You are here
China's tech giants use Internet to deliver smart health services
THE Chinese health service industry is growing fast. According to recent projections, the industry is expected to reach eight trillion yuan (S$1.6 trillion) in revenues by 2020, which is around three times more than 10 years ago. This dynamic growth is driven by rising income levels and higher life expectancies of Chinese customers. However, the Chinese healthcare system faces a number of challenges that are closely linked to the country's transformation from an emerging market to an industrial nation.
One of the biggest challenges is the demographic transition to an ageing society, characterised by significant growth of the elderly population, especially in relation to the working population. In China, this trend was reinforced by the one child policy. The rise of chronic diseases such as cancer and osteoporosis, typical for an ageing society, leads to soaring medical expenses per capita. Moreover, a vast number of people within China's working-age population are classified as "sub-healthy" ie they experience a range of symptoms such as nausea or chronic fatigue, but their pain is not linked to an obvious, easily diagnosable illness. This is a huge problem as recent research shows that 76 per cent of all white-collar workers in major Chinese cities are categorised as sub-healthy.
Another drawback of the Chinese healthcare system is the lack of primary care. Elsewhere, people would visit general practitioners who either prescribe medicine or refer patients to a specialist. In China, however, this first step is often skipped by patients. People go immediately to a hospital and seek the advice of a specialist, even if they just have a headache, which exacerbates the undersupply of doctors and imposes high costs on the healthcare system.
After healthcare reforms in 2006, over 95 per cent of the Chinese population now has some type of basic health insurance plan. However, the quality of health care in rural areas often does not reach the quality provided in the major cities. Another problem is that hospitals are severely understaffed, especially the tertiary public ones. While countries such as Switzerland or Germany have a medical doctor density of 42 per 10,000 people, according to the World Health Organization, China's is only 18. This leads to an extreme shortage of qualified personnel and overworked doctors. Information opacity, high hospitalisation rates, and the rising cost of medications all add to the problems. Due to the absence of a market that would enact a price-setting mechanism, pharmaceutical prices in China are often arbitrary or even directly influenced by bribes.
While there are several tech giants, including Tencent and Alibaba, that are building ecosystems, the most insightful case is Ping An, one of the leading health insurance providers in the world. The company has over 538 million online customers, and its healthcare portal alone has over 265 million users in 257 cities. Its healthcare ecosystem is based on three relevant entities: clients (patients), medical service providers, and payers. Medical service providers are, for example, clinics, doctors or pharmacies. Payers consists of private insurance companies such as Ping An's own core business and the Chinese government, which provides basic healthcare protection.
Customers access the healthcare ecosystem through portals such as the Ping An Good Doctor App. This serves as a link between patients, medical service providers and payers. It also includes an online consultation service. The process flow from the perspective of a patient is as follows: first, the user can access the online consultation for a first screening at any time of the day or night. If necessary, patients can then use the offline follow-up treatment to visit a specialist in a hospital. They can also buy their prescribed drugs online and avoid long queues. The portal is linked to the health insurance provider, which bears the costs of the treatment. With Good Doctor, Ping An pursues a one-stop solution, implying that customers have a single app to cover all of their healthcare needs.
Ping An Good Doctor is one of the largest online healthcare portals in China. It addresses the gap in the underdeveloped primary healthcare system through online consultations. To this end, Ping An employs over 1,000 medical experts and over 5,000 external doctors. The productivity gains of this model become obvious when considering the coverage capacity of the medical personnel. Advanced technologies enable the Ping An ecosystem to conduct between 300,000 and 400,000 consultations daily, which is roughly 8-10 times the usual consultation capacity in China. This very high rate of efficiency would not be possible without technological assistance.
AI: THE ANSWER TO MODERN HEALTH CARE
The most notable elements are artificial intelligence (AI)-assisted screening and AI-assisted consultation. Patients describe their symptoms on the platform. The AI system collects that information and asks further questions that could be relevant for possible treatments. It also makes a pre-diagnosis, trying to forecast ailments. Then the AI system issues a preliminary report, which is then sent to a doctor who conducts a professional diagnosis and decides on further steps. The doctor may prescribe medicine or send the patient to a specialist in a clinic. The transition is seamless so that the patient may not even notice the switch between the AI system and the actual doctor. The decisions made by the doctor together with the consultation protocol are saved and entered into a machine learning system. Hence, the AI model can further improve on its diagnoses and predictions with the goal of being able to treat patients completely independently of human input.
The Ping An Good Doctor portal connects the 265 million users after the online consultation with the offline service providers. This is possible through close collaboration with over 3,000 clinics. In addition, more than 2,000 dental clinics, aesthetics practices and checkup centres, and over 15,000 pharmacy outlets ensure a comprehensive offline service. This creates strong network effects and synergies in the health service industry.
The Ping An ecosystem is not limited to sick people. Instead, the portal also offers services for healthy and so-called "sub-healthy" people, offering in effect a sophisticated health management system. With this tool, customers can view their health information and set up an e-health profile. Furthermore, via the e-commerce platform, they can buy health-related products such as protein supplements or participate in a reward programme to lower their health insurance premiums.
They also have constant access to healthcare consultation services such as a family doctor, an individual health profile and a health management plan. The scalable model helps to provide better-quality health care and lower costs through substantial efficiency gains. Moreover, consumers benefit from significant reductions in waiting time for offline services. Similarly, Tencent's healthcare portal Doctorwork connects over 10 million patients with around 440,000 certified doctors and 30,000 hospitals, providing AI-assisted screening and consultation. Tencent is also developing medical chatbots and clinical decision support software to increase the efficiency of its online consultation network.
Alibaba also features an AI diagnostic system called DoctorYou, which assists doctors in their diagnosis and decision-making. Furthermore, Alibaba operates an AI-assisted processing system called ET Medical Brain. Since Alibaba Cloud is the biggest cloud service provider in China, it can exploit its market-leading position to collect data more easily.
The Internet plays a leading role in this system because medical resources can be shared in real time across regions. This is especially important for rural areas. Urban medical resources can be channelled through the Good Doctor portal to provide health care in rural areas. This form of telemedicine works, because many chronic and common diseases can be managed online. It also reduces the pressure on hospitals.
Another technology working in the background is the Ping An Cloud service, which stores all the data and helps to conveniently share medical information and health reports with the relevant entities (eg pharmacies). It works in synergy with another subsidiary called Ping An HealthKonnect. The latter runs a programme that automatically extracts information from a patient's medical record, then parses, cleans and exports it, before uploading the standardised data into the cloud-based platform.
Moreover, the Ping An Biometrics technology is used in the healthcare and finance ecosystem. A key element of this technology is facial recognition, which can identify faces with 99.8 per cent accuracy. Another feature is voice print recognition, which analyses unique acoustic signals from the voice with 99 per cent accuracy. The last element is the analysis of micro-expressions from the face of the customer. With this technology Ping An can automate the identity verification for registration and check-ups by linking a person's identity to their online profile and thus preventing identity theft and fraud.
Finally, the backbone of the whole system is the Ping An Blockchain, called Onechain. This proprietary technology is faster and more efficient than its open source counterparts and can process over 100,000 transactions per second. It is fully encrypted and provides an effective way to record all transactions made in the Ping An ecosystem.
With China's tech giants transforming its healthcare system using cutting edge technology, we are now seeing improved customer experiences, faster and more effective ways to cope with the growing demand for healthcare services and, most importantly, accessibility with healthcare services reaching remote rural areas.
- This is an abridged version of an article from the Healthcare Transformation report by the Credit Suisse Research Institute.
The writers are from the Institute of Insurance Economics of the University of St Gallen, where Alexander Braun is a professor and Niklas Häusle is a PhD student.