After the "Tier 3" hospitals, the second half of insurance-funded medical services: if not beds, then what are we competing on?

Each Daily reporter｜Yuan Yuan ｜Each Daily editor｜Liao Dan

Recently, Taikang Xianlin Gulou Hospital was rated a “Grade A tertiary (3A)” hospital. This is both a recognition of the hospital’s medical capabilities and a result of insurers’ exploration in integrating medical care with elder care.

In recent years, with the acceleration of population aging and the continued advancement of the Healthy China strategy, alongside efforts to tackle industry transformation, the healthcare sector is becoming a “core track” for insurance institutions’ deployment. Data show that by the end of 2025, insurance funds had invested more than RMB 400 billion in the medical and senior care industry through direct or indirect means. Among them, various hospitals, rehabilitation institutions, and comprehensive medical facilities have become the focus of these investments.

From Ping An consolidating resources from Peking University’s medical network, to Taikang building a “community + hospital” model, and then to China Merchants Shekou? No—specifically, from Qianhai Life Insurance building a tier-3 general hospital, insurers are speeding up their shift from being merely capital investors to becoming builders of healthcare ecosystems. The “insurance + medical” model is moving from concept to execution.

Policy easing + demand release: insurers’ fund deployment enters a “golden window”

Behind the rising heat in insurers investing in hospitals are the synchronized impacts from policy, the market, and the industry.

From the policy side, regulators continue to “loosen the reins” for insurance capital. In 2020, multiple departments issued joint documents supporting insurance funds, in accordance with regulations, to invest in the health services industry, and allowed commercial insurance institutions to orderly invest in and establish medical institutions such as integrated Chinese and Western medicine, as well as health service institutions including rehabilitation, nursing/care, and medical-and-elder-care integration.

In 2025, the “Implementation Plan for High-Quality Development of Pension Finance in the Banking and Insurance Industry” clarified that it supports insurers with stronger capital strength and standardized operations to invest in elder care institutions, rehabilitation hospitals, specialty hospitals, and so on in a steady and orderly manner, providing clear policy guidance for insurance funds’ deployment.

In the same year, the National Financial Regulatory Administration further optimized the industry scope for major equity investments by insurance funds, clarified the linkage between the medical industry and insurance business, and guided insurance funds to increase investment in medical and related fields.

On the market side, population aging is intensifying and has given rise to enormous healthcare demand, opening up broad room for development in the hospital industry. Data show that currently, China’s population aged 60 and above has exceeded 300 million. There are more than 40 million elderly people who are disabled or semi-disabled, and demand from the elderly for services such as medical rehabilitation, chronic disease management, and high-end diagnosis and treatment is increasingly urgent.

At the same time, residents’ health awareness continues to rise. The commercial health insurance market keeps expanding, and consumers’ demand for integrated “insurance + medical services” is growing even stronger. They are no longer satisfied with pure post-incident claims and reimbursement; they place greater emphasis on end-to-end services across the whole process—prevention before incidents, diagnosis and treatment during incidents, and rehabilitation after incidents. This provides a solid market foundation for insurers to integrate medical resources and deploy hospitals.

At the industry level, efforts to tackle industry transformation are forcing insurers to seek new growth engines. In recent years, traditional insurance businesses have faced multiple pressures, including product homogenization, increasingly intense competition, and falling return rates. The dilemma in the life insurance industry—“hard to recruit agents and slower premium growth”—has become increasingly prominent, and the industry urgently needs to find new business breakthroughs and points of profit growth.

Meanwhile, the healthcare industry has anti-cyclical characteristics, stable cash flow, and attractive long-term returns, which closely matches the long-duration features of insurers’ liabilities. At the same time, by investing in hospitals, insurers can close the loop in the “insurance + medical” industry chain, address pain points such as difficulties in controlling claims under health insurance and low customer stickiness, and drive the industry’s shift from “risk compensation” toward “health management.”

“From an insurer’s perspective, the strategic value of deploying hospitals and medical services lies in breaking through traditional business bottlenecks: first, to mitigate the risk of interest margin losses by obtaining stable returns from real-economy assets during periods of falling interest rates; second, to build competitive barriers by forming differentiated product and service offerings through a medical-and-elder-care ecosystem, getting out of the homogenized price war; and third, to activate existing customers by converting low-frequency insurance consumption into high-frequency health service interactions, thereby improving customer stickiness and lifetime value.” Bai Wenxi, Vice Chairman of the China Enterprises Capital Alliance, said in an interview with a reporter from Each Daily.

Leading the way, diversified models: differentiated deployment of insurance funds

Currently, leading insurers such as China Ping An, Taikang Insurance, China Taiping, and New China Life have, leveraging their advantages in capital, customers, and licenses, taken the lead in deploying and forming development models with distinct characteristics. By the end of 2025, leading insurers had deployed multiple general hospitals, rehabilitation hospitals, and medical complexes across the country, forming a full-chain service system covering “prevention—diagnosis and treatment—rehabilitation—elder care.”

In terms of models, insurers’ ways of investing in hospitals vary. Some take equity stakes through mergers and acquisitions, while others choose to build their own hospitals.

For example, after taking over Peking University Health Science Group in 2021, China Ping An comprehensively launched resource integration, operational reform, discipline building, and talent planning. In terms of model, it abandoned the path of heavy-asset expansion and chose a strategy of “light assets, heavy services, integrating top medical resources.” Relying on Ping An Group’s ecosystem advantages in “comprehensive finance + medical and elder care,” it built a full-cycle service model of “health management—comprehensive diagnosis and treatment—rehabilitation therapy.” Data show that in 2025, the non-premium-for-medical-insurance revenue growth rate of Peking University Health Science Group reached 35%, outpatient and emergency visits exceeded 3.2 million, and the number of surgeries in tiers 3 and 4 increased by 20% year over year.

The heavy-asset self-operated model is mainly represented by Taikang Insurance, Sunshine Insurance, and Qianhai Life. As an early mover in insurers’ elder-care and healthcare layout, Taikang—through its platform Taikang Health Investment—pioneered the “insurance + medical and elder care” model, adhering to a standardized layout principle of “one community, one hospital.” On this basis, through self-built projects, investments, and collaborations, it gradually deployed real medical service facilities. At present, Taikang Medical has built five major medical centers nationwide, including Taikang Xianlin Gulou Hospital, Taikang Tongji (Wuhan) Hospital, Taikang Sichuan Hospital, Taikang Ningbo Brain Hospital, and Shenzhen Qianhai Taikang Hospital.

Of course, the two approaches above are not entirely distinct. While insurers deploy heavy-asset hospitals, they also combine some light-asset medical service resources to form an online-and-offline coordinated service network. Insurers that adopt a light-asset model to deploy hospital service resources sometimes also invest in and take equity stakes in one or two real hospitals.

Yuan Shuai, Deputy Director of the Investment Department of the China Institute of Urban Development Research, told reporters from The Daily Economic News that heavy-asset models are generally more suitable for first-tier cities or core strategic regions. By acquiring land to build hospitals and setting up in-house teams, insurers can achieve absolute control over medical quality, brand standards, and service details. Its core advantage is that it enables them to build “3A” benchmark facilities like Taikang Xianlin Gulou Hospital, forming a brand moat through extremely high entry thresholds and providing high-net-worth customers with certain, scarce resources. The light-asset model fits fast-moving lower-tier markets and multi-point deployment needs. Through methods such as taking minority stakes, operating/management outsourcing, or alliances, it integrates existing medical resources. Its core advantage is higher capital utilization efficiency and faster expansion speed. It can quickly weave a widely covered service network and achieve nationwide supporting coverage of insurance products at relatively low marginal cost. This is a powerful tool for insurers to seize market share and achieve standardized service output.

Insurers focusing on specialty characteristics and rehabilitation: three core trends will emerge as they invest in hospitals

“Closed-loop health closure is the Kaiser Medical model. In this model, the doctor group provides medical services only for Kaiser hospitals, and almost all the funds come from Kaiser insurance. The UnitedHealth model belongs to a semi-open health closure—in this model, more users and medical resources can participate, enabling better achievement of medical-and-elder-care integration.” an industry insider said. Health insurance closures have gone through a development stage from closed to open. By integrating internal and external resources, it achieves balance in medical pricing and networks. But with the arrival of the longevity era, building health closures is gradually being challenged by population aging. How to enable customers to live long in good health is an urgent problem for insurance companies to solve.

This issue has also drawn attention from industry institutions and practitioners. In response to the health challenges brought by longevity, insurance companies’ solutions are to cooperate with medical schools, increase investment in and exploration of medical fields such as rehabilitation and chronic diseases. For example, in the case of China Taiping (China Taibao), it signed a strategic framework agreement with the School of Medicine of Shanghai Jiao Tong University in 2022 to jointly build the “Jiaotong-Yuan Shen Rehabilitation Research Institute” and explore a new mode for the development of rehabilitation medicine.

Bai Wenxi said that under the dual drivers of the aging wave and the Healthy China strategy, the cross-industry integration of “insurance + medical” has moved from the exploration stage to a mature stage. Its ultimate goal is not simply asset allocation, but to build a new health ecosystem centered on health, with insurance as the payment hub and medical services as the support. Looking ahead, insurers’ investment in hospitals will show three core trends:

First, the shift from “land grabbing” to “fine cultivation.” Early deployments by insurance funds focused on asset scale and the number of beds. In the future, they will pay more attention to building specialty capabilities, improving operational efficiency, and obtaining medical quality certifications.

Second, technology empowerment becoming a key differentiator. AI-assisted diagnosis and treatment, telemedicine, and intelligent health management will be deeply integrated into insurers’ medical systems. This will not only improve service efficiency, but also, through health data feedback, support innovation in insurance products and optimization of risk control.

Third, “heavy-asset benchmark hospitals + light-asset networks” will become the mainstream paradigm. With a few flagship hospitals to set brands and standards, and a broad cooperation network to expand coverage, this can both control capital consumption and achieve scale economies. This model balances service quality with business sustainability and is expected to become industry consensus.

“Going forward, insurers’ investment in hospitals will show the core trends of ‘refined operations’ and ‘digital symbiosis.’ At the same time, they will no longer blindly pursue the number of beds, but will focus on specialty features and rehabilitation effectiveness.” Yuan Shuai also said. In this process, “heavy-asset projects building benchmarks and light-asset projects expanding scale” will deterministically become the mainstream model in the industry. Insurers will use a small number of heavy-asset projects to establish a “service horizon” and technical standards, serving as the brand’s soul and anchor. At the same time, by linking vast numbers of light-asset institutions through digital platforms, they will form a stepped ecosystem characterized by “leading at the top and coverage at the base.” This model not only addresses the low capital turnover problem of heavy-asset models, but also avoids the risk of inconsistent service quality in light-asset models. It is the optimal balance point for insurers between premium leverage and real-economy operations, and it will also push medical and healthcare services toward truly tiered diagnosis and treatment and continuous management.

Cover image source: Zhu Yu