China is a big country with a large population but its medical resources are not spread evenly. Large hospitals in big cities are stretched, for instance, while smaller facilities elsewhere are under-utilised. It is a market ideally suited to telemedicine.
Telemedicine – ‘healing from a distance’ – offers immense efficiencies and opportunities for both patients and health-service providers, making healthcare more accessible and affordable.
It can overcome geographical obstacles and shatter time barriers, giving patients access to healthcare services in the comfort of their own homes. Internet portals can provide healthcare and disease-management knowledge that even allow the public to self-diagnose, especially light illnesses.
Meanwhile hospitals can use the internet-of-things to enhance operational efficiency by digitalising health records and sharing data through cloud services to reduce administrative costs. And for doctors, telemedicine provides better access to information and training.
Telemedicine provides innovative solutions to some of the chronic challenges of China’s current healthcare system. Telecommunication allows more even distribution of medical resources and greater access to medical help.
We believe internet healthcare in China is already worth around USD4 billion. Despite it being a fragmented industry, one company had 192 million users last year and another three had over 100m each.
Experienced and specialist doctors are very unevenly distributed in China. Most work full-time in the public Class III-A hospitals concentrated in first-tier cities. However, telemedicine makes top specialists available to lower-tier cities and rural patients – especially useful for patients seeking second opinions on complicated conditions.
Yet many Chinese still prefer face-to-face contact with their doctor. While a survey of 1,881 Chinese – biased towards affluent two-person households aged 40 to 64 – found 79 per cent had used a telemedicine platform, most subscribed to free or low value services such as appointment booking, light consultations or browsing for health tips, and the usage frequency is low.
Patients remain sceptical about high-value services. Adoption is much lower for drug purchases, second opinions, online diagnoses, remote monitoring, and family-doctor services.
While close to half the users are willing to pay upto USD14 per online consultation with a Class III-A hospital doctor, few are willing to pay USD88 for a package of 40 sessions or USD150 for unlimited usage. Many online consultations are free trial-offers.
That reluctance may be because telemedicine services are not yet covered by the national insurance schemes that cover more than 95 per cent of China’s population, reimbursing up to 70-90 per cent of basic medical costs. Only 41 per cent of our survey had private insurance and 35 per cent had employer-sponsored insurance.
There is also the issue of data ownership, a highly sensitive topic in the West. Telemedicine companies can collect, store, process, then analyse, large amounts of health-related data that is of great value to insurers and government. However, Chinese telemedicine companies are currently forbidden to sell or to share this raw data.
At the moment, China is relatively liberal about data privacy. But telemedicine is developing quickly and if cases of data mis-usage or leakage occur, Beijing might get tougher, raising public awareness of privacy issues, which could hit user trust and slow the adoption of telemedicine.
Disclosure and disclaimerMore, collapsed
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Charlene Liu
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