March 25, 2019

Free trade zone helps hospital profit

When Xu Jie, director of Shanghai Towako Hospital, stood inside a spacious factory at the China (Shanghai) Pilot Free Trade Zone in the Pudong New Area three years ago, he was full of uncertainty about future.

After three years, however, the hospital has started making a profit as the sole wholly foreign-owned medical treatment institution in the zone and made major advances thanks to the preferential policies offered to enterprises inside the zone.

Its story reflects the development and growth of the zone.

In recent years, cross border medical care has become a booming industry, and it is estimated the market will reach 58.1 billion yuan (US$3.9 billion) by 2020 in China.

In Japan, the hospital's parent company is known for its assisted reproduction.

In 2005, hospitals in Japan that also belong to the company received about 400 to 500 Chinese couples for assisted reproduction.

"It wastes time and cost for patients to make such round trips, and the treatment effect is also affected," said Fan Yu, the hospital's CEO. "Why not let these patients enjoy the treatment in Shanghai?"

A specialist clinic was established in 2005, but its business was hindered due to restrictions in policies over foreign-funded medical treatment institutions.

In late 2013, the zone was established, allowing the establishment of wholly foreign-owned medical treatment institutions. A year later, restrictions on the lowest investment volume and operation period of foreign-funded medical treatment institutions were lifted.

"The policy gave us confidence to introduce the medical treatment technologies and service system of Japan to China," said Fan.

In late 2014, the hospital applied, and quickly obtained, the relevant licenses for operation. It opened in 2016.

Confidence also came from the efficient services of the government.

"We need to purchase a batch of noble gases from outside the zone in our daily operation, and we need to declare at customs for transporting steel cylinders into the zone," said director Xu Jie, who added that the process will increase the cost of the hospital as the purchase volume was not big.

"The management authorities of the zone and the customs cut the red tape for us and use a recording system to handle the headache instead," he said.

The pregnancy rate thanks to the assisted reproduction offered by the hospital has reached about 41 percent so far among patients with an average age of 38, said Xu, adding that it is a high rate in the China market.

The number of the hospital's patients grew 50 percent in 2018 from a year earlier, he said.

Xu originally estimated it would take five years for the hospital to make a profit, but it achieved this in just three.

The recommendation from patients, and the relaxation of China's second child policy also eased Xu's worries about the location of the hospital.

The second phase of the hospital has started construction with a scientific research center, an endoscopic center and expanded wards on the agenda.

"We hope to have more assistance over tax policy from authorities and assistance over exchange and cooperation with our counterparts at home and abroad from authorities," Xu said.