Q&A: United Family Healthcare founder Roberta Lipson on China’s COVID strategy and private hospital market

The founder and CEO of United Family Healthcare (UFH) and New Frontier Health (NFH), Roberta Lipson has over 40 years of experience as a trailblazer in China’s healthcare industry. She co-founded UFH’s predecessor company, Chindex, in 1981, expanding the business from China’s top medical equipment distribution company into China’s first and largest foreign-invested healthcare system.

With a dedication to offering comprehensive premium healthcare services in China, UFH was later acquired by China-focused investment firm New Frontier Corporation in 2019. Staffed by more than 600 full-time doctors from 25 different countries and regions, UFH currently owns and operates nine hospitals and 14 clinics in cities like Shanghai, Beijing, and Guangzhou.

Join us and celebrate Lipson’s achievements at the The China Project Women’s Conference 2022, which is slated to take place virtually on May 19 and in person on May 20. Get your tickets here before they sell out! 

Prior to the event, we caught up with Lipson to talk about China’s COVID strategy, new developments at UFH, and her outlook for the healthcare provider market in the country.

The following interview has been lightly edited for length and clarity.

The China Project: China just extended the sweeping lockdown in Shanghai in an effort to curb the country’s worst outbreak in more than two years. In the meantime, there’s been an outpouring of wrenching tales of Shanghai residents having difficulties accessing medical resources and running low on food, which has made some people seriously question if China’s zero-COVID policy is actually sustainable and necessary. What do you make of the COVID situation in Shanghai? Do you think the leadership will rethink the strict elimination strategy anytime soon?

Roberta Lipson: First of all, our hearts go out to all those who have endured the lockdown and also the frontline workers across all sectors who are working tirelessly to keep Shanghai running despite the obvious challenges.

Prior to the outbreak, in March of this year, we had begun to see the start of some flexibility for a dynamic COVID policy both in Shanghai and in the rest of China. On March 15 the government issued new diagnosis and treatment guidelines which included a more liberal policy for patients with light symptoms no longer needing hospitalizations, and quicker release from quarantine and home quarantine for non-symptomatic cases. In addition, the strategy includes planning to allow lower level hospitals and clinics to use antigen testing to rule out suspected cases with COVID-like symptoms rather than sending every suspected case to a higher level hospital, thus further preserving needed hospital capacity for potential outbreaks.

Then, the Omicron wave came upon Shanghai quite suddenly, after two years of keeping positive COVID cases at single or at most double digits per day. Despite the relatively less lethal nature of the Omicron strains, the reflexive action was to try to control it by a limited, phased lockdown with mass testing in Pudong and then Puxi, the eastern and western sides of Huangpu River. The number of positive cases found was unprecedented to date in China, which then caused the extension of the lockdown. The good news is that in spite of the large numbers of infections, we are seeing very few ventilated or lethal cases. Hopefully, this will encourage the implementation of a strategically more flexible approach to the situation.

The current situation in Shanghai is truly stressful, not only for Shanghai residents but also the business and medical community. The fact that there is a very high vaccination rate in the country, combined with the prevalence of a much less lethal strain of the virus, and more recently approved effective therapeutics, I do believe that there will be further consideration to a more targeted/ flexible policy as the positive test rates in Shanghai begin to decrease.

United Family has two hospitals and several clinics in Shanghai. Many of our staff have been locked down at home. Those who are not are on duty round the clock at our hospital sites, providing 24/7 care to an usually large number of non-COVID patients. As some of the emergency rooms in the city have had to be closed, we have seen increased needs for service. We are so proud of those doctors, nurses and support staff who have been available to care for both our existing patients, as well as new patients who have had challenges accessing their normal channels of care.

The China Project: Two years into the pandemic, China still hasn’t joined the majority of countries in approving foreign-made vaccines based on mRNA technology and seems determined to introduce a homegrown mRNA shot. What are your thoughts on China’s vaccine policies and its inoculation drive? Do you see Chinese authorities introducing Western mRNA jabs this year given the recent outbreaks across the country?

Roberta Lipson: I would say that China’s vaccine drives have been most impressive. Although we cannot deny the studies which show the deactivated virus vaccines to be somewhat less effective than the mRNA counterparts, the domestic vaccines were approved early on and successful mass vaccination drives started in Spring of 2020, leading to the current coverage of close to 90% of the population. Part of the reason for the high acceptance rate among much of the population is a certain level of trust in these more traditional, domestically made vaccines, as well as the well-organized nation-wide distribution.

That having been said, there is also another segment of the population who would very much like to see the availability of the mRNA vaccines. Fosun Pharma through an arrangement with Pfizer/Biontech is licensed to distribute their mRNA in China and has been waiting for approvals since 2020. We have heard recently that they are completing some required domestic real-world clinical trials in Fujian.

Given recent publications of clinical data showing the relative efficacy of mRNA, as well as the excellent results of mRNA boosters following Chinese vaccines, we hope that the government will be motivated to accelerate the approvals for either domestic or imported mRNA vaccines.

The China Project: In light of Beijing’s regulatory crackdowns on its education sector and tech companies last year, some analysts warned that private medical providers might be the next to fall under scrutiny. Do you think there’s some validity to their prediction? In your opinion, how does the private healthcare sector fit into Beijing’s pursuit of common prosperity?

Roberta Lipson: Although over 50% of the hospitals and clinics in China are privately invested, private healthcare accounts for only around 18% of patient care. As the public system is still quite overburdened trying to keep up with its mission of providing basic care to the whole population of China, there is still a very large unmet need for the provision of higher-touch service care from the private sector. In addition, in the efforts to contain the cost of reimbursed public healthcare, recent government regulations have limited the use of certain innovative drugs and technologies at public facilities. Therefore, private healthcare is both seen as a way to reduce the pressures on the public system for specialty care, as well as being a platform for piloting new approaches, technologies and innovative service models, which would not be economical to use in the public system. We have seen in many parts of the world a concerted management of public and private healthcare can yield better cost effectiveness and health outcomes.

The government has continually issued policies which signal increasing support of private healthcare as an important segment of the overall healthcare provision system in China. It is even codified in the Healthy China 2030 document, which is the blueprint for healthcare strategy, as follows: “Remove unreasonable restrictions and hidden barriers for social forces to enter the medical field. Gradually expand the scope of foreign-funded medical institutions. Increase the government’s efforts to purchase services, support insurance investment and the establishment of medical institutions, promote the development of non-public medical institutions to a high level and scale, and encourage the development of professional hospital management groups.”

This has been reinforced since then, in many new government policy proclamations and attendant regulations, including the expansion of social insurance reimbursement to an increasing number of private institutions, exempting the expansion of private health facilities from the centralized public planning limitations, and encouraging local governments to purchase services from private institutions.

That having been said, there was much speculation last month when a research division of the National Health Commission (NHC) approached the Private Hospital Industry Association asking them to participate in a survey which explored the necessity and scope for continued expansion of private healthcare in China, as well as questioning the industry’s need for continued access to public markets for financing. This caused great concern among investors resulting in the public market healthcare equities taking a substantial hit in valuation. The government responded quickly. The NHC confirmed that the request was only for some routine research of one department of the Ministry. The next day there was also a swift response from the highest levels of government when Vice Premier Liú Hè 刘鹤 said at a special State Council Committee Meeting that “the Chinese government will continue to support various enterprises to seek listings in the overseas markets,” and that in the future “any policy that has a significant impact on the capital market should be coordinated with the financial regulatory authorities in advance to maintain stable and consistent expectations.”  I surmise that this referred to the issue caused the previous day by the presumably not pre-approved “research survey.”

After the results of Liu He’s meeting were announced, the markets, including healthcare stocks,  immediately recovered the lost valuations, which reflects the ongoing confidence that investors have for the future growth of private healthcare in China.

I am quite confident that the support of the development of private healthcare has not waned, but rather we see strong support from both the central and local governments for the continued expansion of United Family’s hospital and clinic platform, appreciation for the innovations we have introduced, as well as our contributions during the COVID crisis and through our Foundation.

The China Project: As one of China’s biggest private hospitals, what role has United Family Healthcare been playing in the country’s ongoing battle against the coronavirus pandemic? How has the pandemic affected your company’s hospital system and services?

Roberta Lipson: United Family Healthcare currently owns and operates 9 hospitals and 14 clinics in China. Having developed the United Family brand over the past 25 years, I believe that we have achieved this level of acceptance and success based on our commitment to safely delivering innovative, high-quality healthcare across the whole human life cycle care spectrum.  We take very seriously our obligation to the community and that means that throughout the challenges of COVID we needed to make sure our high-quality care is always available to our patients, especially during these times that healthcare access and normal public services might be interrupted by the pandemic. Here’s what we’ve been doing:

• Our hospitals are among a handful of private healthcare operators in China designated by the government to operate fever screening centers in its hospital facilities for combatting COVID. 
• Since mid 2020, and even in the current situation in Shanghai, nearly all of our departments continue to offer services as needed for both inpatients and outpatients.
• From the beginning of the COVID outbreak, we provided online and telephone consultation services to our patients. Subsequently, we launched our full internet hospital.  This is an online facility licensed by the Chinese government as our 10th “Hospital.”  The United Family online Internet Hospital is available to patients nationwide and now covers over 30 specialties, including Family Medicine, Pediatrics, Obstetrics and Gynecology, Internal Medicine, Surgery, Oncology, and Psychology with more than 200 full time UFH doctors providing online consultation service.
• During the current Shanghai outbreak, we have made our internet hospital services free for Shanghai citizens and will continue this policy for the duration of the crisis.
• We have administered collectively over a million vaccinations and RNA tests to both to both the Chinese and Foreign population. 
• In addition to making sure we have sufficient supplies to protect both our healthcare workers and patients, we also made several relief donations of medical equipment to Wuhan, Guangzhou, Henan, and Hongkong. 
• Last year our affiliated charitable foundation extended our United Family care to over 600 orphans and needy patients through our 1% program. In this difficult time our Foundation’s cervical cancer screen and treatment program also benefited 1500 women in rural china.

From an operational and corporate development perspective, the impact of the coronavirus was two-fold. During the first quarter of 2020, some of our facilities were shut down for a time, and/or had enforced closures of certain high-risk departments and were faced with patients’ concerns about coming to healthcare facilities. In addition, all facilities had to respond to the continually adjusting requirements of epidemic infection control, making adjustments to building space, buying new equipment, and creating fever clinics. This allowed us to get back to more normal operations by the second and third quarter. At the same time the challenges of COVID inspired the accelerated development of our digital networks, we established the internet hospital, and extended our reach through the incorporation of portable connected devices into patient care. All these developments come from the key learning from COVID. We must make our service accessible and available to our patients at all times, even in the face of daunting external challenges.

The China Project: Are there any new developments at United Family Healthcare that you are excited about? What’s your goal for the company in 2022?

Roberta Lipson: In 2019, United Family Healthcare Brand merged into a NYSE SPAC, through which we acquired the corporate title of New Frontier Health, along with a new broader investor group, with many local and global savvy investors. This also brought along new capital and several enthusiastic and talented entrepreneurial additions to our leadership team. At the beginning of 2022, we again privatized and delisted from the NY Stock Exchange. In these three years we have opened two new hospitals, including our second hospital in Shanghai and our third hospital in Beijing, as well as several new clinics. Our new Shenzhen Hospital has just been licensed and will open this quarter. This 80,000 square meter General Hospital is the first premium service private hospital in the affluent and growing city of Shenzhen, and it will allow us to better integrate our services in the Greater Bay Area.

Moving forward, we will continue to expand our United Family Healthcare network in China’s first tier cities, looking at expanding our network through both new builds and greenfield projects. We are also excited about the new digital horizons that will both expand our reach and bring us closer to our existing patients. Both the Chinese government and China’s consumers have shown support for high-quality private healthcare. I believe that UFH can continue to play an important role both in bringing innovative approaches to patient care, as well as public spirited support in times of need to the people of China. This marks the 25th anniversary of our inception and we firmly believe that the best is ahead of us.