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2019-09-19 10:05:42
GBI this month spoke with Celine Zhang, the CEO of MSH China, which acts as the Asia-Pacific base of France-based MSH International, a provider of health insurance services and solutions. Discussion points included the development path of the private insurance sector in China and Ms. Zhang’s experiences as an early industry pioneer, and the challenges involved in developing China’s insurance industry online after MSH’s recent ground-breaking partnership with online pharmacy 111 Inc.
Celine Zhang CEO, MSH CHINA
Celine is a pioneer in China’s international health industry, with almost 20 years’ experience in health insurance market strategy and development in Asia. She has achieved a number of industry milestones, including being the first to introduce the international health insurance concept to China; establishing the first international health insurance service center; setting up the first direct billing network with top-ranked local hospitals; and launching the first international health insurance and Long Term Disability insurance schemes to be approved by the China Insurance Regulatory Commission (CIRC).
MSH currently provides services to over 2,000 Fortune-500 companies, local enterprises, and international schools in China.
Q: Tell us about your early career and background and how you came to be where you are today?
Celine: I do not have a medical or insurance background, you could say I am an entrepreneur and my experience is a bit different from the most. I was originally an English teacher for 13 years, but I decided to change my life and so I went to Nanjing University to gain a master degree in sociology, and then joined the Hopkins-Nanjing Center for Chinese and American Studies (HNC) Johns Hopkins China program for 1 year. That was 1997, and after I graduated there was a big need here in Shanghai for English-speaking talents. I actually started in real-estate as a marketing manager, which helped me to understand the expat community, and then one year later I joined an American insurance company looking for a service representative. We focused initially on expat teachers in the international school market which was growing very fast at that time, but later on expanded into the corporate market, with clients such as EachNet, later bought by eBay, and SMIC, a semi-conductor company.
This client changed all of our perspectives. Previously we only focused on foreigners, but at SMIC the members were all returnees, or Chinese-speaking expats. They wanted good quality Chinese hospitals, and Chinese-speaking specialists and doctors at hospitals like Huashan or Ruijin [Shanghai public hospitals], and it’s not necessary for them to go to English speaking clinics. I was responsible for the operations related to their requests, so I started talking to Chinese hospitals and was the first to introduce direct billing in Chinese hospitals, which meant signing a contract with the hospital to provide cashless service to patients, and the hospital sending the bill to us rather than collecting the medical expenses directly from the patients.
This experience guided me in how I set up the company, and we were the first international health service provider to work with the Chinese hospitals. In 2005, we started to work with Chinese insurance companies with CIRC’s official approval, to provide product design, sales and marketing, and operational services as a TPA (Third Party Administrator). In 2009, MSH came and bought a majority shareholding in us, and from that point onwards we started to promote ourselves as MSH.
Q: Can you tell us more about the TPA business model, and the current scope of MSH’s operations in China?
Celine: We took the decision to operate as TPA as we saw the market needs of many insurance companies growing. They had established big client bases, but it’s not easy to build the necessary global medical network, IT, and customer service capability overnight. So we start to offer a plug-in TPA platform, not only to Chinese insurance companies but also to foreign insurance companies. We act as an operation and service platform providing all-round services relating to international health insurance. Members can enjoy direct billing service at our medical network providers by presenting MSH cards. We have a 24/7 call center that can respond to our members worldwide inmulti-languages. We do claim control for our clients, we accumulate underwriting experience, and we bring a lot of value to the insurance companies. It turns out to be a great business decision to create an open platform for all insurance companies to get access to high-end health insurance.
Today we have established partnership with 39（as of Q2, 2019）insurance companies throughout every major market in Asia. We are servicing around 2,000 corporate clients and international schools with more than 100,000 members, as well as a fairly large number of high net worth individuals.
Q: China’s private insurance sector is reported to be growing very rapidly, what can you tell us about the market growth for MSH and changes in terms of drivers behind that?
Celine: We are growing fast, yes, but compared with the Chinese population the private insurance sector is still relatively small. Before 2014 there were not many individuals buying health insurance, only some Fortune 500 companies and international schools were willing to provide international health insurance benefit to their senior executives and expat employees. MSH was proud to be selected as the international health insurance service provider by Fortune 500 companies such as General Electric, Microsoft, Alibaba, Tecent, etc. since then
In the past 5 years, I am amazed at the number of individuals who are willing to pay out of their own pocket to buy IPMI - international private medical insurance. We haven’t paid much attention to that segment before, but its growth rate seems to outpace group health insurance in the recent years, as more and more affluent Chinese have higher awareness on healthcare and can afford private health insurance.
On a separate note, we also start to provide international health insurance service for Chinese companies going overseas following ”the Belt and Road” strategy.
Q: For the China market specifically, what can you tell us about the state of competition between local firms and foreign insurers and the challenge of localization?
Celine: In the beginning, Chinese insurance companies were lacking in knowledge and technology of health insurance, but after 20 years I can say that Chinese health insurance market is now very competitive. Foreign insurance companies arriving in China do not have much local knowledge about local consumers’ habits, and most of their decisions are usually made thousands of miles away, which is too slow and does not respond to the market need quickly enough.
Chinese insurance companies are now very strong in capital, and very strong in product innovation. Even a foreign insurance company’s executive admitted that there were already so many choices of insurance products in Chinese market which need localized distribution channels. And good distribution channels need strong relations with clients and the possession of local knowledge. Even for IT, you can say that China IT is more matched to the local environment than foreign systems. I tried previously to bring in a system from the USA or other countries but it was impossible to find the right fit.
An operational health insurance service platform has to match the local medical facilities and local medical systems. MSH China has customized our international products to suit China market needs, and has introduced the concept of “international insurance + local service”, which means we have established a local platform that fit the Chinese medical system and local customer needs.
Q: MSH China recently announced a very interesting collaboration with 111 Inc., what is the central focus of that deal, the rationale behind it and significance for your business model?
Celine: 111 is a leading integrated online and offline healthcare platform, and the collaboration works on several different aspects. Firstly, 111 can provide door-to-door drug delivery services for our clients. This is something we have tried with several online pharmacies previously, and it helps us elevate customer’s satisfaction, as well as control claim costs, particularly for patients with chronic diseases. Instead of paying a consultation fee every time seeing a doctor to get a repeat prescription, our clients can do an online consultation for simple symptoms on 111, and we work with them to provide online pharmacy delivery. Many of our members are busy executives who are very happy with this kind of service.
We also bring our medical network resources to 111’s customers. In the past five years we have seen IPMI market growing very fast, with more and more individuals willing to buy medical insurance for themselves. Selling insurance online has attracted a lot of investors recently, but how to realize online sales is a big issue. So we have worked an insurance company to jointly develop an IPMI online distribution platform for IPMI. This means that 111’s mid- and high-end clients will be able to apply directly online.
MSH is able to provide high-quality services to our clients. We have a wide medical network which enables us to coordinate second medical opinions, to provide VIP channel services with specialists in hospitals regardless of the location where the client seeks care – a real problem for patients in China trying to find the right doctor in a city that they don’t know well. 111 has spread all over China and serves patients who may have difficulties and need to find good specialists in big cities far from their home. China’s medical resources are still unbalanced, and Shanghai and Beijing still have the best medical resources and have much more specialists than other places. For patients in other provinces, they need help to access these. By just charge a service fee, we help them get second opinion on their previous diagnosis, set up doctor’s appointment and arrange hospital bed if they need surgery. We are talking about providing these services to non-insured clients. That is good for 111 because it enables them to provide value-added services to their customers, and to take advantage of the capabilities we have built for our insurance clients.
Another thing we are talking about with 111 is to jointly create scenario products for chronic disease. Right now everyone who goes to an online pharmacy is paying out of their own pocket. So how can we use insurance as a facility to solve the problem of payment? This could be mutually beneficial. And we are also considering three-party partnerships with insurance companies as a next step.
Q: That’s fascinating. You mention that you are aiming for the mid- to high-end market, how are you defining that in terms of the China consumer?
Celine：We categorize the health insurance we are providing service into middle-end and high-end based on an evaluation of medical facility pricing. Either of them is integrated with social medical system. They are both private health insurance. However, the middle-end insurance only provides coverage at the VIP wards of Chinese hospitals, while the high-end insurance provides worldwide coverage, and also access at some luxury, highly-priced private clinics or hospitals.
We are now developing very well in the middle-end. This segment is growing, and it is about living style change. In the public wards in Chinese hospitals there are six or eight beds in one room. 20 years ago people were used to living in small spaces, I had four brothers and sisters and we used to share a room. Now the younger generation grow up to have their own private bedroom at home. Once they get sick and have to stay with six or eight other people in a room, they start to feel uncomfortable. Getting outpatient service in Chinese public hospitals is also painful, meaning standing in a long queue and running around. People want convenience and good service. By purchasing middle-end health insurance, the clients can get access to VIP departments/wards in Chinese public hospitals coupled with MSH’s high-quality customer service.
Another reason [for the growth of the middle-end] is that according to some resources I read about, the average debt for young people born post-1990 is now about RMB 120,000. So financially there is also this big change in people’s savings and consumption. It’s a trend in China that young people have less and less savings, so they need insurance. People start to think to use insurance as a tool to block off their financial responsibilities, and we see this is a trend for young families with children.
Q: What can you say about some of the market challenges you face, including those specific to the online model?
Celine: Online insurance platforms have started selling a lot of insurance products, but going online means there are also a lot of fraud risks which are unknown before. Smart product design and proper underwriting and administration tools are needed for on-line insurance distribution. We have spent two years developing our online operation platform. In the future we would also like to explore opening our platform to hospitals for them to upload insurance claim data. Public hospitals are still not open to that but we are talking to some private medical groups and they are happy since this can reduce a lot of administrative work on both sides. Our insurance partners will also benefit from these online initiatives.
There are also remaining issues with capability at the private level still. For really serious illnesses you need a really experienced team of doctors and those are still mainly found in the public hospitals. But I do look forward to seeing more growth of private clinics, for example through doctor’s groups, who we already have a few partnerships with. We would love to see a greater degree of customer satisfaction, good medical quality, and cost-effectiveness.
Q: And to finish up, what is MSH’s plan for the near-term, where are the opportunities coming?
Celine: The high-end insurance market for local Chinese people has just started booming, and we will continue focusing on this customer segment. Besides the traditional high-end medical insurance coverage, we will focus more on working with insurance companies to provide catastrophic disease insurance and critical illness coverage. We developed an overseas critical illness treatment package two years ago with our partners. Under this scheme, if somebody is diagnosed with critical illness, we can provide options for them to go overseas for treatment by covering the costs of flight tickets, hotel accommodation, choosing good doctors and medicines in the USA, Singapore, Japan or other locations. I feel blessed and honored to be able to help those people with some extra overseas options. We now also aim to develop a critical illness insurance product that allows patients to get treatment from facilities within China. There is a big need in China for this.
Private health insurance is getting support from the government as a powerful supplement to social medical system, and the public demand is only going to rise as awareness and knowledge of insurance schemes continues to expand. The government has included private health insurance in its long-term planning up to 2030 as part of a multi-level medical system, so there is a bright future. For us, the next opportunities will be on overall service upgrades, such as chronic disease management, specific insurance product development, providing more advanced medical resources, and sharing service platform. We have plans in all these areas.
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