Dr. Smile Medical Group Files for IPO: Pioneering China's First Multi-Specialty Physician Group
“Allow me to open this article with a pretentious statement: Internet healthcare reform is entering deep waters.”
For a long time, internet healthcare was seen as a carnival for tech entrepreneurs, while doctors—the core of the medical sector—were late to arrive.
There is a doctor named Zhang Qiang, who has a strong Western style and looks very much like the handsome lead physician from "Grey's Anatomy." He possesses both professional expertise and charming charisma.
Chinese Star Physician Zhang Qiang Leaves the Public System to Establish a Physician Group. More importantly, Zhang Qiang demonstrates remarkable vision and resolve; by leaving the public system and founding the Zhang Qiang Physician Group, he aims to unite China’s most outstanding physicians and create a practice platform that affords doctors greater dignity and transparency.
The market has also responded positively to Dr. Zhang Qiang’s decision. According to Dr. Zhang, the company’s first round of financing reached RMB 50 million. Currently, the Dr. Zhang Qiang Medical Group has seven teams and has established partnerships with four hospitals.
The public sector is also responding positively; following the relaxation of regulations on multi-site practice, physician groups within the public system have received substantial support.
On May 11, the “Public-Sector Physician Group,” initiated and led by physicians from Fuwai Hospital, recently secured tens of millions in investment from venture capital firms. This marks the first public-sector physician group in China to receive such substantial funding.
On May 13, Dr. Zhang Qiang was invited by VCBeat to join the VCBeat VB Entrepreneurship Circle WeChat group to discuss the current status and future of physician groups. Also participating in the discussion were Sun Hongtao from the Fuwai Hospital Physician Group, Li Hao from the Cardiovascular Physician Group, and other members of the VCBeat VB Entrepreneurship Circle.
Below, VCBeat takes you into the heart of the heated discussion—
PART 1: Dr. Zhang Qiang Answers Questions from VCBeat Community Members
Dr. Zhang Qiang spent over an hour providing detailed responses to a wide range of questions from VCBeat’s community members. The interview took place in the garden at the headquarters of Dr. Zhang Qiang Doctor Group, a serene and picturesque setting that aligns with Dr. Zhang’s vision of creating a better professional platform for physicians. VCBeat has categorized Dr. Zhang’s answers into several major sections to facilitate reading.
Dr. Zhang Qiang is in the garden at the headquarters of the Doctor Group, having a remote discussion with friends from the VCBeat VB Entrepreneurship Circle.
# On Hospital Collaboration
Q: How many physicians are currently in the Zhang Qiang Doctor Group, and how many hospitals does it collaborate with? What is the model of collaboration with hospitals?
Zhang Qiang: We currently have seven teams and collaborate with four hospitals. We aim to expand into most medical specialties before the end of the year. Our hospital collaborations follow a revenue-sharing model, specifically the Physician-Hospital Partnership (PHP) model. (The PHP model refers to Physician-Hospital Partnership, in which physicians take the lead rather than serving as hospital employees. Physician teams enter into cooperative agreements with hospitals, earning revenue through service fees or insurance reimbursements.—Editor’s Note)
Q: Are you considering collaborating with public hospitals?Zhang Qiang: Public hospitals have also approached us, but we are not considering them at this time. First, medical insurance reimbursement rates fail to cover our costs, which could easily lead us back to the outdated model of subsidizing healthcare services through profits from pharmaceuticals and medical devices. Second, public hospitals lack the philosophy and experience necessary for building open platforms.
Q: What types of hospitals is Dr. Zhang Qiang’s Doctor Group currently collaborating with?Zhang Qiang: Currently, all the hospitals we have partnered with are international hospitals, as their service philosophy aligns closely with ours. What they lack is market access and experts with an international perspective.Q: In your collaborations with hospitals, how are the ownership and usage rights of data generated during medical processes—such as clinical data and patient information—defined?Zhang Qiang: We are building our own HISS, and will integrate all resources in the future.
Physician Collaboration
Q: Must doctors who join your group leave the public healthcare system?
Zhang Qiang: Core experts (i.e., future shareholders) of a physician group must practice independently on a full-time basis. The traditional practice of physicians taking on outside appointments at multiple institutions presents two issues: first, the legitimacy of income sources; and second, taxation issues. Dr. Li (referring to Li Hao from the Cardiovascular Physician Group—Editor’s Note) can effectively help physicians mitigate these risks.
Q: Dr. Zhang, what key pain points do you believe the group you advocate primarily addresses for physicians choosing freelance practice? (Is it about making income transparent and compliant?)
Zhang Qiang: Yes, by making doctors' incomes transparent and legitimate, they can enjoy greater dignity and provide high-quality medical care to patients.
Q: After implementing this group structure, what is the biggest challenge you are currently facing? (Is it the number of patients?)
Zhang Qiang: The greatest challenge lies in the limitations of physicians’ own capabilities and their capacity for learning. It hinges on whether they can break away from certain habits long ingrained by the traditional system, including technical practices, service philosophies, and mindsets.
Q: Are part-time physicians ineligible to join your physician group? Given that you consider “the greatest challenge lies in the limitations of physicians’ own capabilities and their learning ability,” do you apply stricter criteria regarding technical proficiency when selecting physicians to join your group?
Zhang Qiang: The physician group requires experts to be well-versed in the latest international guidelines and research advancements.
Q: Are there specific requirements for professional titles upon entry? Additionally, are there opportunities within the group to advance one’s professional title or academic rank through certain pathways?
Zhang Qiang: We do not have a professional title system. Instead, we have Chief Experts and Young Chief Experts. Our Sijun Club is about to commence operations, hosting an academic release event each quarter. Physicians are also encouraged to publish in SCI-indexed journals and attend international conferences. Next month, we will lead a team of experts to Canada for academic exchanges.
Q: Do you take on high-achieving medical graduates with strong aspirations directly after graduation, or do you only recruit them after they have achieved certain accomplishments in public hospitals?
Zhang Qiang: In principle, we are currently only recruiting seasoned, high-caliber experts and have no plans to hire recent graduates.
Q: Besides physicians, does your team include other personnel, such as nursing staff and operational support staff? What is the approximate ratio?
Zhang Qiang: Currently, there are fewer non-medical personnel than doctors and nurses, but this number will increase in the future.
Q: What is the current status of the main locations for Dr. Zhang Qiang Doctor Group? I notice that you are often in Beijing and Shanghai?
Zhang Qiang: Shanghai, Beijing, Hangzhou.
Q: Do doctors who join a physician group need to be on standby at the group’s office location, or can they remain in their respective cities?
Zhang Qiang: We will primarily rely on local experts, with complementary support provided only in cases of resource scarcity.
Q: How do you recruit seasoned, top-tier experts? Are there any age requirements for experts?
Zhang Qiang: We don’t recruit; top-tier experts will come to us on their own.
The Relationship Between Dr. Zhang Qiang Doctor Group and Patients
Q: Where did the patient come from? Did the patient seek care here based on the hospital’s reputation?
Zhang Qiang: Patients come from multiple channels, including referrals from existing patients, doctor-patient platforms, physician referrals, and media outlets.
Q: Yesterday, we had a lively discussion on how physician groups should handle doctor-patient issues.
Zhang Qiang: Our patients are high-quality and place their trust in physicians. What matters most is that doctors must prioritize patient interests, with robust technical competence as the fundamental requirement. In addition, hospitals will purchase medical insurance, and our physical entities should also obtain medical liability insurance.
Q: Does this mean that all patients are high-end clients?
Zhang Qiang: Currently, it is suitable for the middle class, and there are also high-end patients.
The Relationship Between Dr. Zhang Qiang Doctor Group and the Pharmaceutical and Medical Device Industries
Q: How do physician groups manage their relationships with pharmaceutical companies? And what about medical device manufacturers?
Zhang Qiang: We do not engage in the pharmaceutical business; we focus solely on technology and services. However, experts determine product selection. Routine surgical instruments are provided by hospitals, though we can request purchases. For bulk procurement negotiations, we may invest independently or through joint investments.
Q: During the course of treatment, are all medications and medical devices covered by health insurance?
Zhang Qiang: We do not accept public medical insurance; currently, we only accept self-pay or commercial insurance. We will consider accepting public medical insurance in the future once its pricing becomes reasonable.
Relationships Among Physician Groups
Q: What do you think is the relationship between physician groups?
Physician groups within the public healthcare system and the Zhang Qiang Doctor Group are highly complementary, as our platform requires physicians with multi-site practice privileges. In contrast, independent private physician groups would constitute a competitive relationship.
Future Plans of Dr. Zhang Qiang’s Medical Group
Q: Does Dr. Zhang Qiang Doctor Group have any further financing plans? The first round was RMB 50 million.
Zhang Qiang: Yes, we hope to launch the second round by the end of this year or early next year. The hospital contracting model is currently quite mature, but our initiatives with clinics and ambulatory surgery centers are just getting off the ground and will require time to explore.
Q: From a long-term perspective, what is the positioning of Dr. Zhang Qiang’s Doctor Group?
Zhang Qiang: We are committed to internationalization. Our goal is to explore models for high-quality healthcare, including future payment mechanisms, and to encourage the emergence of more high-quality physician groups.
Q: We used to think of doctors as a relatively conservative group, but the Zhangqiang Doctor Group comes across as very open and international. Dr. Zhang, do you think this is a large segment among Chinese physicians?
There is still a significant gap between Chinese doctors and their counterparts in developed countries; however, an increasing number of physicians have begun to demonstrate international competitiveness in recent years. Our physician group will also expand into overseas markets in the future.
Q: Currently, most physician groups are primarily surgery-focused. Is the internal medicine specialty unsuitable for this operational model?
Zhang Qiang: We will expand into internal medicine and general practice within a year, both of which are open to exploration.
PART 2 Li Hao of the Cardiovascular Physicians Group Answers Questions from VCBeat Community Members
Li Hao is a senior member of the VCBeat community and has established a cardiovascular physician group within the public healthcare system. Here, he shares his insights on the development of physician groups.
Q: How was the Cardiovascular Physicians Group established?
Li Hao: We initially started with "flying knife" services (visiting specialists). During our operations, we identified the pain points of both doctors and hospitals, which led to the concept of a physician group. This model aims to address the respective challenges faced by the three key stakeholders: patients, physicians, and hospitals. Therefore,
The Group was established to meet this emerging need. We serve as patients’ healthcare navigation assistants, physicians’ agents, and collaborative co-development partners for hospitals.
Dr. Zhang Qiang asked, “Are you a physician group within the public healthcare system?”
Li Hao: We are also a physician group within the public system. Our primary focus is collaborating with public hospitals, though we do not exclude private hospitals.
Dr. Zhang Qiang asked: "How do you address the issue of physicians' legitimate income?"
Li Hao: Yes, we leverage the private time of experts from public hospitals to offer additional outpatient appointment slots, while also increasing revenue through multi-site practice arrangements that include outpatient clinics and remote medical consultations.
Q: Are there any out-of-pocket expenses not covered by medical insurance during the treatment process?
Li Hao: There are no additional charges during the treatment process. We only collect fees for outpatient appointment additions and personalized medical services, both of which are collected prior to treatment. Our physicians strictly refuse red envelopes (cash gifts), adhering to the principle of separating medical services from pharmaceutical sales.
Q: Is high-end insurance now the primary revenue driver?
Li Hao: We have not yet partnered with insurance companies, but this represents a future revenue stream for us, and we are currently in negotiations regarding such collaborations.
Q: Will the hospital share in the fees for this personalized medical service? Have there been any post-treatment disputes with patients?
Li Hao: With personalized medical services, the hospital does not take a share of the revenue. The hospital maintains its own revenue streams. Although we charge fees, the overall out-of-pocket expenses for patients are reduced. In the future, we aim to further lower patient costs. Our strategy unfolds in three steps: first, patients pay; second, hospitals pay; and third, insurance providers pay.
Q: Your business model yields high profit margins. Will costs continue to rise in the future? If you charge a service fee for additional appointment slots, will patients perceive this as scalping?
Li Hao: Some may perceive us as scalpers, but we strive to change this perception by offering numerous complimentary services. Our fee for securing additional appointment slots is only a few hundred yuan, comparable to the special-needs clinics at hospitals and significantly lower than scalper prices. We provide patients with detailed medical care itineraries, specifying the date and time for consultations with specific specialists, scheduled dates for required examinations, admission procedures, surgery dates, and expected recovery periods. This enables patients to clearly understand the entire healthcare process and gain a clear perspective on overall costs and time commitments.
Q: Professor Zhang Qiang’s earlier remarks on health insurance regarding service fees are worth examining. He argues that the prices set by health insurance for medical services are too low. Do you encounter such issues?
Li Hao: We also acknowledge that the prices set by medical insurance for services are too low. Therefore, we initially implemented a fee-for-service model to reflect the value of physicians and their services. At the same time, this approach aims to lower patient expectations, thereby helping to resolve issues in doctor-patient relationships.
Q: What are your patient sources?
Li Hao: Our patients currently come from our official WeChat account, referrals from existing patients (users in our groups are also our long-term users), online traffic cooperation platforms, and offline partner hospitals.
Q: Are you the Chunyu Doctor for the cardiovascular field?
Li Hao: We are not the “Chunyu” of the cardiovascular field. We provide a closed-loop service covering the entire patient journey, including pre-consultation triage, physician recommendations, assistance with securing additional outpatient appointments, coordination of diagnostic tests and hospitalization, scheduling with surgical specialists, and follow-up care during rehabilitation.
Q: What other services do you provide to patients?
Li Hao: We will also offer numerous complimentary services, such as remote image interpretation, eliminating the need for patients to travel long distances to Beijing. Naturally, we provide free pre-consultation services as well. Patients are free to decide whether to purchase our premium services. Additionally, we offer post-diagnosis consultations to assist patients with their rehabilitation.
Q: How do you position your platform?
Li Hao: During our chat last night, we discussed the high cost of medical care. In reality, healthcare in China is not expensive; the issue lies in irrational healthcare-seeking behavior. Currently, there is no guidance provided to patients when they seek medical attention in China. We aim to become the first guide for patients seeking care for cardiovascular diseases. As an open platform, we also aspire to build an ecosystem platform specialized in cardiovascular care. We welcome partnerships from all sectors and invite investment collaboration, as we are currently seeking financing.
It is once again time to express our gratitude. We extend our sincere thanks to Dr. Zhang Qiang and Li Hao for their selfless sharing of expertise and knowledge. We also appreciate the professional questions and enthusiastic participation of Sun Hongtao, Luo Nanping, Sun Jian, Zhao Xiaowen, Zhang Jianhua, Zhao Leisheng, GE CAO, Du Junxuan, Zhu Yue, Xu Qing, Chen Shucong, Guo Quan, Mo Rusi, Chen Li, Liu Ting, Wen Quan, Luo Xiong, Robin Bai, Ke Guoning, and others.If you wish to join the VCBeat VB Startup Circle to participate in such high-level discussions, please take out your mobile phone and follow “vcbeat” on WeChat.and leave us a message.