China has the world’s largest population. As a developing country undergoing dramatic changes in the past few decades healthcare is one sector that is vastly under developed and offer plenty of potential for growth. Healthcare is especially interesting since millions of rural people move into large urban cities and their lifestyles change. So in this post lets take a brief look at China’s healthcare system.

China’s healthcare expenditure as a percentage of GDP is much lower than most OECD countries as shown in the chart below:

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Source: China: Themes and Strategy for 2014, Deutsche Bank

Brazil spends more than China on healthcare. But the U.S. spends the most among OECD countries. The US ratio of healthcare expenditure to  GDP is more than three times that China’s. Though the U.S. population is much smaller than China’s, US  healthcare expenditure is so high because of waste, regulations and other factors.

The following are some of the key points from the Deutsche Bank research report:

• Total healthcare expenditure in China rose at an annual average rate of 18% between 2008 and 2012.
• Healthcare system is China is majority owned and operated by the state. Private sector providers such as hospitals and clinics account for only 14% of hospital beds and serve less than 10% of patients nationwide.
• While the demand for healthcare services surges the supply of doctors is inadequate. As of 2012, China had 1.8 doctors per 100 people compared to 2 to 4.3 in OECD countries.

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• With the Healthcare Reform Plan released in 2012, China targets 20% of hospital beds and services to be provided by private sector from the current 14%.
• As noted earlier, the state provides the majority of healthcare services in China. Private sector accounts for only a small percentage of the patients served since strict regulations exist on the growth of private hospital into large scale providers. Much of the private hospitals today in the country are small and provide specialized services. The chart below shows international comparison of healthcare services ownership:

In the U.S. the healthcare industry is dominated by private players with the state basically regulating the market.The 15% public ownership shown is due to Medicare, Medicaid, Veterans Affairs (VA) hospitals, etc. which are all publicly funded.