ByteDance, the Chinese company that owns the controversial video blogging platform TikTok, quietly took control of China’s largest chain of private obstetrics and gynecology hospitals in June.
The South China Morning Post (SCMP) on Friday reviewed documents that showed ByteDance took full ownership of Beijing Amcare Medical Management Company.
This completed an acquisition process that began in September 2021 when ByteDance’s healthcare investment subsidiary Xiaohe Health Technology acquired 17 percent of Amcare. Xiaohe later bought another 13 percent. Amcare recently delisted from the public stock exchange in Shenzhen, paving the way for the final phase of the corporate acquisition.
The takeover deal was approved without reservation or conditions by China’s State Administration for Market Regulation in mid-June, according to SCMP report. Several ByteDance executives quickly appeared on Amcare’s board.
ByteDance is clearly seeking to establish itself in China’s growing online healthcare market, a product that exploded in popularity during the coronavirus pandemic. The Xiaohe division of ByteDance launched two medical apps in late 2020: an online “medical consultation” app for those seeking healthcare and a matchmaking app that validates the credentials of doctors who want to offer themselves as providers.
The SCMP cited estimates that online healthcare was a 22 billion yuan industry in 2020, but will grow to 198 billion yuan ($29 billion) by 2025. Most of China’s tech giants are entering the market, including heavyweights such as Tencent and Alibaba.
Likewise, Amazon.com acquired a chain of 188 clinics called One Medical last month, with an eye to establishing an online service that would become the digital “front door” to the clinics.
Amazon’s corporate planners thought they could improve the “consumer experience” at the clinics, presumably by handling all office functions and paperwork online, so patients spend less time on site waiting to see doctors.
China’s online healthcare system include some remote interaction between doctors and patients, sometimes eliminating the need for patients to visit physical clinics altogether. Before the outbreak of the coronavirus pandemic in Wuhan, a pioneering project called Wuzhen Internet Hospital offered online diagnoses and direct shipment of medicines to patients. Wuzhen Internet Hospital maintained the smallest possible physical facility to comply with Chinese law, with only 20 beds for the entire operation.
China’s growing online health market had a stroke in November 2021 when the communist government published a set of tighter rules, including a ban on using online consultations to make an initial diagnosis, and a ban on using artificial intelligence systems to answer patient questions instead of a qualified human doctor.
Apparently, these practices were widespread, because online health providers lost up to 30 percent of their stock value overnight. Chinese state media suggested more regulations on prescription drug sales and user privacy could be coming, further depressing the industry.