China's healthcare: The case for a joint approach

This level of planning will be crucial in helping to provide financial backers with the assurance they need that their partners who will operate the hospital for both clinical and operational services, are the correct ones and have the credibility and experience to deliver on the shared vision.

A third issue that needs to be addressed at the very outset is securing access to a suitable parcel of land. The length of time it can take to gain approval to develop a site or to meet the necessary requirements is a major concern and something that continues to deter international organizations.

Finally, before the assets are complete it is important that a long-term strategy is in place that outlines how the quality of services provided will be maintained over the long-term.

Across China, there is a desire to work with international organizations to not only improve the delivery of public care, but also help to develop local talent and expertise.

There are significant numbers of international hospital operators who want to enter China, however they will also require appropriate registration to enable them to work as a medical institution within this market.

In China today, there is a clear directive from both central and local governments on how joint venture structures should be formed.

While this is currently under review, many of the core elements are unlikely to change and, consequently, new entrants to the market will need to understand what is required of them and what constraints they may face compared to what they are used to operating under elsewhere.

When setting up a partnership, an organization must meet the requirements for health institutions, which include showing that the new facility will enhance or assist with the lack of adequate medical service capability, treatment, funding and provision of medical care.

Furthermore, the overseas shareholding within the joint venture must not exceed 70 percent and the joint venture agreement must also meet expectations on the form and threshold for investment.

The review currently under way may help to make the formation of joint ventures more attractive, particularly when it comes to the development of senior care facilities, where requirements are already more relaxed than other asset classes.

However, regardless of the outcome, further work may be required in convincing international investors and operators that this market provides them with long term and viable opportunities. The cost of developing such assets is high, and in the face of competition from other areas of the world where access to the market is easier, China may appear a less attractive country in which to operate.

Where internal funding and operators are available within China this may be less of a concern. However, as market demand grows and the desire to improve both public and private hospitals increases, being able to access international support will be of real benefit.

This will not only help to improve the way people in China are cared for but will also help to reduce the current trend of outward health tourism.

International hospitals do not have all the answers, but they do offer some great examples of what can be achieved, which can be molded to fit how healthcare is delivered within China.

This will provide a better solution not just for the rich but also for those who rely on public healthcare too.

More choice around which hospital to visit will inevitably raise standards and provide additional capacity, helping China to provide its population with access to excellent clinical services whenever they want.

The author is head of the health sector of EC Harris Asia-Pacific.