On December 23rd, China’s State Council issued a document titled “Fully Opening Up Senior Care Service Market” with a particular emphasis on the lifting of market access requirements. A big thank you to Yu Yan for bringing the document forward and providing insights.
Now, if you’re like most senior living and home healthcare executives we work with, you are probably asking yourself something like the following: “Great! I think. Unless this is more of the same, and then it’s just bureaucratic bovine scatology.” I shamelessly pull the latter language from one of Norman Schwarzkopf’s press conferences that I recall watching as a teenager. First, relative to this document the most interesting and notable items include the following:
* For-profit senior care service providers are allowed to register their license with the AIC before they receive approval from the civil affairs department.
* For non-profit senior care service providers already registered with civil affairs department, they are allowed to set up multiple service locations (without legal entities) within the supervisory scope of the civil affairs department.
* Foreign investors should enjoy the same preferential policies as local investors do, and the local Chinese municipalities should not restrict access with any excuses.
* For foreign investors, the government encourages them to invest in both for-profit and non-profit services. Non-profit services set up by foreign investors should enjoy the same preferential policies as do domestic non-profit service providers.
* The civil affairs department will further streamline review and approval procedure for setting up senior care service providers.
* The senior care services currently provided by government should be reformed in the way that private capital is encouraged to join as much as possible.
* The percentage of beds operated by government should take up no more than 50% of the total local beds by 2020.
This is only a top-level guiding document. A lot of additional details need to be clarified as the government starts to work on implementation; however, these are all promising because they reflect a couple of important insights. First, the need to expedite the licensing process and to stop letting licenses get in the way of new senior living capacity coming on line.
Second, a recognition that the state run senior living capacity needs to get out of the way of the private sector. This echos a similar strategy as what came from the NHFPC when they started to think about how to address China’s systemic problems in the hospital space. The problem in China’s hospitals has been inadequate and misguided government reimbursement; the problem in China’s senior living sector is a lack of funding, not funding in the wrong areas.
Overall, these are helpful moves but these are also guiding documents and not formally promulgated laws. We have been involved in one licensing issue in the last month where the idea that the civil affairs department needs to not get in the way of new foreign senior care service providers is definitely not happening; as such, these documents from the central government have to always be taken with a grain of salt and viewed as aspirational in nature, and not something that can be counted on in the middle of a difficult licensing discussion.