Massachusetts General Hospital is in early discussions with two partners to build a full-service hospital with 500 to 1,000 beds in China, a country that is struggling to meet growing demand from its 1.4 billion citizens for top-quality medical care.
Mass. General signed a “framework agreement’’ last week with a Chinese hospital that specializes in traditional medicine and a Chinese investment firm, allowing the three parties to exchange financial information and work on developing a definitive agreement to open a facility in an island city close to Hong Kong.
Mass. General executives called the talks preliminary and said they have not made a final decision about whether to participate in the project, but that they hope to do so by next summer.
The Harvard Medical School-affiliated academic medical center would jointly manage the China hospital — which would be called MGH Hospital China — and potentially employ doctors, nurses, administrators, and researchers there. But Mass. General would not contribute money to build it, that would come from Chinese investors, according to a written statement from Mass. General spokeswoman Peggy Slasman.
Many hospitals, including Mass. General, are facing intense pressure from insurers and the government to charge less for their medical services in this country, or at least to slow increases. Regulators also are restricting expansion plans by Partners HealthCare, the parent company of Mass. General, making it harder for it to grow in Massachusetts.
That is in part why the hospital is seeking outside sources of revenue. China is an attractive option for medical organizations, with its growing number of middle-class and wealthy citizens and a government that is suddenly welcoming foreign investment and expertise in its health care system.
“China is a dynamic nation that will be an increasingly important global player in medicine and the life sciences,’’ Slasman said. “We have an opportunity to explore a potential relationship with Chinese partners in an area of the country that is undergoing tremendous development and growth.’’
Mass. General executives declined to provide more details in an interview because the discussions are just beginning. The two partners are Guangdong Provincial Hospital of Traditional Chinese Medicine and Kanghua Healthcare Investments Limited.
If the project goes forward, the hospital would be built in the Hengqin New Area of Zhuhai City, an island off the country’s southern coast in Guangdong province connected to the mainland by a bridge and about 30 miles from Hong Kong. The Chinese government has slated the island for rapid development including a resort and entertainment facilities.
Many American medical providers are looking for opportunities abroad. The Ohio-based Cleveland Clinic plans to open its first hospital outside the United States next year in Abu Dhabi, the capital of the United Arab Emirates. In China, Dr. Thomas Frist, founder of the large US hospital company, Hospital Corporation of America, started another firm that recently opened a 500-bed medical center in Zhejiang province.
“China has a real serious problem in regard to availability of beds,’’ said Benjamin Shobert, managing director of Seattle-based Rubicon Strategy Group, which advises health care companies entering China. The shortage led the Chinese government two years ago to allow outsiders to invest in and provide expertise for the country’s health care system.
Since then, Mass. General, which is the largest hospital in New England, has developed a relationship with China. A Chinese medical tourism firm, Beijing Saint Lucia Consulting, refers patients to the hospital. The firm opened a Boston office last year to provide translators, chauffeurs, and other services for wealthy Chinese coming to Mass. General and other Boston hospitals for cancer treatment, orthopedic procedures, and other medical care.
“There is still a large gap between China and America when it comes to medical technology and service,’’ said Joseph Zhao, the company’s deputy general manager in China. With doctors in high demand there, “physician-patient communication only lasts 5 to 10 minutes,’’ he said.
The growing numbers of rich Chinese have another option: Medical care abroad, which for a serious illness like a brain tumor can cost $200,000 to $300,000 out of pocket for surgery, radiation therapy, and chemotherapy, and require a 3- to 4-month stay in the United States, Zhao said.
Mass. General expects to treat 100 Chinese patients in 2014, 10 times more than three years ago, said Dr. Andrew Warshaw, former chief of surgery who heads international and regional clinical relations.
“They have some very good hospitals and some very good doctors there. They also have 1.4 billion people, so their facilities are often very crowded, and sometimes patients who can afford to do it come here to beat the lines,’’ he said.
Still, opening a hospital overseas has potential pitfalls, especially for prestigious institutions.
The Rochester-based Mayo Clinic closed its small Dubai cardiac care facility in 2009 in the recession that hit the Persian Gulf particularly hard. Sending Mayo employees was the best way to guarantee the care would be of the same quality as in its US facilities, said Dr. David Hayes, medical director of the Mayo Clinic Care Network. But, he said “it was very difficult to uproot people for extended periods of time to a very foreign place. On a grander scale, it would be even harder.’’
As a result, the organization has now decided to advise overseas facilities, but not open its own. “I get calls every week from developing countries like China and India, saying we would like a Mayo Clinic here. It’s just not the approach we are taking,’’ Hayes said.
In China, Shobert said, the best doctors and nurses work in public, government-run hospitals, which are seen as providing long-term job security. “Getting them to exit public hospitals and risk working for private facilities is going to be difficult to accomplish,’’ he said. “It’s going to take some time for prestigious institutions to build up critical mass to attract workers.’’
Mass. General and other hospitals considering these ventures “have to ask if you’re able to deliver the same level of clinical outcomes as you do domestically,” Shobert said. “Initially the answer is going to be no.’’
Warshaw said Mass. General has previously been reluctant to put its name on an institution overseas. “It is difficult to maintain the quality of your brand if someone is carrying it 7,000 miles away,’’ he said.
Yet, the potential project in Hengqin New Area caught the attention of Mass. General leadership. “It’s a very attractive group of Chinese investors and a very attractive property,’’ he said. “At this point we have agreed to discuss the issue and keep the discussions going. We are years away from actually having something completed. It’s not a done deal.’’