UMP Healthcare Holdings Announces HK$200 Million Investment to Expand Premium Medical Services in Mainland China

High-end healthcare, general practitioners, and commercial health insurance have been hotly debated topics in China’s medical industry in recent years, yet a mature operational model has yet to emerge. Last year, United Family Healthcare Group and Phoenix Medical Group announced a capital partnership to jointly expand their network of high-end clinics in Beijing. More recently, United Family Healthcare Group announced a RMB 200 million investment to enter the Chinese mainland market, partnering with Hong Kong-based Chow Tai Fook and Shanghai Pumi to develop the high-end clinic sector in Shanghai. These moves have brought United Family Healthcare Group, a leading healthcare services provider from Hong Kong, into the spotlight of VCBeat.

According to VCBeat, United Medical Group was founded in 1990 and has established a healthcare service model for corporate and insurance clients in Hong Kong and Macau. Its core businesses include general practitioner and dental services, traditional Chinese medicine, physiotherapy, ophthalmology and other specialty services, as well as a range of offerings such as medical imaging and laboratory testing, child development health assessments, nutritional services, and wellness care. Following its listing on the Main Board of the Hong Kong Stock Exchange in November 2015, United Medical Group has focused its future development on expanding into the mainland’s high-end healthcare market, particularly in Beijing and Shanghai.

From the perspective of United Medical Group’s business structure, 95% of its revenue in fiscal year 2015 came from operations in Hong Kong, making expansion into the mainland market a key strategy to support its future development. United Medical Group aims to develop community healthcare and promote primary care services in mainland China, replicating its healthcare management model in which general practitioners serve as the first point of contact, commercial insurance acts as the payer, and corporate clients constitute the primary customer base.

Expanding High-End Healthcare in the Mainland: Beijing and Shanghai Are Key Focus Areas

United Medical Group’s preferred entry points into the mainland China market are Beijing and Shanghai, where it has selected Phoenix Healthcare and Shanghai Pumai as its respective partners.

The collaboration between United Family Healthcare and Phoenix Medical began in July 2015, when Phoenix Medical announced its acquisition of a 20% stake in the former. Following United Family Healthcare’s initial public offering in November, Phoenix Medical’s shareholding was diluted to 15%.

The substantive cooperation between the two parties involves establishing a network of general practice clinics in Beijing. According to the announcement, three general practice clinics will be initially established, and the network will be expanded to no fewer than 10 general practice clinics (including self-operated and affiliated clinics) in Beijing within three years. It is understood that United Medical Group is currently applying for licenses for the initial three clinics, with operations expected to commence in June or July 2016.

These three clinics are located in Chaoyang District, Shunyi District, and Wangjing, respectively:

• Chaoyang District Flagship Clinic: Covering an area of approximately 600 square meters, it will become a flagship clinic offering general practice, dental care, and a variety of specialty services.

• Shunyi District Clinic: Covering an area of over 1,000 square meters, the clinic will provide general practice services, dental care, and a range of specialty services. It will also function as a medical examination center and serve as a training facility.

• Wangjing Dental Clinic: Established in collaboration with Spain's Sun Dental Hospital, covering an area of approximately 500 square meters.

It is reported that the joint venture between United Medical Group and Phoenix Healthcare also plans to establish an additional service point at Phoenix Healthcare’s Jianguo Hospital to provide inpatient services.

United Family Healthcare’s expansion in the Shanghai market has primarily been driven by its partnership with Pumi Physician Group, based in Shanghai. On April 11, 2016, United Family Healthcare announced a collaboration with Pumi Physician Group to establish the Pumi United Clinic in Shanghai, focusing on general practice and cardiology specialties. Pumi United will position itself as a provider of mid-to-high-end specialized medical services, targeting mainly middle- and senior-level managers of mainland Chinese enterprises. In terms of revenue expectations, United Family Healthcare aims to generate not only income from routine outpatient services but also, more significantly, from providing health insurance plan solutions to corporations and insurance companies.

In addition to its partnership with Pumai, United Family Healthcare Group also acquired Target Group, a professional medical examination institution, in October 2015. Target Group comprises Shanghai Yaodong Health Consulting Service Co., Ltd., Beijing Yaodong Outpatient Department Co., Ltd., and Shanghai Yidong Outpatient Department Co., Ltd. Its primary business activities include providing medical examinations for local residents and visa applicants seeking to work, study, or immigrate abroad, as well as offering health check-ups for corporate employees.

For the Shanghai market, United Medical Professionals Group plans to establish 10 UMP outpatient clinics over the next three to five years. The planned UMP outpatient clinic in Puxi, Shanghai, will be located adjacent to the financial and entertainment districts, covering an area of approximately 600 square meters. It will operate as a comprehensive outpatient facility offering general practice, dental care, and a range of specialist services.

Business Model: Premium General Practice + Corporate Clients + Commercial Health Insurance

A review of United Medical Professionals (UMP) Group’s operational model in Hong Kong reveals that it primarily delivers comprehensive healthcare services—mainly medical, dental, and ancillary services—to contracted clients and self-paying patients through a network comprising UMP Medical Centres and affiliated clinics.

Throughout its service delivery and operational processes, United Family Healthcare Group has consistently prioritized the application of information technology and internet-based solutions:

• 2001: Developed the “Kangqiao System,” a web-based electronic platform connecting all affiliated clinics;

• 2008: Introduced electronic medical record (EMR) systems across all its Western medicine clinics;

• 2009: Developed and implemented a medical document scanning system to facilitate document retrieval for corporate clients, enhance operational efficiency, and significantly reduce paper consumption;

• 2013: Launched the “UMP Service Point” smartphone application, providing corporate and insurance clients with the latest locations and relevant information of its affiliated clinics.

Contract customers, represented by corporations and insurance companies, contributed more than two-thirds of United Family Healthcare’s revenue. Over the past three fiscal years, revenue generated from contract customers accounted for 78.4%, 75.0%, and 67.8% of total revenue, respectively, with the remainder derived from self-pay patients. Contract customers fall into two categories: first, insurance companies, for which United Family Healthcare provides healthcare services to policyholders or their employees; and second, corporations, for which it provides healthcare services to employees or their dependents.

United Medical Group typically enters into three types of contracts with its contracted clients: (1) capitation plans, (2) fee-for-service plans, and (3) annual fixed-fee plans.

Corporate healthcare plans primarily include: outpatient medical plans that provide corporate users with general practitioner services, specialist consultations, physiotherapy, traditional Chinese medicine (TCM), and X-ray diagnostic and laboratory services. Additionally, there are specialized dental care plans for dental needs. Based on corporate requirements, other services such as pre-employment medical examinations, health screening programs, occupational injury assessment programs, and 24-hour house-call doctor services can also be provided.

According to the financial reports, United Medical Group had a total membership of 714,000, 778,000, and 800,000 in fiscal years 2013–2015, respectively, with the total number of managed healthcare plans amounting to 8,500, 9,000, and 9,400, respectively.

An analysis of Union Medical Group’s operational data since 2015 shows that the average revenue per visit for contract-based outpatient services (“medical service revenue”) ranges from RMB 231 to RMB 246, while the average revenue per dental service visit is approximately RMB 700. In contrast, the average revenue per visit for self-pay patients stands at RMB 757–851 and RMB 1,211–1,233, respectively. It is evident that, under Hong Kong’s prevailing healthcare pricing levels, contract-based arrangements can significantly reduce medical expenses for users.

United Doctors Group also provides value-added services to corporate clients, such as customized reports covering plan members’ overall utilization rates, visit types, costs, and other statistical data, helping clients efficiently manage employee healthcare benefits and overall expenses.

According to the financial report, at the end of 2015, United Medical Professionals (UMP) Healthcare Group’s UMP medical network operated over 600 service points in Hong Kong and Macau, of which 41 were self-operated. Among these self-operated sites, there were 15 general practice clinics, 8 specialist clinics, 12 dental clinics, and 6 allied health service centers (providing traditional Chinese medicine, physiotherapy, medical imaging, and laboratory services).

In terms of staffing, in the first half of 2015, United Medical Group’s Hong Kong and Macau operations employed 206 staff members, including 92 physicians (covering general practice, specialties, traditional Chinese medicine, etc.), approximately 130 nurses (estimated), and 74 employees in administrative, technical, business, and other departments.

Against the backdrop of growing consumer emphasis on healthcare in mainland China and the state’s active encouragement of private medical practice, United Family Healthcare Group’s strategic focus on the mainland market is undoubtedly prudent. Moreover, its well-established Hong Kong model—centered on premium general practice, corporate clients, and commercial health insurance—aligns closely with the development trajectory of mainland China’s healthcare sector. One area of slight concern is that the group’s plans appear to lack referral services and mechanisms to top-tier domestic and international hospitals; this is an aspect that could be strengthened in the future.

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