U.S. Markets closed

China bets on telemedicine to solve its healthcare woes

Dr. Alan Shatzel is displayed on the monitor RP-VITA robot at Mercy San Juan Hospital in Carmichael, Calif. (AP Photo/Rich Pedroncelli)

There are around 847 million mobile phones in China as of 2015, according to market intelligence firm IDC. The average Chinese person spends about three hours on their smartphone daily and about 83% of Chinese Internet users access the web via a mobile phone.
 
What’s more is that a majority (54%) of doctors in China are currently on social media sites like Weibo and WeChat.
 
Clearly, the conditions and much of the necessary infrastructure for web-based healthcare collaboration, or telemedicine, already exists in China.
 
Now, it’s a matter of application to see if telemedicine can meet the demands of China’s emerging middle class and fix some of its longstanding healthcare woes.
 
How it works
Florian Then, a partner at McKinsey & Company, says that telemedicine has the potential to correct a number of issues in the Chinese healthcare system, many of which stem from a deep well of mistrust between the Chinese people and their government and its institutions, which include healthcare providers.
 
Consider the overcrowding that plagues urban hospitals. Rural patients tend to commute to major cities like Beijing and Shanghai for treatment rather than go to local clinics, which people perceive as unreliable. Urban hospitals “look like train stations in India” says Then, while rural clinics stand nearly empty.
 
Then says that rural institutions would gain the legitimacy they’re currently lacking if they were “telemedically supported” by recognized urban institutions. Furthermore, this could shift Chinese healthcare from reactionary to preventative, as rural patients would enter the health system and get treatment significantly earlier – before they wind up at city hospitals with more advanced medical problems.
 
To be clear, urban doctors would not directly treat rural patients in the current telemedicine model. Rather, they would support their rural colleagues in treatment and diagnosis via email, phone and video conferencing.
 
“The way the telemedicine system is set up now is to augment resources, infrastructure in China, not to replace physician-to-patient care,” says Tad Ferris, a partner at Foley & Lardner LLP who specializes in Chinese telemedicine regulation.
 
Another promising application of telemedicine is its educational potential.
 
“It’s a very unhealthy population in terms of lifestyle and diet,” Then says. One of every three smokers in the world lives in China, and 300 million Chinese suffer from high blood pressure. There’s hope that online health education could change some of these behaviors and thus drastically reduce chronic disease.
 
Then says that “one of the areas you will see the most disruption” thanks to telemedicine is pharmaceutical markets. Until now, generic label prescription drugs have been much more accessible than name-brand ones. But these generic brands are generally unregulated. Then recalls one incident where unusually high amounts of metal were discovered in generic pill capsules.
 
E-commerce sites like Alibaba could address this problem by offering same-day delivery of reputable pharmaceuticals.  Earlier this year the China Food and Drug Administration approved online sales of prescription drugs. While China hasn’t specified when it might allow prescription medicines to be sold via the Internet, Then says web sales should begin this year.
 
A not-so-quick fix
This year marks the beginning of China’s 13th five-year plan, its Communist-era standard for economic development. Under this cycle, many telemedicine initiatives have until 2020 to be implemented, so the process is likely to be slow-moving.
 
Furthermore, exact numbers on what the Chinese government is investing in telemedicine vary. A report by research firm IHS estimated that the government spent around 84 million yuan, or a little over U.S. $13 million, on telemedicine in 2013. Others, including Then, say that number is too low considering that China is spending hundreds of billions of dollars on healthcare this year alone.
 
So far, the biggest roadblock for telemedicine has been doctor participation.
 
“I think it’s still an uphill battle,” says Then. “What the government has not cracked is how to provide a compelling reason for a physician to participate. Why would they lock themselves into a telemedicine partnership when they have their own patients to treat?”
 
The first steps forward will be very small ones, as “quality of care is literally nonexistent as a topic in China,” says Then. Until hospitals are forced to publish patient data that they can be held accountable for, it’s going to be impossible to know exactly how successful these base applications of telemedicine have been.
 
However, according to a report compiled by Benjamin Niu, an analyst at IHS, “China’s next several steps in telemedicine could lay the foundation for the sort of innovation the country has built a reputation for: creating something entirely new out of necessity and the systemic failure of the established way things are being done today.”
 
So while we won’t be seeing surgical robots in China any time soon (the IHS report does allude to them), Chinese telemedicine could really disrupt the playing field in the years to come.