VB Interview with Pan Zhongying: The Triangular Relationship Among Doctor Groups, Private Hospitals, and Public Hospitals

Pan Zhongying

Beijing United Family Hospital was established in 1997. At its inception, the hospital offered services in obstetrics and gynecology, pediatrics, and family practice, with approximately 90% of its clientele being expatriates covered by international insurance plans.

Eighteen years on, we now operate two hospitals in Beijing—Beijing United Family Hospital and its Rehabilitation Hospital and Cancer Treatment Center—as well as eight satellite clinics. The main hospital has 120 beds, and our clinical services span internal medicine, surgery, pediatrics, and most secondary specialties, including cardiac surgery, neurosurgery, and oncology. With the exception of organ transplantation, our coverage extends across virtually all other medical specialties.

Reducing hospital bed capacity is the future trend

There are various hospital rankings in China, each with different indicators. If we consider the economic revenue efficiency per bed, Beijing United Family Hospital is undoubtedly at the forefront. This is also a point of great interest to many: how does United Family achieve this?

I believe that this is partly attributable to United Family Healthcare’s customer base, though not entirely. As you can see, we have established a relatively extensive outpatient care network, the development of which aligns closely with international trends and the evolution of healthcare delivery systems. In other words, medical institutions worldwide are increasingly shifting from an inpatient-centric model to one focused on outpatient services or a combination of outpatient care and day surgery. We have also observed, for example, that in the United States during the 1990s, there was a large-scale reduction in hospital beds; since then, it has become rare to find individual hospitals with more than 1,000 beds.

We believe that the evolution of such a model is actually determined by several factors.

First, new technologies. Advances in technology, including the rise of minimally invasive surgical techniques, have driven this evolution. Second, payment considerations. Insurance companies are no longer willing to cover the high costs associated with prolonged hospital stays. Instead, they aim to promptly transfer patients who consume significant medical resources to rehabilitation facilities suited for long-term care, where costs are relatively lower, thereby reducing overall expenses.

Healthcare institutions have also found, through calculations, that the highest economic benefit from a surgical patient is generated within 3–5 days post-operation. As the length of stay extends, the economic contribution declines. In other words, if a surgical patient occupies a hospital bed for an extended period, it may not yield greater economic benefits for the hospital.

Therefore, driven by these factors, hospitals are reducing bed capacity. While this may differ from certain conditions in China, United Family Healthcare considers it a trend.

The Intersection Between Physician Groups and Hospitals

We believe that collaborating with physician groups, particularly surgical groups with a strong background in performing operations, represents a natural fit, as it aligns with our objective of effectively integrating the development of hospital services with bed utilization rates.

Currently, physician groups in China are emerging continuously, with various models being adopted. However, a key factor determining their long-term viability is whether these groups have clearly defined how to effectively implement their integration with hospitals.

Meanwhile, while hospitals provide a large platform for physician groups, they also face a challenge: how to verify whether physicians’ qualifications and surgical scopes are appropriate.

In China, a physician’s license essentially consists of two documents: the Medical Qualification Certificate and the Physician Practice Certificate. It is difficult to clearly ascertain these physicians’ backgrounds and training, as this is a highly complex system. There are significant variations across different provinces and healthcare systems. In addressing this issue, the United States employs a medical privilege management system (privilege system). This is because the predominant model in U.S. hospitals is that physicians are not employees of the hospital but rather collaborate with external physician groups.

Implementing such a permission system enables systematic management of physicians’ access rights. Many hospitals share this perspective: while they are highly willing to collaborate with external physicians and specialists, the absence of a management framework to standardize all aspects of physician credentials and practices can lead to numerous issues. For instance, the valid qualifications for neonatal resuscitation among general pediatricians and neonatologists require unified oversight. Therefore, it is advisable not to rush into implementation; instead, devote sufficient time to thoroughly understand the respective backgrounds and credentials of all parties involved.

With such a foundation in place, United Family Healthcare has transformed itself into a relatively open platform. Our surgical operating rooms and surgical teams can seamlessly integrate with public hospitals and physician groups, enabling us to support a wide variety of surgical procedures on this platform.

Only with Technological Leadership Can One Go Far

Building a nationally top-tier surgical team solely through one’s own capabilities is challenging; however, partnering with public healthcare institutions makes this goal far more attainable.

We were fortunate to connect with Dr. Jiafu Ji, President of Peking University Cancer Hospital, via the Internet and establish a collaborative partnership. This has led us to continually explore the optimal points of integration between public and private hospitals. If private hospitals approach such collaborations with a mindset of merely relying on or leveraging the prestige of their public counterparts, such relationships will be difficult to sustain in the long term.

Although United Family Healthcare (UFH) provides excellent service, its service model is easily imitated and copied. Without technological leadership, it is difficult for an institution to achieve robust growth and long-term sustainability; therefore, enhancing technical capabilities is imperative. During our collaboration discussions, we recognized that public hospitals face certain obstacles in adopting new technologies and equipment due to policy restrictions. Consequently, we quickly reached a consensus to facilitate UFH’s development toward technological leadership.

The decision to introduce the da Vinci Surgical System was a significant one for us. In fact, back in 2011, when United Family Hospital was expanding its operating rooms, I proposed the construction of a large operating suite to accommodate the potential future introduction of robotic surgery systems. At the time, many of my colleagues considered this idea unrealistic. However, through my persistent advocacy and collaborative efforts with the design team to address challenges and redesign the layout, we successfully built a large operating room, which initially served as a hybrid operating room.

Establishing a Training System Is Key to Retaining Talent

Many people are concerned about the value of healthcare labor. Under the current public system, the value of medical and nursing labor is undervalued. In addition to price distortions, this issue should also be examined from the perspective of cost structure. While some external commentators argue that United Family Healthcare’s fees are relatively high, our fee structure is more reasonable and closely resembles that of most international healthcare institutions.

For us, revenue from pharmaceuticals accounts for only 12%–13% of total income, while revenue from laboratory testing and radiology constitutes approximately 30%. This means that over 60% of our revenue is derived from the labor value of medical and nursing staff. The high proportion of employee wages and compensation presents a significant challenge in our management.

However, this also presents a certain advantage, as relatively competitive salaries can help attract employees. Yet, with intensifying market competition, relying solely on high pay to retain staff has become increasingly difficult. In fact, we rarely attempt to retain employees who leave purely for financial reasons. Instead, we seek to understand their underlying motivations for departure and explore whether we can offer them a robust career development plan to help achieve their professional goals. Additionally, we have established our own comprehensive training and talent development system.

Q&A Highlights

Question 1: Regarding surgical collaborations with physician groups, what is United Family Healthcare’s current approach to managing cases involving severe intraoperative complications that require multidisciplinary surgical support? Does the hospital deliberately avoid accepting such cases?

Pan Zhongying:First and foremost, risks should be minimized as much as possible. For instance, a preoperative case discussion should be conducted in advance. Such discussions should involve not only the surgical team but also internal medicine ICU physicians and the anesthesiology team, to facilitate comprehensive risk assessment. However, it is impossible to completely eliminate risks. In the initial phase of collaboration, it is essential to consider the acceptable level of risk tolerance. If the partnership proceeds smoothly, the level of risk can be gradually increased. In other words, undertaking highly challenging cases right at the outset of collaboration may lead to irreversible losses if complications arise.

Question 2: United Family Healthcare’s physician-patient relationships differ from those in traditional hospitals, resulting in a distinct patient demographic. Building on this difference, it can rapidly address areas of dissatisfaction among patients or clients. How does United Family Healthcare handle medical disputes?

Pan Zhongying:Regarding the handling of medical disputes, we have dedicated departments—the Customer Service Department and the Social Work Department—to address these issues. These departments generally do not include staff with medical backgrounds. Many patients who file medical complaints feel that their concerns are being ignored. Consequently, they may deliberately seek out liabilities or pretexts related to medical care to pressure the hospital and gain its attention. Currently, through our Customer Service and Social Work Departments, we engage in comprehensive communication with patients to understand the source of their dissatisfaction. If the dissatisfaction is indeed related to the treatment itself, we refer the issue to the Chief Medical Officer (CMO) for further inquiry and investigation. Internally, we have a peer review mechanism. In cases involving medical controversies, we assign other physicians from the same specialty to conduct a thorough assessment of the entire treatment process and plan, evaluating whether they would have provided the same treatment to the patient under similar circumstances.

This is a critical point, as physicians often tend to offer comments only after the patient’s outcomes are fully known, which can make the physicians under review feel that the process is unfair. For example, in surgical cases, if pathology results are not yet available and one must make decisions on the spot, would your considerations differ from those of the operating surgeon? Such an approach helps the physician under review identify areas for improvement. Based on the extent of improvement needed, cases are classified into several levels: Level A indicates that the same judgment would have been made, with no issues during treatment. If the patient is dissatisfied with the outcome, they may seek third-party appraisal or pursue legal remedies; Level B indicates minor areas for improvement that would not significantly affect the outcome; Level C indicates notable areas for improvement, with considerable differences in considerations between the reviewer and the physician under review; and Level D indicates divergent opinions. In summary, providing recommendations for improvement through peer review will, in the long term, promote advances in medical practice.

Question 3: Should public-private partnerships leverage their respective strengths, such as the private sector’s flexibility, advanced management practices, talent acquisition, and market-oriented operations, while public hospitals contribute their advantages in brand reputation, government resources, and talent training and education? Director Pan, do you believe this type of collaboration will become a trend?

Pan Zhongying:Collaboration between public and private hospitals will increasingly become a model for exploration and reference, with the key lying in identifying the respective demands of both parties. If private hospitals unilaterally seek to acquire technology, talent, and patients from public hospitals while offering limited benefits in return, this model will be difficult to sustain in the long term.

Question 4: Group members are eager to hear about the legendary story of President Pan. Could you please introduce yourself?

Pan Zhongying:I studied English at university and worked as a translator in the military after graduation. When I joined United Family Healthcare, there were no clear regulations in China regarding Sino-foreign joint venture medical institutions. Although we had obtained approvals from the Ministry of Foreign Trade and Economic Cooperation and the Ministry of Health, specific procedures for customs clearance and commodity inspection remained undefined, leaving us uncertain about how to proceed. The challenges I faced in my role were therefore considerable. As an operational staff member responsible for execution, I strove to find solutions and ensure tasks were completed. After the successful launch of United Family Healthcare, I remained part of the management team as an administrative supervisor, overseeing a wide range of responsibilities and handling many matters personally. Later, I applied to the Guanghua School of Management at Peking University, enrolling in 2009 and earning a Master’s degree in Engineering Management.

Question 5: How does United Family Healthcare attract patients? Is there a referral mechanism?

Pan Zhongying:United Family Healthcare’s referral mechanism primarily encourages internal patient referrals. If a patient is satisfied with my services and has additional medical needs, we assign other physicians to meet those needs, thereby ensuring the patient remains within our network and continues as our client.

Question 6: The United Family Healthcare chain has performed well, but numerous counterfeit versions of United Family Healthcare have emerged. Does this phenomenon significantly impact United Family Healthcare’s own development?

Pan Zhongying:Currently, domestic laws in China offer very limited protection to private hospital chains. Only brands recognized as well-known trademarks can truly receive nationwide, cross-industry protection. As many may have noticed, counterfeit versions of United Family Healthcare (UFH) are increasingly prevalent. For instance, a women’s and children’s hospital registered directly under the name “United Family Healthcare” has emerged in Guiyang, Guizhou Province. In some remote areas, such as Xining in Qinghai Province or Xuzhou, certain institutions are engaging in borderline practices, such as altering the character “家” (Jia) in “和睦家” to “佳” (Jia), which sounds similar but carries a different meaning. Naturally, we have incurred significant costs in addressing these issues, including litigation. However, as is widely known in China, while lawsuits may be won, they often fail to substantially improve the situation. Therefore, we hope to strengthen legal protections for our brand.

Question 7: President Pan, what is the basis for United Family Healthcare’s collaboration with physician groups, and what are the specific criteria?

Pan Zhongying:Our collaboration with physician groups is founded on a shared commitment to delivering trustworthy, high-quality, and safe medical services. If viewed solely through the lens of economic returns or financial gain, I believe such partnerships would not be feasible. For physician groups, if money were the only consideration, United Family Healthcare would not be an attractive partner, as we do not offer them premium pricing or substantial financial incentives.

Question 8: What differences do you perceive between United Family Healthcare, public hospitals, and well-funded private hospitals?

Pan Zhongying:I believe the most significant distinction lies in our international orientation. United Family Healthcare is truly able to practice and implement international medical standards. Many people ask why we focus solely on international standards rather than Chinese standards. In fact, we believe that international and Chinese standards are largely aligned, with minimal differences in most areas. However, comparatively speaking, there are indeed certain gaps or lags in specific aspects.

Question 9: In the face of an increasing number of foreign-invested hospitals, such as Amcare and United Family Healthcare, what is their development direction?

Pan Zhongying:You will notice a growing number of private hospitals, such as Amcare mentioned earlier. I believe United Family Healthcare (UFH) has a distinct development strategy and trajectory compared to others. As a pioneer, we sometimes find ourselves in a solitary position, blazing trails with models and approaches that others have not yet ventured. While others follow in our footsteps, learning from and imitating us, this distinction becomes evident. The UFH model is characterized by innovation and creativity, particularly in terms of medical service layout and development.

Question 10: Is United Family Healthcare considering expanding its reach to more second- and third-tier cities through telemedicine?

Pan Zhongying:I believe we will certainly make some attempts through internet-based healthcare to reach more regions and areas. Of course, the specific approach will only become clear once we actually put it into practice.

Question 11: Which company’s MRI systems does United Family Healthcare use? Is it possible to engage in clinical MRI research collaborations similar to those conducted by public Grade A tertiary hospitals, thereby leveraging high-end technology to develop premium health screening packages?

Pan Zhongying:Many healthcare institutions are considering using magnetic resonance imaging (MRI) for health screenings, a service that is likely to be highly profitable. In my view, the equipment itself is nothing special; the key difference lies in the people operating it. The question is whether they treat it as a cash cow or leverage its clinical value.

Our medical team believes that using MRI for health checkups is akin to using an anti-aircraft gun to swat a mosquito—the benefits are disproportionate to the costs. For instance, it is well known that some patients experience claustrophobia during MRI scans. Furthermore, how can we ensure cooperation from very young infants during the procedure? In terms of service, we take into account the needs of special populations; even if such needs are rare, we are willing to invest millions to address them.

Question 12: How do you interpret the concept of being people-oriented? Some hospital directors refer to patients as “users.” What is your perspective on this issue?

Pan Zhongying:Whether we refer to patients as “users” or “customers,” the intent is simply to employ more euphemistic language to describe the doctor–patient relationship. However, we must always remember that within a hospital setting, our services extend beyond just patients; we serve a broad range of stakeholders, including third-party payers such as insurance companies, who are indeed our clients as well. In the healthcare industry, all participants—patients, payers, and regulatory administrative bodies, among others—are engaged in the same “game.” The game can proceed smoothly only if everyone abides by its rules and continually works to improve and refine them. If everyone seeks to exploit loopholes, the game will certainly become unplayable. On this point, one may consult Dr. Zhang Qiang, who often remarks that if his sole objective were financial gain, he would not have joined United Family Healthcare, as other institutions offer substantially higher compensation.

Question 13: What qualifications must physicians meet to practice at United Family Healthcare? In your opinion, what are the key attributes of the ideal employee for United Family Healthcare?

Pan Zhongying:When onboarding new employees, I often tell them that there is no such thing as “the best,” only “the most suitable.” In 2008, when everyone nominated me to serve as the President of United Family Hospital, I was by no means the best candidate. However, given the circumstances at the time, I was likely the most suitable one. Over the past seven years, I have strived to continually improve myself, but I would certainly not claim to be the absolute best.

Question 14: President Pan, is it mandatory for physician groups to bring their own patients when collaborating with you? If the physicians in the group are from prestigious institutions like PLA General Hospital (301) or Peking Union Medical College Hospital, which already have significant patient draw, would it be acceptable for them to come only to perform surgeries? This is because their home hospitals do not permit them to conduct outpatient consultations elsewhere.

Pan Zhongying:A friend asked whether the doctors we collaborate with are required to bring their own patients, and whether it is acceptable for them to come solely to perform surgeries. I believe clarification is needed: we never require doctors to bring their own patients. However, I firmly believe that a good doctor is certainly capable of attracting patients independently. In other words, while we do not impose such a requirement, doctors can leverage their personal efforts to bring more patients onto our platform.

Question 15: What differences do you perceive between physician groups in the United States and those in China? Some argue that with the development of physician groups, physicians will be able to move freely, potentially transforming hospitals into mere practice platforms. Do you agree with this view? In this context, how should hospitals maintain their core competitiveness?

Pan Zhongying:Many people are concerned about physician groups. Some group members have asked about the differences between physician groups in the United States and those in China. Coincidentally, about 10 years ago, in 2004, I visited a clinic formed by a physician group in Tennessee, USA. As many may know, although Tennessee is located in a relatively remote southern region of the United States, it has given rise to many healthcare service organizations that have had a significant impact on the entire U.S. healthcare system.

Including HCA, they all originated from Tennessee. The physician group practice I visited was co-founded by more than 80 physicians as partners. It is located directly across from the local county hospital, and all physicians are partners in the clinic, with only one professional manager hired to handle its operations and management.

For these physicians, they all have large patient panels and wield significant influence within their patient communities. Interestingly, I have also observed certain parallels between clinics in the United States and those currently operating in China. Both systems feature two primary models: specialty-focused and general practice-oriented clinics. I have had the opportunity to visit both types of facilities.

If we are to discuss the differences between American physician groups and those in China, I believe that Chinese physician groups are still in a relatively nascent stage, with very limited influence on policy. For instance, when I visited an American clinic, they informed me that the clinic planned to purchase its own CT and MRI equipment but required approval through a process referred to as "CNO," which was denied by the county hospital. In response, the physicians at the clinic took a strong stance, filing a lawsuit and engaging in competitive negotiation with the county hospital.

I wonder if, one day, physician groups in China will also rise to become a powerful and influential force with strong appeal on the healthcare landscape. If physician groups have the capacity to challenge hospitals—for instance, by questioning why county-level hospitals can expand bed capacity or purchase new equipment while their own clinics cannot—then both parties could engage in an intriguing competitive dynamic. Ultimately, it is the general public that stands to benefit from such a scenario.

Question 16: Dean Pan, is the personal branding of United Family Healthcare physicians managed by a professional team?

Pan Zhongying:In fact, we do not have a dedicated professional team for managing physicians’ personal brands, and our marketing staff is quite limited. Therefore, we rely primarily on the physicians’ own passion and personal commitment. At the hospital level, we provide appropriate policy support, assistance, and leadership.