With the implementation of numerous favorable policies tailored to facilitate the growth of private healthcare services in the past few years, the private hospitals are much better positioned for the next stage of growth in China. Among them, the most meaningful element is the proposal to consolidate the retirement benefits and medical insurance of government employees with those of the private sectors.
The number of private hospitals increased to 12,500 in 2014 from 2005, representing a CAGR 2005-14 of 16% vs. 2% for public hospitals in the same period. Private hospitals in China are mostly small and mediocre in terms of facilities and services. We expect further investment of private capital in the healthcare service sector would allow the number of higher-tier private hospitals to increase.
In 2014, growth of insurance premiums (fund inflow) was 41% for commercial insurance, significantly higher than the 18% for the three government-managed insurance programs combined. We anticipate commercial insurance fund inflow will continue to outgrow public insurance programs. With public reimbursement funding facing growth deceleration, commercial insurance represents a strong growth driver for the service sector.
The ophthalmology service industry reached RMB 54 bn in 2014 at a CAGR 2005-2014 of 19%. With improving efficiency and expertise, eye specialty hospitals outgrew the overall ophthalmology. However, general hospitals still captured the majority market share. With increasing demand for cataract surgery and the world’s largest myopia population, China ophthalmology service industry will deliver sustainable growth over the medium term.
The market size for the dental service industry reached RMB 47.6 bn in 2014 from RMB16.9bn in 2007, representing a CAGR of 16% in the period. This was driven by stable growth from patient traffic and ASP. The market would grow steadily to reach about RMB 82 bn in 2018 due to higher awareness in dental care and increasing aesthetic demand.
As the largest private ophthalmology service provider in China, Aier is well positioned to enter the next growth stage to morph into a national leader from a regional operator. With 100 hospitals at present, Aier targets 200 facilities by 2017. The replicable business model and brand recognition would lead to rapid expansion, while economy of scale and stock incentive program are likely to improve profitability.
As one of the top-three players in the Chinese dental service market, Topchoice has achieved rapid growth by focusing on its home market in Zhejiang province. In order to transform itself into a national bellwether from a regional leader, Topchoice has invested heavily in the past three years by expanding its geographical footprint beyond Zhejiang and increasing the capacity of its existing facilities.
Table of Contents
1 Executive Summary
2 Development of Private Hospitals in China 2.1 Key Growth Drivers for China Private Hospitals 2.1.1 Positive Policies 2.1.2 Improving Reimbursement and Deregulation 2.1.3 Outgrowth and Efficiency Improvement 2.2 Public-Private-Partnership (PPP) and Specialty Hospitals 2.2.1 Summary 2.2.2 Overview of Specialty Hospitals 2.2.3 Business under PPP Model
3 China Ophthalmic Service Industry 3.1 Market Size 3.2 Overview of Eye Hospitals in China 3.2 Development Status 3.3 Competitive Landscape 3.4 Market of Various Eye Diseases 3.4.1 Myopia 220.127.116.11 Excimer surgery 18.104.22.168 Optometry 3.4.2 Cataract 3.4.3 Glaucoma 3.4.4 Keratopathy
4 China Dental Industry 4.1 Market Size 4.2 Overview of Dental Specialty Hospitals 4.3 Dental Service Industry in China 4.4 Dental Orthodontics Industry in China 4.5 Competitive Landscape
5. Aier 5.1.1 Company Profile 5.1.2 Finance 5.1.3 Operation 5.1.4 Business Segments 22.214.171.124 Excimer surgery 126.96.36.199 Cataract surgery 188.8.131.52 Anterior segment surgery 184.108.40.206 Posteria segment surgery 220.127.116.11 Optometry 5.1.5 Outlook 5.2 Hua Xia Eye Hospital Group 5.2.1 Company Profile 5.2.2 Development 5.3 Bright Eye Hospital 5.3.1 Company Profile 5.3.2 Development 5.4 Aige Eye Hospital 5.4.1 Company Profile 5.4.2 Development 5.5 He Eye Hospital 5.5.1 Company Profile 5.5.2 Development 5.6 Xinshijie Eye Hospital 5.6.1 Company Profile 5.6.2 Development 5.7 Eye & ENT Hospital of Fudan University 5.7.1 Company Profile 5.7.2 Development
6 Major Private Dental Hospitals in China 6.1 Topchoice Medical 6.1.1 Company Profile 6.1.2 Finance 6.1.3 Operation 6.1.4 Business Segments 18.104.22.168 Pediatric dental care 22.214.171.124 IVF (in vitro fertilization) 126.96.36.199 Orthodontics 6.1.5 Customers & Suppliers 6.1.6 Outlook 6.2 Modern Dental Group Limited 6.2.1 Company Profile 6.2.2 Finance 6.2.3 Operation 6.2.4 Dental Business 6.2.5 Customers & Suppliers 6.2.5 Development Strategies 6.3 Dezhou Keen Dental Hospital Co., Ltd 6.3.1 Company Profile 6.3.2 Finance 6.3.3 Operation 6.3.4 Dental Business 6.3.5 Customers & Suppliers 6.4 Royal Dental Laboratory Limited 6.4.1 Company Profile 6.4.2 Finance 6.4.3 Operation 6.5 MEIYA OPTOELECTRONIC TECHNOLOGY INC. 6.4.1 Company Profile 6.4.2 Finance 6.4.3 Operation 6.4.4 Dental Business
List of Charts
Indicative targets by the government on healthcare resources Policies on encouraging private investment in healthcare services industry in China Commercial healthcare insurance in China, 2007-2015 (in RMB bn) Three public reimbursements combined in China, 2005-2014 (in RMB bn) Insurance inflow in China, 2008-2014 (in %) Insurance outflow in China, 2008-2014 (in %) NRCMS, inflow and outflow growth, 2009-2014 URBMI, inflow and outflow growth, 2009-2014 UEBMI, inflow and outflow growth, 2009-2014 Progress of consolidation of NRCMS and URBMI for all provinces Number of Public and Private Hospitals in China, 2005-2014 Market Share of the Number of Hospitals, 2005-2014 Number of hospital beds in China, 2005-2014 Market share of hospital beds, 2005-2014 Outpatients in China’s private and public hospitals, 2005-1-9, 2015 Inpatients in China’s private and public hospitals, 2005-1-9, 2015 Outpatients in China’s private and public hospitals, 2008-1-9, 2015 Inpatients in China’s private and public hospitals, 2008-1-9, 2015 Bed utilization rate in 2005-2014 ALOS (days) for public and private hospitals, 2005-2014 Doctors and assistant doctors in private and public hospitals, 2008-2014 Nurses in private and public hospitals, 2008-2014 Doctors and assistant doctors/thousands of patients in private and public hospitals, 2010-2014 Nurses/thousands of patients in private and public hospitals, 2010-2014 China’s private and public hospitals in 2014 (in terms of hospital tiers) China’s private hospitals in 2014 (in terms of hospital size) China’s non-profit and for-profit private hospitals in 2005-2014 China’s private and public hospitals in 2014 (in no. of beds by types) China’s hospital breakdown in 2014 (by province) China’s hospital beds’ breakdown in 2014 (by province) Inpatient visits to private hospitals as percentage of total inpatient visits in 2014 (by province) Outpatient visits to private hospitals as percentage of total outpatient visits in 2014 (by province) Comparison of different business models Market share of the number of private hospitals in China, 2005-2014 Market share of the number of private hospital beds in China, 2005-2014 The number of public and private specialty hospitals in China, 2003-2014 Market share of the number of public and private specialty hospitals in China, 2003-2014 Breakdown of hospital types for public specialty hospitals, 2014 Breakdown of hospital types for private specialty hospitals, 2014 CAGRs for the number of private specialty hospitals, 2009-2014 Key data for all specialty hospitals in China, 2009-2014 The number of public and private specialty hospital beds in China, 2005-2014 Market share of the number of public and private specialty hospital beds in China, 2005-2014 Inpatient admissions for specialty hospitals, 2004-2014 Outpatient visits for specialty hospitals, 2005-2014 Revenue of specialty hospitals in China, 2005-2014 Revenue breakdown for specialty hospitals, 2014 Bed utilization for specialty hospitals, 2005-2014 ALOS for specialty hospitals, 2005-2014 Revenue growth of the phoenix’s five flagship hospitals EBITDA margin and net margin of Phoenix ASP growth for inpatients of the Phoenix ASP growth for outpatients of the Phoenix Average length of stay (ALOS) of the Phoenix Bed utilization rate of the Phoenix Total revenue of ophthalmic service in China, 2005-2018 Market share of eye specialty hospitals, 2005-2018 Number of public eye hospitals, 2003-2014 Number of private eye hospitals, 2003-2014 Revenue for eye hospitals, 2003-2014 Profit margin of eye hospitals, 2003-2014 Inpatient admissions for eye hospitals, 2005-2014 Outpatient traffic for eye hospitals, 2005-2014 Bed utilization rates for eye hospitals, 2005-2014 ALOS for eye hospitals, 2005-2014 Outpatient visits in China for ophthalmology, 2007-2014 Inpatient visits in China for ophthalmology, 2007-2014 Number of inpatient visits in eye hospitals, 2005-2014 Number of surgeries performed in eye hospitals, 2005-2014 Average length of stay (days) at eye hospitals, 2005-2014 Number of outpatient visits, 2005-2014 Competitive analysis of ophthalmic hospital operators Myopia population by country (millions) Myopia population in China, 2012-2020 (millions) Prevalence rate of Myopia Number of excimer surgeries performed in China (millions) Market size of excimer surgery (RMB bn) in China, 2014-2020 Comparison of different types of excimer surgeries Market size of eyewear in China, 2001-2020 Market share of eyewear market in China, 2014 Number of eyewear stores in China by scale, 2014 Comparison of optometry in retail stores and hospitals Number of cataract surgeries performed in China, 2010-2014 Cataract surgical rate (CSR, per million population) CSR by province in China Market opportunity for cataract surgeries in China, 2011-2020 Global and China glaucoma population (millions), 2010-2020 Anterior chamber of the eye Total market size of the dental industry in China, 2003-2014 Total market size of the dental industry in China, 2003-2014 Outpatient visits in China for stomatology, 2007-2014 Outpatient visits in China for stomatology, 2007-2014 Revenue contribution from dental hospitals of overall specialty hospitals, 2007-2014 Profit contribution from dental hospitals of overall specialty hospitals, 2007-2014 Number of Public Dental Hospitals, 2003-2014 Number of Private Dental Hospitals, 2003-2014 Revenue for dental hospitals, 2005-2014 Profit margin of dental hospitals, 2005-2014 Inpatient admissions for dental hospitals, 2005-2014 Outpatient traffic for dental hospitals Bed utilization rates for dental hospitals ALOS for dental hospitals Dentists per 100,000 population by countries, 2009 General oral health status for different age groups, 2009 Pricing of basic vs. professional dental services (RMB) China oral care products demand by kinds, 2014 Number of orthodontic operations in China, 2014-2018E Market size of the orthodontics industry, 2014-2018E Global invisible orthodontics market, 2014 Basic information on major dental chain providers Company Structure of Aier Revenue and Net Income of Aier, 2009-2015 Revenue breakdown by segments, 2015 Profit from major hospitals, 2010-1H2015 Profit of Aier’s top 10 hospitals as % of total profit, 2010-1H2015 Revenue of Aier’s eight mature hospitals, 2009-14 Distribution of geographical revenue, 2015 Distribution of geographical profit, 2015 Number of hospitals of Aier, 2006-2017 Number of outpatients of Aier, 2009-2015 Number of surgeries performed of Aier, 2009-2015 Aier’s Revenue from excimer surgery, 2011-2015 Aier’s Gross margin from excimer surgery, 2011-2015 Number of excimer surgeries performed by Aier, 2009-2015 ASP of excimer surgeries performed by Aier, 2011-2015 Aier’s revenue breakdown in different excimer surgeries, 2014-2015 Aier’s Revenue from cataract surgery, 2011-2015 Aier’s Gross margin from cataract surgery, 2011-2015 Number of cataract surgeries performed by Aier, 2009-2015 ASP of cataract surgeries performed by Aier, 2011-2015 Aier’s Revenue from anterior segment surgery, 2011-2015 Aier’s Gross margin for anterior segment surgery, 2011-2015 Aier’s Revenue from posteria segment surgery, 2011-2015 Aier’s Gross margin for posteria segment surgery, 2011-2015 Aier’s Revenue from optometry, 2009-2015 Aier’s Gross margin for optometry, 2011-2015 Company Structure
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