Shanghai has unveiled a new initiative to encourage the establishment of wholly foreign-owned hospitals in specific areas of the city, including key economic zones, biopharmaceutical clusters, and districts with significant expatriate populations.

The policy is part of a broader effort to open up the healthcare sector, diversify medical services, and enhance the city’s appeal to foreign investors.

Under the plan, each designated area — including the free trade zone, Lin-gang Special Area, the Hongqiao business district, and the eastern hub international business cooperation zone — will allow up to two foreign-owned hospitals. The initiative aligns with a national policy introduced in late 2024, which permits such hospitals in major cities, including Beijing, Shanghai, Guangzhou, and Shenzhen, as well as five additional regions.

According to a document released by the Shanghai Municipal Health Commission, foreign investors must bring advanced hospital management practices, cutting-edge technologies, and international-standard equipment. They are also required to complement the city’s existing healthcare system by enhancing local capabilities and broadening service offerings.

Permitted hospital types include general hospitals, specialty facilities, and rehabilitation centers, all of which will be categorized as tertiary institutions. However, restrictions prohibit foreign-owned hospitals from operating in certain areas, such as psychiatric care, infectious diseases, hematology, traditional Chinese medicine, and high-risk medical activities like organ transplantation and tumor cell therapy.

The initiative will also allow these hospitals to hire expatriate physicians and healthcare workers from Hong Kong, Macao, and Taiwan, though at least half of their staff must be mainland Chinese.

Industry experts view the initiative as a step toward developing a dual healthcare system, where public hospitals focus on basic care while foreign-owned facilities cater to demand for high-end, personalized treatment options.

In recent years, foreign healthcare providers have already made inroads in Shanghai. Parkway Shanghai, the Chinese mainland entity of IHH Healthcare, celebrated its 20th anniversary in 2024 and is planning to open a new ambulatory care center in 2025. The company previously invested $220 million to open Parkway Shanghai Hospital in 2023.

Business Affairs Homepage