Three Chinese Commercial Giants Battle in the Field of Mobile Payment for Medical Insurance

On November 8, 2016, the Chinese Ministry of Human Resources and Social Security released the “Internet Plus Human Resources 2020” action plan, specifying that Chinese social security cards will now be capable of payment functions for various services, including medical insurance. Meanwhile, the ministry is working with commercial banks and third-party payment platforms to build an open but unified medical insurance data hub, strictly government controlled and designated for public purposes.

Under the premise of safety and controllability, the Chinese government will support relevant agencies to carry out digital services such as the online purchase of medicines. Encouraged by this policy, three major commercial giants in China, i.e. Alibaba, Tencent and Ping An, have entered the field of mobile payments for medical insurance, and respectively laid out their strategies.

The players

Tencent—Wechat

In April 2016, Tencent formally signed a strategic cooperation agreement with Shenzhen Human Resources and the Social Security Bureau regarding urban services. This agreement states that citizens of the Shenzhen Province in China can pay for medical insurance via the social media platform of Wechat (a key service provided by the Tencent Group).

People must perform a name authentication process before using Wechat, to reduce the financial risks for the involved parties. The function of making payments in advance, along with the option of a credit system, are integrated in Tencent’s internal database, and will be implemented to further enhance the user’s safety.

Currently, Tencent has made a priority of covering Grade 3A public hospitals, and plans to target Grade 2A public hospitals and community hospitals afterwards. In the near future, Tencent aims to gradually expand this medical insurance payment service to 21 cities in 11 provinces throughout China.

Alibaba—Alipay

In May 2016, Alipay (the payment application of the Alibaba Group) also worked with Shenzhen Human Resources and Social Security Bureau, to jointly carry out the Medical Insurance Mobile Payment Program. With this service, patients can link their social security card with Alipay, to calculate and pay for their Medicare through their medical insurance.

The essence of this service is the electronization of the health insurance cards, supported by Alipay’s real-name user system. The risk control system of Alibaba Group also ensures the financial security of this payment service. If the accounts of Alipay users are compromised, or unexpected errors occur within Alipay’s real-name verification system, Alipay will pay the victims in full for any losses resulting from such mistakes.

Ping An—Ping An Payment

The fundamental operational model of Ping An, a Chinese medical insurance company, is specifically made to integrate with a hospitals’ HIS (Health Information System), allowing it to broadly help with various processes, such as pre-registration, call waiting, laboratory notification, prescription payment, inspection payment, pre-diagnosis, consultation and post-diagnosis.

However, unlike Alipay and Wechat which have their own external autonomous applications, Ping An Payment has no online application, but simply works through a plug-in unit. This plug-in software can be inserted into the systems of different hospitals and other medical service providers, to facilitate mobile medical insurance payments.

The road to a new medical payment structure

In order to construct a viable medical services ecosystem, Tencent and Alibaba released their payment-application plans as early as 2014. The first step of their plans was to support and improve various processes in hospitals to enhance the institutions’ operational efficiency and to save patients time by streamlining processes, such as online appointments, registration, medical payments and access to medical files.

The second step was to integrated Medicare with medical insurance, to reach a wider range of patients.

While all three commercial giants’ have achieved a lot in the past three years, we can still see challenges accompanying the opportunities in this unsettled field. On the one hand, according to empirical research, the Medicare mobile payment services could reduce more than half of the patients’ entire medical treatment time, which brings many growth opportunities to the medical industry in China.

On the other hand, such a payment service is to a great extent dependent upon government policies. Although the current Chinese Ministry of Human Resources and Social Security encourages commercial trials in this area, it has also given many regulations to control its reach and development, e.g. strictly forbidding the establishment of a commercial Medicare database. Due to the unclarity of the future government policies still to come in this domain, the prospects of the medical insurance mobile payment services of these three giants and other new participates are still unknown.

Without doubt though, these are dynamic and exciting times for China’s healthcare users, providers and payers, opening up a new world of collaborations and synergies.

 

About Zhen Nie

Zhen is in charge of Asian Operations at TforG, with more than 6 years of experience in project management and business consulting for local and international companies. She works in a continuous basis with an extensive network of Key Opinion Leaders and Health Policy makers in Asian markets. She graduated at the University of Antwerp and has a Master Degree in Finance. Tel: +32 3 201 64 24 Mobile: +32 485 89 98 84 Email: z.nie@tforg.com