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March 20, 2019

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FTZ the key to hospital turning a profit

When Xu Jie, director of Shanghai Towako Hospital, stood inside a spacious factory at the free trade zone in the Pudong New Area three years ago, he was full of uncertainty about future.

Now, however, the hospital has started making a profit as the sole foreign-owned medical treatment institution in the zone and made major advances thanks to the preferential policies offered to enterprises in the FTZ.

Its story reflects the development and growth of the zone.

In recent years, cross-border medical care has become a booming industry, and it is estimated the market will reach 58.1 billion yuan (US$3.9 billion) by 2020 in China.

In Japan, the hospital’s parent company is known for its assisted reproduction. In 2005, the company’s Japanese hospitals received about 400 to 500 Chinese couples for assisted reproduction.

“It wastes time and money for patients to make round trips, and the treatment effect is also affected,” said Fan Yu, the hospital’s CEO.

“Why not let these patients enjoy the treatment in Shanghai?”

A specialist clinic was established in 2005, but its business was hindered due to restrictions on foreign medical institutions.

In late 2013, the FTZ was established, allowing the establishment of wholly foreign-owned medical treatment institutions.

A year later, restrictions on the minimum investment and operating period of foreign-funded medical treatment institutions were lifted.

“The policy gave us confidence to introduce the medical treatment technologies and service system of Japan to China,” said Fan.

In late 2014, the hospital applied, and quickly obtained, operating licenses. It opened in 2016.

Confidence also came from the efficient services of the government.

“We need to purchase a batch of noble gases from outside the zone in our daily operation, and we need to declare at customs for transporting steel cylinders into the zone,” said director Xu Jie, who added that the process will increase the cost of the hospital as the purchase volume was not big.

“The management authorities of the zone and the customs cut the red tape for us and use a recording system to handle the headache instead,” he said.

The number of patients grew 50 percent in 2018 from a year earlier.

Xu originally estimated it would take five years to make a profit, but the hospital achieved this in just three.


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