How global tech can drive local healthcare innovation in China

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Andy Ho, CEO, Philips Greater China

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With an ageing population rapidly increasing the rate of disease, China’s healthcare system is ripe for innovation.

From established corporations to fledgling startups, all recognize the potential for digital technologies, such as telehealth and artificial intelligence, to alleviate China’s overstretched healthcare professionals and help provide better care.

In fact, the 2019 Future Health Index from Philips, which surveyed healthcare professionals in 15 countries around the world, shows that China is leading the way in adoption of digital health technology.

However, global health technology innovators looking to China face barriers – including a medical and digital infrastructure that is vastly different from other countries, unique regulatory demands, and a lack of affordability of existing solutions for more widespread use in rural or impoverished regions.

How to overcome such barriers? To help make China’s healthcare system fit for the future, I believe that global health technology companies need to rethink the traditional model of importing medical products developed in western markets. Today, the key to successful innovation lies in having a deep understanding of market-specific needs and challenges, and the ability to forge local partnerships – while also keeping an eye on best practices in other healthcare systems. In other words, by combining a local and a global mindset.

Healthcare services in China are spread unevenly

One problematic aspect of China’s healthcare system that calls for locally relevant innovation is the uneven distribution of resources across the country.

Major cities in China offer access to top-tier hospitals, but many other cities and rural areas do not. This problem is exacerbated by a lack of primary care facilities. China has one general practitioner for every 6,666 people, compared to an international standard of one for every 1,500-2,000 people, according to the World Health Organization.

This causes people to flock to hospitals, sometimes travelling hundreds of miles, only to find themselves queuing up in increasingly long lines. Many hospital specialists are overworked, sometimes seeing as many as 200 patients a day.

Clearly, from the perspective of a global health technology provider, what’s needed here is an approach that transcends the traditional model of importing technological innovations and fitting them into the existing local healthcare system.

As Klaus Schwab, founder and executive chairman of the World Economic Forum, pointed out when he introduced the notion of “leadership 4.0” in 2016, innovation today needs to look at systems, not merely technologies. I couldn’t agree more.

Equipping China’s top-tier hospitals with the latest medical equipment can certainly help to further improve care in those hospitals. But to increase access to care across the country, new types of solutions are needed. Technological innovation needs to go hand-in-hand with locally relevant business models that transform the current system and improve care for all.

Improving access and affordability of care

What does this look like in practice? To serve the unmet needs of patients in China’s remote and less affluent regions, we need to create new ways to make medical expertise more widely available. One way of doing this is by connecting top-tier hospitals to smaller hospitals and primary care facilities that are closer to patients. This allows them to share resources and expertise in order to provide quality care at lower cost across the nation.

Take lung cancer as an example – the leading cause of cancer death in China. According to the China Cancer Foundation, nearly 70% of lung cancer patients in China are diagnosed and treated in a late stage, when their five-year survival rate is less than 5%. Patients would benefit from earlier screening using medical images such as CT scans. However, many of China’s healthcare facilities outside the wealthiest cities do not have the necessary financial resources, staff, or technology to provide such radiology services.

In 2018, Philips struck a partnership with Digital Health China, the largest provider of cloud-based healthcare services in China, to jointly launch a tele-radiology platform. The platform allows radiological images and associated patient information to be remotely viewed and analysed by clinical experts anywhere in the country, so that patients can receive treatment via their local healthcare facility, wherever they are. Unlike traditional business models, which require larger investments from hospitals upfront, a pay-per-use arrangement makes the platform affordable even for smaller hospitals.

This is just one of many examples that demonstrate how a combination of technology, new business models, and local partnerships can fuel innovation tailored to local needs.

Listening to the voice of the patient is equally important. Patients in China may have different needs and expectations than those in other countries. Interestingly, the Chinese population also seems poised to further embrace telehealth. According to the 2019 Future Health Index, people in China are among the most likely to say that, if given the choice, they would prefer a consultation with their doctor remotely via a digital channel for non-urgent care.

While a sensitivity to local needs is essential, there are also learnings to be drawn from other countries when it comes to telehealth. There is where a global outlook provides a useful perspective. Importantly, we know from telehealth programmes in other countries that their success ultimately depends on payers receiving reimbursement. In this light, it is encouraging to see that in provinces such as Guizhou, certain telemedicine services are now reimbursable under the Chinese social insurance program.

Organizing innovation for local impact

As I can testify from my experience as Market Leader for Philips Greater China, developing locally relevant solutions requires more than an understanding of China’s healthcare system and the local needs of caregivers and patients. It also demands an entirely different way of organizing innovation.

When health technology innovation was focused on delivering improved hardware such as higher-resolution CT scanners, it used to be centrally led. Innovations were rolled out to markets in a one-size-fits-all manner that relied on a multi-tiered network of local distributors.

Today, as the example of tele-radiology shows, innovation involves an interplay of medical systems, software, and services, often delivered via new business models. This calls for much closer collaboration; not only with healthcare providers and specialized partners, but also with government organizations, industry associations, private insurers, and other stakeholders.

That’s why local innovation facilities have become essential to the way global health technology companies operate. These facilities integrate traditional R&D capabilities with knowledge of local market dynamics, health economics, and business model innovation. They tap into local as well as global resources, with the aim of delivering innovations that are relevant to Chinese healthcare providers and patients.

Navigating China’s regulatory waters

Another crucial capability to add to this collaborative mix is knowledge of local regulations. Navigating regulatory waters in China can be challenging. For example, one study looked at innovative technologies cleared by the US Food and Drug Administration (FDA) between 2010 and 2014, and found that only 38% of them had been approved and brought into China by mid-2015 – with regulation being one of the main hurdles.

For technologies that are still in a nascent stage in healthcare, such as artificial intelligence, the situation is even more complex because regulations need further development. This is where I see an opportunity for health technology providers to intensify collaboration with local regulatory bodies. Together, we can create the conditions for safe and responsible innovation across the industry.

Local learnings, global relevance

Ultimately, I believe global actors can drive local innovation in healthcare if we combine an appreciation of local market realities with a broader global mindset.

Many of today’s challenges in healthcare are not unique to China or any one country, despite the different ways their healthcare systems are organized. Other regions around the world face similar challenges of providing care to growing and ageing populations across dispersed areas. We can all learn from each other.

With China already leading the way in adoption of digital health technology such as telehealth, it could inspire other countries to follow suit – using local learnings to improve healthcare worldwide.