Rising costs, falling revenues: Chinese hospitals to adapt for survival in new normal

Though the country’s COVID-19 situation has been largely stable, Dr Nie Wei of Institute of Hospital Management at Zhengzhou University points out hospitals have to navigate pandemic’s long-term impact on the industry

“In addition to managing COVID-19, hospitals in China have to focus on survival and development amidst long-term pandemic prevention and control measures. This requires innovative management and building of clinical standards, so as to adapt to the new normal – hospitals that can’t adapt will suffer huge losses and even close down,” said Dr Nie Wei, Director of Institute of Hospital Management at China’s Zhengzhou University.

Dr Nie Wei
Dr Nie Wei

With the vision of becoming an international top-tier healthcare thinktank, the Institute’s work scope includes conceptual design of healthcare organisations, research into medical technology proposals, and formulating operations and establishment plans for medical centres, among other work areas. Based on his deep expertise in China’s healthcare industry, Dr Nie highlighted several areas in which the pandemic has impacted hospital management in China.

The impact of COVID-19 on Chinese hospitals

Firstly, the pandemic has delivered a blow to the financials of Chinese hospitals. Dr Nie raised that costs relating to pandemic control have risen – hospitals now need to invest significantly more in their facilities, equipment and supplies, such as PPEs for staff and products required for infection control.

In addition, the rise of remote care, virtual activities and work from home requirements have led to hospitals needing to greatly ramp up investments in digitalisation initiatives, and also bear higher digital-related operating costs.

At the same time, regular income streams have fallen as compared to pre-pandemic levels, although the level of impact differs across different healthcare organisations, said Dr Nie. Revenue dip had been further worsened by clinic closures or restrictions on opening hours due to lockdowns.

His observation is supported by research findings published in The Lancet, which revealed that as of March 2021, health facility visits and inpatient volumes in China have not rebounded to pre-COVID levels, although no new cases have been reported in most provinces for many months. The study warned that revenue loss would be especially damaging for “private primary care clinics and village practices that were already financially vulnerable.” With primary care already an identified weak spot in the country’s health system, COVID-19 disruption could further hinder efforts to build capacity and capabilities in this area.

On the other hand, Dr Nie pointed out that some operators in the healthcare ecosystem have thrived off the pandemic. Organisations performing COVID-19 testing and prevention services have profited, with an increase in new third-party testing vendors entering the market, together with more organisations appointed for COVID-19 prevention and management-related work.

Raising the quality of Chinese healthcare post-pandemic

With China’s COVID-19 situation largely under control, how could the country ensure continued growth in the quality of clinical care?

“In my opinion, firstly we need to comprehensively comply with international healthcare institute standards in patient safety, and ensure that healthcare institutes and staff are able to work as usual under the new normal,” said Dr Nie.

He also listed a trend in the formation of medical corporations and closely-linked consortiums, as well as a focus on the annual national hospital performance evaluation – which is tied to fund allocation from the government – as areas that could enhance the country’s care standards.

The establishment of smart hospitals, or hospitals that leverages on ICT to improve existing procedures and introduce new capabilities, will be a clear trend in China moving ahead, Dr Nie noted. The increasing use of big data, analytics, IoT technology in hospitals will add a competitive edge to the country’s healthcare system on the global stage. The wide adoption of telemedicine and online appointments by Chinese consumers during the pandemic bodes well for future implementation of smart hospitals in China.

Join Dr Nie at HMA China

At the upcoming HMA China conference, Dr Nie will be sharing his insights on how hospitals can achieve the ideal of improved clinical outcomes with lowered medical costs, as part of the Quality & Safety Excellence track. The online exchange, to be held on 6-7 August 2021, will gather hospital executives from China and around the world to share ideas and best practices across a wide range of hospital management topics. Dr Nie himself is looking forward to learning through the discussions how China’s hospital management can be more globalised, standardised and professional.

Don’t miss the chance to hear from Dr Nie and other Chinese and international healthcare leaders at HMA China – click here now to register.