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Dental health product companies and orthodontists interested in the China market take heart!
An announcement from China’s Ministry of Health designated September 20, 2009, as National Dental Health Day. The theme is “Maintain oral health and elevate your quality of life,” with a focus on public awareness of dental health. The announcement outlined the rationale for improving dental health, which goes beyond health issues such as cardiovascular, respiratory, diabetes and prenatal care to potential effects on speech and psychological well-being. It cited a recent national survey that showed that 66 percent of five-year-olds show signs of tooth decay, while the prevalence is even higher (above 88 percent) in the older population. Furthermore, the survey showed that most cases are not receiving proper treatment. The announcement lists the necessary steps for improving oral health to be communicated to the public. In addition to standard good practice such as frequent brushing and checkups, the announcement specifies the use of dental floss and fluoridated toothpaste and rinses, as well as correction of tooth irregularities.

The May 7, 2009, release of Opinion of the State Council on the Support and Acceleration of the Development of Traditional Chinese Medicine culminated recent statements from China’s Ministry of Health and nationwide activities to promote traditional Chinese medicine (TCM). The position paper offers insights into the current standing of TCM in China and its expanding role in China’s healthcare.

Contrary to most Westerners’ perception, TCM plays a relatively minor role in the average Chinese citizen’s life today. Just as in the West, there is some level of recognition of its potential value, but when it comes to medicine, most Chinese people look to the West. In fact, in recent years, there has been vigorous debate about its future in China.

The fact that the position paper originated from the State Council underscores how important TCM is to the government. The policy recommendations reflect the fundamental principle that TCM and Western medicine are of equal importance.

Updated pricing and government subsidy to support the transition. The government plans to evaluate and update fee schedules for TCM services (e.g., patient consultation, prescription, pharmacy compounding) by qualified personnel, with the goal of bringing prices to a level that adequately reflects the value of TCM. TCM will systematically be included in formularies. Furthermore, the government plans to step in with subsidies while the market adjusts to the new (and higher) prices.

Maximizing the value of TCM in preventive medicine. Conventional wisdom in China is that TCM is most valuable in systemic adjustments that can improve health. Toward that end, the paper recommends establishing the Chinese Medicine Preventive Medicine Services Organization, which will mandate qualification and certification of professionals and service standards as well as provide leadership and management focused on the use of TCM in health maintenance.

Incorporating TCM in expansion plans for healthcare facilities. The policy paper calls for financial support to encourage the inclusion of TCM in more than 20,000 new healthcare facilities in rural, urban and suburban communities. Specifically, one fifth of healthcare facilities being constructed this year will be allocated to TCM.

Investing in training and development. According to Vice Minister of Health Wang Guo Qiang, the bottleneck in the development of TCM lies in the scarcity of trained professionals. The plan will address three areas in education: (1) recruitment of students and improving the quality of incoming students; (2) reviewing and revising the curriculum to better match real-world healthcare needs by emphasizing clinical practice rather than theory; (3) ensuring that TCM students have a rich fund of knowledge that can be drawn upon in clinical practice.

This interest in TCM is not new in China. The push toward improving manufacturing quality and applying a level of regulatory rigor and demand for efficacy and safety data comparable to Western medicine has been going on for some time. With the position paper from the State Council, however, there is now a mandate to advance TCM. Let’s hope this translates into innovations that the whole world can benefit from, particularly in preventive medicine.

The 15,000-word healthcare reform position paper released on April 6 clarified the vision of China’s leadership toward government-supported universal healthcare, to be supported by a revamped and reinforced healthcare delivery system, new policies around pharmaceuticals and an overall increase in the government’s responsibility in healthcare. Additional details that followed, responses from citizens, and interviews with policy makers and observers have flooded the Chinese media. For Americans interested in China’s healthcare reform from a personal or business perspective, the interview China Central Television (CCTV) conducted with former minister of health Gao Qiang, who left the Ministry of Health in February, provides a good overview and insight into the underlying thought process and challenges ahead. Below is an excerpt from the transcript.

CCTV: The healthcare reform policy has been described as an in-depth reform of the healthcare system. What does “in-depth” mean in this context?

Gao: We are talking about going deep with healthcare reform at three levels. The first is that healthcare reform is not new; in fact we have been working toward reform for several years. Second, while past healthcare reform efforts have resulted in some successes, those achievements were inadequate. In fact, the solution of old problems often led to the uncovering of new ones. So we need to think about reform as a long-term, gradual and continuing process. Third, building on past experience and extensive research over the past few years, we have been able to elevate the level of clarity in the way we think about our goals, directions, responsibilities and policies; and we need to think about all of this from the perspective of scientific development and the healthcare needs of our citizens.

CCTV: You speak with confidence about the new plan for healthcare reform. What is truly new about this plan? Where is its biggest value?

Gao: Compared with past efforts, the current plan is much more comprehensive. It extends beyond health services to public health. It covers health insurance, pharmaceuticals and medical supplies. It goes beyond reforming public hospitals to healthcare in the community and rural areas. The new plan addresses funding for expanding health-related services. We are working with a more defined goal, to build a basic healthcare system that covers all citizens, urban and rural, so that all citizens can have fair and equal access to basic health services. The government’s involvement will go beyond funding to stronger oversight. The basic system reforms will touch on resource allocation, including human resource allocation. And human resource development will very much be a part of the effort to rebuild our system.

CCTV: Do you think these new initiatives represent drastic changes or evolution and progress?

Gao: I think the biggest change is in the development of the system itself and transitioning toward one that focuses on the society and the health and benefits of the people.

CCTV: Why do you think they will succeed where we’ve failed in the past?

Gao: Our past efforts did not adequately anticipate some of the system changes that led to the dilution of the public interest. The whole purpose of the healthcare system is to protect the people’s health and serve their healthcare needs. You cannot think about the health system without putting the benefit of the citizen first.

But this focus on public benefit does not come naturally. First, the government needs to make clear that the healthcare system is a public service system. Second, the government has to take financial responsibility for the construction and staffing of such a system. Some say that the government cannot take on this financial burden. I think they are mistaken. I believe the government’s role is to help the system along until it can sustain itself through health insurance as health insurance gets built up. The government also has a role in helping those who are less able to pay. In this way, the government can also effectively help curb unreasonable profit motives and protect the public’s interest. Third, we will increase training on ethics and professionalism among healthcare workers—increasing their sense of responsibility, honor and sense of mission, establishing a public service model within a secure environment. Fourth, we need stringent oversight, encouraging and rewarding organizations that embrace these values and penalizing those in violation. In my mind, all four conditions must be satisfied to be effective. The past practice of some local governments that cut funding as a way of penalizing non-compliance, leaving the local health system to survive on their own, makes it difficult to consider public interest when the focus shifted toward survival.

CCTV: How far do you think we are away from achieving this focus on public interest?

Gao: We are still a fair distance away. . . . Our healthcare reform plan has two sets of goals. This is a long-term plan spanning 2009 through 2020, with the goal of building a standardized, scientific and complete healthcare system. We also have a three-year plan that takes us to 2011.

CCTV: You don’t think we can achieve that sense of public service in three years?

Gao: Think of the next three years as a trial period, especially for public hospitals. Public hospitals are far more complex than rural and community healthcare. Not only do we need to refocus them on public service, we need to make them less exclusive [favoring the socioeconomically privileged]. Right now, public hospitals charge more for their services, yet people prefer them because of the level of care they provide. If we lower fees for public hospitals, but are not able to simultaneously elevate the care standard at the community level, then we will not be able to meet demand. This is a clear dilemma. A related issue is to develop a fair and equitable system for classifying [and compensating] healthcare workers [and in general elevating their status].

Healthcare workers are the driving force behind healthcare reform. They have to implement the new policies and bring the vision to fruition. We have to protect the rights of the healthcare workers without taking away their mandate to serve the public. In the past, some organizations adjusted compensation based on hospital revenue, but this encouraged inappropriate use. We have to evolve a pay-for-performance system with the proper performance metrics.

CCTV: We all know that current compensation for doctors is insufficient and they make up for the difference through other means. It seems that one requirement is to make sure their base compensation, within the new system, is the same as their total compensation in the old. So the new, totally transparent compensation equals the old.

Gao: We have to look at this in two ways. First, we need to protect a lawful and reasonable income level for the doctor. Doctors should not suffer lower income as a result of healthcare reform. Second, where compensation is excessive due to abuses, we cannot offer them protection from income reduction. We need better strategies based on more detailed analysis to come to a fair resolution.

CCTV: What other significant challenges do you see ahead?

Gao: Healthcare reform touches 1.3 billion people, the interrelationship between the government and the healthcare system, as well as the relationship between the healthcare workers and the public. At the heart of this is the conflict of interest between the healthcare workers and the public. Tying the doctor’s compensation with what the public pays for healthcare is a formula for failure. Moving forward, we need to consider metrics such as quantity of care, quality of care, patient satisfaction and competency. This will be a fundamental shift from the current preoccupation with how much the doctor or hospital can charge the patient.

CCTV: Today, the public has high expectations of what healthcare reform can deliver. And many people look to it to solve a number of different problems. Based on your past seven years at the Ministry of Health, what touches you the most?

Gao: I feel some level of regret. I was preoccupied with the problems around healthcare for a long time. We solved some of them, but we did not achieve the level of care for the public that I would have liked. People from all socioeconomic levels have experienced some level of difficulty with the healthcare system. I truly hope that this time around, we will be successful. I hope that the government will implement the policies in their entirety. And I hope that the investment made by the government will be tightly managed to make sure they benefit the public, to solve the public’s health problems and relieve their burden. Managing healthcare is a difficult task, because it touches everyone. By necessity, healthcare reform has to draw upon our collective intellect and reflect the will of the public—and these needs have driven our process to date.

It will be interesting to watch China’s healthcare reform unfold, even as the United States launches yet another new chapter on this. While we are two vastly different societies, and there are few commonalities between our health systems, we do share one central issue—the juxtaposition of the multiple economic interests. Please post a comment and let’s start a discussion.

I seem to be getting a lot of content about innovation these days. But those in marketing and especially sales are seldom in a position to wait for innovation to come down the development pipeline; indeed, we are often told to “sell what you have.” I went to my favorite Chinese business book, Why Southerners Succeed in Business, and found this gem of a story.

A large company, in the south of course, was looking for new salespeople. An ad drew hundreds of responses. The company gave the applicants an assignment: to sell hair combs to Buddhist monks who, by tradition, have shaven heads. The assignment frustrated and angered all but three applicants, who were given a supply of samples and ten days to complete the assignment.

Li, the first applicant who returned, told of being scolded and in fact thrown out by angry monks at a hilltop monastery. As the dejected Li hobbled down the hill, he saw a young monk lying in the sun, scratching his itchy scalp. Li immediately offered his comb to the young monk, who tried scratching his head with it, felt satisfied, and paid for the one comb.

The second applicant, Zhang, did better. As he walked toward the monastery, he noticed that the wind was blowing hard and the pilgrims who were heading toward the monastery to burn incense entered the temple looking a little disheveled, with their hair out of place. Zhang went up to the head of the monastery and suggested that poor grooming was a sign of disrespect to the deity. He then recommended that the monastery put a comb in front of every altar, so that pilgrims could brush their hair before lighting incense. Zhang proudly reported that he had sold ten combs.

To everyone’s astonishment, the third applicant, Wang, reported that he had sold his entire inventory of 500 samples and received an order for 10,000 combs from just one monastery in the area. It turned out that Wang had repackaged each comb he was given and, with a simple label, branded it the “Comb of Virtue.” He gave the monastery an initial batch of branded combs and instructed that the monks briefly brush the hair of each pilgrim after the worship session and then give the comb to the pilgrim. Word soon spread about the Comb of Virtue, and that it was available exclusively from this one monastery. Pilgrims began crowding the monastery, and revenue—in the form of incense purchased and donations—increased dramatically. The delighted monastery head placed the order for 10,000 combs.

Do you have a favorite “selling ice to Eskimos” story? Please share.

On February 7, the Chinese press reported that Gao Qiang, former minister of health and most recently party secretary at the Ministry of Health (MOH), is moving to a finance post at the National People’s Congress (NPC). Gao was recruited to the MOH from his previous position as vice minister of finance in 2003 during the uproar about the SARS epidemic. As he announced his exit from the MOH, the congenial Gao laughingly noted that he had used up all his brain cells in the past six years over healthcare reform and the many problems with the transitioning health system. Indeed, Gao presided over a period of increasing public dissatisfaction with the cost of care and access to care, as well as deteriorating physician-patient relations and growing impatience while the public waits for the long anticipated healthcare reform plan to be unveiled. At the press meeting announcing his departure from the MOH, he noted that the State Council had just approved the budget necessary for the reform and, following the annual NPC meeting in March, a national conference will be convened to focus on moving the new plan forward.

Shortly before Gao’s departure from the MOH, he responded to numerous posts on the Internet that resulted from the Chinese government’s effort to solicit public input about healthcare reform. Of 63,296 people who cast their votes online, 40.3 percent believe that the root of healthcare problems in China is the lack of government financial support and the commercialization of hospitals, which were previously owned and operated by the government. “Every time I go to the hospital, I feel like I’m entering a market, where doctors are like salespeople, except that the prices are not negotiable,” commented one of the respondents. Another 25.4 percent believe that the culprit is the practice of hospitals undercharging for physician consults based on an archaic fee structure and then making up the loss with pharmacy and procedure charges. “The doctor’s mission is to help the wounded and save lives. Yet, in today’s environment, doctors are forced to become merchants,” reads another comment. In summary, “Most countries around the world have government-funded healthcare. China is the world’s third largest economy. Why can’t we do likewise?”

Gao agreed that inadequate government funding for healthcare is the primary reason for patient dissatisfaction with physicians and overall care. “Government funding for healthcare has been seriously lacking for a long time. As a result, hospitals have to focus on revenue from patients to maintain operations and fund any development. This puts the healthcare workers and the public on opposite sides, and is a key reason for the tension between physicians and patients,” according to Gao’s analysis. He further stated that healthcare couldn’t rely on market forces alone. “The market system can be a driver, but such principles cannot be applied en bloc in our situation. Protecting the public good and adjusting the classification [compensation] for healthcare workers are two key issues that must be addressed, but we cannot sacrifice one to satisfy the other.” In his view, many elements of a market system, such as encouraging orderly competition and rewarding performance, are necessary, as is the deployment of public funding to advance healthcare. Therefore, the appropriate solution will require a balance of market forces and government intervention/investment. He suggested that all of this begins with government leadership and commitment through substantive investment in healthcare. The social forces that follow will drive improvements in healthcare workers and then increase the support, understanding and active involvement of the public.

If you’d like to read more about healthcare in China, see my article. If you would like me to write about healthcare in China on a regular basis, please post a comment and I will make it happen!

During a visit to Beijing, I picked up a book entitled Why Southerners Succeed in Business. Being a southerner myself (I come from the province of Fujian, directly across the strait from Taiwan), I was intrigued. It turned out to be a great book, filled with everyday tips and great lessons about life. Following is one of my favorite stories. For context, note that the north-south divide in China is somewhere around Shanghai. In this story, Shanghai represents the south and Beijing represents the north.

Two peasants from the countryside decided to venture into the big cities to make a better living. One was heading to Shanghai; the other had a ticket to Beijing. In the waiting room at the train station, the two peasants overheard a conversation.

“The Shanghai people look for every opportunity to make money. Sometimes you even get charged a fee for asking a passerby for directions,” one man lamented.

“Well, Beijing people are very generous. If they see that you have no money, they will offer you food; sometimes they’ll even give you their old clothes,” said the other.

The peasant heading toward Shanghai thought to himself, “I think I’d be better off going to Beijing. That way, even if I don’t make any money, I won’t starve.”

The other peasant, who had planned to go to Beijing, reflected on the conversation and came to the opposite conclusion: “If people in Shanghai can make money just giving directions to strangers asking the way, think how many other ways there must be to make a living!”

At the ticket exchange booth, the two peasants met, exchanged tickets and got on the trains. The fellow who went to Beijing found everything exactly as he had imagined. During his first month in the city, he enjoyed himself, did nothing, but never went hungry. By just picking up loose change here and there, he even managed to send small amounts of money home.

The other peasant arrived in Shanghai and, sure enough, began making a living right away. He started by standing at the train station waiting to give people directions. He also learned to park himself in front of public toilets to collect a fee, and he earned extra money bringing people water to wash their faces. Eventually, he came up with a business idea. Noting how people in Shanghai loved indoor plants, he went to the countryside, collected ten bags of dirt, and brought it into the city to sell as “potting soil.” To his astonishment, the ten bags sold right away. That same day, he made six trips to net a fifty-dollar profit. Before too long, he opened a store. Soon he had an entire franchise of stores, employing hundreds of people, from Shanghai to Nanjing to Hangzhou, even north to Beijing.

Three years later, the peasant-turned-businessman was on a routine tour of his stores. As his train pulled into Beijing, a man came up to him and asked for his empty beer bottle. As the two men made eye contact, they immediately recognized each other and remembered the day they swapped train tickets back in their hometown in the countryside.

Do you have favorite stories about good businesspeople you’d like to share? Please post a comment.