Shanghai lays out welcome mat for wholly foreign-owned hospitals

To meet diversified medical demand and improve the city's business environment, Shanghai announced that it will promote the establishment of wholly foreign-owned hospitals.

The city government will specially encourage such hospitals in places like the China (Shanghai) Pilot Free Trade Zone, the Lingang Special Area, the Hongqiao Commercial Zone, and the Shanghai Eastern Hub International Business Cooperation Zone, which boast an expatriate population and the presence of the biomedical industry.

The number of wholly foreign-owned hospitals will be limited to no more than two in a single zone, according to a document on the city government's Website.

The investors should:

• Have direct or indirect health investment and management experiences;
• Be able to provide international advanced hospital management theory, management model and service model;
• Be able to provide world-leading medical technology and equipment; and be able to add or renovate inadequate local health ability, medical technology and equipment while expanding diversified services.

The hospitals can be for profit or non-profit ones. The government permits wholly foreign-owned hospitals to operate as general, specialty, and rehabilitation medical institutions and the facilities should meet the requirements of a grade-three hospital, the highest in the current three-tier system, also known as city-level hospitals.

However, there are restrictions. They are not allowed to serve as mental health hospitals, infectious disease hospitals, blood disease hospitals, TCM hospitals, TCM and Western medicine integrated hospitals and ethic minority hospitals. Wholly foreign-owned hospitals are not allowed to set up hematology departments, according to the document.

These hospitals are also barred from performing medical activities with significant medical or ethical risks, such as human organ transplantation, assisted reproductive technology, prenatal screening and prenatal diagnosis, psychiatric hospitalization and new experimental treatment of tumor cell therapy, according to the document.

They can hire foreign doctors, as well as doctors and technicians from Hong Kong, Macau and Taiwan, but the proportion of staff from the mainland in management and among health professionals and technicians shall not be less than 50 percent.

The hospitals' information management system should be connected to the city and district medical service supervision platform, and the information storage servers of electronic medical records and medical equipment should be located in China.

Hospitals that meet the requirement of the government-run medical insurance system can apply for participation and the government encourages hospitals' links with commercial health insurance companies from home and abroad.

In September last year, the central government announced plans to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, and Shenzhen, as well as the island province of Hainan in a move to further open up its medical sector.

According to Xinhua news agency, Tianjin issued a license for medical services on December 16 to a wholly foreign-owned, grade-three general hospital, the first of its kind in the country.

The Perennial General Hospital Tianjin, invested and built by Singapore's Perennial Holdings Private Ltd, has a total investment of around 1 billion yuan (US$140 million).

In 2023, the number of hospitals in China topped 38,000, with less than one-third of them public hospitals. However, public hospitals accounted for 83.5 percent of the total number of patient visits nationwide, according to official data.

Since 2000, China has allowed the establishment of joint-venture medical institutions with foreign investors. After more than 20 years of development, there are currently over 60 foreign-invested joint-venture medical institutions in the country, Xinhua said.

Shanghai Towako Hospital, which started operation at the China (Shanghai) Pilot Free Trade Zone in the Pudong New Area in 2016, is the first and the only wholly foreign-owned hospital in the city. The special policy inside the FTZ allowed for the establishment of the hospital, which focuses on gynecology and reproductive medicine.

Shanghai has 30 international medical facilities with investment from foreign countries and China's Hong Kong, Macau and Taiwan. They offered 1.5 million outpatient and emergency services in 2023, covering 0.6 percent of the city's total.