New Regulation May Slow China’s Booming Online Medical Service Industry

Ma Xiaohua / Yicai

2017-05-12

(Yicai Global) May 12 -- Internet hospitals have gained popularity lately, but a ‘winter’ may be coming for the online medical care market. An unpublished National Health and Family Planning Commission (NHFPC) draft regulation says that all existing online medical groups must restructure and re-register to meet proposed rules within 15 days of official enactment.

An insider confirmed the existence of the ‘draft for comments,’ saying that “Feedback [on the regulations] is being solicited from internal sources, and the public’s opinions will also be sought in future.”

“It’s a timely move made by the national health administration and regulation authorities,” said Deng Liqiang, head of legal affairs at the Chinese Medical Doctor Association. Currently, internet medical services are virtually unregulated, but medical services are a life-and-death business, so regulators must act before it is too late, Deng said.

The draft regulations would limit online diagnosis and treatment services to telemedicine operations between medical institutions and basic-level organizations providing chronic disease treatment, and outlaw all other forms of internet-based medical services.

Accountability is an issue with remote medical services. “It’s difficult to identify the responsible party in the event of a medical accident,” an insider said. “Should the internet company or the medical institution be held liable for it? Chinese hospitals are managed by local regulators, meaning that a local regulator doesn’t have jurisdiction over doctors at other places.”

The draft regulations also prohibit the use telemedicine on first-visit outpatients. If the condition of a patient receiving telemedicine treatment changes and requires physical examination by a doctor, the remote treatment center must stop immediately, and the patient should be guided to receive treatment at a hospital.

The document will also ban web-based medical service providers from using terms such as ‘internet hospital,’ ‘cloud hospital,’ or ‘online hospital’ in their names.

“Indeed, the regulations are very strict, and internet health services will be subject to some rigid restrictions,” a medical researcher said. “From the perspective of ensuring medical safety though, the rules will prevent illegal practices in the internet health care market. Because using massive capital injection will inevitably lead to vicious competition. The regulations are definitely necessary.”

“Existing internet medical service companies failing to meet the requirements must apply for business registration again,” said Cheng Long, a professor at NHFPC’s development research center.

Internet health care businesses have thrived amid the ‘internet +’ phenomenon. From 2011 to 2016, 533 of them received USD3.321 billion worth of investment, averaging USD6.23 million apiece.

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