Healthcare in China: Institutional Trajectories and Future Opportunities

China’s healthcare system was undergoing significant growth in the early 2010s, evidenced by expanded government-backed insurance and experiments with private clinics, hospitals, and insurance. Reforms under discussion would further restructure relations among insurers, hospitals, physicians, and patients. Policy changes also were likely to change competitive dynamics in major healthcare industries, and especially for pharmaceutical, biotechnology, and medical device and diagnostics companies. This case summarizes the institutional history of China’s healthcare system and identifies dilemmas for reform, especially in the insurance system and payment structures for hospitals and physicians. A final section analyzes opportunities for healthcare innovation and systems integration in China. The case is designed to help students learn about the Chinese healthcare system overall as well as strategic choices faced by insurance firms, hospitals, and pharmaceutical and medical device companies. It also can be used to analyze moral hazards, opportunity costs, and systems integration in healthcare more generally.