Private equity backs China’s healthcare push

Hao Capital injects $12.5m; Olympus Capital Asia invests $40m; BCG forecasts China’s digital healthcare market to grow to $110 billion by 2020.

Hao Capital said on Wednesday it has invested $12.5 million in hospital IT provider, DJ HealthUnion Systems, one of the latest private equity firms to back China’s push to improve healthcare for its aging population.

Olympus Capital Asia said on Thursday it has recently invested $40 million in China's Tian Jian Hua Xia Medical, or Tendcare Medical, a private hospital management company, to help fund the company’s expansion program.

“We are very excited about the opportunity to partner with Tendcare to participate in the rapid growth of the healthcare sector in China,” said David Shen, regional managing director of Olympus Capital Asia. 

Spending on digital healthcare in China will hit $110 billion in 2020 up from $3 billion in 2014, the Boston Consulting Group forecast in a report released on Wednesday.

This digital healthcare revolution has been driven by widespread adoption of technologies, such as mobile, cloud computing and big data applications, and Chinese government policies and looser regulation to make the national healthcare system more efficient.

As a result venture capital and private equity funding has poured into the sector, putting to work about $700 million in 2014 supporting businesses from physician-to-patient communication services to disease management apps.

“The need for effective data sharing within and among hospitals has rapidly increased in recent years,” said Qian Weijia, CEO of DJ HealthUnion in a press release about Hao Capital’s investment.

Competition in this expanding market is also heating up from digital companies such as Baidu, Alibaba and Tencent, which are leveraging strength in search and ecommerce to build new healthcare businesses. Alibaba's 'future hospital' initiative will allow hospitals to digitise patient-service processes.  

DJ HealthUnion Systems will use the injection from Hao Capital to help hospitals digitalise medical records, share patient information across departments and allow doctors to conduct in-depth data analysis.

This is in line with a long-standing policy by the Chinese government.

China’s Ministry of Health outlined a plan in 2012 to invest $9.5 billion to make all hospitals' records electronic, implement data exchange systems and regional healthcare information systems. The State Council gave a fillip to this push in the ‘Outline of National Healthcare Service System Planning (2015-2020)’ in March.

Spending on China healthcare

The investment has been made from Hao’s $73 million Auxiliary Fund, which was launched in 2014. Hao Capital first invested in DJ HealthUnion in 2010.

The platform has already been used by hospitals and regional union projects in Guangzhou, Suzhou, Shanghai, Beijing and Jinan.

Elaine Wong, a co-founder of Hao Capital, said the platform provides hospital administrators with a real-time dashboard to understand and improve the speed, quality, safety, and cost of hospital-wide patient care.

Updated on September 17 to include Olympus investment

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