Jiamei Dental: Private Health Care in China Harvard Case Solution & Analysis


“Jiamei” being the china’s largest private dental clinics, having more than 84 clinics in different cities of China including capital Beijing. Jiamei grows rapidly on its initial fifteen years and Jiamei has expanded continuously and looking ahead to new markets and seeking for new opportunity to grow rapidly and timely. Jiamei has commenced with many clinics in the recent years and faced more competition as more local and international competitor entering the market. Government of China is more adaptive and concerned about this industry as it has recently announcedthe new reforms in improving health services more effectively and efficiently. The Chinese government encourages the private investor to invest in the health sector to boost up the market. Investment ofthe private sectorin the industry triggers competition in the market place (Health Sector), which is analogous to the great deal of improvement in the health care sector.

In the early stage, China has marked a high death ratio as more 20% newborns are dead and average life of people are nearby 36.5 years. Which is only due to the lake of health care services in the back ward areas of china. Gradually, Chinastarted working on the sector and has been able to cover the service gap so far to some extent. These serious problems are lethargic for the entire population and the state does its best to overcome them. Now the new born babies’ ratios are decreasing from 20% to 4% and average life of China populations increases from 36.5 years to 70 years of average life. Chinais spending more and more in the health sector as recent investment shows that China has invested more than 5% of its total GDP. Patients are still facing difficulty to get an appointmentto the doctors due to long processing for OPD. To overcome this problem China government is looking forward for a private investment in the relevant sector to improve and ensure the facilities to the effected population.

Private health care units are opened by the retire doctors of the public health care hospitals, but it is quite difficult to open a private clinic in China as it requires long procedures of approvals and authorization. After the first private healthcare approvals, the number of private health care units has been increasing day by day in China and serving more than 14% of the population of China in 2007. The increasing number of the private health care reduces the quality of services in the market as some private clinics are using unfair practices for the treatment of the patients. 75% of the total China health care clinics are operating in the private sector and only 15% are operating in the China public sector, reported by market survey in 2008.

Problem &Strategic Decision ofthe Organization:

New Government Policies:

The Chinese governmentis making laws and regulations for the health care units to improve the health care system to better facilitate the patients.

Liu, student China University opened a first private dental clinic in 1993. Liu faces too much trouble to get the license of the private clinic, but he gets the license soon. Liu opens the dental clinic to overcome the problem of the dental patients as he has a bad experience as a dental patient. Liu target was to look up patients over the age of 45, as they have more dental problems as compared to younger age people. Liu started from low investment, but generates a high return from its low investment in the dental clinic, because public sector dental clinics are not providing effective services and a long process of appointment is required for the customers to get a proper checkup. Taking advantage from this weak point of the public sector, Liu vows to provide best, timely and reliable services that attracted a huge mass of market in china. His this creativity enables him to generate high profits and market position. Liu came up with a huge investment to serve patients of the whole country by opening more clinics across the country. The government law, rules and regulations did not allow Liu to invest thoroughly across the economy until he has to follow certain conditions. He must have 10 years of no-objection services to get the nationwide license of service the same industry.

Liu focus was to get the license of the nationwide service in china for the dental health care unit. Liu closed down all its business to focus on the dental clinic to get the license.To obtain the licenseof thenationwide dental clinics,Liu moves to china capital Beijing to get permission of the nationwide clinics. In a few years,Jiamei gets the license of the nationwide services and obtain a license of chain dental clinics. The operating costs of chain dental clinics are not high in all parts of China, but thelegislation prolongs the process to grant the license...............

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With the recent announcement from the Chinese government that the health system in the country is going to pass reforms, Jiamei Dental Chairman Liu Jia wonder what it meant for his 15-year-old dental clinic business. Founded in 1993, Jiamei Dental Management Group ("Jiamei") rode on the wave of rapid economic development of China and China has become the largest private dental chain with 84 hospitals in Beijing and seven other cities. But China has been changing rapidly, and Liu admits that constant expansion Jiamei depended on many factors beyond its control, in spite of the government's reform, Jiamei also faced pressure from equity general partners. 2009 promises to be a key one for Jiamei. He plans to open dozens of clinics throughout the year. At the same time, Liu faces stiff competition from regional and international private dental clinics rivals high-end private hospitals, and now, perhaps, the government. These factors offer new challenges in terms of expansion of the entrepreneurial firm. "Hide
by William C. Kirby, GA Donovan Source: HBS 26 pages. Publication Date: January 22, 2010. Prod. #: 910404-PDF-ENG

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