Market Intelligence
Healthcare Services China

China Healthcare Market

A new foreign-backed hospital in Shanghai signals an increase in potential demand for innovative U.S. healthcare technologies, digital services, and cross-border insurance. However, preferences for local solutions/partners and compliance challenges remain.

Summary: It is reported that a newly approved Shanghai Perennial Hospital will serve as a model for foreign-funded and foreign-led healthcare projects in East China, aided by strong support from free trade zone (FTZ) authorities. This development is in line with the Chinese Government’s (Ministry of Commerce, National Health Commission, and National Medical Products Administration) launching of a pilot project program to expand opening-up in the healthcare sector.   Although this deal marks a significant change in healthcare financing in East China, other considerations—including regulatory alignment, preferences for Chinese-made medical devices, the volume-based procurement system, and intellectual property concerns—will also need to be addressed for U.S.-backed enterprises to fully take advantage of this development.

Policy Opens Access—And Sets the Rules
Shanghai Perennial Hospital is the first project to proceed under China’s 2024 national policy to expand foreign access to healthcare services in nine pilot cities, including Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan Island.

Building on this national policy, the Shanghai-issued implementation plan in December 2024 encourages international healthcare investment in Shanghai’s FTZ-designated areas—provided hospitals meet a range of requirements including staffing ratios, regulatory integration, and IT compliance.

Key Requirements for Foreign-Invested Hospitals
As specified in Shanghai’s implementation plan, foreign-invested hospitals must meet certain criteria including 

  • Eligible types: General, specialty, and rehabilitation top-tier hospitals
  • Exclusions: Psychiatric, infectious disease, hematology, traditional Chinese medicine (TCM), integrative, and ethnic minority hospitals are excluded from the new policy, as are organ transplantation services, IVF, prenatal diagnostics, and experimental tumor therapies
  • Digital infrastructure: IT systems must connect to local health authority platforms, and all health data must be stored within China
  • Quota: A maximum of two foreign-invested top-tier hospitals are permitted for each of the seven FTZs in Shanghai

These measures—which ensure alignment with China’s national health priorities, data security, and public safety—will nonetheless limit the scope of international participation and reflect China’s strategy of gradual and cautious opening to foreign owned health care with Chinese regulatory oversight.

Implications for U.S. Health & Life Sciences Companies
As China’s healthcare system gradually opens to foreign investment and innovation, U.S. companies may find opportunities to participate in the delivery of high-quality care. The introduction of wholly-foreign-owned hospitals may create opportunities for U.S. companies in innovative medicines, medical equipment and services. Unlike local public hospitals that prioritize cost control and domestic suppliers, foreign-owned hospitals often follow international standards and cater to patients seeking premium care, making them more inclined to adopt U.S. products, though the overall scale and impact remain uncertain.

Key areas of potential engagement include hospital operations and management, digital health and diagnostics platforms, wellness, executive health, and rehab services—areas that align with China’s Healthy China 2030 plan, which emphasizes high-quality care delivery, technology-driven innovation, and a shift toward prevention and healthy aging. 
           
Key Considerations for U.S. Companies

  • Market Access: Confirm alignment with approved hospital types and service categories.
  • Localization: Adapt offerings for regulatory compatibility, language needs, and data residency rules
  • Partnership Potential: Explore collaboration with FTZ officials, commercial insurers, and early project participants
  • Insurance Integration: Consider collaboration with direct billing networks and cross-border reimbursement platforms
  • Regulatory Navigation: Understand approval timelines, licensing requirements, and compliance obligations before pursuing business engagement with foreign-invested hospitals.

For tailored assistance, contact Commercial Specialist Janet Li at Janet.Li@trade.gov.