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Mainland opportunities for Hong Kong’s medical sector

The rapid growth of the middle class on the Chinese mainland has given rise to huge opportunities in the consumer goods market. In line with fast rising incomes and an overall improvement in living standards, consumer services are now emerging as an area for priority development. The demand for professional services, notably medical services, is expected to grow dramatically among mainland consumers over the coming decades. Under the central government’s 12th Five-Year Plan, one of the chief priorities is to improve the provision of medical services available in this sector.

Hong Kong’s medical services sector is renowned for the professionalism of its practitioners, its provision of quality service, and its sound regulatory regime. Its medical practitioners, then, are well-positioned to capitalise on this opportunity and to move into the mainland medical services market.

In order to better understand this emerging market, in early 2013 the Hong Kong Trade Development Council (HKTDC) and the Hong Kong Doctors’ Union (HKDU) undertook a joint survey on the mainland business opportunities available to Hong Kong’s medical sector. This research saw questionnaires distributed to more than 11,800 contacts validated by the Hong Kong Medical Council database. A total of 740 valid responses were received, representing an effective response rate of 6.2%.

Profile of survey respondents
Profile of respondents to the medical survey
Source: HKTDC survey

 

Demand for private medical services set to rise on mainland

The survey found that 89% of respondents believed that demand for private medical services on the mainland will continue to grow dramatically over the next three years. Of this figure, half of the respondents believed that increase will be significant, a finding very much in line with the optimistic views of many figures within the Hong Kong medical establishment.

 

Three-year outlook of mainland medical service demand
Three-year outlook of medical service demand on Chinese the mainland
Source: HKTDC survey

 

The rapid rise in incomes is seen as the driving force behind the boom in the mainland medical services sector, but mainland consumers’ growing awareness of healthcare issues and increased medical knowledge are also playing their part. The increased demands of the mainland’s expanding retirement sector are also contributing somewhat to this growth.

 

Drivers of the mainland’s shifting demand for medical services
Drivers of the mainland’s shifting demand for medical services
Source: HKTDC survey

 

Hong Kong set to benefit from rise in mainland medical service demand

According to the questionnaire findings, three-quarters of the respondents had treated mainland patients in Hong Kong in the three months prior to the survey. While the survey also attempted to determine the share of mainland patients in terms of the total appointments over that period, no statistically valid findings were uncovered, with respondents opting not to reveal those figures. In short, though, it seems clear that Hong Kong’s medical services sector has become accustomed to providing medical services to inbound mainland visitors.

 

Respondents who treated any patients from the Chinese mainland in Hong Kong over the past 3 months
Inbound mainland patients treated in past three months and channels through which the patients get to know the medical institutions
Source: HKTDC survey

 

The majority of mainland medical tourists in Hong Kong just walk into clinics or rely on a word-of-mouth referral from friends and relatives. Less than 5% of these inbound mainlanders currently seek appropriate practitioners via a directory of doctors on the Internet or through referral from mainland medical institutions. This indicates that there is clear scope for developing a referral network in association with mainland medical institutions and the need to promote a far greater general awareness of the available online doctor databases.

Hong Kong: a preferred medical tourism destination for mainland patients

As an international city offering world-class medical services, Hong Kong naturally generates considerable inbound demand. The survey’s findings show that the quality and professionalism of its practitioners are seen as the greatest assets of the Hong Kong medical sector followed by the strong underpinning of the public hospital system and its sound industry regulation. While Hong Kong’s medical practitioners are recognised for their professionalism and experience, the public system won plaudits for its outstanding achievements in nurturing talent and its continual advances in medical research. 

 

Key strengths of Hong Kong’s medical services sector
Key strengths of Hong Kong’s medical services sector
Source: HKTDC survey

 

Despite these overall high levels of approbation, Hong Kong medical practitioners still face a number of challenges when it comes to providing services to mainland visitors. The particular issues here are the difficulty in follow-up with patients, the lack of access to mainland medical records, the cultural differences and the possible language problems. Significantly, only a few respondents cited the pricing of relevant services and payment methods as potential issues. This clearly indicates that inbound mainland patients have no problems with Hong Kong medical fee levels and that payment is not considered anything of a critical issue among medical institutions.

 

Challenges in connecting with and serving inbound mainland patients
Challenges in connecting with and serving inbound mainland patients
Source: HKTDC survey

 

In rendering medical services to inbound mainland patients, more than half of the respondents believe that the biggest competitive threat they face personally comes from other private medical service practitioners within Hong Kong. Outside Hong Kong, Singapore is the major competitor looking to attract medical tourists from the Chinese mainland. Other destinations, such as Thailand, Taiwan and South Korea, were mentioned by less than 10% of respondents. Overall, there was a high level of confidence in Hong Kong’s continuing ability to attract high levels of medical tourists from the mainland.

 

Competition for mainland medical tourist business
Competition for medical tourists from the Chinese mainland
Source: HKTDC survey

 

The mainland: an outbound market for Hong Kong’s doctors

Aside from providing medical services to mainland visitors in Hong Kong, a number of the city’s medical practitioners also visit the mainland to work in existing medical institutions or have opened their own clinic there. This, however, relates to only a small number of respondents, with only eight out of 740 having provided medical services on the Chinese mainland within the preceding three months.

While respondents acknowledged the demand for medical services by mainlanders, only a small number indicated they would undertake to deliver outbound treatment. The survey shows that almost 60% of the 740 respondents thought it highly unlikely that they would work on the mainland, with less than 2% indicating a strong likelihood of working there over the next three years. This is not too difficult to explain when weighting the net benefits of working on the mainland against the many and varied reported or perceived challenges of working there.

 

Outbound service provision to the mainland over next three years
Outbound service provision to the mainland over next three years
Source: HKTDC survey

 

Medical practitioners face a number of practical challenges when it comes to working on the mainland, with licensing and registration requirement issues of particular concern. Although Hong Kong service suppliers (HKSS) enjoy a certain leeway when it comes to qualification accreditation and licensing when compared to other foreign service suppliers, the licensing and registration involved is still seen as complex and lacking in transparency, with approval from a considerable number of regulatory and administrative units required. The cost and time spent on travelling to the mainland proved to be another major consideration for many Hong Kong medical practitioners and specialists.

 

Major impediments to practising on the mainland
Major impediments for doctors to practise on the mainland
Source: HKTDC survey

 

Leveraging CEPA benefits to secure due access to the mainland market

Following its introduction in 2004, several supplementary agreements have been added to The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) each year. A number of liberalisation measures relating to the medical sector have been introduced as part of this process. To date, CEPA offers many privileges to HKSS, including the relaxation of equity share limitations and operating requirements with regard to establishing medical institutions, accreditation of qualifications and short-term permits for medical practitioners to practise on the mainland.

Despite this, the survey found that the majority of the medical practitioners do not have a firm grasp of the exact CEPA liberalisation measures with regard to the medical sector. Overall, only 2% of the respondents reported a good understanding of most CEPA measures. While 49% indicated that they were unfamiliar with the details, almost half of all respondents said they were unaware of any specific or applicable CEPA measures with regard to the medical sector. This may, in part, account for the fact that there were only 21 HKSS applications in total submitted relating to the overall medical sector (including dental services) as of June 2013, some 10 years since CEPA’s initial adoption.

 

Awareness of CEPA measures
Awareness and understanding of CEPA measures
Source: HKTDC survey

 

As part of the survey, the CEPA liberalisation measures were grouped under six categories, with respondents considering those measures related to qualification accreditation most useful. The introduction of short-term permits allowing HKSS to practise on the mainland and the relaxation of the equity share limits on setting up medical institutions were deemed to be the next two most important benefits. This highlights that most medical practitioners in Hong Kong, in terms of outbound medical service provisions, are more concerned with practising on the mainland as individuals rather than in setting up a clinic or investing in dedicated hospital facilities.

 

Usefulness of CEPA liberalisation measures for the medical sector
Usefulness of CEPA liberalisation measures for the medical sector
Source: HKTDC survey

 

Content provided by Picture: Dickson Ho
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