Blue ocean strategy beckons the brave to hospital PPPs

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A public-private partnership (PPP) includes but is not limited to concession, service procurement and equity co-operation. Medical services are one of the sectors for which the adoption of the PPP model is encouraged by the state, and applying the PPP model among hospitals has huge market potential.

According to the Opinions to Promote Healthcare Industry Development, issued by the State Council in October 2013, it is planned that a well structured full-lifecycle healthcare service system with comprehensive business coverage will be established by 2020, representing total market volume of over RMB8 trillion (US$1.23 trillion). Furthermore, market-oriented healthcare reforms also lay the groundwork for introducing PPPs in the health sector.

Screen Shot 2016-04-10 at 11.40.08 AMHospitals are a key area for PPP application in many developed countries. In the UK, 76 PPP hospitals were in operation as of April 2009, with a total investment of approximately £6 billion (US$8.62 billion). There are already some existing PPP hospitals in China, but PPP operations need to be further improved at the institutional level, and Chinese PPP hospital projects are still at a tentative stage. This is a “blue ocean”, where a great deal can be accomplished by private capital operators and lawyers.

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Wang Zhijian is a senior partner at Zhonglun W&D Law Firm and head of the firm’s healthcare practice. He can be contacted on +86 28 6504 1007 or by email at wangzhijian@zlwd.com

Song Cheng, the firm’s associate in Chengdu and secretary-general of the healthcare practice, and Cao Yang, the firm’s associate in Chengdu, also contributed to this article

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