Guangdong Releases Plan to Accelerate Socially Operated Healthcare, Allowing Physicians to Open Clinics in Pharmacies

Recently, the Guangdong Provincial Government issued the “Implementation Plan for Accelerating the Development of Socially Run Medical Institutions in Guangdong Province” (hereinafter referred to as the “Plan”). Featuring substantial policy support and breakthroughs in multiple areas, the Plan explicitly outlines several measures to promote socially run medical institutions, including relaxing market access conditions for private capital entering the healthcare sector, permitting physicians to practice at multiple locations, encouraging licensed physicians working part-time to establish clinics, and fostering public-private partnerships in healthcare. By 2018, the number of beds and the volume of diagnostic and treatment services provided by non-public medical institutions accounted for approximately 30% of the total.

Currently, Guangdong Province has 22,000 private medical institutions, accounting for 46.3% of the total number of medical institutions in the province; there are 57,000 beds, representing 13.1% of the total beds in the province; and 102,000 health technical personnel, comprising 16.5% of the total health technical personnel in the province. The total number of outpatient visits and discharges at private medical institutions reached 161.709 million and 1.288 million, respectively, accounting for 20.5% and 8.9% of the corresponding totals for all medical institutions in the province. At present, large Grade A tertiary general hospitals with strong competitiveness comparable to public hospitals have emerged in Guangdong Province, such as Dongguan Kanghua Hospital, Donghua Hospital, and Foshan Chancheng District Central Hospital.

It is understood that the Plan primarily consists of the following ten key points.

1. Medical institutions should be planned for newly built commercial housing projects

“The Plan” stipulates that no restrictions shall be imposed on the category, scale, quantity, or layout of non-public medical institutions. It requires all localities to formulate or adjust their regional health plans and medical institution establishment plans within 2016 and make them publicly available. Where such plans have not been publicly disclosed, authorities shall not refuse applications by social forces to establish medical institutions on the grounds of planning considerations.

For prefecture-level cities with more than four public hospital beds per 1,000 residents, the incremental capacity for healthcare facilities should, in principle, be primarily allocated to social forces establishing medical institutions. New commercial residential housing projects in urban areas shall plan and configure medical institutions of appropriate quantity and scale based on factors such as plot ratio and projected population.

2. Streamline Approval Restrictions and Ensure Timely Completion

In response to the previous challenges in applying for the establishment of private medical institutions, such as significant departmental barriers, lengthy processing times, excessive regulations, and cumbersome procedures, the "Plan" comprehensively reviews and eliminates various unreasonable pre-approval requirements, while integrating approval processes including the setup and practice licensing of private medical institutions.

Decentralize approval authority. Except for the establishment and approval of privately-run medical institutions involving provincial-level administrative powers, such as those with foreign capital (including from Hong Kong, Macao, and Taiwan), which shall remain under the jurisdiction of provincial health and family planning (traditional Chinese medicine) authorities in accordance with regulations, all other privately-run medical institutions shall be subject to localized approval and management. Encourage chain and group-based operations of privately-run medical institutions.

3. Allow physicians to establish clinics within pharmacies

The Plan proposes to prioritize support for non-profit medical institutions established by social forces, encourage social forces to establish rehabilitation hospitals, geriatric hospitals, nursing homes, and high-end healthcare service providers, as well as specialized traditional Chinese medicine (TCM) hospitals and TCM outpatient departments and clinics that provide only traditional TCM services, thereby accelerating the development of privately run TCM institutions. Physicians are permitted to open clinics in qualified pharmacies.

4. Encourage physicians to practice at multiple locations and nurses to establish nursing care institutions

Previously, the inability of medical personnel to move between medical institutions of different types and levels, coupled with a shortage of talent in private medical institutions, was a significant factor constraining the development of socially-run medical institutions. The Plan encourages licensed physicians working part-time to establish clinics, traditional Chinese medicine (TCM) halls, and TCM consultation clinics, and encourages licensed nurses working part-time to set up nursing care institutions. It also supports the establishment of medical human resource management entities, such as physician groups. Across the province, a system will be implemented whereby the primary practice location for all categories of physicians and nurses is reported, registration is conducted at the provincial level, and multi-site practice is registered and filed through an online network. Medical personnel will not be adversely affected in terms of academic standing, professional title promotion, or vocational training due to their engagement in multi-site practice.

5. Encourage public-private partnerships in healthcare delivery

The Plan proposes that, under the premise of clearly defined rights and responsibilities, public hospitals should be permitted to collaborate with social forces in establishing medical institutions through models such as brand franchising and purchasing services, and to revitalize surplus medical resources through comprehensive restructuring. Public hospitals are allowed to cooperate with social forces through forms such as publicly built but privately operated facilities, privately run institutions with public subsidies, or medical alliances. Social entities with healthcare management expertise are encouraged to explore participation in the management of public medical institutions through hospital management groups and other similar structures.

6. Water and electricity rates for privately operated medical institutions shall be the same as those for public institutions

For a long time, privately run medical institutions have operated independently, assuming sole responsibility for their profits and losses and self-driven development, without receiving fiscal support. They also differ from public institutions in terms of fee structures, clinical practices, and academic activities. The Plan has achieved new breakthroughs. Regarding fiscal support, local governments may include non-profit private medical institutions that provide basic medical and health services within the scope of government subsidies in accordance with relevant regulations, implementing subsidy policies equivalent to those applied to public medical institutions.

For all government-regulated fee items, non-profit private medical institutions are subject to the same charging policies and standards as public medical institutions, with water, electricity, and gas supplied at the same prices as those for public medical institutions. The former enjoy equal treatment with public medical institutions in areas such as standardized residency training, general practitioner development, scientific research, specialty construction, professional title evaluation, hospital accreditation, and participation in academic activities.

7. Guaranteed Demand for Medical Land

“The Plan” permits social forces to establish medical institutions by utilizing existing construction land and currently vacant premises in accordance with relevant regulations. For socially funded medical institutions established on existing construction land, where the transfer (leasing) or assignment of allocated construction land use rights is involved, it is permitted—subject to compliance with urban and rural planning—to make up the payment for land grant fees (rent) and complete the procedures for agreement-based land grant or leasing.

For the use of existing vacant rooms to establish privately-run medical institutions, the function of the premises may be adjusted in accordance with relevant regulations upon approval by the competent departments of the local government.

8. Further Expansion of Investment and Financing Channels

The “Plan” encourages local governments to provide construction funding and interest subsidies to privately-run medical institutions by establishing health industry investment funds, among other measures. It encourages privately-run medical institutions to raise start-up capital and development funds through equity financing, project financing, and other means. It supports eligible for-profit privately-run medical institutions in raising capital through initial public offerings or bond issuances.

Explore medical trust investments and healthcare bonds, and support privately run medical institutions in establishing medical funds using operational surpluses and donated funds in accordance with regulations, with the proceeds dedicated to the development of medical institutions. Encourage privately run medical institutions registered as corporate legal entities to explore the establishment of private equity investment funds for healthcare.

9. Personnel from privately-run medical institutions may receive training at public institutions

"The Plan" actively encourages public medical institutions to train medical personnel for private medical institutions and to carry out technical exchanges and cooperation.

Promote the co-construction and sharing of large-scale medical equipment, explore the establishment of regional testing and examination centers through various models, and open them to all medical institutions. Encourage localities to integrate existing large-scale equipment resources through diverse approaches to improve utilization efficiency.

10. Improve the assessment and exit mechanisms for licensed practitioners

The “Plan” actively promotes the establishment of standards, norms, and institutional frameworks for interim and ex-post regulatory oversight of administrative approvals for privately run medical institutions. It advances the development of credit systems for medical institutions and licensed practitioners, and improves mechanisms for verification, assessment, registration, and exit.

Encourage third-party evaluation agencies to conduct professional assessments of privately operated medical institutions and medical personnel. Severe penalties will be imposed in accordance with the law on illegal practice of medicine, leasing or lending practice licenses to establish medical institutions, subcontracting or outsourcing clinical departments, as well as confirmed cases of egregious medical malpractice, fraud involving health insurance funds, false advertising, excessive medical treatment, and refusal or shifting of responsibility for patients.