New Opportunities in the China Healthcare Sector: Wholly Foreign-Owned Hospitals

In September 2024, China’s National Health Commission, in collaboration with the Ministry of Commerce and the National Medical Products Administration, released an implementation plan for establishing wholly foreign-owned hospitals in 9 provinces and cities.

Background

Foreign investors were allowed to set up wholly owned hospitals in 2013 when China issued the Tentative Administrative Measures on Wholly Foreign Invested Medical Institutes of China (Shanghai) Pilot Free Trade Zones. In August 2014 the National Health and Family Planning Commission and the Ministry of Commerce followed up on the measures by publishing a Circular that widened the pilot area for the establishment of wholly foreign-invested medical institutions to the 7 provinces and municipalities, i.e. Beijing, Tianjin, Shanghai, Jiangsu Province, Fujian Province, Guangdong Province and Hainan Province.

However, in 2015 medical institutions were included in the Negative List for Foreign Investment Industries. Starting 2017, the annually issued Negative List specified that foreign investors could only invest in medical institutions by establishing a Sino-foreign joint venture.

Pilot Program for the Opening-up in the Medical Sector

In September 2024, China announced the Circular on Launching the Pilot Program for Expanding the Opening-up in the Medical Sector, allowing the establishment of wholly foreign-owned hospitals in Beijing, Fuzhou, Guangzhou, Nanjing, Shanghai, Shenzhen, Suzhou, Tianjin, and Hainan Island.

Nevertheless, the Circular excludes the set-up of foreign-invested institutions focusing on traditional Chinese medicine, psychiatry, infectious diseases, and hematology, and prohibits the acquisition of public hospitals.

As a result, in March this year, Delta Health Hospital Shanghai, first established in 2016 as a joint venture, was granted a license as the first wholly foreign-owned hospital.

Perennial Holdings, headquartered in Singapore, is set to invest 5 billion yuan ($691.4 million) to develop a 1.18 square kilometer Greater Bay Area Baiyun International Healthcare and Wellness City in Guangzhou. The initial phase of the project involves a 1-billion-yuan investment to establish the Perennial International Hospital which is set to open doors to patients later this year.

Eligibility criteria for establishment of the wholly foreign-owned hospitals in China

To establish wholly foreign-owned hospitals in China, foreign investors must meet specific eligibility criteria:

Basic Requirements:

Foreign investors must be legal entities capable of assuming civil liability independently with direct or indirect experience in healthcare investment and management.
Hospitals must be established and operated in compliance with relevant Chinese laws and regulations, including the Basic Medical and Health Promotion Law, Biosecurity Law, Data Security Law, and Regulations on the Administration of Medical Institutions.
Investors must be able to provide advanced international hospital management concepts, models, and service standards. The wholly foreign-owned hospitals should offer medical technologies and equipment at an internationally leading level and enhance local medical service capacity.

Operational and Staffing Requirements:

Hospitals can operate as for-profit or non-profit entities but must be classified as tertiary-level general, specialty, or rehabilitation hospitals.
Psychiatric, infectious disease, hematology, Traditional Chinese Medicine and ethnic minority medicine hospitals are not permitted.
High-risk medical procedures such as organ transplants and assisted reproduction are prohibited.
At least 50% of the hospital’s management and medical technical staff must be from the Chinese mainland. Hospitals are allowed to hire foreign medical practitioners and healthcare professionals from Hong Kong, Macao, and Taiwan for short-term practice.

Insurance and Integration:

Hospitals that meet the requirements may apply to be included in the medical insurance network.
Collaboration with domestic and international private health insurance providers is encouraged.

Location and Approval Procedure:

Wholly foreign-owned hospitals are permitted in nine cities: Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire island of Hainan.
The approval process involves application with both municipal and provincial-level health authorities, with specific requirements varying by region. Different regions may offer varying levels of financial incentives, tax benefits, or land allocation preferences.

Overall, China’s healthcare sector offers promising opportunities for foreign investors in 2025, driven by supportive policies and a growing demand for healthcare services.

Furthermore, the Ministry of Commerce and the National Development and Reform Commission have unveiled a 20-point action plan for 2025 aimed at stabilizing foreign investment in China. The Plan focuses on broader market access, fostering equitable competition, and enhancing financial mechanisms, including expanding pilot programs and encouraging foreign equity investment.

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