(Yicai) Jan. 10 -- Shanghai has issued a plan to encourage the establishment of wholly foreign-owned private hospitals in several areas.

Up to two wholly foreign-owned hospitals can be funded in each the Lingang Special Area of the China Shanghai Pilot Free Trade Zone, Hongqiao International Business District, Shanghai Oriental Hub International Business Cooperation Zone, and other selected areas, according to the plan released on Jan. 8 by the local government.

On Nov. 29, the National Health Commission issued a plan to allow wholly foreign-owned hospitals to be established in Beijing, Fuzhou, Guangzhou, Nanjing, Shanghai, Shenzhen, Suzhou, Tianjin, and Hainan province. General, specialty, and rehabilitation hospitals fall within the scope, but traditional Chinese medicine hospitals are excluded, along with the acquisition of public hospitals by foreign entities.

Moreover, the NHC specified that such hospitals should not carry out organ transplants nor provide assisted reproductive technologies. They must store patients’ health data in the country and only sell drugs and use medical devices that are approved for marketing in China.

“Wholly foreign-owned hospitals will need to differentiate their role and service model from existing medical institutions,” Cai Jiangnan, executive director of the Shanghai Chuangqi Health Development Institute, told Yicai. “This way, they will not only facilitate access to medical care for foreign nationals, but may also attract some affluent domestic patients who might otherwise seek advanced treatments overseas.”

This pilot opening-up of hospitals to foreign capital can optimize the Chinese business environment and diversify China’s supply of medical resources, a source from a private Chinese hospital told Yicai. However, it remains to be seen whether follow-up policies will be implemented, as well as the willingness of foreign investors to tap into the Chinese market, the person added.

At the end of last year, it was announced that Singaporean real estate and healthcare giant Perennial Holdings would invest in the establishment of the Guangzhou Baiyun Perennial Hospital in China’s southern Guangzhou.

Singaporean private healthcare provider Luye Medical Group also unveiled plans to build its international headquarters and a wholly-owned specialty hospital in Shenzhen last month.

Editor: Futura Costaglione