The delivery of healthcare in China is about to get a shot in the arm as the government says it will now permit hospitals to be wholly owned and operated by foreigners. It’s the first time non-Chinese companies can own and operate a hospital in China as the country looks to reform its healthcare system.

Investors from overseas will be able to found new hospitals or merge with existing ones in Beijing, Shanghai, and Tianjin as well as in the provinces of Guangdong, Jiangsu, Fujian, and Hainan, reports the Wall Street Journal.

The pilot project was jointly approved by the National Health and Family Planning Commission and the Ministry of Commerce (MOC) on July 25. It was announced by the MOC on August 27.

The first foreign-owned hospital is already getting set up in Shanghai’s sparkling new Free Trade Zone. An agreement was reached on July 22 to permit German hospital operator Artemed Group and other investors to operate the new facility.

Public demand for better healthcare and an aging population has prompted calls for reform in China’s hospitals. In May, the State Council said hospitals would undergo pricing reform and new private hospitals would be introduced.

Official figures show the number of private hospitals has grown from 5,400 in 2008 to 10,877 by the end of October 2013. In comparison there were 13,440 public hospitals in China as of last October.

“There is so much interest and a lot of money just waiting to have the opportunity to invest,” said Simon Li, a managing director at Kantar Health in Shanghai. ”It’s not only a huge and growing market, but also the level of care is not that high, meaning there’s a huge unmet need.”

Underfunded Chinese hospitals offer varying standards of service depending on urban and rural locations, a point that leads to frequent bribery and conflicts between patients and staff, reports Reuters.

Photo: The Telegraph