Two years ago, Health Evolution reported about how health care executives were embracing opportunities in Asia overall and China specifically.
Then COVID hit, international travel shut down completely, and the diplomatic relationship between China and the U.S. became even more fraught, complicating collaborations between the two countries. One of China’s largest real estate companies, Evergrande, began to teeter on the edge of defaulting, muddling development within the country.
All these things are still true but Chuck Bogosta, President of UPMC International and UPMC International Vice President and China Country Manager, Jeffrey Bernstein remain undeterred in work that began in October of 2019 when the University of Pittsburgh Medical Center (UPMC) and Chinese conglomerate Wanda Group announced an initiative to jointly develop and co-manage five hospitals in China. The deal was part of a $2 billion, 20-year investment by Wanda Group into Chinese health care and it was their first major foray into the market.
“We have looked at [COVID] as an opportunity,” Bogosta says. “Everyone in the world was ill prepared for COVID. In China, they did some quick things to deal with the crisis. Since then, they understand they have to build capacity. That has really helped us and more specifically, there have been opportunities with how we’ve designed the hospital to address pandemic-related issues.”
Bogosta says the efforts in China have progressed and the Wanda-UPMC collaboration plans to open the first hospital in Chengdu in the first quarter of 2023, which is only slightly later than the original June 2022 date. They are still planning to build four more hospitals, although the focus is on getting that first one right. During the craziness of the last 22 months, the UPMC-Wanda collaboration has had to make some adjustments.
Our interview with UPMC two years ago: Is China the land of opportunity for U.S. health care?
“Initially, we hadn’t planned on putting as large of a team on the ground until six months before we opened. But over the past year and a half, we have found ourselves in a situation where we’ve had to build our team, which has worked out remarkably well. The team is highly focused and highly skilled. We’ve been fortunate to find the right people to activate the hospital,” Bogosta says.
Bernstein adds that even before COVID, UPMC realized it was going to need a more blended team of experts from inside and outside of China. “Now given the challenges of traveling between U.S. and China, this core team of local talent has grown to about 25 people,” Bernstein says. He notes UPMC has worked with the Chinese National Health Commission to train clinicians virtually using physicians that have experience in international work.
When the Chengdu facility does open, UPMC will be the only American academic medical center on the ground that will be responsible for running a hospital in China, which elevates the initiative’s visibility among health care executives around the world given the uncertainty over the real estate situation in the country.
“With Evergrande close to defaulting, everyone is looking at how it is going to work for real estate developers building hospitals in China, particularly since real estate has run into a slowdown in the country. Wanda-UPMC is the one that everyone is watching,” says Mark Wen, a consultant who has experience in international development in China for U.S. health systems. “Real estate developers have the capacity to build a hospital, but to maintain and manage it? It’s not that simple.”
Prior to the pandemic, American health systems were increasingly interested in China, which has a large aging population and a need for higher-end hospitals. Back then, the geopolitical environment between America and China was “decidedly less contentious,” says Jarrett Fowler, director of the US Cooperative for International Patient Programs (USCIPP), a consortium of 60 health systems that either receive international patients or are interested in business development opportunities abroad.
Fowler says USCIPP and its parent organization, the National Center for Healthcare Leadership, received an award in 2015 from the U.S. Department of Commerce to help American hospitals expand business opportunities in several markets, including China, Hong Kong, and Brazil. This grant lasted until 2018, he says. Moreover, the Chinese government announced in 2014 that it would allow for 100 percent foreign-owned hospitals. These changes spurred interest in the Chinese health care market but the dynamic has changed over the last few years.
“Since COVID began and there have been travel restrictions on both sides, the market has shown a decrease in new U.S.-China hospital business collaborations,” says Fowler. “A lot of this has to do with travel. Business travel has been not completely impossible, but extremely difficult with Americans going into China and the reverse has been quite difficult.”