2015 Internet Healthcare Battle: Returning to the Essence of Doctors

[VCBeat Note: This article is a reader submission. Its core argument is that competition in mobile health will ultimately be a competition among hospitals and physicians. In 2014, mobile health emerged as the most prominent trend, with a large number of mobile health companies rising rapidly. In 2015, these companies are likely to face even fiercer competition, making product optimization a top priority.]

As the ubiquitous nature of “Internet Plus” extends into the healthcare sector, a remarkable “chemical reaction” is underway. Mobile health has transformed the traditional model where patients had no choice but to visit hospitals for care; “easy appointment scheduling and consultations anytime, anywhere” are becoming part of daily life. Overnight, mobile health has become a highly sought-after opportunity. A number of mobile health companies—such as DXY, Chunyu Doctors, Guahao.com, Jiuyi 160, iAskDoctor, and Linjia Yisheng—have rapidly grown, while tech giants BAT have also flocked to the space, accelerating their strategic investments in the mobile health industry.

Will the Hospital of the Future Make Doctors Unemployed? Is It True?

In May, Alipay officially unveiled its “Future Hospital” initiative. In November, Jack Ma made a bold proclamation at the World Internet Conference, stating that doctors would be put out of work within 30 years—a remark that sparked widespread uproar. Accustomed to standing at the center of public opinion, Ma is adept at delivering sharp insights that galvanize his followers, eliciting a resounding response. His famous line, “You still need to have dreams, in case they come true,” is enough to ignite the passion of countless fans.

Following the launch of Jack Ma’s “Future Hospital” initiative, he openly admitted to harboring a “healthcare dream.” Provocative assertions such as “future medical consultations will be conducted at home,” “the Future Hospital will disrupt traditional care models,” and “doctors will face unemployment within the next thirty years” have undoubtedly sparked intense debate across both the healthcare sector and the technology community.
However, ideals are full, but reality is thin.

The patient journey in the “Future Hospital” generally follows this sequence: online appointment registration and waiting → offline consultation → online payment for examinations → offline laboratory tests → online access to test reports → offline diagnosis → online medication payment → offline medication pickup and treatment.

However, the current “Future Hospital” model undoubtedly suffers from two major flaws. First, most hospitals face significant challenges in integrating with the national medical insurance system. This integration is not a technical issue but rather reflects the attitude and determination of local governments toward reforming the medical insurance system. For ordinary citizens, purchasing medications through medical insurance is a common practice and habit. For local governments, issues related to drug control and safety must also be carefully considered following the integration of medical insurance networks. The path to seamless medical insurance integration remains long and arduous.

Second is the issue of aligning interests with hospitals. The current industry survival model relies on “drug-markup subsidies for medical care.” If no subsidies are provided to hospitals and physicians, Alibaba’s prescription drug order-grabbing platform would directly eliminate a significant portion of hospital profits. As Jack Ma’s business expands, hospitals’ losses would deepen. Would hospitals agree to this?
Mobile Health Shouldn’t Be Reckless: Capital Alone Isn’t Enough—You Need Doctors Too

Therefore, although Jack Ma has realized his “dream” through e-commerce and certainly has no shortage of funds for deploying mobile healthcare initiatives, the medical sector differs fundamentally from traditional B2C e-commerce; it is not an industry where one can act capriciously simply by virtue of having capital. A review of currently active mobile health companies reveals that they are preoccupied with raising capital and acquiring patients, focusing predominantly on patient acquisition and even sparing no expense in subsidizing patients to capture market share.

Yet most people forget that patients follow doctors’ advice; physicians are the core of healthcare and its scarcest resource. Whether “online” or “offline,” without a cohort of high-quality physicians, any initiative is merely lip service. If we continue to market medical services using the traditional consumer-goods sales model, we will certainly not sustain long-term growth. Therefore, mobile health must not act capriciously; capital alone is insufficient—access to physicians is essential.

In China, most physicians are employees of public institutions rather than independent practitioners, and they are restricted to being employed by a single hospital. This lack of professional autonomy means that physicians are institutionally dependent on hospitals. Therefore, if mobile health platforms aim to acquire a large pool of high-quality physician resources and migrate their services from “offline” to “online,” they must integrate with hospitals and adopt a hospital-centric approach.

Of course, the path of developing mobile healthcare by starting with hospitals, gathering doctors, and serving patients is something everyone can think of. Entrepreneurs in the mobile healthcare sector have long coveted hospitals, but this barrier is not easily breached.
Serving Hospitals: Those Who Win the Hospitals Win the Market

In China, and indeed across Asian countries, patients tend to “trust the temple rather than the monk.” The patient–physician consultation relationship is typically established through hospitals as an intermediary, with very few patients directly requesting a specific physician by name (except for a small number of renowned experts). Under this prevailing condition, many digital health products have been effectively rendered nonviable. There are numerous “XX Doctor” platforms; however, the only stable patient–physician connections they can build are limited to the aforementioned exception of renowned experts. These products attempt to bypass hospitals and establish direct patient–physician relationships, which constitute weak ties. Nevertheless, if they can devise ingenious strategies to attract physicians by first engaging patient communities, they may still achieve favorable outcomes, as exemplified by Xingren Doctor.

Under this logic, which companies are serving hospitals to conquer the market? Guahaowang? Quyi.com? Or traditional HIS vendors?

Has Guahao.com acquired hospitals? Indeed, it has access to 900 public hospitals across 23 provinces, enabling patients to easily schedule appointments online. Reportedly, its user base has reached 37 million, with over 23 million successful appointment bookings, securing the largest market share in China. With Tencent’s support, it appears poised to dominate the industry.

The author was fortunate to participate in market research for some friends, visiting dozens of hospitals across the country. Surprisingly, it was found that even Guahao.com, a leading player in the industry, remains somewhat disconnected from hospitals. First, while many hospitals appear to offer appointment registration on their platform, only a limited number of specialist slots are available. Second, data exchange with many hospitals is still conducted via Excel files. On reflection, this light-touch engagement model allows them to onboard hospitals rapidly, which helps explain how they achieved the largest market share.

Let’s look at Qu Hospital. This product originates from Kingyee, a traditional HIT vendor. As mentioned above, they have an opportunity; they are inherently positioned to serve hospitals and generate revenue from them. They are closely connected to hospitals and understand their operations well. However, after carefully experiencing their product, there still seems to be some gap, suggesting that they have a long way to go. It appears that traditional HIS vendors represented by them, despite their experience, will need time to adapt and refine their approach in developing internet-based products.

In this case, are there other representative models for mobile healthcare, which has been bustling for a year?

Return to the Essence of Healthcare: Service Is King

2014 was undoubtedly a bumper year for mobile health companies, with over 80 financing deals occurring—a figure three times the total number of such deals in the field from 2008 to 2013. Major investments by BAT tech giants repeatedly pushed industry benchmarks to new heights. So, is this the Year One of mobile health?

Though I am no expert and dare not presume to offer definitive judgments or rash commentary, the underlying nuances remain, in my view, a matter of personal speculation; it is truly difficult to predict who will ultimately prevail. Nevertheless, I firmly maintain that only by effectively serving hospitals, physicians, and patients can we hope to change the world. It is not about “mobile healthcare,” but rather “healthcare on the move.”

 

Note: This article was submitted to VCBeat by Feng Qingyang.