Internet Healthcare Profitability Hinges on Capturing 'Core Traffic': A Prospectus Insight

It is not uncommon to hear the view across the industry that it is still too early for internet healthcare to focus on profitability. This stems from the difficulty of achieving profits; for now, let us set aside profitability and discuss traffic alone. However, as practitioners, if we do not clearly figure out how to generate profits, it is akin to dating without the intention of marriage, which will ultimately jeopardize the bright future of the young women involved.

“Core Traffic” Is the Key to Monetization

Some entrepreneurs always believe that once their platform has hundreds of thousands of doctors, thousands of hospitals, or millions of users, the resulting traffic will naturally translate into monetization. Is this really the case?

In terms of physician coverage capability, traditional pharmaceutical companies are undoubtedly the strongest. Offline sales teams from companies like AstraZeneca and GSK, often numbering in the thousands, each manage relationships with hundreds of thousands of physicians—relationships that are exceptionally robust, built on mutual trust and deep commitment. This is something that even the most well-funded internet ground-promotion teams cannot hope to match. In the early years of the mobile internet boom, pharmaceutical companies seemed to awaken to this new trend and rushed to integrate physician resources onto online platforms. They launched their own official WeChat accounts and apps, but what were the results? While these platforms initially amassed significant traffic, they ultimately became mere window dressing.

It is worth noting that the greatest competitive advantage among pharmaceutical companies does not depend on who covers a larger number of physicians. This is evident from the fact that Beta Pharma achieved billion-level sales volume with just one drug, Icotinib. Of course, this is a digression and will be discussed in detail in a separate article in the future.

When it comes to assessing the capability of hospital coverage, software companies specializing in Hospital Information Systems (HIS) are the most authoritative voices. HIS represents a highly coveted resource within the healthcare ecosystem, as online appointment registration, electronic prescriptions, and electronic medical records all rely on it. However, the reality is that even Kingdee Medical, which has secured contracts with over a thousand hospitals and leveraged the dividends from years of operating hospital HIS platforms, has implemented a “mobile payment + hospital care process reengineering + consultation services + patient health records” model for certain institutions, creating a robust closed-loop system. Nevertheless, its profitability remains to be verified.

From the perspective of user traffic acquisition capabilities, health checkup institutions are second to none. Meinian Onehealth Healthcare serves tens of millions of users annually; however, beyond its core business, it has not leveraged this vast amount of data to generate additional monetization or value-added services. On a personal note, the author has had gallbladder polyps for several years and has undergone examinations at multiple different institutions, with one provider conducting repeat scans twice. Yet, no institution has followed up with any form of “care” or outreach.

In this light, healthcare differs from other industries; the path from “traffic” to “monetization” is not a natural or straightforward one. Why is this? The core issue lies in whether such traffic constitutes genuine “core traffic” and represents the true key stakeholders in the healthcare delivery process. Only by securing authentic “core traffic” can robust monetization capabilities be achieved.

In reality, patients place their trust in recommendations from friends and family, word-of-mouth endorsements, authoritative sources, and the small elite group of experts at the apex of the medical profession’s pyramid—not in the vast majority of China’s more than two million healthcare professionals. Therefore, despite high patient traffic volumes, there is still a long road ahead before monetization can be achieved.

Are the millions or even tens of millions of user records held by health checkup institutions truly core traffic? Certainly not. Most of these individuals are healthy. It is important to recognize that healthy individuals and “patients” are entirely different groups. Does this mean that by targeting healthy individuals first, one can eventually capture patients? After all, people will inevitably fall ill at some point. However, the reality is: who would download an app for online appointment registration or medical consultation if neither they nor their family members are currently ill and they consider themselves healthy?

Therefore, the core of healthcare is the “patient”—the individual who is ill, who comes to realize the paramount importance of health only after falling sick, and who ultimately bears the cost of medical services (note that even public health insurance is funded by premiums paid out-of-pocket by patients during their healthy years). It is thus evident that the core traffic that internet healthcare should truly aim to capture consists of what we term “patient users” (a broad reference to either the patients themselves or their family members who pay for their care; hereinafter collectively referred to as “patients”).

How to Acquire Precise Patient Users?

Let us first examine the components of the healthcare ecosystem and identify the target users of internet healthcare products.



Patient

Directly targeting patients may seem straightforward, but the results are often less than ideal. Most such products focus on disease management and are designed to complement healthcare providers. However, without dedicated medical staff or a systematic out-of-hospital disease management team for intervention, discussions about disease management remain purely theoretical. In fact, the biggest challenge goes beyond this; it lies in patient acquisition. Relying on physicians for referral—such as having doctors ask patients to scan QR codes to follow official accounts or download apps during clinical consultations—shifts the bottleneck away from the patient side and back to the acquisition of physician resources and their level of cooperation.

Healthcare Professionals

Starting with healthcare professionals—covering areas such as medical consultations, physician tools, nursing tools, physician communities, and medical news—creates the largest user base. Addressing physicians’ pain points to onboard them onto the platform, thereby enabling them to refer patients to the platform, is a logical progression. This is precisely why platforms like DXY and Chunyu Doctor have become highly sought-after. However, monetization remains challenging. Both DXY and Chunyu Doctor have begun expanding into offline clinics.

Pharmaceutical and Medical Device Companies

Taimei Medical, which has recently been widely covered by the media, leverages a SaaS model to help pharmaceutical companies track data from expanded clinical studies after drug launch. This model, in which pharmaceutical firms subsidize patients participating in “surveys,” ensures high user engagement regardless of the authenticity and validity of the data. It is significantly closer to monetization than pure chronic disease management models. Therefore, by targeting the “payers,” the financial prospects are exceedingly bright!

Pharmaceutical and Medical Device Sales Representative

This group may seem distant from patients, yet it holds the greatest potential to unexpectedly disrupt the healthcare landscape. Numbering in the millions, this large population possesses intimate knowledge of physicians’ needs and a solid understanding of medical basics. Any offline business development initiatives in internet healthcare inevitably rely on this group to varying degrees. However, integrating these resources and monetizing them is no overnight endeavor. Alternatively, charting a new course by guiding their career planning and leveraging their business operational capabilities in conjunction with physician groups presents an appealing vision outlined by the author, though its feasibility remains to be verified.

Medical Institutions

Undoubtedly, healthcare institutions are naturally prime venues for acquiring patient users. Targeting hospitals—such as by building Hospital Information Systems (HIS), enabling online appointment registration, providing telemedicine services, or setting up Wi-Fi infrastructure—is a highly promising approach, particularly the first three models. The key challenge lies in offline business development capabilities. Given the limited resources of healthcare institutions, those who establish an early presence can build robust commercial barriers. For instance, Guahao.com, one of the earliest companies in China to enter hospital medical scenarios through appointment registration, has accumulated extensive hospital resources, especially precise patient data. Consequently, launching internet hospitals, physician group platforms, and online surgical centers became a natural progression. It is therefore no surprise that the company has secured hundreds of millions in capital injections. Notably, last year Guahao.com introduced a private physician package service for children. Leveraging its abundant upstream medical resources and vast downstream patient traffic, this service, priced at several thousand yuan, is a business opportunity only enterprises of such scale can realistically capture.

Pharmaceutical and Medical Device Terminal Operating Enterprises

Pharmacies constitute a vast business sector; it is reported that by the end of 2015, there were more than 500,000 pharmacies of various types across China. The surge in drug-related O2O (Online-to-Offline) platforms last year has involved both B2B and B2C operations. However, with online sales of prescription drugs still prohibited, purchases are largely limited to treatments for colds, diarrhea, and stomach pain—transactions that are low-frequency and low-value, making growth challenging. Even if companies operate in regulatory gray areas or await policy liberalization, whether integration with medical insurance payment platforms can be achieved remains critical to their survival.

TCM Wellness and Rehabilitation Center

As China’s population continues to age, medical rehabilitation will emerge as a highly promising and profitable sector in the future. Given the specialized and service-oriented nature of this industry, it is inevitable to undergo critical processes such as the recruitment and management of nursing staff, the accumulation and management of patient resources, and the establishment and enhancement of relationships with healthcare institutions (since “care” stems from “illness,” healthcare institutions serve as high-quality channels for patient referrals). Thus, while this sector offers clear profitability and significant growth potential, building competitiveness requires substantial and complex preparatory efforts, making it difficult to achieve success overnight.

Caregiving Companies

Hospital Escort Services: Anyone who has experienced inpatient treatment can deeply understand the critical importance of these services. As the saying goes, “30% treatment, 70% nursing.” During hospitalization, beyond the general nursing care provided by hospital nurses, tasks such as daily living assistance (e.g., turning patients and patting their backs), accompanying patients for various examinations, and retrieving test reports are often beyond the capacity of ordinary family members. Consequently, there is substantial demand for inpatient escort services, with a paid service adoption rate exceeding 50%. With over 200 million hospitalizations annually in China, assuming an average escort fee of RMB 180 per day and an average duration of five days, the market size could reach hundreds of billions of RMB. This figure pertains solely to the in-hospital escort market and excludes home-based care services. Furthermore, these expenses are entirely out-of-pocket, unrelated to medical insurance, free from policy restrictions, and settled through direct cash transactions. Given the precise target audience and clear payment scenarios, leveraging platform capabilities to extend into other medical services follows naturally, demonstrating significant monetization potential.

So, who are the entities providing escort services? More than 90% of hospitals adopt a model of tendering or authorizing third-party escort companies to operate these services. Therefore, targeting inpatients by partnering with these escort companies presents an excellent entry point. For instance, Peihutong enters the market by serving these escort companies through a “SaaS + Order” model, helping them reduce management costs and generate additional revenue from services such as in-home patient escorting. Meanwhile, it also accumulates valuable resources for the broader future landscape of rehabilitative medical care, achieving three objectives with one move.

Others

Health insurance, commercial insurance, physical examination institutions, genetic testing, and other emerging ancillary medical services do not solely cater to patients; a significant proportion of their clientele consists of healthy individuals, placing them somewhat removed from the core of medical care. Health insurance is entirely constrained by policy barriers and is therefore excluded from this discussion. Other services, such as genetic testing, include screening programs for high-risk factors among healthy populations. While these programs boast clear profitability and substantial margins, acquiring orders remains a traditional sales challenge that relies on securing deals one by one, making it difficult to achieve significant scale. For internet healthcare companies, there are limited opportunities to monetize through traffic alone. Only by establishing an effective mechanism for follow-up disease management for patients can these services naturally convert into additional medical consumption and generate revenue.



Therefore, platforms that are closer to patient-users (the actual payers in healthcare) and possess the capability to integrate these resources to generate precise patient-user traffic, such as appointment registration platforms and pharmaceutical data research SaaS solutions.、Caregiver SaaS"The longer you wait, the closer you get to monetization, and the clearer the profit model becomes."

In conclusion, the mission of internet companies is to integrate resources and achieve efficiency. By fulfilling this role, as long as we genuinely drive the optimization of the healthcare ecosystem, earning reasonable commercial profits and reinvesting them into business activities will naturally foster substantial growth in internet healthcare.

By Tao Jin, Founder of Hesheng Technology (This article is a guest contribution and does not represent the views of VCBeat.)