Key Differences Between Chinese and U.S. Mobile Health Markets: A Comparative Analysis

In the internet sector, China and the United States are advancing side by side. Among the top 10 internet companies globally by market capitalization, four are Chinese and six are American. However, in the field of mobile health/digital health, there is a significant gap between the two countries. For instance, in the United States, there are no fewer than ten publicly listed companies in this sector (such as Athenahealth, Epocrates, and Castlight), whereas China has none. Today, we will examine the key differences between China and the United States in this field.

User Perspective: China—Patient-Centric vs. US—Tripartite Balance Among Patients, Physicians, and Hospitals
From the user perspective, most Chinese mobile health companies place patients or healthy individuals at the center of their business models; in contrast, the U.S. market is evenly divided among companies serving three distinct stakeholders: patients, physicians, and hospitals. The primary bottleneck in China’s healthcare system is patients’ difficulty in accessing high-quality medical services, which has spurred numerous companies to leverage the internet to bridge this access gap. In the United States, however, patient access to physician services is relatively straightforward; the predominant challenges are exorbitant costs and inefficiency. For U.S. physicians and hospitals, there is a pressing need to improve efficiency, reduce waste, and enhance the quality of care, giving rise to a substantial number of enterprises dedicated to addressing these needs.

Healthcare System Development: China Focuses on Expanding Access to Care vs. the U.S. Focuses on Improving Healthcare Quality
In China, mobile health companies favor the “platform model,” which involves building a platform that serves as a bridge for communication among patients, physicians, and hospitals, effectively becoming the “DiDi Chuxing” of doctor–patient or hospital–patient interactions to address information asymmetry and difficulties in accessing medical care. In contrast, the United States places greater emphasis on leveraging cloud computing and big data technologies to improve the quality of healthcare services. For example, several of the most heavily funded health internet companies in the U.S. in 2014—NantHealth ($135 million), Flatiron Health ($130 million), and Alignment Healthcare ($125 million)—exemplify this approach. Overall, China and the United States are at different stages of healthcare system development: China focuses more on improving access to medical care, while the United States prioritizes enhancing healthcare quality and controlling costs.

Value Chain of Healthcare Services: “Under-the-Table Rules” in China vs. Process Transparency in the US
The value chain of healthcare services is lengthy in nearly every country around the world. Whether there is effective integration and interaction among the upstream, midstream, and downstream segments of this value chain is key to determining whether mobile health business models can succeed. In China, the participants involved in the healthcare service value chain are highly fragmented, much of the value transfer still occurs “under the table,” and there is a lack of robust channels for information exchange. By contrast, the United States has largely achieved end-to-end integration. For example, Practice Fusion, a cloud-based electronic health record (EHR) provider, offers an integrated solution that spans physician referrals, online access to diagnostic reports, and prescription issuance. Exploring the underlying reasons, the high degree of privatization in the U.S. healthcare sector and relatively low policy barriers to entry have allowed third-party service providers to flourish. In China, however, the healthcare system is government-owned and fragmented, making integration significantly more challenging. Nevertheless, these differences also present opportunities for healthcare services and mobile health startups in China.

Technical Aspect: China: Technology Transfer vs. US: Technological Innovation
From a technological perspective, Chinese startups mostly apply existing mature technologies, transplanting them from other vertical sectors into the healthcare industry. In contrast, U.S. companies are more dedicated to achieving genuine technological innovation. For instance, NantHealth, mentioned earlier, has made significant technical breakthroughs in integrating diverse types of medical data (such as electronic health records, genomic data, and clinical trial data), analyzing these data in real time to provide feedback, and transmitting large volumes of data at high speeds on mobile devices. In terms of innovation in this field, Chinese mobile health enterprises still have a long way to go.

Business Model: China (Patient-Pay) vs. US (Multi-Payer)
In relation to the value chain of the Chinese and U.S. healthcare systems, Chinese mobile health companies have yet to identify a mature and scalable business model. Many enterprises have attempted direct-to-patient payment models, but patients’ willingness and ability to pay remain unproven. Meanwhile, the e-marketing model adopted by pharmaceutical companies also faces inherent limitations. In contrast, in the United States, insurers, pharmaceutical companies, hospitals, and physician practices all serve as payers, while out-of-pocket payments by individual patients are relatively rare.

Privacy Protection: Security Risks in China vs. Privacy Safeguards in the U.S.
In the United States, safeguarding the security of medical data and patient privacy is a fundamental requirement for mobile health enterprises. Many startups comply with the requirements of the Health Insurance Portability and Accountability Act (HIPAA) by, for example, appointing a Chief Compliance Officer, conducting HIPAA training for employees, and encrypting private information. In China, due to incomplete laws and regulations in this field, enterprises generally place insufficient emphasis on these aspects.

Due to differences in fundamental national conditions, social systems, user habits, value chains, and other factors, the development stages of mobile health in China and the United States differ significantly. Blindly replicating U.S. mobile health products and services is likely to result in poor adaptation within the Chinese market. Many existing mobile health products target patients, striving to bridge the gap between patients and providers. However, the author argues that in China, if the issues of a scarce number of high-quality physicians and their relatively low efficiency are not addressed, the supply will remain insufficient regardless of how the market is segmented. In a market characterized by a severe mismatch between the supply and demand for medical services, physicians constitute the most critical resource and source of value for mobile health businesses. By targeting this physician segment and providing them with mobile internet solutions to enhance efficiency, improve quality, and increase output in patient care and daily workflows, the supply of medical services can be more effectively expanded, thereby enabling care for a larger patient population.

Author: Zhang Yusheng, M.D., Mobile Health Observer. This article is byZhang YushengAuthorized for republication by VCBeat. The views expressed in this article are solely those of the author and do not represent the position of VCBeat.