Over the last year, Jing‘s work has been more and more involved with helping investors and healthcare service providers understand how to position their services to access China’s yibao (government reimbursement). She has now helped map out, in detail, reimbursement plans at the local level in nearly a dozen provinces for home healthcare, senior care, rehabilitation and pharmaceutical companies. It is hard work, and requires a very unique ability to blend the quantitative with the qualitative, if for no other reason than much of what constitutes “policy” in China varies widely.
The backdrop of much of what is happening in China’s healthcare reform is very positive: the government is starting to pilot physician compensation reforms that address long-standing grievances by physicians that have led to economic rent seeking and pharmaceutical mark-ups, eliminating the multiple invoice systems that made non-compliant activities almost inevitable, and expanding those services that are available to be reimbursed by the Chinese government. What we have been able to do is dig into the actual provincial and municipal reimbursement policies and get into the hands of a foreign healthcare platform what the actual reimbursement will be for their services. What do we typically find out as a result of these efforts?
First, foreign companies hoping for national reimbursement practices are going to be sorely disappointed. The disparities between what is put forward by the central government, and how that is implemented locally, are extreme and as such, require very local emphasis through the respective stakeholder within the Chinese government.
Second, what is really tricky is being able to place where your particular service lies as a priority with the local government office. Again, this cannot be predicted nationally. You have to have relationships (or if you don’t, rely on someone like our firm to be able to get into the actual versus aspirational), where you can get someone to tell you whether or not reimbursement for your particular service (or, in the case of a pharma company, product) ranks given all their other pressing priorities.
Third, in an environment where public healthcare finance is very much in flux, you need a well-planned out lobbying strategy for how to get included in the yibao. This is achievable for most companies, but it will not simply happen with good intentions. You need a plan and that plan needs to reflect the sort of insights that have been cultivated from our work with a variety of healthcare delivery and pharma companies over the last couple of years.
Fourth, view access to the yibao as less a financial trigger and more a signal to the general public that a service is two things: accepted clinically by the government, and likely to be the recipient of more reimbursement over time. If you think access to the yibao is a magic bullet, you are in for a rough ride. It is a signal of what could come, not necessarily a short-term source of meaningful revenue.
How do we summarize this all, specifically as it relates to helping clients understand the yibao? From a western perspective, less can be done nationally than we might like; however, a lot can be done via local connections. Being successful locally requires good due diligence, a strategy for how to get the local officials’ attention, and how to align their technocratic goals with what you are offering the local population. While the role of the government in China’s healthcare economy remains very much in flux, important standards are being set – many informal and unspoken – that will guide the actual opportunity western healthcare providers have in China for the next decade. Better to have these conversations now, build these relationships today, than to wait until the yibao has been set in stone, and your ability to influence policy has dissipated.