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

Each reporter | Yuan Yuan Each editor | Liao Dan

Recently, Taikang Xianlin Gulou Hospital was rated as a “three-level A” hospital, which not only affirms the hospital’s medical strength but also represents the achievements of insurance capital in exploring the integration of medical care and elderly care.

In recent years, the acceleration of population aging and the continuous promotion of the Healthy China strategy, combined with the industry’s transformation challenges, have made the medical industry a “core track” for insurance institutions. Data shows that by the end of 2025, insurance funds have invested over 400 billion yuan in the medical and elderly care industry through direct or indirect means, with various hospitals, rehabilitation institutions, and comprehensive medical bodies becoming the focus of investment.

From Ping An’s integration of Peking University Medical resources, Taikang’s creation of a “community + hospital” model, to Qianhai Life’s establishment of a tertiary comprehensive hospital, insurance companies are accelerating their transformation from mere capital investors to builders of the medical health ecosystem, with the “insurance + medical” model moving from concept to implementation.

Policy relaxation + demand release, insurance capital layout welcomes the “golden window period”

The sustained enthusiasm of insurance companies investing in hospitals is driven by a three-way resonance of policies, markets, and industries.

On the policy level, regulators continue to “loosen” restrictions on insurance capital. In 2020, multiple departments jointly issued documents to support insurance funds in legally investing in the health service industry, allowing commercial insurance institutions to orderly invest in establishing Chinese and Western medicine medical institutions and health service agencies that integrate rehabilitation, care, and medical care.

In 2025, the “Implementation Plan for High-Quality Development of Pension Finance in the Banking and Insurance Industries” clearly supports insurance companies with strong capital strength and standardized operations to invest steadily and orderly in pension institutions, rehabilitation hospitals, specialized hospitals, etc., providing clear policy guidance for insurance capital layouts.

In the same year, the National Financial Supervision Administration further optimized the industry scope for significant equity investments by insurance capital, clarifying the relevance of the medical industry to insurance business and guiding insurance capital to increase investment in the medical field.

On the market level, the intensification of population aging has created enormous medical demand, opening up vast development space for the hospital industry. Data shows that currently, the population over 60 years old in China has exceeded 300 million, with over 40 million elderly individuals being disabled or semi-disabled, and the elderly group’s demand for medical rehabilitation, chronic disease management, and high-end diagnosis and treatment services is increasingly urgent.

At the same time, residents’ health awareness continues to rise, and the commercial health insurance market is expanding, with consumers’ integrated demand for “insurance + medical services” becoming increasingly strong—no longer satisfied with simple post-incident claims but focusing more on comprehensive services for prevention, diagnosis, treatment, and rehabilitation, which provides a solid market foundation for insurance companies to integrate medical resources and layout hospitals.

On the industry level, the transformation challenges faced by the insurance industry have forced insurance capital to seek new growth engines. In recent years, traditional insurance businesses have faced multiple pressures such as product homogeneity, intense competition, and declining yields, with the dilemma of “difficulty in increasing personnel and slowing premium growth” in the life insurance industry becoming increasingly prominent, necessitating the search for new business breakthroughs and profit growth points.

The medical industry, characterized by anti-cyclicality, stable cash flow, and considerable long-term returns, highly matches the long duration of insurance capital liabilities. Moreover, by investing in hospitals, insurance companies can close the “insurance + medical” industry chain loop, solving pain points such as the difficulty in managing health insurance claims and low customer stickiness, and promoting the industry’s transformation from “risk compensation” to “health management.”

“For insurance companies, the strategic value of laying out hospitals and medical services lies in breaking through traditional business bottlenecks: first, mitigating interest spread loss risks by obtaining stable returns through physical assets during interest rate downturns; second, building competitive barriers by creating differentiated product services through health and care ecosystems, escaping homogeneous price wars; and third, activating existing customers, transforming low-frequency insurance consumption into high-frequency health service interactions, enhancing customer stickiness and lifetime value,” said Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, in an interview with the Economic Daily reporter.

Leading the way, diverse models, differentiated layouts by insurance capital

Currently, leading insurance companies such as Ping An, Taikang Insurance, China Taiping, and Xinhua Insurance have taken the lead in layout and formed their unique development models based on their advantages in capital, clients, and licenses. By the end of 2025, leading insurance companies have established multiple comprehensive hospitals, rehabilitation hospitals, and medical complexes nationwide, forming a full-chain service system covering “prevention—diagnosis—rehabilitation—elderly care.”

In terms of models, insurance companies invest in hospitals in various ways; some do so through mergers and acquisitions, while others choose to build their own hospitals.

For example, since taking over Peking University Medical Group in 2021, Ping An has comprehensively launched resource integration, operational reform, discipline construction, and talent planning. In terms of model, it has abandoned the heavy asset expansion path, opting for a strategy of “light assets, heavy services, and integrating top medical resources,” relying on Ping An Group’s “comprehensive finance + medical elderly care” ecosystem to build a full-cycle service model of “health management—comprehensive diagnosis and treatment—rehabilitation treatment.” Data indicates that by 2025, the non-medical insurance revenue growth rate of Peking University Medical Group will reach 35%, with outpatient and emergency visits exceeding 3.2 million and the number of three-level and four-level surgeries increasing by 20% year-on-year.

The heavy asset self-operated model is mainly represented by Taikang Insurance, Sunshine Insurance, and Qianhai Life. As pioneers in the insurance industry’s elderly care layout, Taikang has introduced “insurance + medical care” model through its platform Taikang Health Investment, adhering to a standardized layout of “one community, one hospital,” and based on this, gradually establishing physical medical service layouts through self-building, investment, and cooperation. Currently, Taikang Medical has established five major medical centers nationwide: Taikang Xianlin Gulou Hospital, Taikang Tongji (Wuhan) Hospital, Sichuan Taikang Hospital, Ningbo Taikang Brain Hospital, and Shenzhen Qianhai Taikang Hospital.

Of course, the aforementioned two models are not entirely distinct. While insurance companies lay out heavy asset hospitals, they may also integrate some light asset medical service resources, forming a service network that coordinates online and offline. Insurance companies adopting the light asset model for hospital service resources may also invest in one or two physical hospitals.

Yuan Shuai, Deputy Director of the Investment Department of the China Urban Development Research Institute, told the Economic Daily reporter that the heavy asset model is more applicable to first-tier cities or core strategic areas. By acquiring land and building hospitals, insurance companies can achieve absolute control over medical quality, brand standards, and service details. Its core advantage lies in the ability to create benchmarks like Taikang Xianlin Gulou Hospital, establishing a brand moat through very high entry barriers, providing high-net-worth clients with a reliable scarce resource. The light asset model is more suited to rapidly sinking markets and multi-point layout needs, integrating existing medical resources through shareholding, management, or alliances. Its core advantage is high capital utilization efficiency and rapid expansion, quickly weaving a widely covered service network, achieving nationwide ancillary service coverage for insurance products at lower marginal costs, and serving as a tool for insurance companies to seize market share and achieve standardized service output.

Focusing on specialty and rehabilitation, investment in hospitals by insurance companies will show three core trends

“The closed-loop health loop is the Kaiser medical model, under which the physician group only provides medical services for Kaiser hospitals, with almost all funds coming from Kaiser insurance; the integrated health model is a semi-open health loop, allowing more users and medical resources to participate, better achieving the integration of medical care and elderly care,” said an industry insider. The medical insurance closed loop has evolved from a closed to an open development phase, achieving price and network balance through the integration of internal and external resources. However, with the advent of the longevity era, the construction of health loops is gradually challenged by aging, making it urgent for insurance companies to address how to help customers live healthily and long.

This issue has also attracted the attention of industry institutions and practitioners. For the health challenges brought by longevity, the solution from insurance companies is to cooperate with medical schools to increase investment and exploration in fields such as rehabilitation and chronic diseases. For example, China Taiping signed a strategic framework agreement with Shanghai Jiao Tong University School of Medicine in 2022 to jointly establish the “Jiao Medical - Taiping Yuan Shen Rehabilitation Research Institute,” exploring new models for the development of rehabilitation medicine.

Bai Wenxi stated that under the dual drive of aging and the Healthy China strategy, the cross-border integration of “insurance + medical” is moving from the exploration phase into maturity. 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 care as service support. Looking ahead, investment in hospitals by insurance companies will exhibit three core trends:

First, from “rapid expansion” to “meticulous cultivation,” early insurance capital layouts focused on asset scale and bed numbers, while future focus will shift towards specialty capability building, operational efficiency improvement, and medical quality certification.

Second, technology empowerment will become a key differentiator. AI-assisted diagnosis, telemedicine, and smart health management will deeply integrate into the medical system of insurance capital, enhancing service efficiency and feeding back health data for insurance product innovation and risk control optimization.

Third, the “heavy asset benchmark + light asset network” will become the mainstream paradigm. Establishing brands and standards with a few flagship hospitals while expanding coverage through a broad cooperation network can control capital consumption and achieve economies of scale. This model balances service quality and commercial sustainability and is expected to become an industry consensus.

“In the future, investment in hospitals by insurance capital will show core trends of ‘refined operation’ and ‘digital symbiosis,’ no longer blindly pursuing the number of beds but deeply cultivating specialty characteristics and rehabilitation efficacy,” Yuan Shuai also stated. In this process, “heavy assets as benchmarks and light assets for expansion” will undoubtedly become the mainstream model of the industry. Insurance companies will utilize a few heavy asset projects to establish “service skylines” and technical standards as the soul and ballast of their brands; at the same time, they will link a vast number of light asset institutions through digital platforms, forming a tiered ecosystem of “pinnacle leadership and foundational coverage.” This model not only addresses the low capital turnover rate pain point of heavy asset models but also avoids the risk of uneven service quality in light asset models, finding the optimal balance between premium leverage and real business operations, and promoting medical health services toward true hierarchical diagnosis and continuity management.