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Private dental care grows fast

By David Blair and Gao Songya | China Daily | Updated: 2016-10-07 09:11

Private dental care grows fast

[Song Chen/China Daily]

As consumer demand for more sophisticated services rises along with disposable incomes, the Chinese middle class is paying much more attention to dental care.

So, the private dentistry market in China is booming, with a growth rate of about 30 percent per year. But, problems in quality assurance, patient finances and insurance, and market fragmentation are keeping many potential customers away.

According to the World Health Organization, China has the lowest density of dentists per capita of any G20 country-only half that of India and less than a quarter of the United States.

Until recently, Chinese use of dentistry was one of the lowest in the world. But, that's changing fast. A study by Zhong An Insurance Co estimates that China's total dental revenue will reach 120 billion yuan ($18 billion) this year, and will exceed 200 billion yuan by 2019.

Many Chinese are reluctant to go to private healthcare, believing that the large public hospitals are better regulated and more qualified than the private sector.

Zhang Liang, an orthodontist at the Shanxi Medical University summed up the dilemma: "I've seen so many patients coming here to get further treatments, as they've been wrongly diagnosed or treated in those private clinics. ... I'm not saying they are all bad since they at least make up for the insufficient medical resources and save people the trouble of waiting and getting registered. The industry is indeed heading better, but through mistakes and troubles. ... The patients should carefully distinguish the bad ones from the good ones and related regulations must follow up."

Many investors believe that Chinese healthcare offers great long-term opportunities, but they have not yet found profitable business models.

According to the report from Zhong An, about half the dental revenue goes to public hospitals and the other half to the private sector.

Dentistry is less regulated than other healthcare and competition from State-owned hospitals is weaker since the basic social medical insurance covers little dental care.

The larger chains, which receive about one-fourth of total dental revenue, are trying various strategies to grow and, especially, to assure patients about their quality.

Arrail, which has the largest number of clinics, around 75, and is growing about 40 percent per year, aims for wealthier clients and charges higher prices, according to its founder and CEO Robert Zou. This gives the company resources to hire dentists from the top 5 dental universities, give them training, and do frequent peer-to-peer evaluations.

On the other hand, Hangzhou-based TC Medical Corp has grown largely through acquisitions and focuses on hospitals in its native Zhejiang province rather than stand-alone clinics. It has also partnered with the Temple University medical school in Philadelphia. It bought Hangzhou Dental Hospital, now the world's largest, and just acquired Kunming Dental Hospital through a joint venture with the Kunming municipal government. Its 2014 annual report argues that "bringing in a top overseas partner can solve the problem of the public's mistrust toward non-State-owned facilities."

Many patients would like to have dental insurance and more expensive procedures often need to be financed. But, today, the dental insurance and lending markets are almost nonexistent. The lack of information on costs and on patients limits the abilities of insurers, banks and other financial services firms to participate in this market.

Despite rapid growth and high demand, dental care in China is still lacking. Dental schools and companies need to focus on training more dentists, and those must be highly qualified. Insurance and financial companies need to be able to support the market. Ironically, more government regulation might boost companies by reassuring customers and weeding out the less competent.

In many ways, the issues and opportunities of the dental care market are harbingers of the coming much larger general healthcare reform.

Gao Songya, in Beijing, contributed to this story.

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