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GCC China Healthcare Conference


GCC China Healthcare Conference Wharton School of Business March 24, 2012 The Dorenfest China Healthcare Group and Its Business in China * * * Emerging Business ... – PowerPoint PPT presentation

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Title: GCC China Healthcare Conference

GCC China Healthcare Conference
Wharton School of Business
March 24, 2012
  • The Dorenfest China Healthcare Group and Its
    Business in China

Presentation Agenda
  • Page
  • About the Dorenfest Group 3
  • A Foreigners View of Healthcare in China 14
  • Current Status and Future Direction of HIT in
    China 24
  • Where Does China Stand on the Global HIT
    Continuum? 32
  • Emerging Business Opportunities in China
    Healthcare 34
  • Career Considerations 40

About the Dorenfest Group
  • 40 years experience in HIT
  • Offer healthcare improvement services through a
    variety of businesses.
  • Software
  • Hospital Operations Improvement
  • Consultation with Technology and Software Vendors
    In Health
  • Information Business
  • Focus on improving patient care and operational
    efficiency through better change management
  • Work process improvement
  • Management systems improvement
  • Improvement in services for patients
  • Improvement in quality of patient care

Dorenfests Investigation of China Healthcare in
  1. Visited 17 cities in China
  2. Met 100s of healthcare industry leaders in China
  3. Visited over 100 hospitals to review hospital
    operations and define opportunities for
  4. Met provincial and city health bureau leaders in
    cities visited
  5. Met with many companies selling products and
    services to the healthcare industry in China
  6. Evaluated a group of hospital ownership and
    management opportunities and assessed viability
    of the Dorenfest model hospital in China
  7. Developed a strategy for bringing Dorenfest skill
    and experience to China

Dorenfest Vision of a Model Hospital
  • Provides improved quality of care to its patients
  • Operates at a highly efficient level through
    effective use of systems and better work
  • Offers its services to patients at an affordable
  • Creates a highly satisfied patient population
    with the patients observing a noticeable
    improvement in the services and treatments
    provided by the hospital
  • Utilizes appropriate digital technology to create
    a state of the art digital hospital

China Healthcare Leaders Want to Leapfrog the
World in IT Use
  • Chinese hospitals and health bureaus are
    carefully considering how to be more successful
    in taking next steps forward in IT use
  • There is a recognition that for China to
    accomplish its objectives in HIT requires the
  • Learning quickly from the global experience
  • Overcoming resistance to change
  • Knowing how to manage change
  • Doing more of what the rest of the world did
    right and less of what they did wrong to avoid
    mistakes other countries have made and China is
    still making
  • Developing more expertise in these areas of need

Chinese Hospitals Needed Help in the Following
  • The creation of IT plans
  • The buying of IT systems
  • The implementation of IT systems
  • Change management to gain benefits and
    improvements from new IT systems

The Dorenfest Group Is Bringing Needed New
Skills to China
  • 1. Hospital operations improvement and change
  • 2. IT program improvement, problem-solving,
    strategy, and planning
  • 3. New approaches to buying IT systems in a
    stronger partnership with users
  • 4. New ways to implement IT systems

Project Examples
  • The Dorenfest China Healthcare Group was formed
    in 2006 to offer consulting services to China
    Hospitals and Health Bureaus. We have worked
    with over 25 hospitals and health bureaus to help
    them use information technology more effectively
    and have consulted with a variety of Chinese and
    Western healthcare companies
  • Examples of health bureau clients for RHN and
    digital hospital planning
  • Shenzhen
  • Chongqing
  • Examples of hospital clients
  • Peking University Third Hospital
  • Foshan City First Peoples Hospital
  • Shanghai Changning Maternity Infant Health
  • Rizhao City Peoples Hospital

Project Examples (Continued)
  • Examples of Western clients bringing their skills
    to mainland China
  • Hong Kong Hospital Authority
  • IMS China
  • Microsoft China
  • Philips Healthcare China
  • Examples of Chinese company clients
  • Donglian
  • Heren Health
  • Simcere Pharmaceuticals

Dorenfest Education in China Tongren Hospital,
Beijing 2005
Dorenfest Education in China Zhejiang Medical
Association 2009
The Dorenfest China Healthcare Group Current
Status as of March 24, 2012
  • Still in Phase 1. Timing of Phase 2 not
    determined yet
  • All our current clients like our work a lot and
    buy more projects from us
  • The market is booming with interest and
    opportunity in the areas we have skill in
  • We made our entry at the right time and developed
    the experience and reputation before all of these
    new opportunities emerged, and as a result are
    positioned with great understanding of the
    current situation and a good reputation in China
  • Issues for us
  • Consulting market in China HIT still very small
  • Dorenfest operates in China as a small
    entrepreneurial company, because the consulting
    market is small. This will not always be true, so
    we are now in the process of building critical
    mass to handle the expected growth in the market
  • Finding and training the right people to bring
    these new services to China is an important
    factor in the next steps in growth

GCC China Healthcare Conference
  • A Foreigners View of Healthcare in China

The Development of Healthcare in China
  • 1. In the change to a more market driven economy
    in China, there was a shift from government
    funding of the healthcare system to citizen
    funding, which has made China the highest
    patient pay out of their pocket healthcare
    system in the world
  • 2. Chinas healthcare spending has made it one of
    the most efficient healthcare systems in the
  • 3. Chinas outpatient care has followed a
    different model than the rest of the world, with
    most outpatient care now provided on hospital
  • 4. Most countries healthcare systems now have
    problems, which generally come from not managing
    past changes properly
  • 5. China, on the other hand, has not changed its
    healthcare system as rapidly as other countries,
    so its problems are different

Healthcare Cost Trends( and RMB in billions)
Forecasted Growth Rate 15 in 2008 and 20 in
2009 and 2010
RMB in Billions
Government Social Insurance Out-of-pocket
Average Medical Expense Per Outpatient Hospital
Visit ( and RMB)
136 RMB (19.9)
129 RMB (18.8)
127 RMB (18.6)
118 RMB (17.3)
86 RMB (12.6)
40 RMB (5.8 )
Outpatient Registration Is an Example of the
Problems of Being an Efficient Investor
Waiting to Pay for Services
The Outpatient Health Record Which Patient Keeps
Customer Service Has Been a Lower Priority
1. Long wait times 2. Very few advance
appointment systems 3. Average time of physician
visit is 2-5 minutes 4. Collecting money and
making profits are a major focus
Challenges of the Chinese Healthcare System
  • 1. Over 50 of healthcare costs are paid directly
    by patients out of their pocket
  • 2. Access to healthcare for the poor has been
    limited, but now changing
  • 3. The middle and upper classes are dissatisfied
    with healthcare services
  • 4. Doctor income earning methods weaken the
    doctor-patient relationship
  • 5. Drugs and tests have funded too much of the
    healthcare costs
  • 6. Hospitals have needed to earn profits to
    support themselves
  • 7. Primary care is just beginning to separate
    from hospitals to newly-developed community
  • 8. Healthcare reform will cause healthcare costs
    to rise more rapidly

Healthcare Reform in China is Bringing Many
Changes and Much New Spending
  • 1. Basic care for people in China who cannot
    afford to pay for care
  • 2. Large stimulus spending is being made to
    improve healthcare
  • 3. Many major changes are being implemented all
    at once. Some are
  • Public hospital reform
  • Community clinics
  • Modernizing facilities
  • Clinical pathways
  • Regional health networks
  • Electronic health records
  • Many more
  • 4. The challenge for China and the opportunities
    for wise business people is in the management of
    all of these changes in a short period of time to
    accomplish the desired outcomes

GCC China Healthcare Conference
  • Current Status and Future Direction of HIT in

The Development of HIT in China
  1. Chinese hospitals began to computerize in the
    early 1990s
  2. The initial focus of computer efforts was on
    financial systems
  3. In the early 2000s, Chinese hospitals began to
    implement IT for clinical systems
  4. Many software solutions are now available, with
    well over 500 smaller software companies now
    operating in the HIT market in China
  5. Between 2005 and 2010, China hospital spending on
    IT grew from 5 billion RMB in 2005 to 16 billion
    RMB in 2010, and we forecast it will rise to 21.5
    billion RMB in 2011
  6. Spending will continue to grow in the next few
    years at an even more rapid pace as many
    investments are being made in information
    technology throughout China healthcare

Factors Contributing to Future Spending Growth in
China HIT
  • China hospital work processes are redundant,
    expensive and error-prone. Past IT investment
    has increased these problems by adding work to
    the work processes and creating unhappy
  • The desire to share healthcare data in cities and
    provinces has fueled much IT investment by health
    bureaus in RHNs/HIEs throughout China
  • 3. Improved use of IT is one of eight pillars
    (see chart) of the new China healthcare reform
    plan, giving a new momentum to HIT in China
    healthcare. Focuses include
  • Improved hospital IT systems
  • Electronic health records (EMR and EHR)
  • Data sharing through RHNs and integration with
    community clinics
  • IT systems to support expanded health insurance
  • 4. Chinese hospital leaders want to take a big
    leap forward in improving work processes and in
    digitizing Chinese hospitals
  • While money has always been a problem in Chinese
    hospitals, today there is much more money
    available from many sources, and it is now being
    spent more freely

HIT Is One of Eight Pillars of China Healthcare
The Competitive Environment
  • 1. There are over 1,000 small software vendors
    active in China HIT
  • 2. The market segments with the most vendors are
    HIS, PACS, RIS, LIS, and EMR
  • 3. All HIT vendors in the market started in a
    city and most are still operating in that city or
    a small region around the city. Many of these
    smaller local vendors have a dominant market
    share in the area they service. Some HIT vendors
    have become more national in scope
  • 4. Many vendors in the hospital computer systems
    market offer heavily customized solutions rather
    than products. These heavily customizable
    solutions create greater dependency on the
    software vendor and are more difficult/expensive
    to keep current when vendors release new software
    updates periodically
  • 5. Chinese hospital leaders would like to see a
    new generation of HIT software developed for the
    country to assist in helping them accomplish
    their leapfrog objectives

The Current Computing Environment in a Typical
Large Complex Chinese Hospital Today
Sample Current Systems (High Level View)
Office Automation Systems
Core Vendor (Vendor 1)
Major Financial Systems
Major Ancillary Systems
Major Clinic
R.I.S./PACS (Vendor 4)
Financial (Vendor 2)
Performance Assessment System (Vendor 13)
Order Management
Inpatient ADT and Billing
Policy Exchange Platform (Vendor 13)
Inpatient Physician Workstation
L.I.S. (Vendor 3)
MD Workstation (Vendor 2)
Outpatient and ER Registration
Webport System (Vendor 13)
Outpatient Physician Workstation
Blood Bank (Vendor 3)
Pharmacy (Vendor 2)
Outpatient Pricing and Charging
Major Admin Systems
Hospital Website (Vendor 13)
Inpatient Pharmacy
Bar Code (Vendor 3)
L.I.S. (Vendor 3)
Material Supply
Medical Ins (Vendor 9)
Outpatient Pharmacy
OR/Anesthesia (Vendor 5)
Smart Card
Medical Ins (Vendor 10)
Lab Price System
Ultrasound (Vendor 6)
Patient Consultation Survey
Medical Records (Vendor 11)
Inpatient Insurance Interface
Stomatology (Vendor 7)
RF Card Producing Sub-System
Human Resources (Vendor 12)
Instrument and Equipment Management
Many Other Niche and Specialty Systems
Inpatient EMR (Vendor 8)
Note Chart taken from a couple of real hospital
situations with each vendor or product family
shown in a different color
Major Areas of Future Development and Opportunity
in the China HIT Market
  • 1. Application software will become more
    productized with greater tools to support the
    growing use of IT in hospitals
  • 2. New application software to serve the not yet
    automated areas of clinical work processes are
    emerging very quickly
  • 3. Integration tools to facilitate the
    development of an improved IT environment will
  • 4. Data analytics products and support tools to
    facilitate better data analysis, reporting, and
    decision making will emerge as Chinese Hospital
    Managers grow in sophistication
  • 5. Service and implementation tools will improve
  • General contracting for entire efforts with some
    company software and some partner software
  • Planning and implementation services to support
    making better buying decisions and creating more
    successful implementation of software
  • Other problem-solving services

Today Chinese Hospital HIT Investment Is Spent
Differently Than the Rest of the World
GCC China Healthcare Conference
  • Where Does China Stand on the Global HIT

Broad Comparison of US and China HIT Situations
  • .

Key Element US China Per Capita Healthcare
Spending 7,500 100 Employees per bed 6 1 to
2 HIT Spending Very high Very low Number of
Software Vendors in a Hospital 80 20 Integration
Status Okay Very bad Size of IT Staff Very
Big Small Dependence on Software
Vendors Medium Very High Implementation
Approaches Fair Bad Historic Data Available in
Any Form Lots Very Limited Historic Data
Available in Accessible Automated
Form Considerable Very limited Clinician Use of
Data Growing Limited to none
GCC China Healthcare Conference
  • Emerging Business Opportunities in China

Western Businesses Now Operate in Many Markets in
  • Most major Western companies and many Western
    investors have reviewed China for investment
  • Large multinational companies are now operating
    in most industries in China
  • First for low cost manufacturing
  • Later to serve the Chinese marketplace
  • Western companies operate in China at the
    pleasure of the Chinese government
  • When there is a strong need for what the Western
    company offers, the Chinese government will make
    it easier
  • When the need is reduced, the Chinese government
    can create a variety of obstacles for the
    progress of that company
  • The size and future growth of the Chinese
    marketplace is like a magnet that attracts these
    companies, even though there are lots of
    challenges for them

Western Businesses Now Operate in Many Markets in
China (Continued)
  1. Doing business in China is different than doing
    business in the West. When Western companies
    come to China, there are many things they must
    learn in order to be successful in operating a
    business in China
  2. When Chinese companies come to the West, they
    experience similar adjustment issues
  3. The Chinese people are very entrepreneurial and
    in general are great business people. Doing
    business with them on their turf presents a
    variety of challenges for Western companies

Western Companies in the Healthcare Industry in
  • Many Western companies operate in the Chinese
    healthcare industry
  • Most dominant market segments served by Western
    companies are
  • Pharmaceuticals
  • Medical devices
  • Medical imaging
  • Many companies in these markets have operated in
    China for a long time and have been quite
    successful in serving the Chinese healthcare
  • In addition, multinational technology companies
    such as IBM, Hewlett Packard, Cisco, Microsoft,
    Intel, and others that operate in many industries
    in China also sell their products in the
    healthcare industry in China

China Healthcare Offers New Opportunities for
  1. Rapid growth in healthcare spending and a desire
    to improve healthcare services
  2. A desire to move toward international standards
    for serving the growing middle class and wealthy
  3. Skills missing in China to accomplish healthcare
    improvement objectives
  4. Foreign skills are valued and many universities,
    hospitals, and companies are bringing their
    skills to China
  5. Ways to serve the emerging needs profitably are
    still not clear

Some Opportunities Emerge in Healthcare Services
  1. With the emergence of healthcare reform, China
    has a much bigger desire to learn from the US
  2. China is serving the middle class and wealthy
    with the same healthcare system they serve the
    poor people with, and there is an opportunity for
    better healthcare provided by foreigners to the
    upper middle class and wealthy
  3. New opportunities are emerging in senior care,
    rehab medicine, and a variety of medical
    specialties where China has limited skill (a good
    example is what happened in cosmetic care a
    number of years ago)
  4. Opportunities are emerging in HIT software and

GCC China Healthcare Conference
  • Career Considerations

Career Considerations
  • It is a great opportunity for me to talk with so
    many young people just starting their working
  • Questions on your mind I am sure include the
  • What should be my career entry point?
  • In what geography should I start my career?
  • What should be my career objectives?
  • What other questions do you have?

    NO. 45
  • PHONE 312-464-3000 SHANGHAI, CHINA
  • FAX 312-467-0541 PHONE 021-51001821
  • WEB SITE ADDRESS www.Dorenfest.com
  • E-MAIL ADDRESS info_at_Dorenfest.com
  • SHELDONS E-MAIL ADDRESS sheldon_at_Dorenfest.com
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