Dr. Thomas Frist Jr. sees parallels between the shifting healthcare landscape in China today and the changes that were taking place in the U.S. when he co-founded the Hospital Corporation of America in Nashville in 1968. “It's like déjà vu for me,” Frist said. “It's almost like turning a clock back 45 years in the United States.”
In the U.S., there was a development and population boom in the Sunbelt, and the establishment of Medicare and Medicaid greatly expanded the demand for healthcare. “Today, the same phenomenon for different reasons is occurring in China,” Frist said.
So Frist finds himself once again in the middle of a changing healthcare environment that presents both opportunity and risk. In 2008, Frist and his son-in-law Charles Elcan founded Nashville-based Chinaco Healthcare Corp., a privately held company focused on improving healthcare delivery in China.
In July, Chinaco's new 500-bed CHC International Hospital in Cixi, a growing city of 2 million 90 miles from Shanghai, admitted its first patients. The hospital is a first-ever joint venture between the company, which owns 70%, and the municipal government of Cixi, which holds a 30% stake. The project involved converting the Second People's Hospital, a 150-bed public facility. It's Chinaco's first hospital in the country.
Other U.S. companies also are eyeing the Chinese hospital market, including conversions of public hospitals like Chinaco's. Last month, healthcare investment firm Columbia Pacific Management announced plans to invest $200 million in the construction of two 250-bed hospitals in China that would be wholly owned by the Seattle-based company under the Chinese government's pilot project to expand foreign investment in private hospital development. Columbia Pacific, which operates three senior-living facilities in Beijing and Shanghai, aims to create a care continuum to serve the growing number of elderly patients.
In October, Boston-based Partners HealthCare, which operates Massachusetts General Hospital, announced it was in preliminary talks with two Chinese partners to build a 500- to 1,000-bed facility.
China's healthcare market is expected to boom over the next decade, driven by the country's giant economic expansion and its burgeoning senior population. The country is projected to reach $1 trillion in total healthcare spending by 2020. Spending more than doubled from 2006 to 2011, from $156 billion to $357 billion, according to a 2012 report by McKinsey & Co.
Potentially speeding the growth, in 2009 the Chinese government launched a major healthcare reform initiative to expand healthcare access and improve quality of care for its population of 1.3 billion people. The initiative included the establishment of two new public insurance programs for low-income people.