In China’s mission to build a healthy society by 2030, digital strategies will ensure that society can afford the ambitious medical ecosystem upgrade required

In 2019, China’s social health insurance revenue grew by 10 per cent, but expenditure increased by 12 per cent — and that funding gap is widening. Simple arithmetic says that the current model for financially supporting China’s healthcare system is unsustainable.

The World Bank warns, in fact, that without reform, Chinese healthcare spending will surgeto $2.5tn in 2035, a roughly five-fold increase from $550bn in 2014. The crisis is further exacerbated by insurance fraud. A combination of massive public funding and overburdened healthcare bureaucracy has created a honey-pot for inflated claims, bleeding an already struggling system.

“Doing nothing is not an option.” That’s the blunt assessment of the World Bank and the World Health Organization regarding the social healthcare-funding chasm. Consequently, the Ping An Group — a financial services powerhouse and pioneer in digital healthcare solutions — has developed a platform called Ping An HealthKonnect to help the government bridge the divide with AI-driven tools.

With China on a mission to create a healthy society by 2030, the stakes could not be higher. The programme targets chronic problems such as insufficient primary care and overwhelmed hospitals that deprive millions of health and wellbeing.

Resolving the social health insurance crisis is integral to the mission’s success, but funding issues are just part of the challenge. Provider payment must be placed within the context of the entire healthcare ecosystem. “Provider payment methods,” the World Bank and the WHO say in a joint report, “create powerful incentives affecting provider behaviour and the efficiency, equity, and quality outcomes of health finance reforms.”

Ping An launched HealthKonnect to empower the government with anti-fraud and resource optimisation systems that root out corruption and inefficiencies. The solutions are driven by big data and AI algorithms drawn from Ping An’s decades of risk management expertise.

The need for powerful digital tools to bolster China’s near-universal health insurance system became clear in 2018, when two hospitals in Shenyang were implicated in a high-profile insurance scam. The scandal exposed abuses including fabricated services, forged invoices and unnecessary treatments.

But Ping An HealthKonnect’s reach extends way beyond fraud prevention. It is conceived as a smart technology company that maximises the impact of each healthcare dollar by optimising social health insurance (SHI), thus empowering the overall ecosystem.

Ping An HealthKonnect helps China’s National Healthcare Security Administration with its macro-decision making and operation monitoring, facilitating the digital transformation of SHI business management. Through software and services, Ping An HealthKonnect promotes the co-development of SHI, healthcare and medicine to lower medical costs, improve service experiences and strengthen insurance coverage. It also empowers commercial insurers through insurance product design, risk management and marketing channels.

In China’s struggle with healthcare funding, it is the patients who suffer the most. The government shoulders 50 per cent of China’s medical expenditures, while commercial insurance accounts for 6 per cent. Patients pay for the rest.

Out-of-pocket expenditures by patients account for 10 per cent of disposable income in China, compared to 7 per cent in the United States. Ping An HealthKonnect’s smart solutions enable the government to fund a greater share of services — leading to better care and fewer costs for patients.

The platform works seamlessly with other drivers of Ping An’s healthcare ecosystem, including Ping An Good Doctor (a telemedicine app for patients) and Ping An HealthKonnect (a platform to enable efficiencies of medical providers). The aim is to forge vertical and horizontal integration of all stakeholders: government, patients, providers and payers. By the end of 2019, Ping An HealthKonnect provided services to over 800m people in more than 200 Chinese cities.

In the Ping An healthcare ecosystem vision, it’s not sufficient to solve patient and provider issues in isolation. “We have to be able to pay for it,” says Jessica Tan, Co-CEO of the Ping An Group. “Therefore we have to work in conjunction with social health insurance.”

Ping An has evolved from insurance into a diversified financial services group. While healthcare is today a priority for the group, insurance and risk management acumen still underpin its success, making it ideally suited to drive what Deloitte calls an opportunity for China’s insurance industry to “demonstrate value as a ‘shock absorber’ and ‘stabiliser’ of social risks” in the Covid-19 pandemic and beyond.

Citing Ping An’s healthcare capabilities, Deloitte says “insurers can participate more deeply in the construction of China's public health system”. In particular, Deloitte says, insurers can play a transformative role in China’s digital healthcare upgrade through:

1. Pandemic analysis for government (as an example, Deloitte highlights Ping An Medical Technology’s partnership with Tsinghua University on a Real-Time City Health Index).
2. Disease control research support to hospitals and communities via a trove of insurance claim and customer behaviour data.
3. Health solutions for individuals deploying data “within legal boundaries” for smart home equipment, wearables and online communication.

As the world’s largest insurer by market capitalisation (and global No. 1 in fintech and digital healthcare patents), Ping An owns the AI technology and data assets required to turn the synergies between insurance and healthcare envisioned by Deloitte into reality.

The synergies go both ways. Up to 20 per cent of Ping An’s new financial customers come from its healthcare ecosystem. Among Ping An’s 218m financial service customers, 61 per cent use at least one of its healthcare services.

For the Ping An Group, healthcare ecosystem integration is a powerful generator of value, rooted in a belief that a central mission of business is to foster the health of people and society.