The 20th Central Committee of the Communist Party has clearly proposed to expand independent openness and promote the orderly expansion of openness in fields such as telecommunications, the internet, education, culture, and healthcare.
On September 7, the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration issued a notice regarding the implementation of pilot projects to expand openness in the medical field, proposing to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and throughout Hainan Island (excluding traditional Chinese medicine and not including the acquisition of public hospitals). Specific conditions, requirements, and procedures for establishing wholly foreign-owned hospitals will be notified separately.
According to the requirements of the notice, the National Health Commission, in cooperation with the Ministry of Commerce, the National Administration of Traditional Chinese Medicine, and the National Center for Disease Control and Prevention, issued the "Pilot Work Plan for Expanding Openness in the Field of Wholly Foreign-Owned Hospitals" (hereinafter referred to as the "Pilot Plan"), which outlines specific and clear requirements for establishing wholly foreign-owned hospitals and organizes relevant localities to ensure implementation.
The Pilot Plan focuses on introducing high-level foreign medical resources while improving regulatory measures to ensure the safety of human genetic resources and the quality of medical care. Wholly foreign-owned hospitals must comply with the general requirements of relevant Chinese laws and regulations as well as the pilot conditions stipulated in the Pilot Plan. Regarding approval and access, there are specific requirements concerning the investment entities, levels, categories, diagnostic subjects, treatment activities, personnel composition, and data security of wholly foreign-owned hospitals. The approval process includes initial review by city-level health commissions and final approval by provincial health commissions. In terms of practice management, wholly foreign-owned hospitals are required to implement medical quality management similar to domestic medical institutions and comply with laws, regulations, treatment standards, and norms. Local health departments should strengthen supervision.
The full text is as follows:
Pilot Work Plan for Expanding Openness in the Field of Wholly Foreign-Owned Hospitals
To implement the spirit of the 20th Central Committee of the Communist Party and promote the orderly expansion of openness in the medical field, this plan is specially formulated.
Overall Requirements
Guided by Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era and comprehensively implementing the spirit of the 20th Central Committee, this plan aims to coordinate development and security, promote the orderly expansion of openness in the medical field, and allow the establishment of wholly foreign-owned hospitals to introduce international high-level medical resources, enrich domestic medical service supply, and optimize the business environment, providing diversified medical services for the public and foreign nationals in China. Meanwhile, it aims to further strengthen risk prevention, improve regulatory measures, and ensure smooth implementation of the pilot work.
Pilot Tasks
Allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and throughout Hainan Island (excluding traditional Chinese medicine and not including the acquisition of public hospitals).
Pilot Conditions
(1) Investment Entity Conditions: Foreign investors applying to establish wholly foreign-owned hospitals must be legal entities capable of independently assuming civil liability and must have direct or indirect experience in medical and health investment and management. They must also meet the following conditions:
Must be able to provide internationally advanced hospital management concepts, management models, and service models;
Must be able to provide medical technologies and equipment that are internationally leading;
Must be able to supplement or improve local medical service capabilities, medical technologies, and medical facilities, thereby expanding the diversity of service supply.
(2) Establishment and Operation Conditions: Wholly foreign-owned hospitals must be established and operated in accordance with laws and regulations such as the Basic Medical and Health Promotion Law of the People's Republic of China, the Biosafety Law of the People's Republic of China, the Data Security Law of the People's Republic of China, the Regulations on the Administration of Medical Institutions, and the Regulations on Human Genetic Resources Management of the People's Republic of China, and must meet the following conditions:
The operational nature of the hospitals may be for profit or non-profit;
The categories of hospitals can include general hospitals, specialized hospitals, or rehabilitation hospitals, and the hospital level must be tertiary. Establishment of psychiatric hospitals, infectious disease hospitals, blood disease hospitals, traditional Chinese medicine hospitals, integrated Chinese and Western medicine hospitals, and ethnic minority medical hospitals is not permitted;
The hospital's diagnostic and treatment specialties must not include hematology;
The hospital must not engage in medical and ethical high-risk diagnostic and treatment activities, primarily including: organ transplantation technology, assisted reproductive technology, prenatal screening and diagnostic technology, inpatient treatment in psychiatry, experimental treatments for new tumor cell therapies, etc.;
The hospital may hire foreign physicians, physicians from Hong Kong, Macao, and Taiwan, and other health professional technical personnel for short-term practice, provided that the proportion of Chinese (mainland) personnel in the hospital's management and among health professional technical staff is not less than 50%;
The hospital's information management system must connect to the local medical service regulatory platform, and servers for storing electronic medical records, medical equipment information, etc., must be located within the borders of China;
Hospitals that comply with relevant medical insurance regulations may apply for inclusion in the designated medical insurance program. Additionally, the hospitals are encouraged to connect with domestic and international commercial health insurance.
4. Management Measures
Local health administrative departments must fulfill their responsibilities for the admission and ongoing management of wholly foreign-owned hospitals according to the law. Wholly foreign-owned hospitals must conduct diagnostic and treatment activities legally and enhance their self-management.
(1) Admission Management: The establishment approval and practice registration of wholly foreign-owned hospitals will be initially reviewed by city-level health administrative departments and then submitted for review to provincial health administrative departments. If conditions are met, provincial health administrative departments will issue medical institution approval certificates and medical institution practice licenses.
The processing procedures, application materials, and timeframes for establishment approval and practice registration will adhere to the "Interim Measures for the Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions" and the "Notice from the Ministry of Health on Adjusting the Approval Authority of Sino-Foreign Joint Venture and Cooperative Medical Institutions." The medical institution practice license for wholly foreign-owned hospitals is valid for 5 years and may be renewed according to regulations before expiration. If qualified, a new medical institution practice license will be issued.
(2) Practice Management: Health administrative departments should include wholly foreign-owned hospitals in the medical quality and safety management framework and encourage them to participate in hospital assessments and evaluations. Wholly foreign-owned hospitals must operate and manage in accordance with relevant Chinese laws and regulations and conduct diagnostic and treatment activities following clinical guidelines, clinical technical operation specifications, industry standards, and ethical medical norms.
(3) Supervision Management: Relevant provincial and city-level health administrative departments must fulfill their local supervisory responsibilities according to specific matters and applicable laws and regulations.
5. Organization and Implementation
Relevant provincial health administrative departments, along with commerce, traditional Chinese medicine, disease control, and other departments, should formulate specific work plans and submit them to the National Health Commission and the Ministry of Commerce by the end of December 2024.
Local health administrative departments should enhance monitoring and evaluation of the operational status of wholly foreign-owned hospitals, establish collaborative management mechanisms with relevant departments, and timely study and resolve key and challenging issues encountered in the pilot phase. In case of significant situations, they must promptly report to the National Health Commission and the Ministry of Commerce. Previous regulations that conflict with this pilot plan will be superseded by this plan.
Openings in the Field of Wholly Foreign-Owned Hospitals: Q&A
1. Why choose Beijing and eight other cities as pilot locations? What advantages do these places have?
The 20th Central Committee of the Communist Party has deployed to promote the orderly expansion of openness in sectors such as telecommunications and healthcare. These fields also have significant domestic market demand and a strong willingness for investment from foreign investors. On September 7, the Ministry of Commerce and three other departments issued a notification allowing the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and throughout Hainan Island. The selection of these nine cities is based on several considerations:
First, from the perspective of medical service demand. The primary function of foreign-funded hospitals is to provide diversified medical services to the public and foreign personnel in China. These nine provinces and cities have a higher degree of openness, a significant number of foreign enterprises, and more foreign personnel, which leads to a corresponding higher demand for medical services from expatriates. Additionally, conducting pilots in these nine provinces and cities provides a new avenue to meet the multi-level and diversified healthcare service needs of our residents.
Second, from the perspective of healthcare management levels. Medical activities directly relate to the health and safety of the public. We will steadily and orderly promote the opening up of the medical field. In 2000, we issued the "Interim Measures for the Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions." A considerable number of such institutions were established in these nine provinces and cities. These regions have accumulated rich experience in the management of foreign-funded medical institutions and have relatively high management levels. Therefore, conducting trials for wholly foreign-owned hospitals in these areas is more conducive to policy implementation, experience summarization, and institutional improvement.
Third, from the perspective of promoting foreign investment. These nine pilot provinces and cities not only have large populations and high healthcare service demand, but they also boast good medical infrastructure and a favorable business environment, accounting for over 45% of the total actual use of foreign capital in the country. This makes them attractive regions for foreign investment and is beneficial for establishing wholly foreign-owned hospitals. The concentration of foreign-invested enterprises and expatriates in these nine provinces and cities, along with dense international flight routes, will further facilitate the advancement of the pilot projects.
Next, we will guide these nine provinces and cities in effectively implementing the pilot work, promptly summarizing beneficial experiences, improving relevant management systems, and steadily and orderly promoting the opening-up of the medical field.
2. What impact will wholly foreign-owned hospitals have on the development of hospitals in China? How will they affect the community's access to medical services?
Overall, establishing wholly foreign-owned hospitals in these nine provinces and cities will not have a significant impact on the overall development of the national hospital system or on basic medical services for the general public. However, they will facilitate the satisfaction of diverse healthcare needs within the community.
First, the high-quality development of hospitals in China is progressing steadily. By 2023, the number of hospitals in China reached 38,000, including 3,855 tertiary hospitals, indicating a relatively sound service system and continuous improvement in service capacity and levels. Public hospitals account for 83.5% of the total number of medical visits across all hospitals in the country.
Second, the primary service targets of wholly foreign-owned hospitals are domestic residents and expatriates in China who have diverse medical service needs. This complements the medical and health services provided by other hospitals.
Third, introducing high-level wholly foreign-owned hospitals will help optimize the business environment. In the pilot areas, there will be further improvements to the foreign investment environment and an expansion of high-level opening-up. Additionally, the management concepts, methods, and service approaches of wholly foreign-owned hospitals can also provide valuable references for the development of domestic hospitals.
3. Will wholly foreign-owned hospitals offer higher salaries, leading to a mass exodus of excellent medical personnel from other hospitals?
The pilot programs for establishing wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, and eight other provinces and cities have a limited geographic range and are part of a gradual development process, which will not significantly impact the medical personnel workforce in other hospitals across the country.
First, hospitals in China maintain a high level of employment attractiveness. In recent years, the high-quality development of hospitals in China has been continuously advancing. Tertiary hospitals have achieved notable successes in aspects such as discipline construction, service capacity, technical levels, medical management, and personnel development, providing vast opportunities for medical personnel to thrive. Notably, various regions have earnestly implemented the "Two Permissions" policy (allowing healthcare institutions to exceed the current salary control level for public institutions and permitting the main portion of medical service revenues to be used for personnel rewards after deducting costs and extracting required funds), steadily improving the compensation for medical personnel in public hospitals, and optimizing conditions for research, teaching, and academic environments, further enhancing their employment attractiveness. By the end of 2023, the number of health professional technical personnel in public hospitals nationwide reached approximately 7.723 million, maintaining a continuous growth trend.
Second, China has a relatively sound management system for medical personnel. Hospitals at all levels have clear regulations regarding physicians conducting consultations, practicing in multiple locations, and personnel mobility, ensuring stable operations and long-term development of hospitals.
Third, based on over 20 years of development of Sino-foreign joint venture and cooperative hospitals, there has not been a significant impact on staff movement in other hospitals. We have a mature and comprehensive management experience and system for foreign-funded medical institutions. Currently, there are more than 60 Sino-foreign joint venture medical institutions in China, mainly distributed in Beijing, Tianjin, and Shanghai. In terms of the overall situation, these Sino-foreign joint venture medical institutions do not significantly influence the mobility of medical personnel in local hospitals.
4. What are the requirements for foreign investment entities?
Regarding investment entities, we emphasize a clear orientation toward high-level openness while balancing development and security. The "Pilot Plan" clarifies the conditions for investment entities.
On one hand, foreign investors applying to establish wholly foreign-owned hospitals must be legal entities capable of independently assuming civil liability and must possess direct or indirect experience in medical and health investment and management.
On the other hand, investment entities must be able to provide internationally advanced hospital management concepts, management models, and service models; provide medical technologies and equipment at internationally leading levels; and supplement or improve local medical service capabilities, medical technologies, and medical facilities, thereby expanding the diversity of service supply.
5. How can management of wholly foreign-owned hospitals be strengthened to ensure quality and safety in healthcare?
For wholly foreign-owned hospitals, the "Pilot Plan" sets forth full-process management requirements, including admission and ongoing regulatory supervision.
First, wholly foreign-owned hospitals must comply with general requirements of Chinese laws and regulations such as the Basic Medical and Health Promotion Law, the Biosafety Law, the Data Security Law, the Regulations on the Administration of Medical Institutions, and the Regulations on Human Genetic Resources Management, while also meeting the specific pilot conditions outlined in the Pilot Plan.
Second, regarding approval and admission, specific requirements are set for the investment entities of wholly foreign-owned hospitals, their level and category, diagnostic subjects, treatment activities, personnel composition, and data security. For example, hospitals are explicitly required to connect their information management systems to the local healthcare service regulatory platform, with electronic medical records and other data storage servers located within China to ensure the safety of medical information and data. The approval process includes initial review by city-level health departments, followed by approval from provincial health departments.
Finally, in terms of practice management, wholly foreign-owned hospitals are required to implement medical quality management similarly to domestic medical institutions and comply with laws, regulations, and treatment standards. They will be included in the medical quality and safety management framework, encouraged to participate in hospital assessments and evaluations. Local health departments will treat wholly foreign-owned hospitals and other medical institutions equally in terms of regulatory oversight.
6. How can the risk of human genetic resource leakage be prevented?
In recent years, China has continuously strengthened the management of human genetic resources. The "Regulations on the Administration of Human Genetic Resources of the People's Republic of China," implemented in July 2019, clearly stipulate the collection, preservation, utilization, and external provision of human genetic resources, requiring that it should not harm public health, national security, or public interests.
According to the regulations, the pilot plan further stipulates strict limitations on diagnostic activities involving human genetic resources in wholly foreign-owned hospitals, such as prohibiting the establishment of blood disease hospitals, registering hematology departments, and conducting high-ethical-risk diagnostic activities like organ transplantation technologies, assisted reproduction technologies, prenatal screening, and diagnostic technologies. Local health departments are responsible for fulfilling their regulatory duties to ensure the safety of human genetic resources
7. What efforts has the Ministry of Commerce undertaken in recent years to attract and utilize foreign investment to promote the development of the domestic healthcare sector?
The Ministry of Commerce actively guides high-quality foreign investment into China's healthcare sector, including pharmaceuticals, medical devices, and healthcare institutions. The main efforts can be categorized into two aspects:
On one hand, there has been a continuous optimization of investment attraction policies. In August 2023, the Ministry of Commerce, in collaboration with relevant departments, submitted proposals for the "State Council's Opinions on Further Optimizing the Foreign Investment Environment and Increasing the Efforts to Attract Foreign Investment," also known as the "24 Measures for Foreign Investment." These measures aim to optimize the registration and filing procedures for transferring overseas-listed drugs to domestic production and strengthen intellectual property protection in procurement for pharmaceuticals and other areas. Relevant departments have issued supporting documents. This year, initiatives such as the pilot program for expanding openness in the healthcare sector and the cross-border segmented production of biological products have been coordinated and promoted.
On the other hand, a regular communication and exchange mechanism has been established. Since the introduction of the foreign enterprise roundtable meeting system in July 2023, the Ministry of Commerce, along with related departments, has held three roundtable meetings focused on healthcare. Over 80 enterprises participated, addressing key concerns of foreign-funded enterprises in the medical sector, such as the implementation of the "24 Measures for Foreign Investment," equal participation in government procurement, large-scale equipment updates, and cross-border data flow. These meetings provided face-to-face interpretations, clarifications, and responses to queries.
An issue request collection and handling system has been launched, allowing foreign enterprises to report difficulties at any time. Additionally, through supervision, evaluation, and research methods, efforts are being made to promote the implementation of policies across various departments and localities based on actual results.
Through these initiatives, the Ministry of Commerce aims to guide foreign investment to expand in healthcare-related fields, introduce more products and services, enrich and improve China's healthcare industry chain, supply chain, and innovation chain, and accelerate the overall enhancement of the healthcare sector.
8. The healthcare sector has become a hotspot for foreign direct investment in recent years. What other considerations and arrangements does the Ministry of Commerce have for attracting foreign investment in the healthcare sector?
As China's economy and society continue to develop, the standard of living has steadily improved, resulting in new characteristics in the demand for healthcare that are multi-level, diversified, and internationalized. Multinational companies have recognized the enormous market potential in China and have been increasing their investments in the healthcare sector in recent years. For instance, in the field of manufacturing medical instruments and devices, foreign investment in the first three quarters of this year increased by 57.3% year-on-year.
Next Steps: The Ministry of Commerce Will Increase Investment in the Medical Sector in Three Key Areas.
Implement Open Pilot Projects: Strengthen communication with foreign-funded enterprises through roundtable meetings and other means, and effectively interpret policies. At the same time, guide the commerce departments of nine provinces and cities to collaborate with health departments to implement the pilot policies for wholly foreign-owned hospitals.
Increase Policy Support: Based on the actual needs of China’s medical sector and the latest developments in international medical technologies, research the inclusion of encouraging items for the medical sector in the revision of the "Catalogue of Industries for Encouraging Foreign Investment." Support foreign-funded enterprises in channeling more resources into technological innovation to promote high-quality development in China’s medical sector.
Enhance Service and Support for Foreign Investment: Collaborate with relevant departments and local governments to promptly resolve issues related to land use, environmental assessments, energy consumption, financing, and other challenges encountered by key foreign-funded projects across various sectors, including the medical field. This aims to facilitate the timely implementation, construction, and production of projects.
As China's reform and opening-up continues to advance and various measures yield results, new driving forces and advantages in China's development will become increasingly prominent. More foreign investors are welcome to invest and develop businesses in China, sharing the dividends of China's reform and opening-up.
9. After entering the Chinese market, can wholly foreign-owned hospitals become designated institutions for basic medical insurance?
The National Medical Insurance Administration welcomes and supports eligible medical institutions of all levels and types to become designated institutions for medical insurance, providing quality and convenient medical services to insured individuals. According to the "Interim Measures for the Administration of Designated Medical Institutions for Medical Insurance" (National Medical Insurance Administration Order No. 2), the management of designated medical institutions is treated equally regardless of ownership. In principle, medical institutions that meet the resource allocation planning for designated medical institutions, adhere to the medical price policies set by medical insurance administrative departments, and fulfill all management requirements for medical insurance can apply for designation, whether they are public hospitals, privately funded hospitals, or wholly foreign-owned hospitals.
Currently, there are 520,000 designated medical institutions in China, providing sufficient medical services to basically meet the healthcare needs of insured individuals. It is hoped that wholly foreign-owned hospitals will strive to contribute to the establishment of a multi-layered medical security system and provide differentiated services to better meet the diverse and differentiated medical needs of the people.
10. What are the requirements for wholly foreign-owned hospitals to become designated institutions for basic medical insurance?
The management of designated medical institutions treats all ownership types equally. To apply for designation as a basic medical insurance institution, medical establishments must meet at least the following four requirements:
Implement Unified Medical Service Price Items: According to existing policies, if wholly foreign-owned hospitals are to be included in the range of basic medical insurance designations, they must adhere to the medical service price items applicable to medical institutions in their regions.
Implement Unified Medical and Pharmaceutical Service Price Policies: Currently, the basic medical service prices provided by domestic public hospitals are subject to government guidance prices. To ensure fairness, wholly foreign-owned and privately funded medical institutions applying for designation must also commit to executing the same medical service prices and charge patients no more than the prices set for pharmaceutical consumables by public medical institutions to better protect the rights of insured individuals and maintain fund security.
Implement Unified Medical Insurance Scope: Wholly foreign-owned hospitals included as designated institutions must strictly adhere to regulations from health and medical insurance departments regarding the use of drugs and consumables, prioritize basic medicines, and ensure compliance with national standards. They also need to properly implement local payment reform requirements, such as payment per disease group (DRG) and disease-specific values (DIP), and ensure accurate settlement of medical expenses.
Accept Supervision and Management by Medical Insurance Departments: Wholly foreign-owned hospitals designated must accept supervision from medical insurance departments, including but not limited to management of medical insurance agreements, compliance audits, collecting drug and medical consumable traceability codes, ensuring full compliance with intelligent supervision systems, and purchasing drugs and consumables according to the medical insurance administrative departments' stipulated platforms, maintaining accurate records of "input, output, and inventory." Additionally, physicians working there must adhere to medical insurance regulations and accept qualification management for medical insurance payments. Non-designated medical institutions set their own prices and are subject to industry department supervision.
11. Why are traditional Chinese medicine hospitals not included in the pilot scheme?
Traditional Chinese medicine is a magnificent creation of the Chinese nation and a treasure of ancient Chinese science. Upholding the equal emphasis on both traditional and Western medicine and promoting their complementary and coordinated development is a notable advantage of China's health and medical undertakings. Currently, traditional Chinese medicine hospitals are mainly established within China, with very few overseas.
The introduction of the "Pilot Plan for Expanding Openings in Wholly Foreign-Owned Hospitals" aims to attract high-level international medical resources and enrich the domestic supply of medical services to better meet the healthcare needs of the public. For these reasons, traditional Chinese medicine hospitals were not included in the pilot project.
12. What Regulations Should Wholly Foreign-Owned Hospitals Follow Regarding the Use of Drugs and Medical Devices?
Like other medical institutions, wholly foreign-owned hospitals must use drugs and medical devices that have been approved for sale within China.
Wholly foreign-owned hospitals should comply with laws and regulations such as the "Drug Administration Law," "Vaccine Administration Law," "Implementation Regulations of the Drug Administration Law," and "Regulations on the Supervision and Administration of Medical Devices," as well as relevant supporting rules, to strengthen the quality management of drugs and medical devices. For example, they should establish and improve a quality management system for drugs and medical devices, designate a specific department (or assign a responsible individual) for managing drug and medical device quality, and be responsible for quality management throughout the procurement, storage, and use processes of these materials. They must obtain relevant usage licenses for specific controlled drugs like radioactive medicines as required.
Moreover, they must enforce strict procurement and acceptance management, sourcing drugs and medical devices from entities with legitimate qualifications such as licensed drug manufacturers or registered medical device producers. They are also required to monitor adverse events in accordance with the law, establish an effective monitoring system, and promptly detect, collect, analyze, and report adverse events related to drugs and medical devices.
The National Medical Products Administration will carry out drug and medical device quality supervision for wholly foreign-owned hospitals according to laws and regulations.
Regarding the urgent clinical need for imported drugs and medical devices: For the urgent clinical need to import small quantities of drugs and Class II and III medical devices, the regulations outlined in the "Drug Administration Law," "Regulations on the Supervision and Administration of Medical Devices," "Temporary Import Work Plan for Clinically Urgent Drugs," and "Management Requirements for the Temporary Import and Use of Clinically Urgent Medical Devices in Medical Institutions" apply equally to wholly foreign-owned hospitals.
13. Can Wholly Foreign-Owned Hospitals Conduct Clinical Trials for Drugs?
According to the "Measures for the Administration of Drug Clinical Trial Institutions" and the "Conditions and Filing Management Measures for Medical Device Clinical Trial Institutions," medical institutions that meet filing conditions and are classified as either second-class grade A or higher can be filed as clinical trial institutions for drugs and medical devices. The nature of the trial institution (such as wholly foreign-owned hospitals, private hospitals, or public institutions) does not restrict its filing as a clinical trial facility for drugs and medical devices.
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