Caritas (China) Medical Group IPO Roadshow Highlights: Strategic Insights on Specialty Hospital Development and Healthcare Innovation

Interviewee of this issue: Bo'ai (China) Medical Group

Time: 7:30-8:30 PM, January 28, 2015

Host: Yuan Lin, VCBeat

Background: Wang Yifan holds a Master’s degree in Management and currently serves as the Brand Director for the Shanghai Region of Boai (China) Medical Group. In this role, he oversees brand campaign planning, media promotion, and external brand partnerships for the group’s hospitals in the Shanghai area. With over ten years of experience in hospital marketing management and promotion, Mr. Wang has gained profound insights into the current landscape of private healthcare in China. He possesses extensive practical experience in the operations of both specialized and general hospitals, and offers deep expertise in medical project positioning, packaging, and promotion. As one of the early preparatory team members for Shanghai Yuan Da Cardiothoracic Hospital, he led brand planning and marketing initiatives that have garnered notable influence within the industry. Currently, he is closely focused on new media and mobile health.

1. Which specialties are suitable for establishing specialized hospitals or clinics, particularly physical ones? Why?
There is no absolute rule on what is suitable or unsuitable; it primarily depends on available resources and financial strength. Generally speaking, medical projects suitable for specialized hospitals or clinics can be categorized as follows: The first category includes services that are medical in nature but do not constitute diseases in the strict sense. Public hospitals are often reluctant to provide these services, yet there is market demand for them, such as cosmetic surgery and aesthetic dentistry.

The second category consists of services covered by medical insurance, but whose primary profit drivers are non-reimbursable items, yielding relatively high margins. These services mainly rely on medical devices, carry relatively controllable risks, and serve a substantial patient volume. Examples include ENT (with rhinitis treatment as the main profit generator), ophthalmology (excimer laser procedures), and men’s health and gynecology. The current poor reputation of private hospitals is closely tied to this segment.

The third category comprises services covered by medical insurance. However, due to higher risks or stringent regulatory barriers, general investors are currently either unwilling or unable to enter this market. Despite these challenges, profit margins are relatively high, and competition is limited primarily to public hospitals, with few other competitors. This applies to specialties such as neurology, cardiology, orthopedics, and obstetrics and gynecology. Nevertheless, this sector demands exceptional expert resources, making it difficult to recruit top-tier specialists.

The third approach represents a major direction for the development of private hospitals, as well as the path toward their transformation.

2. Department of Rehabilitation Medicine, what are your thoughts?
Rehabilitation is a low-margin sector with a relatively long return on investment period; nowadays, it is often integrated with elderly care services.

3. Why is Chunyu not used by all doctors?
Chunyu provides merely a platform for lightweight consultations, where both parties are strangers and interact only through brief inquiries. Since doctors consider these questions to be quite routine and offering no professional benefit or enhancement, many are reluctant to respond. Furthermore, as physicians receive only financial compensation, this model lacks incentive for senior or highly experienced doctors.
I believe there will be a market for platforms that provide in-depth interaction between doctors and patients.

4. Why not establish a specialized psychiatric and psychological hospital?
Medical disputes in psychiatric and psychological specialties are relatively common. Currently, private institutions primarily rely on pharmacological treatment. Moreover, psychiatric and psychological care must be strictly regulated; otherwise, the impact on an individual and their family can be extremely severe.

5. What is Teacher Wang’s view on the PPP model? PPP refers to cooperation between public hospitals and social capital.
From my perspective, this is a highly promising model that is poised to become one of the mainstays of the healthcare market in the future, addressing the current challenges private hospitals face regarding specialist expertise and brand recognition.
Let me first explain this model, which may not be fully understood by everyone. In simple terms, it is a public-private partnership model. This is the approach adopted by many medical groups involved in the restructuring of public and enterprise-owned hospitals, such as Phoenix Medical, China Resources Medical, CITIC Medical, and Peking University Medical. At present, the development strategy of private hospitals is largely dominated by the Putian network, with the exception of the major players mentioned above. The biggest bottleneck at this stage is not funding, but rather access to expert talent and brand recognition. Strictly speaking, apart from the aforementioned collaborative hospitals, private hospitals in China currently have virtually no brand equity. Top-tier expert resources are the crown jewels; for the sake of recruiting a nationally renowned expert, our group’s chairman personally visited Beijing several times to make in-person appeals, but the ultimate outcome was only an agreement for the expert to perform surgeries at our hospital on a visiting basis, with full-time employment being out of the question.
Moreover, the Chinese government is vigorously promoting this sector, having recently issued three policy documents before the Lunar New Year to facilitate this model.

6. How should brands be built in the face of new opportunities in healthcare? How should quality and promotional packaging be handled?
To discuss branding in the context of new opportunities, we must first address the changes brought about by the new environment, taking various wearable devices or remote monitoring products as examples. The traditional model involved products reaching patients either through physicians or directly without medical intermediation. The current model, however, is defined by “product + service + stickiness.” Here, “service” is straightforward: for instance, with a remote ECG monitor, the product is the device itself, while the service refers to timely, professional responses and follow-up support for users. Whereas providing the standalone product was once sufficient, this is no longer the case; today, service has become the core offering, with the product serving merely as the medium.

Under the new model, branding focuses on precision communication to build trust, maintain stickiness, and enhance conversion. Precision communication primarily addresses product positioning and media strategies.

Due to time constraints, I will focus on only two aspects: first, product positioning.

In my view, positioning is about identifying what patient problem you aim to solve and whether it truly addresses a critical pain point. Mobile health has been a hot topic this year, with many projects claiming to solve numerous problems. In reality, however, it is already quite challenging to effectively address even one genuine issue. The core challenges in mobile health fall into three categories: 1) improving the efficiency of healthcare institutions; 2) addressing physicians’ needs, including follow-up care, academic publications, and income; and 3) tackling patients’ concerns. Successfully resolving any one of these areas is sufficient. For instance, Guahao.com and DXY have secured financing by meeting the rigid demands of appointment scheduling and academic publication support, respectively.

There are also many players currently engaged in chronic disease management, offering content focused on lifestyle wellness, healthcare, and remote monitoring for the elderly. In reality, however, these services are not essential needs. The lack of essential demand necessitates extensive market education, which consumes significant energy and financial resources, causing many companies to become casualties in the process.

• Positioning is essentially aimed at addressing the following issues:
a. Who is the product designed to serve?
b. What are their pain points?
c. Can the product meet it?
d. Is the market size sufficient to sustain itself?
e. Who Pays the Bill?
f. How to Set Barriers Against Competitors.

• Regarding the resolution of trust issues, such issues may be addressed through the following approaches:
a. Leverage the power of traditional media news. Although the influence of traditional media is gradually waning, it remains a primary news source for online media. Companies can endorse their products by capitalizing on the inherent credibility of these outlets. In China, public recognition and trust in traditional media are significantly higher than those in new media.

b. Incorporate rating or “like” features at every touchpoint where users interact with patients, leveraging user reviews to establish a trust-based evaluation system, thereby reducing patients’ transaction costs, shortening decision-making time, and improving conversion efficiency.

c. Leverage endorsements from leading experts and prestigious hospitals to bolster product credibility. In the healthcare industry, such endorsements carry significant weight. Even if they do not endorse your product, ensure they do not speak negatively about it.

d. Enhance affinity for your products by orchestrating creative micro-philanthropy campaigns.

e. Establish patient communities to enable word-of-mouth promotion of high-quality products or services among patients. However, this approach carries risks and should be implemented with caution.

f. Produce and disseminate short videos and micro-lectures to gradually build trust over time.

7. What is your understanding of the core of service?
Service is about meeting and exceeding customer expectations.

8. The development of specialized oncology seems to be lagging; what are your thoughts, Professor Wang?
Specialized oncology care currently relies heavily on medical equipment, yet survival rates remain modest. Many services are not covered by basic medical insurance, requiring substantial capital investment; some operators adopt an equipment leasing model. Furthermore, promotional activities face significant policy restrictions, and competition is intense. Nevertheless, it remains a viable strategic direction. One emerging approach involves integrating traditional Chinese medicine with Western medicine to target the Southeast Asian market, which appears to be yielding sustainable business outcomes.

9. Is there a significant correlation between the difficulty in accessing specialists and the prevailing tendency to trust institutions rather than individual practitioners? Regarding the trust mentioned by Mr. Wang, can it be interpreted that public trust in hospitals is higher than that in physicians?
Yes, Chinese patients tend to prioritize prestige over medical expertise. This reality conceals a significant business opportunity. In my view, Zhang Qiang has already opened the door in this regard. The “Zhang Qiang Model” represents a highly valuable exploration beyond existing frameworks such as the PPP model and the Putian model. Its future prospects appear promising. By building a platform for physician brand development, individuals with such needs can be transformed into renowned doctors through the platform, and they are willing to pay for these services. Although there is no established practice of this model yet, discussions with physicians have confirmed genuine demand. Many patient–provider follow-up software solutions are already shifting in this direction. Mobile internet offers another advantage by providing effective technical means to enhance user stickiness; as long as sustained engagement can be achieved, eventual conversion will be assured. For initial platform selection, it is advisable to prioritize WeChat, which offers better cost-effectiveness and easier interaction than standalone apps at the communication level.

10. Physician Demand Issues?
In my view, although this issue is frequently raised, it truly represents the core challenge of mobile health. Mobile health primarily refers to the integration of mobile internet with healthcare. However, from the perspective of the essence of medical services, it can be divided into two components: one is the mobile portion, such as pre-operative processes—including consultations, self-medication, appointment registration, information inquiries, and out-of-hospital rehabilitation; the other is the non-mobile portion, such as diagnosis, biochemical testing, and treatment procedures. The new opportunities we discuss are typically concentrated in the mobile portion.

The above diagram illustrates the entire value chain of the healthcare industry. In a sense, whether or not physicians’ needs are met largely determines the ultimate fate of many products.

Generally speaking, when referring to senior physicians with duplicate names, it primarily denotes those holding associate senior titles or above. This group serves as opinion leaders within hospitals and is instrumental in building institutional prestige. They have access to various channels that yield substantial financial returns; for instance, it is not uncommon for a renowned cardiologist in Shanghai to earn an annual income of one million yuan.

Attending physicians are primarily driven by financial considerations. As the main workforce in hospitals, they receive modest incomes and hold relatively low status within their departments. They also face the greatest family pressures, needing to balance income generation with the demands of publishing academic papers and performing surgeries. This demographic constitutes the foundational user base that has enabled DXY’s survival and growth. To effectively serve them, it is essential to address these aforementioned challenges.

The medical profession as a whole is relatively conservative. Coupled with the current tense doctor-patient relationship, physicians are generally reluctant to try new things; however, if your product can truly resonate with them, they will be willing to give it a try. Meanwhile, under the existing system, physicians typically do not attain the associate senior professional title until around age 40, and in Grade 3A hospitals, this may not occur until around age 45. Therefore, attending physicians constitute the main force in the mobile healthcare sector and are also the primary participants in light consultation services. This group is relatively young and demonstrates a stronger capacity to embrace new innovations.

(Compiled and edited by VCBeat)

(To stay updated on the latest news about internet healthcare startups, please follow VCBeat’s WeChat official account: vcbeat. We also welcome you to engage with us on topics of interest, contact us via WeChat, and share your research insights.)