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    Why Private Practices Are Poaching China’s Physicians

    Medical groups run by doctors are challenging traditional structures of medical institutions.

    Doctors in China are unhappy. Long hours, rigid hierarchical structures, and an overwhelming focus on profits over patient rehabilitation in hospitals have left many doctors wondering how they can reform the system. One doctor had an inkling. In July 2014, Dr. Zhang Qiang, an eminent Chinese vascular surgeon, established the first medical group in China.

    A medical group is a group of doctors who have formed their own private practice and share medical resources among one another, sometimes partnered with hospitals. This relates closely to what are called “group practices” in English-speaking countries. Medical groups are normally established to help train doctors and allow them to better help their patients, as a response to unsatisfying conditions at hospitals, or just as a means of making money. They are different from private hospitals, which are normally formed by businessmen, as they are established and run by doctors.

    Power structures dominate public hospitals in China. The reputation of the hospital is held above all else, including the happiness of its doctors and patients. The seniority in this system is determined by a doctor’s publication history in academic journals. These publications bring hospitals prestige, which is why they are valued so much higher than diagnoses rates or actual talent in medicine. But even though many doctors are unsatisfied with the status quo, they have until recently not dared to leave the system. Public hospitals provide a guaranteed source of patients, academic status, and stable income.

    This is slightly different than private hospitals, where profits are the most important factor in determining how the facilities are run. In many cases, doctors are treated as low-level employees in a corporate structure and things like necessary trainings for doctors and medical teams — which cost money — are often ignored. Medical treatments are aligned with investment strategies, and there is also a lot of pressure on doctors to fill quotas and push expensive but unnecessary medical treatments.


    However, there are many reasons why a doctor would want to remain in the established medical system — prestige, job security, and money. Thus, many medical groups are established as part-time ventures by doctors who remain working in the hospitals full time.

    The majority are formed by junior-level doctor groups: relatively young, ambitious physicians in top-tier hospitals. Most of them have distinguished titles, but are not in the upper reaches of the hierarchy. They are reluctant to give up the abundant patients, academic status, and income that their well-established hospitals can provide, but still yearn for an independent platform of their own.

    Many of these young doctors choose to counter the things causing them frustration at the hospitals by forming medical groups in their spare time. In this way, they continue working at their hospitals, while effectively starting up private clinics where they have the final say. By staying on full time, many of these doctors are allowed to use the facilities of the hospital for their private practices, which would otherwise be unaffordable to them if required to purchase themselves.

    However, there are some problems associated with this business model. First, junior-level doctors need permission from their supervisors before being allowed to establish such groups. They cannot exist without the tacit cooperation of the leading figures of the hospitals. Second, they are not sustainable as a business model. The part time work of the doctors cannot provide enough resources to turn a profit or attract investors.

    The other set of people who remain in the hospital system and found medical groups on the side are those in senior leadership positions in the hospitals. These are people who are already well-established in the medical world, have a strong understanding of the administrative sides of hospitals, and often have more time to conduct business than their younger counterparts since they aren’t required to engage in surgeries or clinic duty. These leaders are often just concerned with turning a profit.

    This type of medical group often runs into trouble since they are established by those in senior positions who are not used to compromise or being subordinates. Everyone fights for control of the company instead of working toward a well-oiled business model. Start-ups run best under a governance model with one person in charge. When two or more top leaders are installed, internal conflicts in decision-making can happen which are ultimately harmful to the hospital.

    For a medical group to be successful, four requirements must be met. First, doctors must take the lead on medical and administrative decisions. Second, the emphasis should be benefitting the patient — not on profits or prestige. Third, a strong team of lawyers must be recruited to protect the doctors since they are no longer protected by the hospital. Finally, a strong, sustainable business model is needed to provide the framework of the operation. The number of practitioners is irrelevant — they could be a team of two, dozens, or hundreds. Hierarchy must always exist, but it should be afforded to the most senior members of the team and not based on publication history. In hospitals, doctors are often defined by their medical abilities and knowledge, while administrators must be successful at running a business. However, for a medical group to be successful, doctors must act as administrators and administrators as doctors. By making their roles more fluid, the misunderstandings that arise between the two will decrease.

    The rise of these groups in China is contributing to the country’s rapidly transforming medical industry. By allowing doctors to run their own practices, they are helping to break down traditional ideas of how medical establishments should be constructed and thus usher in a new era of medicine. 

    (Header image: A doctor massages his temples in an emergency room at Peking University People’s Hospital in Beijing, Feb. 10, 2016. Fu Ding/VCG)