The Digital Revolution in China: PACS and Networks

Gaojun Teng, Minglin Li, Vincent Li May 11, 2012

8th Annual MIIT Conference, Toronto

Table of Content

•  Background Information

•  2011 Chinese PACS Market Analysis

•  Regional Health Network in Planning

Background Information

Increasing number of Health Institutions

•  The number of Chinese health institutions are increasing over the years. The healthcare infrastructure is now well established.

•  By the end of 2010, there are 937,000 health institutions, an increase of 20,000 from 2009. –  Hospitals: 20918, increased 627 –  Community level health centers: 902,000, increased 20,000 –  Professional public health institions: 11835, increase 170

Number of Chinese Healthcare Institutions

Total

Hospitals

Community Health Service Centers

Rural Health Service Centers

Clinics (Health stations, Care centers)

Table 1 2008-2010 Chinese Number of Healthcare Institutions

Village Health Stations

Women & Children Health Centers

Special Disease Prevention Centers

Centers for Disease Control

Hygiene Inspection Office

Source of data: MOH

Hospitals

•  Majority of the hospitals are public –  Public: 13850 –  Private: 7068

•  Hospitals are classified in 3 levels –  Level 3 (A):1284 (including AAA hospitals: 813) –  Level 2 (B): 6472 –  Level 1 (C): 5271 –  Unclassified: 7891

•  Hospital sizes based on # of beds –  800+ beds: 718 –  500-799 beds: 1069 –  200-499 beds: 3241 –  100-199 beds: 3496 –  0-100 beds: 12394

Community and Public Health Institutions

•  Community Healthcare Institutions –  Community Health Stations: 33,000 –  Rural Health Stations: 38,000 –  Clinics: 173 ,000 –  Village Health Clinics: 648,000

•  Public Health Institutions –  Center for Disease Control: 3513

•  Provincial: 31 •  Regional: 403 •  County: 2822

–  Hygiene Inspection Offices: 2992 •  Provincial: 31 •  Regional: 393 •  County: 2490

Healthcare Expenditure Surpassed 5% of GDP

•  2003-2009, the total gross healthcare expenditure grew from 658.41 billion RMB to 1.72048 trillion RMB, CAGR 17.36%

•  Healthcare expenditure in % of GDP grew from 4.85% to 5.13%

•  2008-2009, Total gross healthcare expenditure grew 18.36%

•  Public funds accounted for 27.4% of the expenditure – a 2.5% growth.

Source of data: Huatong Health, eHealth

2011 Chinese PACS Market Analysis

2011 Chinese PACS Market Size

•  2009-2011, Chinese PACS growth rate was at CAGR 25%+ •  2011 Chinese PACS market size was 1.04 billion RMB, a 28.4% growth •  2012-2015 projection for Chinese PACS market will continue 20%+

growth rate. 2015 market size will reach 2.6 billion RMB

Source of data: Huatong Health, eHealth

2011 PACS Software Sales and Growth

•  2011 Chinese PACS software market size was 280 million RMB, at 40% annual growth rate

•  2015 projection will reach 710 million RMB

Source of data: Huatong Health, eHealth

Digital Revolution is Happening…

•  Chinese government is pushing for healthcare coverage for the population, especially in rural area. –  More rural health stations –  More equipment

•  CR and DR markets are growing dramatically –  CR market size was 2000 units in 2011 –  There was a plan to deploy 7000 DRs in 2011-2012

Analog is Not Going Away Soon…

•  Most of the hospitals in China still print film!! –  CR/DR/CT/MR images are printed on film. –  It’s a tradition that the patient would want to take the film along

with the radiology report, even though the diagnosis could be done on PACS workstations.

•  The film market is about 6 billion RMB/year and growing. •  Annual sales of new imagers is about 10,000 units. •  Reason – reimbursement for film

Analog is Going to Be Replaced by Digital

•  The city of Shanghai has published a new reimbursement structure for film and digital media (e.g. disc).

•  Regardless of film or discs, the media price for each exam is 20 RMB/case.

•  This pushes hospitals to consider disc as an alternative media to film.

•  The adoption of disc media is very slow.

Characteristics of Chinese PACS Trends

•  The growth of PACS in China is not even •  PACS adoption rate is 8-10 years behind the US market. •  Top à down growth trend

–  80-90% AAA hospital –  10% county level hospital

•  East à West growth trend - eastern region grow faster than western China.

•  60% Hardware, 30% Software, 10% Service •  Local vs. multinational companies

–  Local PACS companies are much more active and stronger than multinationals

•  Local language and workflow –  RIS is 100% local

PACS Technology

•  Type of PACS –  90% PACS installed are still modality PACS –  Some departmental PACS –  Few enterprise PACS

•  Most of the deployed PACS are using client-server technology

•  Web based PACS is a new, but growing trend for clinical viewing.

•  Mobile based viewing is very new. Only a few companies are promoting it.

•  Will China leap frog to cloud storage? –  XDS is very new concept. –  Infrastructure will be a challenge (internet speed ranks 90th in the

world)

Market Share of PACS Venders at AAA Hospitals

•  The PACS market is still fragmented. •  The top 3 players are Huahuai (15.8%)，Tianjian (8.8%) and Neusoft (7.9%). •  Other venders like GE, Carestream, Anke, Crealife, Star each has 3%-4% •  Fuji, Infinitte, Zhonglian, Sanwei, Landwind each has 2%-3% •  The rest is 36.8%

Market Share of PACS Venders at County Hospitals

•  Top 3 players are Zhonglian (28.6%), Anke (7.1%), ZKML (7.1%) •  Tianjian, Neusoft, GE, Landwind each has 3-4% •  The rest is 42.9%

Hybrid Funding for AAA Hospitals

•  The funding for PACS for AAA hospitals are shared between the government and the hospitals.

•  The decision makers are mostly in the hospitals. •  In some situation, e.g. Shanghai, a consortium is formed

to manage the tendering process. –  Multiple venders are selected as “qualified venders”. –  The hospitals then make their own decisions to choose between

“qualified venders”.

Government Support for Country Hospitals

•  MOH Policy #2010-1074 –  Promote the development of IT infrastructure for county hospitals –  Improve the hospital environment –  Improve medical quality –  Control medical expense –  Improve service and hospital management capability –  Promote information connectivity and data sharing

•  In 2010, 3.9 billion RMB was allocated for healthcare IT infrastructure for Shanghai, Zhejiang, Anhui, Chongqing, Xinjiang provinces. The products included EHR, EMR, out-patient management.

•  In 2011, 2.5 million RMB for each county hospitals was allocated in Beijing, Inner Mongolia, Jiangsu, Henan, Hunan, Yunnan, Ningxia, Xiangjiang provinces.

•  In 2012, 20 billion RMB will be allocated for healthcare IT infrastrcture. •  In 2012, there a campaign to fund the development of Chinese medicine

hospitals and ethnic group hospitals, including 1956 new hospitals. •  The funding for these projects are often matched and managed by the

provinces.

Example: Country Hospitals Configuration •  Yunnan Province Project 2011-08 •  The tender includes 11 modules for medial IT. The PACS module includes

following functionality. •  Image storage and distribution for Xray, CT, ultrasound, endoscopy,

pathology. •  Authorized user can share images and image related information between

hospitals over a remote conferencing platform. •  Chinese PACS/RIS user interface.

Regional Health Network in Planning

Government Plans Healthcare Network •  In the “12th Five Year Plan”, the government defined direction for

medical IT - “3521 Project”. –  3 levels of healthcare data platform

•  Country •  Province •  region

–  5 applications •  public health •  medical services •  new rural medical insurance plan •  basic drug plan •  general management

–  2 basic databases •  EHR •  EMR

–  1 special network

Government Funding for Regional Medical Centers

•  1.254 billion RMB is allocated to fund 110 regional medical centers in 22 provinces. Each is given subsidy of 11.40 million RMB.

•  The regional medical centers are selected based on the population, size of the region, transportation, etc. The AAA hospitals in the regions are preferred choice.

Regional Medical Center Communication Front End

Regional Medical Center Communication Front End

Challenges

•  Lack of integration •  Lack of standards •  Lack of continues investment •  Lack of communication infrastructure •  Lack of IT resources •  Lack of high-end applications for decision support

–  Stops at basic data gathering and management

•  Low perception of value for software •  Government sponsorship: success is measured by how

much money spent, not the outcome for productivity improvement.

Conclusion •  The PACS market is still in its infancy. •  Chinese government is investing significantly in

healthcare infrastructure. •  Medical IT is a key focus. •  The investment coverage is broad, yet still not very deep. •  Enterprise level PACS is rare to find •  Basic radiology review is the focus of PACS, not clinical

applications. •  Regional network approach is critical to the future success

of medical IT.

Thank You