Wholly Foreign-Owned Hospitals in Hainan: What the Pilot Program Actually Permits and What It Takes to Qualify

For two decades, establishing a hospital in China meant finding a Chinese partner. That requirement has now been lifted for nine specific locations, and Hainan is the only one where the pilot applies across an entire province rather than a single city. A Singapore-based healthcare group has already signed a cooperation agreement for a 600-bed tertiary facility in Sanya. The window is open and the first movers are moving.

This thread sets out what the pilot permits, what it requires, and how approval works in Hainan.

The Legal Basis

The pilot derives from two instruments issued in late 2024. On September 7, the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration issued a notice permitting wholly foreign-owned hospitals across nine designated locations. On November 1, the National Health Commission, together with the Ministry of Commerce, the National Administration of Traditional Chinese Medicine, and the National Disease Control Bureau, issued the Pilot Program for Expanding the Opening-Up of Wholly Foreign-Owned Hospitals, which sets out the specific conditions and management framework.

Hainan is the only location in the pilot where permission extends across the entire island. The other eight locations are individual cities: Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, and Shenzhen.

What Is Permitted

Foreign investors may establish wholly foreign-owned hospitals in Hainan -- general hospitals, specialty hospitals, and rehabilitation hospitals -- at tertiary level, on either a for-profit or non-profit basis.

The following are explicitly excluded from the pilot scope:

• Traditional Chinese medicine hospitals
• Acquisition of existing public hospitals
• Psychiatric hospitals
• Infectious disease hospitals
• Hematology hospitals
• Integrated Chinese and Western medicine hospitals
• Ethnic minority medicine hospitals

The following medical activities are prohibited regardless of hospital type:

• Human organ transplantation
• Assisted reproductive technology
• Prenatal screening and diagnosis
• Inpatient psychiatric treatment
• Experimental cancer cell therapy
• Any clinical department registered as hematology

These exclusions are not incidental. They reflect deliberate policy boundaries around human genetic resource security, medical ethics, and the protection of existing public hospital capacity.

Investor Qualification Requirements

Foreign investors must be legal entities capable of independently assuming civil liability. Beyond the legal form requirement, three substantive criteria apply:

First, the investor must have direct or indirect experience in healthcare investment and management. A holding company with no prior healthcare track record does not qualify on its own.

Second, the investor must be able to provide internationally advanced hospital management concepts, models, and service approaches. This is an assessed criterion, not a self-declaration.

Third, the investor must be able to supplement or improve local capacity in medical services, technology, and facilities -- contributing to a diversified healthcare supply system rather than duplicating existing provision.

The policy is explicitly designed to bring in international capability that does not already exist locally. Investors whose value proposition is primarily financial rather than operational are unlikely to satisfy the second and third criteria.

Staffing Requirements

Wholly foreign-owned hospitals may hire foreign physicians, physicians from Hong Kong, Macao, and Taiwan, and other healthcare professionals from Hong Kong and Macao for short-term practice. However, Chinese mainland personnel must account for no less than 50% of both the management team and the healthcare professional staff.

For foreign medical professionals employed in these hospitals, there is an additional benefit available in Hainan. Those whose overseas qualifications are recognised by the relevant industry authorities and who hold a Permanent Residence Permit for Foreigners or a Residence Permit for High-level Overseas Talents may apply for professional title evaluation based on their expertise and work performance under Hainan provincial regulations.

Data and Systems Requirements

Two non-negotiable technical requirements apply to all wholly foreign-owned hospitals:

The hospital's information management system must be connected to the local medical service regulatory platform. Electronic medical records, medical equipment data, and other information storage servers must be physically located within China's territory. Cross-border data transfer of patient records and clinical data is not permitted.

Investors accustomed to operating integrated international health record systems will need to plan for localised data architecture from the outset.

Medical Insurance and Commercial Coverage

Wholly foreign-owned hospitals that meet the relevant criteria may apply for inclusion in China's basic medical insurance designated system. The application is treated on equal terms with domestic public and private institutions -- ownership structure is not a disqualifying factor.

To qualify for medical insurance designation, hospitals must adopt the unified medical service pricing items applicable to medical institutions in their region, implement unified pharmaceutical and medical device pricing policies, accept DRG and DIP payment reform requirements, and submit to full supervision by healthcare security authorities including on-site inspections and intelligent supervision system connectivity.

Hospitals that do not seek insurance designation may set their own prices and operate under standard industry regulation.

Beyond the public insurance system, wholly foreign-owned hospitals are supported in connecting with both domestic and international commercial health insurance providers. For hospitals targeting internationally mobile patients and expatriate populations, commercial insurance connectivity may be the more relevant framework.

The Approval Process in Hainan

The approval pathway in Hainan has two tracks depending on location.

For hospitals outside the Boao Lecheng International Medical Tourism Pilot Zone, applications are submitted first to the municipal or county-level health administrative department for preliminary review, then to the Hainan Provincial Health Commission for final approval. The Provincial Health Commission issues both the Approval for the Establishment of a Medical Institution and the Medical Institution Practice License. The Practice License is valid for five years and is renewable.

For hospitals within the Lecheng Pilot Zone, applications are submitted to the Lecheng Pilot Zone Administration Bureau. The Lecheng Medical and Pharmaceutical Supervision Bureau issues the relevant approvals. The Lecheng pathway benefits from one-stop service coordination and a joint meeting mechanism among health, commerce, administration, and regulatory authorities -- with "one case, one discussion" and "one hospital, one policy" approaches available to resolve specific issues during establishment.

For investors with a healthcare and medical tourism focus, the Lecheng Pilot Zone offers both the most streamlined approval process and the broadest access to Boao Lecheng's existing international medical infrastructure.

The First Mover: Singapore Perennial Holdings, Sanya

Perennial Holdings is a Singapore-based diversified group integrating real estate and healthcare, with operations across China, Singapore, Malaysia, and Indonesia. Its China healthcare network spans 16 cities with over 22,000 beds across general hospitals, rehabilitation hospitals, specialty hospitals, wellness centers, senior care apartments, and nursing homes.

Following preliminary coordination with the Sanya Municipal Health Commission, Perennial has expressed intent to acquire Sanya Guang'anmen Hospital and use the existing site to establish a wholly foreign-owned hospital focused on premium rehabilitation, health management, and eldercare services.

The proposed facility in Haitang District covers approximately 9.27 hectares with a total construction area of 136,144 square meters and is planned for 600 beds at tertiary Class-A standard. The land transfer fee has been paid in full. Phase I construction is substantially complete. On November 8, 2024, Perennial signed a cooperation agreement with Liwang Excellence (Sanya) Health Management Co., Ltd.

The Perennial project is notable not only as the pilot's first major commitment in Hainan, but because it was structured as a proposed acquisition of an existing facility -- a pathway that the pilot explicitly excludes for public hospitals but does not restrict for private ones.

The Strategic Context

By the end of 2023, China had 38,000 hospitals including 3,855 at tertiary level. Public hospitals account for 83.5% of all hospital visits nationwide. The wholly foreign-owned hospital pilot is not designed to compete with that system. It is designed to address what that system does not provide: diversified, internationally benchmarked medical services for China's growing middle class and for the country's substantial and growing expatriate population.

For healthcare investors currently evaluating Asia-Pacific market entry, Hainan's position in this pilot is materially different from the other eight locations. Island-wide coverage, the Boao Lecheng infrastructure, the 15% corporate income tax rate, the Hainan talent policies for overseas professionals, and the existing framework for importing unapproved overseas drugs and devices for clinical use in Lecheng -- these are not available in any of the eight city-level pilot locations.

The combination warrants a serious look.

Source: FTP Enterprise Navigator / Pilot Program for Expanding the Opening-Up of Wholly Foreign-Owned Hospitals, National Health Commission, November 2024 Lead department: Hainan Provincial Health Commission Contact: 0898-65311951 | bgs_yzygj@hainan.gov.cn | No. 38 Haifu Road, Meilan District, Haikou