Wu Yuxiong: Disruptive Innovation in Healthcare Demands Products That Are Affordable, Quantifiable, and Aligned with Commercial Insurance

How Can the “Healthcare + Internet” Innovation and Entrepreneurship Landscape Be Transformed? On August 17, VCBeat’s VB Group Interview invited Mr. Wu Yuxiong, Executive Vice President of the Guangdong Family Doctor Association, to explore this topic with readers from perspectives including the core of healthcare, the involvement of healthcare reform, and the participation of insurance.

Founder of the Guangdong Family Doctors Association and U-Care; hospitalized in 2008, where he gained firsthand insight into the shortcomings of the healthcare system, prompting his entry into the medical industry.

The difficulties and high costs of accessing medical care are tangible issues felt by everyone. The root cause lies in the flaws of the current healthcare service system. First, medical services are currently reimbursed on a fee-for-service basis, incentivizing revenue generation through increased service volume. This readily leads to over-treatment, preventing patients from receiving the medical care they truly need. Second, government basic medical insurance faces unsustainable payment pressures, while commercial health insurance fails to be effectively implemented. As a result, out-of-pocket medical expenses for the public continue to rise. It is precisely the existing healthcare service system that has given rise to the problems of “difficult and expensive access to medical care.”

The fundamental solution to the problem is to strengthen primary healthcare, build a robust primary care service system, and establish a new health ecosystem centered on health and prioritizing prevention, thereby replacing the existing disease-centered, treatment-oriented healthcare ecosystem.

The development of the primary healthcare service system should be enterprise-led. Existing public hospitals and the primary healthcare service system are unable to shoulder the task of developing primary care.

First, it fails to meet diverse needs. Primarily, the healthcare service system, dominated by large hospitals, was designed for treating acute infectious diseases. However, the disease spectrum has undergone significant changes, with the majority of diseases now being non-communicable chronic conditions; the existing system is ill-equipped to address current medical demands. Furthermore, China’s basic medical insurance scheme aims to provide broad coverage with limited benefits, resulting in a relatively narrow range of products covered under basic medical care. Consequently, payment for more innovative medical products must largely come from commercial health insurers.

Second, physicians lack competitive compensation and sufficient incentives. Primary care institutions can only deliver progressively superior and high-quality services by achieving sustained profitability, thereby establishing a robust primary healthcare system. Therefore, commercial insurance companies or enterprises must lead and drive the development of medical services to successfully commercialize primary care and achieve profitability.

In the course of the transformation of the healthcare ecosystem, products relying on legacy systems have limited growth potential; only disruptive innovative products will achieve significant development. For such innovative products to succeed, in addition to offering high quality at affordable prices, they must also meet the requirements of commercial health insurers. Specifically, they must: first, enable clear quantification of every cent spent on medical services; and second, align the interests of the three key stakeholders—medical insurance providers, healthcare providers, and patients.

Meanwhile, disruptive innovative products in the healthcare sector must possess the following attributes: entering from the low-end application market, leveraging new technologies to open up new markets, creating new markets and developing niche markets through novel business models, and circumventing existing regulatory frameworks.

Starting with the low-end application market is due to the strong service capabilities of large hospitals, especially in disease treatment. It is difficult to find disruptive products that can replace the existing treatment systems of large hospitals from this aspect. The once-popular online light consultation has been proven to be an unsuitable product.

Other points will be elaborated in the case analysis.

U Care is a home-Home care platforms, which fall within the nursing care sector, cater to the low-end application market. Characterized by low fees, this segment is often neglected and overlooked by large hospitals, rendering it a marginal market. Users place orders through primary healthcare institutions; upon order placement, these institutions dispatch personnel to verify registration information on-site and establish formal home hospital bed procedures with the users. This process legitimizes medical practices, thereby achieving the aim of circumventing regulatory oversight.

The specific operational model of UHu involves users registering online, submitting personal information, and requesting services. Offline, UHu collaborates with primary healthcare institutions, where nurses register their availability and location on the platform, thereby achieving a decentralized network of care delivery. First, UHu leverages nurses’ fragmented time slots, resulting in relatively lower time costs. Second, primary healthcare institutions can opt to lease nursing services, which not only reduces medical costs associated with long-distance service provision and allows them to earn a margin, but also enables them to access specialized nursing staff that are otherwise scarce, thus expanding their scope of business. This represents a new business model for market expansion.

On the U-Hu platform, both incumbent and former nurses can provide services, thereby forming the foundation of societal nursing resources. Additionally, directing a large volume of clients to offline primary healthcare institutions enables these facilities to achieve profitability and subsequent growth and expansion. At a macro level, this also promotes the development of the primary medical service system.

Dr. Robin focuses on asthma management, which also falls under low-end applications and niche markets.

Dr. Robin adopts a commercial health insurance model, under which patients pay fixed premiums to the insurance company, and Dr. Robin assigns physicians to provide one-on-one health management. If a patient falls ill, the insurance company reimburses their medical expenses. In this process, the physician’s income is derived from a percentage of the medical cost savings achieved among the patients they manage. Through this business model, the interests of patients, insurance companies, and physicians are aligned.

However, Dr. Robin’s model relies on the establishment of a mature new healthcare ecosystem, which requires a robust network of local primary care facilities and strong primary care capabilities; otherwise, issues such as who manages medical costs and where patients seek care will remain unresolved.

Women undergo screening for two major cancers: cervical cancer and breast cancer. Currently, two-dimensional ultrasound is widely used for breast cancer screening. However, due to the scarcity of sonographers at the primary care level and the difficulty in ensuring image quality, the widespread adoption of breast cancer screening remains challenging.

GE Healthcare in the United States has developed a new breast cancer screening device, ABUS, which provides high-definition 3D volumetric images and can significantly reduce the rate of missed diagnoses. Moreover, it imposes no technical requirements on primary-care facilities; only simple installation and operation are needed. Post-screening images are automatically transmitted to the cloud for remote diagnosis by professional ultrasound physicians.

This represents a gap in the current healthcare service system and constitutes an entirely new healthcare services market. By deploying equipment to grassroots levels, breast cancer screening has not only been promoted, but primary care institutions have also been afforded opportunities for growth, thereby advancing the development of primary healthcare. This is something the existing healthcare service system fails to achieve.

UHu is a fully open platform where all products and services are completely free of charge. Our strategy centers on mutually beneficial partnerships. For instance, in the case of Robin Asthma Management, UHu nurses can assist in product sales, while offline service centers can deliver its services. Meanwhile, asthma patients receive high-quality medical care and health management from physicians at UHu’s offline service centers, enabling these centers to generate revenue by supporting asthma patient management.

Many medical service items can be integrated into the U-Hu platform. U-Hu has two advantages: First, there is a large online network of nurses who not only provide nursing services but also help deliver your products directly to users. Second, there are numerous offline service outlets; high-quality products can reach community health centers, clinics, and community nursing stations through our offline network. For example, an ECG monitoring product could partner with the U-Hu platform to deploy its dynamic monitoring devices across all of U-Hu’s offline locations. This would allow users to receive 24-hour dynamic ECG monitoring right in their neighborhoods, eliminating the need to queue at large hospitals.

Currently, we have not identified an effective solution for achieving healthcare data interoperability. If any colleagues have proven methods, our association is willing to assist with implementation and contribute resources, as breaking down healthcare data silos is of critical importance. Our association has established a referral center that facilitates the transfer of patients who cannot be adequately managed by primary care physicians to tertiary hospitals. This is a completely free service; however, the most significant challenge encountered during its operation is the lack of timely data synchronization. Specifically, specialists at tertiary hospitals do not have access to information from the initial consultations conducted by family doctors at the primary care level.

I believe that whether insurance organizations arrange group purchases or consumers pay individually, the most critical factor is that the insurer serves as the primary payer. Neither group purchasing nor individual payment is of paramount importance. Product design must align with the needs of insurance companies. Once insurers procure the product, it will be well-positioned for robust development.

Our U-Hu platform operates on the same principle. When designing U-Hu, I carefully considered who would ultimately bear the costs on the platform: it is commercial long-term care insurance (referred to as long-term care insurance in some countries). Long-term care insurance constitutes the most critical safeguard for an aging society, as basic medical insurance cannot cover these nursing expenses due to their substantial financial burden. However, according to the data I have reviewed, approximately 70% of the population has needs for long-term care.

At UHu, we hope that in the future, long-term care insurance providers will purchase services through our platform, enabling UHu to deliver nursing care to the general public. Therefore, we have designed UHu around three core principles: high quality, affordability, and accessibility. This approach is tailored to meet the needs of insurance companies by standardizing, quantifying, and normalizing nursing care, making it more suitable for procurement by insurers.

“Whoever is willing to pay the bill should be the one to use the service; this is crucial. It is unrealistic for insurance companies to bear all costs, and the development of commercial health insurance must rely on voluntary payment.”

What kind of medical services are consumers willing to pay for? Those that address essential, non-negotiable needs. Our U-Hu service precisely fulfills such essential needs. Under what circumstances should one purchase nursing services through U-Hu? First, when family members are unable to provide adequate care, such as for bedridden patients or young children requiring meticulous attention. Second, to significantly reduce costs and inconvenience; for instance, pregnant women requiring progesterone injections would find daily hospital visits burdensome, whereas having a nurse administer the injections at home offers considerable convenience.

We assign each user registered on the U-Hu platform to partnered primary care institutions offline, enabling these institutions to establish a home-based hospital bed service relationship with the user. Once this relationship is established, the medical institution can legitimately provide medical services in the patient’s home. This approach legalizes home-based nursing and other medical services, thereby circumventing stringent regulatory requirements.

We are the Guangdong Family Doctors Association. We are currently in the process of establishing the China Family Doctors Association, and our application has been accepted by the Ministry of Civil Affairs of the People's Republic of China. Barring any unforeseen circumstances, approval is expected to be granted shortly. We welcome collaboration with all interested parties and individuals. Our association has but one aspiration: to pool our collective strengths to advance the development of primary healthcare.

Excluding health insurance reimbursement, as the cost of nursing care is too high to be covered by basic medical insurance, with Shanghai being the only exception. Due to the ample funding of Shanghai’s health insurance fund, a portion of home-based nursing care costs can be reimbursed there, whereas this is not possible in other cities.

U-Hu will introduce commercial health insurance, specifically long-term care insurance. We are currently in discussions with commercial insurance companies that offer long-term care insurance products. Here is my business card; please feel free to add me on WeChat. You are welcome to contact me.

Our association has not yet established its own clinics; however, we have partnered with CITIC Group, which provides diverse financial support to clinics. This support includes loans, equity investments, and assistance in securing policy-based interest-free or low-interest loans to facilitate the establishment of new clinics. Currently, clinic expansion projects are already underway.

Establishing offline clinics via internet-based healthcare providers is a viable path forward. However, first, clinics are capital-intensive assets; second, there is not yet a single proven success story among chain clinic models. Internationally, our research has found very few examples of successful chain clinic management. For instance, in Hong Kong, where primary care is relatively well-developed and numerous clinics operate, there is still no robust model or strategic framework for managing chain clinics. Last week, I visited Taiwan and paid close attention to this issue. Although clinics are abundant there—ubiquitous on the streets—I spent considerable time walking through Taipei and Kaohsiung and did not observe any clinics sharing the same brand identity.

Therefore, I believe that building a large-scale and highly successful chain of clinics is a challenging endeavor, as it entails significant managerial complexities.

Large public hospitals provide basic medical services to ensure fundamental coverage, which is a national mandate. In contrast, high-end and personalized medical services should be provided by the private healthcare sector and commercial insurance. This distinction addresses two key issues: the sustainability of basic medical insurance and the broader concerns of social equity and justice.