(Yicai) July 24 -- Private hospitals will likely to find new living space from the medical and healthcare system reforms proposed by the 20th Central Committee of the Communist Party of China at its third plenary session.

“We will deepen the reform of public hospitals to see that they better serve the public interest, establish mechanisms whereby medical expenses are primarily based on medical services, improve the remuneration system, and set up a mechanism for making dynamic staffing adjustments,” according to the resolution made public on July 21. “We will guide and better regulate the development of private hospitals and introduce new approaches in the supervision of medical and healthcare services.”

Public hospitals should focus on public welfare, so the biggest market opportunities for medical device companies are private hospitals, Qian Feng, a senior medical device agent, told Yicai.

Since the introduction of the centralized procurement of high-value medical devices, products of companies that are unwilling to lower prices may not be able to enter public hospitals, Qian noted. However, as such firms do not want to give up the Chinese market, they may turn to private hospitals, he added.

“Niche and high-profile medical needs can be piloted in private hospitals,” an expert told Yicai. “For example, they can take the lead in applying some newly-approved therapies and devices.”

In the past few years, private hospitals have been struggling because of a series of factors, and many of them have eventually gone bankrupt because it is hard to survive without external capital.

Several industry insiders explained to Yicai that the main problem of private hospitals is a shortage of funds, with many of them seeking fundraising opportunities.

Under new circumstances, private hospitals will hardly develop if they follow the management philosophy of public hospitals, Dai Hongdong, vice president and general manager at General Electric Healthcare China’s private healthcare business, said earlier this year. Private hospitals will continue to face difficulties in the next five years, he predicted.

Private hospitals should rely on advanced medical equipment and technologies, ultimate medical services, and innovative medical models to make a breakthrough and stand out to attract more patients, according to Dai.

Editor: Futura Costaglione