In April this year the owner of China’s largest gay dating app Blued was given the licences needed to open an ‘internet hospital’. “This essentially closes a glaring gap in the field of men’s health in China, itself a sector that is expected to grow significantly over the next few years,” the company explained.
Blued started as an underground forum for the gay community in 2000, going public 20 years later with a debut on Nasdaq that valued the platform at $614 million. But it isn’t alone in morphing into medical consultations. Indeed, between January and August 2021 alone, some 500 online hospitals were created, taking the total number to 1,600, according to the Securities Daily.
Among them was Blued’s He Health, an online-to-offline platform which specialises in male health issues – regardless of the patient’s sexuality. Since July He Health users have been able to book consultations with doctors on issues as varied as depression, erectile dysfunction, cancer and infertility. “Thousands of men have had consultations since launch, illustrating again the huge demand of this flourishing business sector,” the platform’s owner Ma Baoli said in August.
But this month the flourishing sector caught a nasty cold when China’s central government issued draft regulations that included the creation of a new supervisory body for the industry and new limits for when online consultations can be offered.
There are also new restrictions on the usage of artificial intelligence in making a diagnosis and requirements mandating that recordings of online appointments be stored for up to 15 years.
Share prices of some of the larger players like Ping An Health, JD Health and Ali Health all dropped sharply on the news, despite claims that tighter regulation will benefit the industry in the long run.
The policy outline was “a clear signal that online medical consultation should be of the same quality as that provided by physical institutions, reflecting China’s determination to develop digital medical services,” agreed Liao Jieyuan, founder of WeDoctor, another of the leading healthcare platforms.
China’s first online medical advisor appeared in 2014, centred around the Number Two Peoples Hospital in Guangdong province. Today the description of an online or internet hospital is a broad one, applying to many kinds of platforms that combine online and offline medical services. Examples include individual bricks-and-mortar hospitals that have built apps to manage appointments and prescriptions to much more complex platforms that aggregate a wider range of services, allowing patients to have online consultations with doctors anywhere in China.
In 2020, nearly 49 million Chinese had participated in an online consultation, according to the National Health Commission, up from 28 million in early 2018.
Analysts say the new regulations – which are not yet finalised – are likely to have most impact on smaller players which cannot prove the credentials of their medical experts. But the changes also incorporate measures that ban any link between doctor salaries and the number of examinations they carry out or the quantity of drugs they prescribe (seen as a conflict of interest). There’s also a block on “fraudulently using or substituting” an AI programme for consultations with a real person, as well as restrictions on relying on online sessions for the “first” diagnoses of anything other than the most common health complaints.
Demand for online medical services surged last year during the wider efforts to curtail the spread of Covid-19. The government also introduced guidelines allowing some internet-based medical services to be included within insurance coverage. “During the epidemic, internet and physical hospitals have been further integrated in many regions to meet the surging demand for diagnosis and treatment,” China.org.cn pointed out.
China-based research firm AskCI Consultancy predicts that the value of the ‘remote appointment market’ will grow to Rmb68 billion ($10.62 billion) by 2022, up from Rmb22 billion last year. So the sector seems to be here to stay and could prosper further if the new regulatory environment puts a check on some of its unhealthier practices.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.