Ping An's Big Health plan risks excess success

[SINGAPORE] Ping An's Big Health plan risks excess success. A US$9 billion unit of the Chinese insurer dedicated to analysing patient data has attracted backers including SoftBank, Reuters reports. The digital upgrade of China's threadbare medical system is a lucrative opportunity. Security is one risk; getting too big, too quickly may be a bigger one.

Public healthcare infrastructure in China is cruelly uneven. It is stretched to the limit by a rapidly ageing population: roughly a quarter of citizens will be over 60 by 2030, according to the United Nations. President Xi Jinping's Healthy China 2030 blueprint, announced in 2016, aimed to address that political embarrassment, in part with technology.

Beijing is now allowing the private sector into a system once jealously guarded by hospital bureaucrats, outsourcing even sensitive functions such as medical record collection and analysis. This is where Ping An Healthcare Management comes in.

The unit works with the authorities to analyse information from state facilities, then use it to suggest better allocation of resources such as nurses, doctors and drugs. Ping An provides few details, but its investors don't expect it to make much money from number crunching, nor can it sell the data itself to third parties. Instead they hope it can profit from the analytical conclusions themselves.

Big Data will help the parent company price insurance and other health-related products, such as online consultations, better. The management unit can also earn via partnerships with healthcare consultants or private hospital groups. If things go well, the government could outsource yet more functions - more hospital management, for example - with Ping An well-placed to swoop.

The sensitive nature of medical records means obvious risks. In China much of this ground is untested. Leaks, such as the details of politicians or pollution-related illness clusters, could provoke an official backlash. China is already toughening data protection rules, with additional requirements for the healthcare industry.

The other risk is trickier to parse: too much success. Beijing has been enthusiastic about public private partnerships in other areas, but public institutions are still reluctant to cede real control to private investors. If officials decide Ping An is making too much easy money from public information, nothing stops them from stepping back in.

Reuters reported on Jan 18 that China's Ping An Insurance Group raised nearly US$1 billion for its medical data collection and analysis business, Ping An Healthcare Management, citing two people familiar with the matter. That values the business at US$8.8 billion. The unit could ultimately seek to list.

Investors participating in the funding round include SoftBank Group's Vision Fund and Japanese financial firm SBI Holdings, the report said.

Ping An already plans to float two units in Hong Kong this year: Lufax, a wealth management platform, and Ping An Good Doctor, an online medical platform that allows users to consult with doctors.

According to Ping An, the healthcare management business covers data for more than 800 million people, out of a population of 1.4 billion.

Ping An said in a statement on Jan 18 that it could seek "external financing for certain technology businesses" but did not provide details.

Reuters