As criticism of the U.S. healthcare system continues to mount due to its high per capita costs, relatively poor population health outcomes (life expectancy, infant mortality, etc.), and restricted access, comparison of our system to those of other developed countries has become increasingly common.
There have been many attempts in recent years to rank countries’ health systems, but the most notable findings are that these rankings generally don’t even agree about which measures are most important, much less which countries have the best healthcare systems.
To the extent that there is agreement on which nation’s healthcare systems are preferable, many of the rankings point to systems in countries that are much smaller and with more homogeneous populations than the U.S. (which doesn’t rank in the top 10 in any of the major rankings and is noted mainly for its high complexity and cost and — on the plus side — proven ability to innovate).
For example, Ezekiel Emanuel’s very good 2020 (pre-pandemic) book, Which Country Has the World’s Best Health Care, concluded that the four best systems are those in Germany, The Netherlands, Norway, and Taiwan.
This got me wondering how the U.S. system compares to those of countries as large and heterogeneous as our nation. This, in turn, made me think of China because it more than fits this description, and because these two countries are the world’s leading political and economic powers.
In addition, the last company I led as CEO, FastMed, had a joint venture partner that has opened clinics in China initially modeled on the urgent care format we used in the U.S., so I have had the opportunity to learn about healthcare in China from our partner’s direct experience, as well as from other reliable sources.
I’ll return to “FastMed China’s” experience shortly, but first, here is a brief overview of the Chinese healthcare system as I have come to understand it.
China’s Version of Single-Payer
It is important to acknowledge at the outset that the challenge of providing healthcare to a country with a population of 1.4 billion is nothing short of monumental. To meet this challenge, China’s healthcare system has evolved significantly over the past 50 years to the point that roughly 95 percent of the population is covered by government-sponsored health insurance in a form generally referred to as single-payer (vs. roughly 92 percent of U.S. citizens currently covered by private and public health insurance).
With that said, there are significant gaps in access to care in China, particularly in its rural / inland areas that are home to roughly 40 percent of the country’s population. These gaps mainly result from the fact that China’s provinces have significant latitude in determining the scope of coverage, reimbursement rates, and patient obligations, and coverage gaps are rarely closed by private insurance, which is supported by less than five percent of the population. In addition, most of the best doctors and care are provided in hospitals located in the urban / coastal regions.
However, vaccinations are now free for children, and vaccination rates have reportedly exceeded 95 percent for all citizens since 2016.
There also are notable gaps in the kinds of coverage China’s public health insurance covers, including the absence of coverage for dental and vision care, mental health conditions (which are heavily stigmatized), and long-term care.
Long-term care is also not covered by public insurance in China. While it also is not covered in the U.S. and many other developed countries, the absence of long-term care coverage is particularly problematic in China because its longstanding “one child policy” has left the country with an aging population and not enough offspring to support the healthcare system financially or provide the kind of family-centered home care of elders that was typical in the past.
The sliver of good news here is that China’s oldest citizens seem to be generally healthier than similar cohorts in the U.S. This is at least partially because (I believe) China’s senior citizens were not as exposed to the ultra-processed food that has caused the surge of chronic illness in the U.S. and many other developed countries. However, it appears that the health of middle-aged Chinese citizens is instead being negatively impacted, as the introduction of Western food supplies and adoption of its dietary habits was delayed but not deterred.
China’s Care Delivery Model
One of the most obvious characteristics of China’s care delivery infrastructure is that it is extremely hospital-centric, with the vast majority of evidence-based care provided in hospitals (which are designated in three levels, with “Tier 3” hospitals being the most prestigious), and comparatively few primary and other ambulatory care sites (such as FastMed urgent care clinics). One of the effects of this is that access to quality care is restricted and thus long wait times for it are the norm.
In addition, since providing routine care in hospitals is generally more expensive than in ambulatory care settings, China does not have a particularly efficient delivery system (though China spends approximately 6 percent of its GDP on healthcare, compared to roughly 18 percent in the U.S., with now comparable rates of life expectancy and infant mortality).
This not only stresses government budgets, but it has also resulted in the need for Chinese citizens to augment the “single payer” system with significant out-of-pocket expenditures — reportedly 30 percent or more of the cost of care — through high deductibles, co-pays, and co-insurance, as well as through caps on coverage beyond which patients are required to pay all costs.
Another prominent characteristic is that the system has been ripe with corruption, though there is evidence that recent government crackdowns have reduced its incidence. Most physicians are poorly paid (with base pay in the $30,000 per year range), and it has not been unusual for Chinese providers to supplement their incomes by accepting bribes from patients for access and from pharmaceutical companies for prescribing certain drugs.
The result of this endemic corruption is that there is a significant distrust of physicians, and violence against them has not been uncommon. Exacerbating the distrust of providers is a distrust of the healthcare system generally due to the government’s well-publicized determination to collect health data on all its citizens — which may be counter-balancing much of the population health benefits that analysis of such a large data set should enable.
In addition, Traditional Chinese Medicine (“TCM”) continues to be frequently prescribed, particularly at the village level, and World Health Organization reports claim that it is involved in 30-50 percent of all healthcare in China. While the efficacy of these treatments — including acupuncture, herbal remedies, and cupping — is backed in some cases by thousands of years of experience, very few of them have been subjected to the kinds of scientific rigor and large-scale clinical trials that are required of prescription drugs and other treatment modalities in the U.S.
Meanwhile, overprescribing of drugs is common in China, and the Chinese pharmaceutical market is the world’s second largest. However, it is still far behind the U.S., which accounts for approximately 45 percent of the world’s pharmaceutical spending with only 4 percent of its population.
In fairness, it appears that China’s National Health Commission (a government department that was formed to shift responsibility for healthcare from the CCP) is making a concerted effort to understand and address the system’s shortcomings by, for example, beginning to encourage more physicians to practice in outpatient and ambulatory care settings.
However, the current system is limited by significant structural, cultural, and behavioral issues that frustrate innovation, and while the government says they are open to privatization to stimulate innovation and investment, until very recently their policies have been ambivalent in this regard.
The “FastMed China” Experience
When I became FastMed’s CEO in 2017, I was intrigued to see that the company had recently entered into a joint venture with an Austin, TX-based company to open and operate urgent care clinics in China modeled after FastMed’s U.S. clinics.
While I thought the idea had merit based on my awareness of China’s hospital-centric delivery model and the resulting long wait times for routine care, I was concerned about the potential diversion of resources from our primary goal of growing FastMed domestically.
However, I was pleased to learn that JV partner (Pacific Springboard) was led by a longtime friend, former colleague, and proven entrepreneur named Frank Krasovec, who had considerable and successful experience doing business in China.
I was also encouraged that the company’s leadership team included a very able former FastMed operations executive named Cindy Stefanko, who I had contacted early on in my tenure for background on FastMed’s aggressive expansion in Texas. Because of the resulting faith in our partner, we elected to continue supporting the JV, though under new terms in which FastMed would convey many aspects of its operating model in return for equity but would not invest financially.
Now, nearly eight years later, I recently caught up with the CEO of Family First Medical, Dr. Neil Smith, who reported that they had changed their clinics’ name in 2024 from FastMed to avoid stigma related to an American brand, and that they now operate four clinics in Shanghai and Guangzhou, with two more clinics opening in 2025.
While this is great news, it begs the obvious question of why it has taken so long. The answer says volumes about the challenges of innovating in China, as well as the willingness of government authorities to evolve their system to achieve the four pillars of “Healthy China 2030”: Equitable access and outcomes; Healthcare systems transformation; Technology and innovation; and Environmental Sustainability.
As it pertains to Family First Medical, Smith reports that the early and repeated delays in opening FastMed clinics were related to the difficulty of securing government licenses and the requirement that all clinics operated by foreign entities had to have a Chinese partner.
Behind these obstacles was the government’s fear that foreign-owned entities would divert physicians and other healthcare workers (already in short supply) from the public health system and thus exacerbate its well-recognized issues with access and quality. While the domestic partner requirement still made it possible to secure licenses, the leverage it gave to Chinese partners made it more difficult for foreign-owned entities to succeed financially.
However, Smith says that government authorities — recognizing the need to increase the supply of non-hospital-based primary care — recently eliminated the Chinese partner requirement and are now actively encouraging companies that operate outpatient clinics like Family First Medical to open them by granting licenses in as little as two months.
He reports that patient volumes are generally strong, though Chinese citizens have yet to completely overcome their longstanding bias towards hospital-based care, and that most of their patients must pay cash because public insurance reimbursements are too low for ambulatory care providers to depend upon. However, Smith also states that while in the early years, 60 percent of their patients were foreign visitors and ex-pats, today 90 percent are Chinese citizens.
Most of this sounds like progress, and it is to the credit of both Chinese government regulators that they recognized the need for more ambulatory care, and of FastMed China’s investors that they have stayed the course long enough to begin realizing a return on their investment.
What’s the Verdict?
So, is China’s health system any better than ours?
By some common outcome measures it is comparable, while being considerably less expensive on a per capita basis. On the other hand, it suffers from access issues (common to many single-payer systems), quality concerns, high out-of-pocket costs, and persistent disparities in the care available to citizens who live in rural areas versus those who live in urban ones (which is also a growing problem in the U.S.).
Perhaps most notable about China’s system is the progress that has been made. When Mao and the Communist Party came to power in 1949, life expectancy was 35-40 years. Today it has roughly doubled to 77, which is comparable to life expectancy in the U.S.
In addition, there are signs that the Chinese healthcare system is continuing to evolve in ways that will improve the health of its massive population in the years ahead.
I wouldn’t trade our system for theirs today, but I wouldn’t bet against China closing the gap in the future, as China is demonstrating in healthcare, as it has in many other areas, that it has the ability, resources, and determination to continuously improve.
China and the U.S. share common problems, though, including aging populations that are increasingly afflicted with chronic disease, as well as the significant challenges of paying for expensive new treatments and long-term care.
In this sense, our two countries are in the same boat, and our respective leaders will need to embrace change to meet the growing healthcare needs and rising expectations of their citizens.