Psychiatric hospital stocks go viral, private healthcare reshuffle for survival

Why does AI and psychiatric hospital investment in A-shares reflect industry anxiety?

Reporter Han Liming of 21st Century Business Herald, Intern Jiang Yutong

Recently, Shengtong Co., Ltd. (002599.SZ) released a first-quarter report showing that the Fifteen Ridge Mountain Psychiatric Hospital Co., Ltd. in Guangfeng District, Shangrao City, ranked as its ninth-largest shareholder with 1.4337 million shares, accounting for 0.27%. Suddenly, the topic of “psychiatric hospitals speculating in stocks to become top ten shareholders of A-share companies” unexpectedly went viral.

In response to market hot discussion, the involved party clarified that this secondary private hospital’s investment behavior fully complies with relevant regulations and is a normal participation in the capital market. Additionally, according to China Securities, a person in charge related to this psychiatric hospital stated that the company’s actual controller began engaging in A-share investments as early as ten years ago. Initially, the funds were small and mainly used for wealth preservation and appreciation of idle funds, not blindly following trends.

In fact, this psychiatric hospital’s investment actions are not an isolated case. Many listed private medical institutions also use some idle funds for stock trading and financial management under the premise of ensuring daily operational capital needs. The recent hot topic may stem from the industry’s particularity and the stark contrast with capital market behavior.

This hot event may also serve as a mirror, reflecting the current anxiety within the private medical industry during its transformation and development. After years of market baptism and strict regulation, China’s private healthcare has long moved beyond the stage of reckless expansion and entered a critical phase of shifting from scale to quality. Under multiple pressures, how to find new breakthroughs has become an urgent issue for the entire industry.

Uneven Warmth

Under the spotlight of the capital market, the 2025 performance reports of private medical institutions listed in Hong Kong provide a clear sample of the industry’s real situation. According to Wind’s data on Hong Kong-listed hospital companies, revenue and profit performance show a “polarized” picture.

In terms of revenue, among 10 sample institutions, only Universal Medical, Guoshengtang, Sima Medical, and Meizhong Jiaye achieved year-over-year revenue growth. Among them, Universal Medical ranked first with a revenue of 14.94 billion yuan, up 9.34% year-over-year.

2025 marked Meizhong Jiaye’s first full operational year since listing, with revenue reaching 460 million yuan, a significant increase of 18.44% year-over-year. Its core hospital business revenue surged 37.4% year-over-year, becoming the main growth engine; Sima Medical achieved revenue of 1.95B yuan, a slight increase of 1.75%, marking a key turnaround from loss to profit.

Meanwhile, more institutions faced downward pressure on revenue. Hajiya Medical achieved revenue of 4.01B yuan in 2025, down 9.84% year-over-year. During the same period, China Resources Medical and Jinxin Reproductive saw revenues decline by 6.89% and 5.78%, respectively; Kangjian International Medical, Ruil Group, and Baize Medical also experienced revenue declines, illustrating the industry’s growth pressure.

Regarding the reasons for revenue decline, many companies cited external environmental impacts in their annual reports. For example, China Resources Medical pointed out that although its own hospitals’ outpatient and emergency visits increased by 3.4% to 10.67 million, due to medical insurance cost control and intensified external competition, inpatient volume and average costs per visit decreased; Baize Medical stated that reductions in hospital business income and revenue from pharmaceuticals and consumables jointly led to the revenue decline.

Profitability shows even more dramatic divergence. Universal Medical’s net profit attributable to parent company was 2.157 billion yuan, up 6.15%, maintaining industry-leading scale and growth rate; Sima Medical successfully turned losses into profits, with net profit attributable to parent reaching 100 million yuan, up 174.26%. Its strong performance in Hong Kong ophthalmology became the main profit driver, while mainland ophthalmology operations also saw significant narrowing of losses.

In contrast, many institutions experienced sharp declines in profitability. Jinxin Reproductive reported a net loss of 976 million yuan, down 444.81% year-over-year, turning from a profit of 283 million yuan in 2024.

Its annual report indicated that the sharp profit decline mainly resulted from impairment of goodwill and intangible assets related to U.S. and Laos operations, depreciation adjustments for Wuhan Jinxin Hospital, and a one-time accelerated amortization of renovations at the old Shenzhen hospital. Operating profit was also affected by the inclusion of Assisted Reproductive Services (ARS) into medical insurance reimbursement, unfavorable factors in obstetrics, and increased expenses from U.S. expansion.

This uneven performance snapshot encapsulates the current development status of China’s private healthcare industry: amid profound transformation from scale expansion to emphasizing quality and efficiency, issues such as stricter medical insurance cost control, regional competition intensification, and homogenized services that fail to create barriers are accelerating industry reshuffling.

How to Break Through?

Behind the industry reshuffle, the vast market space provides a solid foundation for the long-term development of private healthcare. According to the prospectus recently disclosed by Zhuozheng Medical, from 2020 to 2024, the number of public medical service institutions in China increased slightly from 537k to 537.7k; private medical service institutions grew from 483k to 554.3k, and is expected to further increase to 669.9k by 2029, with continuous expansion.

In terms of revenue scale, private medical institutions in China increased from 676 billion yuan in 2020 to 1.292 trillion yuan in 2024; from 2024 to 2029, this growth rate is projected to remain at 11.3%, reaching 2.2061 trillion yuan by 2029, indicating huge market potential.

Meanwhile, 2026, as the start of the “14th Five-Year Plan,” will see policies guiding industry standardization and ongoing deepening of medical insurance reform. Coupled with the continuous release of residents’ diversified and personalized health needs, the private healthcare industry faces new opportunities and challenges. Industry exploration is underway from multiple dimensions.

Differentiation is the core direction for private healthcare to break through. Su Qilin, chairman of Guangdong Zhonghe Group, told 21st Century Business Herald that private medical services, after years of market baptism, have long abandoned rough management. The future focus is on strategic differentiation—building特色专科 (specialized departments) through environment and service, creating complementary relationships with public hospitals. Private hospitals can only rely on flexible mechanisms and the advantage of rapid innovation and reform to develop steadily and with high quality, thereby securing a place in the healthcare industry.

Yang Huanqu, founder and chairman of Panoramic Medical, also told 21st Century Business Herald: “Private healthcare as a supplement to public resources” has largely become a false proposition. The key is to start from their own endowments, establish clear competitive advantages, and seize unmet “medical-grade” health management needs under public healthcare and insurance coverage.

Under the backdrop of stricter medical insurance cost control, private medical institutions relying solely on insurance payments face increasing financial pressure. Deep integration of commercial insurance and private healthcare is becoming an important path for breaking industry bottlenecks. Hajiya Medical also mentioned in its annual report that its hospitals have reached cooperation agreements with over 70 insurance companies to provide efficient and convenient medical services for commercial insurance patients.

Trust barriers remain a long-term constraint on private healthcare development. High-quality medical services, transparent diagnosis and treatment processes, and authoritative technical backing are key to breaking this barrier.

Liu Wensheng, founder, chairman, and director of Guangzhou University of Chinese Medicine Jinszhou Hospital, emphasized at the recent China Healthcare Industry Leaders Summit that tumor treatment is never a war won by a single device or technique. An effective tumor diagnosis and treatment ecosystem must start with precise diagnosis and combine multimodal approaches such as radiotherapy, cryotherapy, hyperthermia, and surgical robots to form a “combination punch.” The pursuit of technology and efficacy is the core path for private medical institutions to establish credibility.

Meanwhile, industry ecological collaboration is also injecting new momentum into private healthcare development. It is reported that at the summit, the “Value Coexistence Plan” for high-quality development of China’s healthcare industry, initiated jointly by GE Healthcare and several leading private medical institutions, was officially launched. It aims to empower from equipment, clinical services, talent, AI+, and finance, helping private medical institutions focus on disciplinary differentiation and talent cultivation, forming a new win-win pattern of “specialized strengths and collaborative coexistence.”

Notably, while deeply cultivating the domestic market, some private medical institutions are also exploring overseas markets as a second growth curve. Hajiya Medical mentioned in its annual report that Chongqing Hajiya Hospital has begun accepting overseas patients from mid-2025, providing medical services for patients from Southeast Asia and other regions. Its international medical business is taking shape, with two wards already opened.

Standing at the crossroads of industry transformation, Qian Yangming, secretary and president of the China Private Medical Institutions Association, emphasized that the huge demand for health services—such as rehabilitation, elderly care, chronic disease management, longevity medicine, integrated traditional Chinese and Western medicine tumor treatment, and personalized services for the elderly and children—provides a broad blue ocean for industry development. The technological revolution driven by AI, robotics, big data, and telemedicine, along with talent return, also offers vast opportunities. “After industry淘汰 (survival of the fittest), differentiated services and standardized operators will stand out quickly.”