured, giving them the confidence to embark on entrepreneurial paths. Online medical consultations require a trust relationship between patients and physicians, which is built upon brand reputation. Therefore, with the growth of these personal brands, we are entering the golden age of independent medical practice.