[ANALYSIS] Insight on Government Expenditures on Healthcare and Medical Device Trends in China
January 16, 2020
the journey towards realizing the ambitious goal of universal health coverage, more countries are expanding benefits, creating institutional arrangements and allocating public funds to expand health services coverage. Countries from all regions and at all levels of income are increasingly spending more to cater to growing public demands. In 2016, the world spent US$ 7.5 trillion on health, representing close to 10% of global GDP. Health spending is growing faster than the overall economy globally as well as in most countries. In this article, we are looking at the healthcare expenditure and medical device demand trends in China, Thailand, Malaysia and Singapore, to understand how their government are spending to improve the living standard of their citizens.
China Highlights “Internet Plus Healthcare”
Chinese government’s share in healthcare expenditure has been rapidly increasing. In 2000, its domestic general government health expenditure per capita was US$ 9.3 and it has increased up to US$ 231 in 2016. As its GDP grows, its public budget is expected to grow faster. However, the share of healthcare expenditure spent in China is much lower than other countries in Asia such as Singapore and Japan. In 2016, China spent only 9% of its expenditure on healthcare, whereas Singapore spend 13% of its expenditure. Under such publicly spent less budget, hospitals in China are overcrowded due to the unequally distributed healthcare and rapidly growing demand of middle class for healthcare.
To tackle these issues, the government announced in the 13th Five-Year Plan and the Healthy China 2030 strategy that healthcare is now an important area to improve. in the 13th Five-Year Plan and the Healthy China 2030 strategy. The government particularly issued guidelines to promote internet-based healthcare to increase the accessibility and efficiency of healthcare. The leading private company, Tencent, has already built up a system which collaborates with more than 38,000 medical facilities since 2017. Tencent’s system enables people to book doctor’s appointments, access their medical reports and pay for their medical bills through WeChat so that the users can avoid overcrowded hospitals.
In order to even out both the medical resource and the demand of patients, online medical consultation, remote patient monitoring and online clinician support are already becoming a standard. The world’s leading healthcare ecosystem platform, Ping An Good Doctor, has created cooperation with nearly 50 hospitals across China, to provide comprehensive medical management platform, featuring online diagnosis platform, prescription sharing platform and health management platform. This “online hospital” system not only benefits to an increase of accessibility but also to the integration of healthcare data.
There seems tons of rooms for foreign manufacturers to cultivate the market of China, yet foreign manufacturers must pay attention to its domestic manufacturing plan. According to China’s “made in China 2025” initiative, China is aiming to strengthen the use of its domestic products in hospitals to 70 per cent by 2025, Chinese government plans to strongly support and upgrade its domestic products so that they can prevail in the export market. Leading Chinese companies such as Alibaba and Tencent have been making significant progress in healthcare field and looked at ways to build diagnostic tools to make doctors more efficient.
Source: World Bank, 2020
Figure 1: Domestic general government health expenditure per capita (current US$)
Source: World Bank, 2020
Figure 2: Current health expenditure (% of GDP)
Source; World Bank, 2020
Figure 3: Domestic general government health expenditure (% of general government expenditure)