Meiloo.com: China’s future Web 2.0, proto-HMO

Posted By Damjan DeNoble

Yesterday we had a sit down with the President of Meiloo, Yan Zhang.  Meiloo is an exciting company for several reasons, but if you are not a Chinese health professional, then chances are that you have not heard of Meiloo because the company peddles exclusively to Chinese private clinics, and Chinese patients.  The first time we heard about the company was in early 2008, when the start up was featured in the April issue of China International Business Magazine (though the cover of that issue featured Olav “Kro” Bauer of The Kro’s Nest, where I was the closest thing a three restaurant strong pizza business could have to a GM, through November of 2008…just a point of pride…).

In brief, Meiloo is a health care provider referral gateway, connecting patients seeking care with health care providers in Beijing and Shanghai.  Their business model is simple – Meiloo screens private clinics offering care in one of seven separate categories (Plastic surgery, dental, OBGYN, ophthalmology, weight loss, spa, and psychological).  They have contracts with the clinics they advertise, and Meiloo gets paid on a per referral basis.

Patients, who receive care at a Meiloo partner clinic, can log in and describe their post up experience.  To augment the self reporting of patients, Meiloo does a further series of follow ups with the providers and patients to paint comprehensive picture of the clinics it works with.  At the end of a one year contract cycle, Meiloo chooses which of the clinics they should continue working with, basing their decisions on a set of internal quality indicators.This last part of what they do as a business is, in my view, the keystone of their value added proposition to the Chinese health industry (and I will go into further, but later in the article).

Yan pointed out early on in our talk, and at the very end, that  figuring out just how to appraise the health care services of clinics is the trickiest part of the job – one that Meiloo is putting a lot of time into – and that this process lies at the center of Meiloo’s “primary value”;

Meiloo’s “primary value is to provide transparency” in China’s private health care sector,  and to build  “a basis of trust” for the relationship between the Chinese health sector and the Chinese public.

Our talk with Yan covered a lot of ground, and even included an ad-hoc lesson given by Meiloo co-founder, Jeffrey Wu, on why Chinese web-pages are on the whole so much more crowded than the majority of web-pages designed for western readers.  James will be writing about how the talk with Yan shaped his view of Health Web 2.0 in China in a later post.  What struck me are the implications that Meiloo’s success could have for the managed care industry in China.

I will back up a bit, and give some context before I dive into these (exciting) implications.

At one point in our conversation, I asked Yan about his views on how the 850 billion yuan health reform package that China unveiled in February is going to impact China’s health industry.  Yan’s main concern was that it did not address the status of doctors, in the sense that they were not given freedom to practice independent of a public institution, and that this , in effect, furthered a damaging unspoken rule, by where doctors’ prestige is tied to the size and reputation of the public hospital they work for, while their wallet size is dependant on the private hospital they moonlight for.  The catch 22 is that access to the best (and highest paying) private hospitals is more than somewhat dependant on the size and quality of one’s social and professional network, which, again, starts at one’s public hospital.

So, according to Yan (and I fully agree, having seen my parents go work within a similar system as doctors in the pre-war republic of the former-Yugoslavia), if the success of the health reforms is predicated upon the ability of community and provincial level clinics and hospitals (Tier I and II) to better themselves, and this betterment is dependant a large part on the quality (and, in some cases, quantity) of doctors available, then failing to address doctors’ status would seem to be a big misstep.  When doctors status and prestige is tied to public hospitals, then young medical graduates will continue to naturally gravitate towards the biggest hospitals since they will, rightly or wrongly, “see [postings at small, community health establishments] as career dead ends.”

(To their credit, however, the draft persons and policy makers of the health reform seem to be aware that doctor’s status is an issue, and you can read about it in this interview with Dr. Li Ling, a primary draft person of the health reform here, and here, where I wrote about it in a previous post.)

The implication of this failure to address the status of doctors in China is that while the nationalization of health care is probably going to happen, China is going to move towards a hybrid nationalized/privatized model because the lack of incentives to bring doctors to smaller hospitals is going to leave China with little choice but to semi-privatize the public health sector.

This is very much like the round of privatizations of SOE’s in the late 80s and throughout the 90s.  Yan predicts that we will start to see this happen in the next five years.  If smaller community and provincial level health facilities are able to go private, then, naturally, the lure for doctors to go there will be higher because of the financial rewards.

So how does this lead to Meiloo, and the implications its success has for managed care? About two months ago I wrote about the difficulties of establishing a TPA in China, in a piece called Third Party Administration in China: Shortcuts are Pointless where I said that someone wishing to set up a successful China TPA organization needed to put themselves in a position to have as much information about the market as possible, because while the concept of a TPA organization is easy enough, timing one’s entry into the China insurance regulation market was difficult, and no major international insurer is willing to jeopardize its entry in the Chinese market by partnering with an inexperienced (or illegal) TPA company, instead;

“[Insurers] want someone to offer them a solution for when the market opens, and nobody knows when that is going to be. So, they don’t need someone to regulate their prices. They need someone to position their business so that when the market opens it hits the ground running, and gives them an advantage that the competition is not going to have. “

Meiloo.com fits, to a tee, all of my previous requirements of a successful, TPA like, China market entry guide for health insurance companies. With every new clinic (currently Meiloo.com works with 310 clinics, but Yan said “frankly, we could have signed up many more”) and patient it  partners or follows up with, Meiloo.com gathers market information that know one else in China has.  Yan is already amazingly knowledgeable about the Chinese health industry for someone who professes “not to be a health care guy,”  but “simply a marketing guy.”

Moreover, by establishing financial partnerships Meiloo.com has already built that precious ‘guanxi’ that will be so important for insurers wishing to come into the market.  The best part, is that Meiloo fulfills all the roles that a health insurer looks for in a TPA, without ever really venturing into territory that could clash with the regulatory impulses of the MoH and/or the CIRC (Chinese Insurance Regulatory Commission) since none of what it does is truly a regulatory role.

What’s really amazing, is that Meiloo is doing all this through a fairly simple online marketing platform that is more Web 1.0 than Health 2.0.  Yan likened the web of health information on Chinese Internet as something resembling an early WebMD where one could only find STD related info, leading to the very funny moniker “WebSTD”.

If health 2.0 takes off in China as quickly as it did in America, and Meiloo.com keeps track, it could very well be a global Fortune 500 company, and a one of a kind China TPA.  Traditional, American-based HMOs will be left in the dust.

We’ve seen how Health 2.0 has started to redefine the role of patients in the developed health care space of the United States.  But, in the ‘under development’ Chinese health care space, Health 2.0 with Meiloo.com at the forefront, has the chance to redefine how the entire system is structured. Remember, folks – Asia Health Care Blog said it first.