Health­care needs fixes: ex­pert

China Daily (Canada) - - ACROSSAMERICA - By MICHAEL BAR­RIS in New York michael­bar­ris@chi­nadai­lyusa. com

While the Chi­nese govern­ment has just cracked down on price fix­ing by for­eign-based lens mak­ers, it also needs to be­come “more con­cerned” about sys­temic prob­lems in the coun­try’s health­care in­dus­try, a con­sult­ing firm ex­ec­u­tive said.

Since 2009, China has spent 3 tril­lion yuan ($480 bil­lion) on health­care re­form, but the sys­tem still strug­gles with a scarcity of doc­tors, at­tacks by pa­tients on med­i­cal staff and a frag­mented drug dis­tri­bu­tion and re­tail mar­ket.

“Till that’s fixed you’re go­ing to see costs, qual­ity and ac­cess be prob­lems in ( China’s) health­care sys­tem,” Ben­jamin Shobert, founder and man­ag­ing di­rec­tor of Ru­bi­con Strat­egy Group, a Seat­tle, Wash­ing­ton, con­sult­ing firm spe­cial­iz­ing in health­care, life sci­ence and se­nior-care in­dus­tries in China, told China Daily on Thurs­day.

Shobert’s com­ments were made in re­sponse to China’s top eco­nomic reg­u­la­tor an­nounc­ing that John­son & John­son, Bausch & Lomb Inc and other ma­jor eye glass and con­tact lens pro­duc­ers were fined more than 19 mil­lion yuan ($3.04 mil­lion) for fix­ing prices.

The com­pa­nies man­dated that their deal­ers set the price of lenses strictly in ac­cor­dance to a “sug­gested level”, the Na­tional De­vel­op­ment and Re­form Com­mis­sion (NDRC) said in a state­ment on its web­site. They also or­dered re­tail­ers to jointly launch pro­mo­tions in ma­jor Chi­nese cities all year around to keep prices sta­ble, the no­tice said.

Deal­ers and re­tail­ers who do not com­ply with the or­der will be sub­ject to un­spec­i­fied fi­nan­cial penal­ties, the NDRC said. Other penal­ties may in­clude see­ing a halt to their sup­plies from the over­seas man­u­fac­tur­ers.

Ex­ec­u­tives with New Jersey­based John­son & John­son and Bausch & Lomb could not be reached for com­ment.

Hoya Corp and Shang­hai We­icon Op­tics Co were also in­ves­ti­gated and were ex­empt from pun­ish­ment be­cause they had vol­un­tar­ily re­ported mo­nop­o­lis­tic prac­tices and rec­ti­fied the is­sue, the NDRC said.

This week’s crack­down on the lens mak­ers comes as China’s pri­vate health­care sec­tor is be­ing al­lowed to draw in­vest­ment from both do­mes­tic and over­seas firms.

Shobert said the in­creased scru­tiny could cause the health­care sec­tor’s for­eign in­vestors to be­come “more con­cerned” about their in­vest­ments. “They could take a step back be­cause they will see that the dou­bledigit rate of growth of the past is go­ing to slow be­cause they have to be more con­ser­va­tive,” the con­sult­ing firm founder said in an in­ter­view.

Shobert dis­cour­aged ty­ing China’s plan to ease curbs on for­eign in­vest­ment in jointven­ture hos­pi­tals to its crack­down on price fix­ing, say­ing they are sep­a­rate re­forms.

“Those two poli­cies are go­ing in dif­fer­ent di­rec­tions. One is more hos­pitable to for­eign in­vest­ment and the other less hos­pitable,” he said.

In a health­care re­form plan for 2014 pub­lished on its web­site, China’s cab­i­net, the State Coun­cil, said it aimed to re­lax lim­its on for­eign in­vest­ment in hos­pi­tals on the main­land.

The plan in­volves over­haul­ing the man­age­ment of med­i­cal joint-ven­tures that in­volve over­seas part­ners, in­clud­ing “re­duc­ing re­stric­tions on the per­cent­age of for­eign own­er­ship in med­i­cal joint ven­tures and col­lab­o­ra­tions,” it said in the state­ment.

The move would in­crease the num­ber of cities where in­vestors from Hong Kong, Ma­cao and Tai­wan could set up wholly-owned med­i­cal in­sti­tu­tions, and al­low over­seas in­vestors to set up wholly-owned hos­pi­tals in des­ig­nated ar­eas, such as the Shang­hai free trade zone.

The state­ment gave no de­tails of the time­frame of the eas­ing or the changes in hold­ings.

China’s un­der­funded net­work of 13,500 pub­lic hos­pi­tals re­lies heav­ily on drug sales, con­tribut­ing to in­flated prices, kick­backs and ten­sion be­tween pa­tients and doc­tors.

About 40 per­cent of Chi­nese pub­lic hospi­tal rev­enue in 2011 came from pre­scrib­ing drugs, Health Min­istry data show, while med­i­cal ser­vices ac­counted for just over half, with govern­ment sub­si­dies and other in­come mak­ing up the rest.

China will also stiffen mon­i­tor­ing of the prices of im­ported drugs and med­i­cal equip­ment, the State Coun­cil said.


Bausch & Lomb Inc’s dis­play at a mall in Bei­jing. The com­pany has been fined for price-fix­ing, along with other con­tact lens and eye­glass man­u­fac­tur­ers.

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