Site icon CRI Report

China General Health and Wellness Industry Overview

China general health and wellness industry

China general health and wellness industry is one of the largest components of the national economy, which refers to services and products related to the maintenance, recovery and promotion of health, encompassing healthcare services, pharmaceuticals, nutrition and health products, medical devices, maternal and infant products, as well as other services such as health management and care of the elderly.

The market size of China general health and wellness industry reached RMB 8.6 trillion in 2016, and is expected to increase to RMB 26.8 trillion in 2026, at a CAGR of 12.0%.

The healthcare services industry currently accounts for the largest part of China general health and wellness market, which consists primarily of disease prevention, treatment and rehabilitation. The market size of China healthcare services industry was RMB 3,316.6 billion in 2016 and is expected to reach RMB 7,754.4 billion in 2026.

Meanwhile, the size of China beauty care market was RMB 153.7 billion in 2016, and is expected to reach RMB 877.9 billion in 2026. The penetration rate of the beauty care market was 2.9% in China in 2016, compared to 18.9% in South Korea and 16.0% in the United States, indicating considerable potential market opportunities.

Overview and Outlook of China Healthcare Services Industry

China healthcare services industry has experienced rapid growth in recent years. The total healthcare expenditure in China increased significantly from RMB 2,811.9 billion in 2012 to RMB 4,634.5 billion in 2016, at a CAGR of 13.3%.

As of December 31, 2016, there were approximately 3.2 million licensed doctors in China, and approximately 21.7 million outpatient visits took place at healthcare institutions on a daily basis in 2016 Increasing per capita disposable income, an aging population and the rising prevalence of chronic diseases are the three key drivers propelling the growth of China’s healthcare services industry.

The per capita annual disposable income in China was RMB 23,821.0 in 2016 and is expected to reach RMB 51,280.3 in 2026, at a CAGR of 8.0%. The number of people older than 60 was approximately 230.9 million in 2016, representing 16.7% of China’s total population, and these numbers are expected to reach 271.5 million and 18.6% in 2026.

As the overall metabolic and immune capacities of elder people gradually decline, they are more likely to suffer from chronic diseases, and thus incur high costs on long-term medication and scientific disease management. The prevalence rates of cancer and diabetes, both chronic diseases, are expected to roughly double over the next ten years in China.

China’s total healthcare expenditure was RMB4,634.5 billion in 2016 and is expected to reach RMB 11,403.1 billion in 2026, at a CAGR of 9.4%.

Meanwhile, China’s healthcare expenditure, either as a percentage of GDP or on a per capita basis, remains relatively low compared to that of the other countries with top GDPs.

China’s national healthcare expenditure accounted for 6.1% of the GDP in 2015, as compared to 7.4%, 10.9% and 17.7% for South Korea, Japan and the United States, respectively.

In addition, the per capita resident healthcare expenditure in China was US$481.6 in 2015, which was approximately one fourth, one eighth and one twentieth of that of South Korea, Japan and the United States, respectively. China’s relatively low healthcare expenditure, either as a percentage of GDP or on a per capita basis, indicates considerable growth potential.

Current Weaknesses of China Healthcare Services Market

Scarcity and Uneven Distribution of Quality Medical Resources in China

Despite increasing healthcare demand and expenditure, quality medical resources remain scarce in China and their distribution is uneven, which has become a structural weakness plaguing Chinahealthcare industry. The gap in per capita medical resources, along with that in per capita primary healthcare resources, between China and the United States remains huge.

The number of licensed doctors and registered nurses in 2016 was 4,844 per million population in China, compared to 12,714 per million population in the United States. In 2016, the number of family doctors was 49 per million population in China, compared to 259 per million population in the United States.

The low presence of family doctors in China’s primary healthcare sector, who are supposed to serve as the first point of contact for patients to facilitate effective and efficient utilization of medical resources, further exacerbates the existing mismatch of medical resources supply and demand in China.

At present, hospitals remain the most important healthcare providers in China, with Class III hospitals being the premium class in terms of expertise and caliber of medical team, management and technologies. there were only 2,232 Class III hospitals out of 29,140 hospitals in China as of December 31, 2016.

As China’s quality medical resources are mainly concentrated in Class III hospitals, patients often prefer to seek healthcare services in such hospitals, regardless of the severity of their conditions or cases.

In 2016, Class III hospitals, which accounted for only 7.7% of China hospitals, were burdened with 49.8% of the medical consultations in 2016. Meanwhile, many Class III hospitals are in tier one cities such as Beijing and Shanghai as well as more affluent and densely populated eastern coastal provinces, such as Shandong, Jiangsu and Zhejiang, where more than one hundred Class III hospitals are located in each province, with more than one Class III hospital per million population. In contrast, in less affluent but densely populated provinces such as Hebei, Henan and Hunan, there are less than one hundred Class III hospitals in each province, with less than one Class III hospital per million population.

The significant mismatch of supply and demand, combined with the relative scarcity of quality medical resources, including primary healthcare resources, results in inefficient and unnecessary utilization of medical resources in China.

Poor Medical Service Experience for Patients

The mismatch of medical resources supply and demand leads to another weakness of China healthcare services market, namely poor medical service experience for the patients.  a patient in China spent on average three hours on an outpatient visit in 2016, in which the effective time dedicated to the patient’s diagnosis only accounted for on average 4.4%, or eight minutes.

Expected Deficit of the Social Medical Insurance

China’s increasing healthcare demand and expenditure pose challenges not only to healthcare providers, but also to its medical insurance system. At present, China medical insurance system consists primarily of government-sponsored social medical insurance and medical aid schemes, as well as commercial medical insurance offered by private insurers. The growth of social medical insurance’s expenditure has outpaced that of its revenue. A deficit is expected to arise in 2020 and expand to over RMB 2.3 trillion in 2026, assuming no timely and effective cost control measures in response.

Future Trends of China Healthcare Services industry

China healthcare services industry is expected to experience the following changes in the near future:

• Rising Private Healthcare Service. With the opening up of China healthcare services industry to private capital and favorable policy support, private hospitals have experienced rapid expansion recently, and in the next few years, more private capital is expected to enter into the hospital operations, focusing on either the mass or premium healthcare services market. The rise of private healthcare providers is expected to further divert patients from large public Class III hospitals and reduce the average time spent on medical consultations;

• Emerging Commercial Insurance. Since China social medical insurance only reimburses part of patients’ medical expenses, private medical insurers are well-positioned to fill the gap. Commercial insurance is expected to increase gradually over the next decade and play an active role in China healthcare services market. A thriving commercial insurance market is expected to help China reduce its over-reliance on social medical insurance and consequently exposure to a potential deficit risk; and

• Development of Internet Healthcare. Internet healthcare is a relatively recent healthcare practice supported by Internet technologies, which primarily involves online consultation, health management, pharmaceutical B2C business, online advertisement and marketing promotion, insurance cooperation and patient guidance. Benefiting from Internet technologies, Internet healthcare provides convenient and secure access to healthcare services, bridging the wide gap between China’s scarce and unevenly distributed medical resources and increasing healthcare demand. Moreover, through technological innovations including big data analytics and AI, Internet healthcare is expected to shorten the conventional diagnostic process and lower patients’ medical-related costs, which, in turn, is expected to alleviate the financial burden of China’s social medical insurance.

http://www.yuanzhezixun.com/quanqiuxinxingdexinlijiankangshebeihepingtaishichang-zhuanjiadongchayushendujiedu/
Exit mobile version