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ABOUT David Chou

David Chou is a healthcare industry leader in the digital space.  David is the CIO for Luye Medical Group (Cleveland Clinic Connected) while also serving as the VP, Principal Analyst of Silicon Valley based Constellation Research, Inc.  Chou has held executive roles with the Cleveland Clinic, Children's Mercy Hospital, University Of Mississippi Medical Center, AHMC Healthcare, Prime Healthcare, and is also advising many academic medical centers and healthcare start-ups.  

David is a dynamic keynote speaker and industry commentator working with clients to transform their business models using technology.  He has spoken around the world at healthcare tech-related conference including keynotes for leading industry events and intimate executive settings. Chou is also one of the most mentioned CIOs in the media and well quoted in outlets such as the Wall Street Journal, Modern Healthcare, HIMSS Media, ZDNet, CIO.com, Huffington Post, and Becker's Healthcare.  David is an active member of both ACHE and HIMSS while serving on the board for CHIME. 

$1 Trillion Healthcare Market

November 28, 2018

 

As the population of China ages, the economy grows, and basic health insurance access increases, the healthcare market has seen significant expansions. Simultaneously, there have been notable reforms taking place in the healthcare market to ensure appropriate healthcare services to the entire population as well as increased quality and the ability to meet diverse patient needs. Private hospitals are one way in which healthcare market expansion can be accommodated and I have been talking with a few private hospital investors in the region.  I have seen the following areas of expansion:

  • Premium healthcare – Concierge healthcare with a higher price tag catered for the wealthy clientele.

  • Specialty chains – Offering services such as cancer treatments, ophthalmology, children’s hospital, etc.

  • General hospitals – Private hospitals that is looking to compete with the public hospitals.  They are looking to enter the market with an emphasis on quality of life services and health services.

These areas of expansion are in line with the changing and expanding needs of patients in China as well as meeting the expectations of more knowledgeable patients who demand a higher level of quality and technology incorporated into their health care.

 

Public hospitals are expected to maintain a dominant position in China's system. The trust of the citizens are still with the public hospitals at this moment in time.  However, national reform is forcing these facilities to examine their operations to reduce costs, increase revenue, and improve quality of care provided. These demands have come about due to the changes in the Chinese population and the nation itself, drawing attention to different areas of interest in health care. In order to address these changes, it is suggested that public hospitals address five specific areas: improved performance management systems; improved patient experiences; establishment of mutual trust with patients and marketing management systems; standardization of services and processes; and integration and optimization of hospital information systems. These five areas will adequately address the needs of Chinese patients as the nation changes, requiring changes to meet the diverse needs of the people.

 

Rapid Growth of the Chinese Health Care Market

According to a report by Deloitte between 2004 and 2013, health expenditure in China quadrupled in value, reaching $460B in 2013 and a compound annual growth rate of approximately 17.2%. If the trend continues as expected, healthcare expenditures will reach $963B by the year 2020. This growth in expenditure has come as a direct result of factors in the nation, including an aging population, urbanization, individual wealth growth, and the advancement of medical insurance. However, this stands in contrast to supply-side growth, which has been sluggish by comparison. Despite the increased demand, the growth in supplies and care providers has fallen short.

 

Aging Population

The overall population of China is rapidly aging. According to the China Statistics Yearbook, individuals over the age of 65 accounted for 7.6% of the population in 2004 and has grown to nearly 10% as of 2013. As people age, they are at higher risk for injury and illness, thereby increasing the need for high-quality health care services on a more frequent basis, especially in comparison to younger population groups. Not only are these needs different from the needs of younger population groups but they require different sub-specialties to be successful in the context of risks associated with providing care for older adults. As the population of China continues to age, it is expected that the need for healthcare services will continue to increase.  I have the uptick in senior care facilities grow from the private investors in the region

 

Increased Complexity of Health Care Demand

As the Chinese economy grows, the Chinese people become wealthier, which provides them greater knowledge of health care. As a result, Chinese patients expect more complex and diverse health-related services. This includes a stronger emphasis on patient privacy and a willingness to accommodate higher costs for better service and high-tech services. In addition, patients will have greater knowledge of rehabilitative care and preventive screening and treatment, which will increase the demand for these services. As the population ages, this will also increase the need for age-specific specializations and sub-specializations to meet diverse care needs.

 

Basic Medical Insurance Expansion

Over the past ten years, basic medical insurance has been a significant focus point for policy change. The changes that have been made have led to greater depth of coverage over that time. The three basic medical insurance systems cover approximately 95% of the population. Changes within the systems have made it easier for residents to seek care, and the Chinese government has been promoting critical illness coverage. These policy changes have made health care more accessible and affordable for Chinese residents, which will in turn increase the demand that these services be available.

 

While there is a desire for many North American healthcare system to expand their services offering globally, china is a tough market with a different culture and expectation.  I have seen a few successful entries but it has been a slow journey.  The model of picking up a North American healthcare entity and dropping it internationally is the easy and simple solution that comes to mind but unfortunately it will not be an easy road. 

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