Battle for Yinchuan: Why WeDoctor and Haodf Are Fighting for Internet Hospital Dominance

Coincidentally, WeDoctor and Haodafu Online Hospitals were established and launched one after the other in recent days, sparking endless speculation.

WeDoctor has once again demonstrated its strong government public relations capabilities. At the launch ceremony of the Ningxia Internet Hospital, nearly 400 high-level officials from the government, medical, and business sectors attended, including Ma Li, Vice Chairman of the People's Government of Ningxia Hui Autonomous Region; Bai Shangcheng, Mayor of Yinchuan City; Ma Xiuzhen, Director of the Ningxia Health and Family Planning Commission; and Sun Tao, President of Ningxia Medical University, making it a grand occasion.

Haodaifu, of course, refused to be outdone. Not only did it secure substantive commitments from the Yinchuan Municipal Government at the launch ceremony of the Yinchuan Smart Internet Hospital, including qualifications for medical institutions and policy support for physicians’ multi-site practice across provincial boundaries, but it also scheduled its annual flagship event, the “Brand Doctor Summit,” to coincide with the internet hospital’s opening. It is easy to imagine that the event will attract a gathering of leading figures in the medical community, ensuring Haodaifu considerable prestige and visibility.

In the evolution of internet healthcare, standoffs teetering on the brink of direct confrontation are rare. Previously, most fledgling internet healthcare startups were limited to engaging in “guerrilla warfare” centered on competing for individual physicians. It is only when these companies grow to the scale of WeDoctor or Haodf.com that they become capable of waging “positional warfare” focused on capturing entire cities.

But what does this competition truly signify?

Wang Hang, founder of Haodf, has previously stated that internet hospitals could enable Haodf’s revenue to grow by an order of magnitude and ultimately resolve its profitability model. To date, more than 40 internet hospitals have been launched across China. Can we therefore assume that their emergence stems from a clear understanding of how to implement a viable business model for internet-based healthcare?

When systematically outlining the concept of internet hospitals, WeDoctor founder Liao Jieyuan proposed the “3+3” framework. The first element he highlighted was “legal and regulatory necessity,” meaning that online diagnosis and treatment provided through internet healthcare must be conducted by entities holding proper medical qualifications. From this perspective, is the widespread popularity of internet hospitals driven by various market players’ need for a “ticket” to legally provide online diagnostic and therapeutic services?

Internet healthcare has undergone approximately five years of development. From online consultations addressing pain points between patients and physicians, to management tools tackling physicians’ operational challenges, to disease management focusing on specific conditions, to integrated online-offline models closing the service loop, and to medical-insurance synergies within the broader healthcare ecosystem—it seems that most of the narratives have already been told. Even internet hospitals were first explored as early as 2014. So, after cycling through stories centered on patients and physicians, doctors, pharmaceuticals, and hospitals, are internet hospitals truly the final chapter in the internet healthcare saga?

Of course, major companies have firmly chosen this path, and Jin Xiaotao, Deputy Director of the National Health and Family Planning Commission, has affirmed internet hospitals as “an integrated innovation.” The more pressing question now may be: if internet hospitals truly take off, what problems will they encounter, and what challenges will they pose to the current healthcare service system, policies, and even laws?

Although both are referred to as "Internet Hospitals," Haodf and WeDoctor have distinctly different strategic approaches.

Haodaifu’s internet hospital is not “bound” to any single local medical institution. Instead, it leverages the Yinchuan Smart Internet Hospital, which already holds diagnostic and treatment qualifications, as its platform. By integrating its accumulated high-quality medical resources, it collaborates with hospitals at all levels in the Yinchuan area, community health service centers (township health centers), community health service stations (village clinics), pharmacies, and other primary healthcare institutions, as well as Tiantian Check-up Huts, enabling patients to access premium medical services close to home.

WeDoctor obtained its internet hospital license by establishing the physical center of the internet hospital under the auspices of the General Hospital of Ningxia Medical University. By connecting large hospitals with primary healthcare institutions via the internet and integrating WeDoctor’s accumulated medical resources, it provides family doctor services to the people of Ningxia based on electronic medical records and health archives. WeDoctor also specifically proposes leveraging economies of scale to enable reverse customization of pharmaceuticals, streamlining intermediate links in drug distribution, and reducing medication costs for the public.

How Will Internet Hospitals Change the Current State of Medical Care?

Wang Hang has noted that patients from different regions across China can access medical experts nationwide through the Yinchuan Smart Internet Hospital. This, of course, includes local patients in Ningxia. Medical services such as consultations, examinations, and prescription issuance are collaboratively delivered via the internet by medical experts, healthcare institutions, physicians, and pharmacies located in the patients’ areas. Wang Hang is relatively optimistic about follow-up visits and remote consultations but maintains a cautious stance on initial consultations. He believes that internet hospitals should primarily serve triage and referral functions for initial consultations, which may be suitable only for certain medical specialties.

WeDoctor’s approach is markedly different. Ningxia Internet Hospital is already the 17th internet hospital under WeDoctor’s umbrella, clearly demonstrating its stronger focus on regionalized services. WeDoctor states that Ningxia Internet Hospital will provide online and offline services to the local population of 6.7 million, and will introduce high-quality medical resources from across China—including 260,000 specialists, 7,200 specialist teams, and eight specialty-specific remote consultation centers—to enhance local disciplinary capabilities and healthcare standards.

Based on existing discussions, internet hospitals offer several theoretical benefits: From the patient’s perspective, they facilitate access to medical care, make it easier to consult specialists, and may even provide services akin to those of a health gatekeeper. From the hospital’s perspective, they expand the reach of medical resources, allowing for broader patient coverage while helping to triage and divert patients. From the government’s perspective, they deliver high-quality medical services directly to patients’ doorsteps, potentially promoting the implementation of tiered diagnosis and treatment, among other advantages.

However, these remain merely theoretical possibilities.

Setting aside all other possibilities, what is the core change brought about by internet hospitals? Undoubtedly, it is the acquisition of qualifications to provide medical services to patients. This is because the National Health and Family Planning Commission mentioned in its 2014 guidelines on telemedicine services that diagnostic and treatment services directly provided to patients outside medical institutions by healthcare facilities using information technology fall under the category of telemedicine services.

Therefore, internet companies and healthcare IT firms “assist” medical institutions in establishing internet hospitals. By leveraging the policy on physicians’ multi-site practice, these entities can legitimately deliver medical services to users via the internet and mobile devices. Such services may include pathological diagnosis, medical imaging interpretation, patient monitoring, consultations, outpatient care, and remote case discussions, functioning like a hospital floating in the air.

If it were merely telemedicine and online consultations, the matter would be relatively straightforward. However, the inclusion of hospitals as a key stakeholder has made the entire logic exceedingly complex, nearly intractable. Here, we attempt to clarify this complexity.

Understanding internet hospitals generally involves three dimensions: why, what, and how. The statements commonly cited by the public, such as “internet hospitals can XXX” or “are beneficial for XXX,” fall under the category of “how.” In fact, it is evident that these points could be applied to virtually any topic within the broader context of digital health or healthcare reform. The more complex dimension is “why.”

The perspective of internet companies is easy to understand: they aim to obtain qualifications for online diagnosis and explore another revenue stream. The objective of hospitals is also relatively clear, namely, to attract more patients. However, from the patient’s standpoint, the interests of internet companies and hospitals are actually divergent. This is because the essence of the internet is decentralization; it seeks to keep patients out of hospitals and maintain their health through out-of-hospital interventions. In contrast, the fundamental interest of hospitals lies in having more people seek medical consultations and hospitalization, thereby keeping their beds fully occupied.

There are, of course, ways to align their interests, such as having hospitals and internet companies share the revenue from online consultations. However, the complexity of this issue lies in two aspects: on one hand, hospitals need to calculate whether their share of the revenue can offset the losses incurred from diverting patients; on the other hand, it must be determined whether the revenue from online consultations stems from medical services provided by doctors or from drug sales. If it is driven by drug sales, the situation becomes complicated, as it may constitute a disguised form of “subsidizing healthcare with drug profits.” If it is derived from medical services, well… the matter may become even more troublesome.

If such an online service does not require examinations or imaging and consists entirely of doctor-patient communication, it is essentially equivalent to an online Q&A product, similar to “Ask a Doctor” launched by DXY. There is no need for such extensive effort. However, if the aim is to provide online diagnostic and treatment services on par with hospital outpatient care, then internet hospitals are somewhat premature. This is because, apart from online Q&A, other aspects of outpatient care have not been sufficiently digitized, which significantly limits the potential impact of internet hospitals.

As for the frequently mentioned issue of whether doctors have the time and energy, it is actually notThis is the core issue. If online medical services and payments can be seamlessly digitized, physicians will naturally be incentivized to provide virtual care. The preceding discussion addressed the “why,” but the most challenging aspect may well be the “what.” This is a question that could impact the entire industry.

The large-scale emergence of internet hospitals has not directly resolved the challenge of accessing medical care; instead, it has compelled regulatory authorities to enact legislation. This is because internet hospitals have penetrated the core of healthcare services and extended their reach into public hospitals. Only through legislation can the nature and scope of practice of internet hospitals be clearly defined. Legislation implies the establishment of market entry requirements and licensing, which will significantly raise the barriers to entry for startups in the digital health sector. If there is a “second half” for the internet healthcare industry, this regulatory shift represents the true watershed moment.

Industry insiders have likely noted that a seminar on the legislative, standards, and security system research project for internet healthcare services was held in Sichuan Province on November 14. Regarding the legal aspects involved, the National Health and Family Planning Commission (NHFPC) disclosed in its press release that these include industry supervision, classified regulation, legislative guidance, implementation of standards, security protection, payment innovation, and medical liability. Particular attention should be paid to the four Chinese characters “修改意见” (comments for revision) in the press release. What does this mean? It indicates that the draft law has been completed, and its official promulgation is only a matter of time.

Fundamentally, transforming the current healthcare landscape means dismantling the monopoly held by public hospitals. This is also the direction established by national healthcare reform policies. Efforts across various sectors—including public hospital reform, private capital investment in healthcare, internet-based medical services, and physician groups—are all aligned with this objective. From this perspective, we naturally hope that internet companies’ ventures into internet hospitals will succeed. However, the prerequisite for such success is precisely to outcompete the public hospitals that currently serve as their partners.

From the preceding analysis, it is evident that internet hospitals still face significant challenges in rapidly implementing online diagnosis and treatment, and the question of “why” remains unclear. However, leaders in the digital health sector have clearly not chosen to wait; instead, they have committed themselves wholeheartedly to launching internet hospitals on a large scale. Therefore, the more pragmatic question at present may be “how.” While some discussions regarding “how” have already been mentioned, from a long-term perspective, those approaches appear somewhat diversionary.

For years, internet healthcare has been operating on the periphery of the core medical system. The most significant value of internet hospitals may lie in their ability to finally help internet healthcare startups penetrate the inner sanctum of public hospitals. If we maintain an optimistic outlook, internet hospitals could one day become the “Trojan Horse” that breaches the walls of public hospitals.

First, internet hospitals have effectively and indirectly broken the constraints imposed by regional health planning. Anyone involved in establishing private hospitals knows that the first hurdle to entering the industry is regional health planning, which stipulates the number of medical institutions allowed within specified distances and areas. However, as virtual medical entities, internet hospitals transcend physical limitations, thereby breaching the first layer of protection afforded to public hospitals.

Second, internet hospitals have provided physicians with a legitimate channel for online consultations. Their significance lies not in the online consultations themselves, but in increasing the frequency of medical services. In traditional brick-and-mortar medical institutions, doctors and patients may meet only once in their lifetime, with little regard for each other’s identities, let alone satisfaction levels. However, internet hospitals mean that doctor-patient interactions can occur not only offline but also online. The increased frequency of service will, in turn, drive physicians to strengthen their brand awareness. Past experience has shown that building a personal brand is the first step toward independent practice for outstanding physicians.

Third, internet hospitals will provide substantial support to “allied” entities such as clinics, imaging centers, laboratory testing centers, and ambulatory surgery centers. Previously, these institutions struggled to secure orders from large hospitals. However, in their pursuit of online operations, internet hospitals now inevitably need to incorporate third-party services that are efficient and rapid. The rise of such third-party service providers will further erode the comprehensive monopolistic power of public hospitals.

Fourth, internet hospitals may divert medical insurance funds, which could pose the greatest challenge to public hospitals. With the establishment of universal health insurance coverage, medical insurance funds have become the largest source of revenue for public hospitals. Although the basic medical services for common and frequently occurring diseases provided by internet hospitals do not constitute as large a share as inpatient care, they may still redirect a portion of outpatient medical insurance funds away from hospitals to other institutions.

Fifth, internet hospitals have the potential to fundamentally transform the current healthcare landscape, where patients prioritize institutions over individual physicians, thereby weakening the dominant brand advantage of public hospitals. Users of internet hospitals are less concerned with whether a hospital is located in Ningxia, Sichuan, or Shanghai; rather, they value access to excellent physicians who can provide them with care. Of course, realizing this shift requires market education by internet companies, as well as robust triage and referral systems. Once these systems operate smoothly, the brand influence of public hospitals may gradually diminish, although it is unlikely to be completely eradicated.

Of course, these are merely theoretical possibilities. Nevertheless, we hope that internet hospitals will unite all available forces to address the root causes and collectively transform the current healthcare landscape, rather than colluding across online and offline channels to pursue short-term profits and perpetuate the practice of subsidizing medical services with drug revenues.

Source: 36Kr

Original Author: Liu Yong