There are more than 10,000 private hospitals in China, and their numbers -- and revenues -- are growing every year. Yet they’re also among the least trusted institutions in China, widely assumed to be dens of quackery, malpractice and shameless profiteering.

So why do patients flock to them? One reason is that China’s top search engine, Baidu, accepts their advertising.

That’s how Wei Zexi, a 21-year-old cancer patient, ended up spending more than $30,000 on what was advertised as an experimental treatment at a private Beijing clinic. He died on April 12, but not before writing an angry account of his fleecing that went viral on China’s Internet. For now, most criticism has focused on Baidu. But that’s not entirely fair. The Chinese government, which has been the first to point fingers in this case, is just as much at fault, in large part for its longstanding failures to reform and regulate China’s health care sector.

The problems start in Putian, a small city in China’s coastal Fujian Province. It’s best known as a manufacturing base for counterfeit designer footwear. But Putian’s biggest business is the network of 8,600 private hospitals owned and run by a handful of Putian families. Collectively, they represent roughly three-quarters of all private hospitals in China.

The empire has sordid roots in 1980s China, when a handful of entrepreneurs started selling iffy skincare treatments and later expanded into sexually transmitted disease clinics. Their methods were less than ethical. A 2006 account by a Chinese state media organ claimed that the company often tricked people into paying for treatments when they had no STD; in pursuit of additional business, some agents even allegedly sprayed public toilets in Shanghai with an itch-inducing lacquer.

The Putian clan’s methods don’t seem to have improved much since then. According to Caixin, a respected Chinese business magazine, some Putian-affliated hospitals threaten to punish doctors who don’t collect at least 1,000 yuan per patient -- the equivalent of $153 and an extraordinary sum when public hospital consultations can be had for the equivalent of $2 or $3 (plus a long wait). To meet the quota, doctors prescribe unnecessary treatments and drugs, oftentimes pressuring patients when at their most vulnerable. Vice recently reported on one man talked into undergoing a medically unnecessary circumcision at a Putian-affiliated hospital, then “pushed” to sign off on more expensive procedures that eventually left him impotent.

These kinds of stories are rife in China, told and retold whenever Chinese complain about health care. Part of the problem is that there aren’t enough regulators to keep up with the growth in private hospitals and clinics. Of course, even if there were enough, many Putian-owned facilities -- including the one used by Wei Zexi -- are embedded in military hospitals that are exempt from oversight by civil medical authorities.

The bigger problem, though, is a lack of capacity in the state-run health system. Since the late 1970s, the Chinese government has steadily reduced its contributions to public health institutions in hopes that they’ll develop their own, market-based revenue sources. But many of these clinics and hospitals -- especially at the local community level -- simply aren’t able to survive without government help.

The same goes for medical personnel. China’s famous “barefoot doctors,” for example, who were trained over three-to-six month periods to offer simple medical care in rural villages, have largely disappeared. Well-trained general practitioners are almost as scarce -- China currently has 25,000 general practitioners serving a population exceeding 1.3 billion. Low pay deters many students from entering the field. So, too, does an ongoing epidemic of patient violence against physicians, driven by the widespread perception that the profession is profiteering and corrupt.

With no general practitioner or community clinic to consult, most Chinese patients self-diagnose and then head to China’s overcrowded public hospitals to wait in line for a specialist. Those who don’t trust the public hospitals (and they have their own serious problems), either go directly to private hospitals or -- even worse -- scour the Internet for options. Baidu, China’s leading search engine, has long allowed medical providers to push up their listings in search rankings, making them look more legitimate.

The problem eludes easy fixes. Banning online advertising of medical services would be a good place to start, with one smaller Chinese search engine already announcing it will do so voluntarily. The Chinese government also needs to pay for more regulators, while extending their remit to cover military hospitals.

Above all, though, the government needs to improve the quantity and quality of China’s doctors. That means funding new clinics and subsidizing higher salaries for general practitioners and specialists in less-lucrative fields such as pediatrics. Strengthening malpractice laws would also encourage both private and public hospitals to focus more on patients than profits.

Training thousands of new doctors will take years. But if China is truly focused on creating a consumer-based economy, then ensuring the health of those consumers would seem a good place to start.


By Adam Minter

Bloomberg

Adam Minter is an American writer based in Asia, where he covers politics, culture, business and junk. He is the author of “Junkyard Planet: Travels in the Billion Dollar Trash Trade,” a best-selling and critically acclaimed account of his decade writing and reporting in the world’s scrap yards. -- Ed.