Overview
China’s healthcare service providers can be categorized into three kinds: hospitals; primary healthcare institutions, such as community health centers; and other healthcare institutions, such as centers of disease control and preventive institutions for special diseases. Hospitals play the most essential role in China’s healthcare service industry, by serving nearly 40.1% of total out-patients and over 76.4% of total in-patients in 2015. Revenue generated by healthcare providers in China reached CNY 2,953.8 billion in 2015, of which CNY 2,287.9 billion, or 77.5%, was attributable to hospitals.
Overall hospital revenue in China grew at a CAGR of 16.4% from CNY 1,245.1 billion in 2011 to CNY 2,287.9 billion in 2015, and is estimated to further grow at a CAGR of 10.5% to CNY 3,765.7 billion in 2020.
With regards to the total number of hospitals, there were 27,587 hospitals in China by the end of 2015. China’s hospitals are mainly categorized as public hospitals and non-public hospitals. With regards to the classes of hospitals, China’s hospitals are categorized as Class I hospitals, Class II hospitals and Class III hospitals, with Class III representing the highest evaluation. According to Frost & Sullivan, Class II and Class III are classifications of hospitals authorized by the PRC government and are determined by a number of criteria such as medical specialties, medical staff of hospitals, work efficiency and clinical skill. According to the same source, hospitals of Class II and Class III-equivalent scale are hospitals that are similar in size and level of service quality with those of Class II and Class III hospitals but have not been rated by the PRC government due to the complexities of China’s hospital level evaluation procedures.
Class III public hospitals represent the largest market share in the public hospital market in China. The market share of Class III public hospitals among all public hospitals in China in terms of revenue grew from 56.9% to 66.4% from 2011 to 2015, and is expected to grow further in the future. Although the total number of non-public hospitals outstripped that of public hospitals by the end of 2015, the total number of Class III hospitals is significantly lower than that of public hospitals, indicating that China’s hospital industry is still dominated by public hospitals. In 2015, the total revenue of public hospitals reached CNY 2,084.3 billion while that of non-public hospitals reached CNY 203.6 billion. Although the market size of non-public hospitals is still small compared to that of public hospitals at present, non-public hospitals will play an increasingly important role in the healthcare service industry in the future.
Non-public Hospitals in China
Overview
The number of non-public hospitals has grown rapidly due to government incentive policies. The number of non-public hospitals has increased from 8,440 by the end of 2011 to 14,518 by the end of 2015, representing a CAGR of 14.5%. In the same period, the number of public hospitals decreased from 13,539 to 13,069. Moreover, the revenue of non-public hospitals increased from CNY 81.1 billion in 2011 to CNY 203.6 billion in 2015, with a CAGR of 25.9%. In the same period, the revenue of public hospitals increased from CNY 1,164.1 billion to CNY 2,084.3 billion, with a CAGR of 15.7%. Non-public hospitals are playing a more essential role in the healthcare service industry. Non-public hospitals represent the fastest growing sector in the healthcare service industry in China, and the growing trend is expected to continue in the next five years.
Despite a fast-growing trend, non-public hospitals are still developing at an early stage. Although the number of non-public hospitals outstripped that of public hospitals by the end of 2015, the total revenue generated by non-public hospitals amounted to less than 10% as much as that of the public hospitals, indicating that non-public hospitals in China are still featured with low-earning performance. However, given that more and more non-public hospital groups have been developing through establishing, acquiring and/or cooperating with other hospitals or medical institutions, non-public hospitals are expected to have the competitive edge in the healthcare market and gradually become the major market players.