CR and Phoenix

Show a Win-win Way in the Mixed-ownership Reform

  • “I was born and raised in Beijing. But like everyone else, I also find it difficult to register for a specialist clinic at the hospital. Last year, there was a video on the Internet that tells the story of a girl from other provinces, who was unable to register for a specialist clinic after queueing up for a whole day, and therefore had to buy a registration number that costs originally 300 RMB from a scalper at 4,500 RMB. To be honest, my son has also bought registration numbers from scalpers for me at 2,000 RMB”. According to Li, urban residents nowadays don't trust small hospitals, not to mention community clinics. Against such background, the higher the registration fee is, the more people are rushing to large hospitals. “It’s easy to understand as we all believe that the more expensive, the better. How dare one to go to the hospital if one doesn't have a channel to get registered”.

    We can’t make the promise of providing medical resources for all, but we can at least improve the quality of community healthcare services to enable the public to treat small diseases quickly and conveniently. We have to make efforts to realize the goal and make contributions to the national healthcare reform”. Liang Hongze, General Manager of CR Healthcare, said slowly and firmly.

    Since half a year ago, Liang Hongze has been actively attending all kinds of activities as the Administrative President of Phoenix Healthcare. On 31st October, 2016, CR Healthcare acquired 490 million shares of the equity of Phoenix Healthcare, accounting for 35.7% of the total, through injecting capital and offering the right of operation, thus becoming the largest shareholder of Phoenix healthcare after the acquisition. At that time, Phoenix Healthcare was the first Chinese hospital group getting listed in the international capital market and the largest company in the healthcare sector using social capital. After acquisition was completed, CR Phoenix Healthcare witnessed exponential expansion, becoming the largest healthcare company in Asia with 13000 beds and 10 million patients being received in total. As it is often said: capital always goes to where it is most profitable. On the day of the acquisition, the price of the shares of CR Phoenix Healthcare grew by more than 35%. The net value of the capital injected by CR in the healthcare sector expanded by more than 5 times, making the acquisition a typical case of large Chinese enterprises liquidizing state-owned capital.

    Traditionally, in mixed ownership reform cases in the Chinese market, large state-owned enterprises acquiring shares of private enterprises emphasizes getting the controlling power while neglecting the rights and interests of capital owners. In some cases, the new enterprise is even forced to adopt the outdated models and strategies that would gradually leads to failure in today’s market with fierce competition. This is the biggest challenge for traditional state-owned enterprises in initiating M&A.

    “The M&A this time is a mixed ownership reform. I think the priority should be keeping the energy and momentum of the listed company”, said Liang Hongze. In fact, as the largest shareholder, CR doesn't take absolute control, but leads the strategic direction. While having the right to decide development strategy and planning, CR will maintain and safeguard the flexible market mechanism of the listed company, the highly efficient employee incentive mechanism and the personnel promotion mechanism. “The M&A is called “the Flying Phoenix”, which indicates that it is a win-win case in mixed ownership reforms. As the two sides hope to help each other to fly higher and become stronger, I believe that CR will not force the listed company to change its existing development model and personnel development mechanism so as to create a virtuous cycle”, said Liang Zehong, who is confident in his new boss.

    Liang Zehong said

    It is imperative for China to accelerate the supplyside reform in the healthcare sector, as it deals with the problem of life and death. However, it is also the sector that witnesses the most complaints. The public has been complaining for years for the high cost of healthcare and the lack of medical resources, but only see the problem becoming increasingly severe. Doctors are also complaining as they have a heavy workload but low salary, which leads to the decrease in the number of quality doctors. What is more worrying is that the tension between patients and doctors is intensifying, making doctors targets for violent attacks, which leads to a sharp decrease in the number of graduates who aspire to become doctors. Hospitals, especially public hospitals who are the pillars of the healthcare sector in China, are also unsatisfied. Having only less than 8% of the operation cost coming from government investment, they are not allowed to decide the price of healthcare services by themselves. Governments, however, are also complaining. The public spending in improving local healthcare infrastructure has doubled in five years, but people are still rushing to large hospitals in big cities as they don’t trust the quality of local hospitals and community clinics. In a nutshell, in the past 40 years, the healthcare sector in China never stopped reforming and modernizing itself, but saw little effect.

    “For CR Healthcare, on the one hand, as an enterprise, we have to lead business development, and on the other hand, we also need to improve people’s wellbeing and health as it is part of the social responsibility of a central enterprise. As a capable and responsible enterprise, CR is willing to become the forerunner in initiating reforms and encourage others to follow. Moreover, business value and social value are not necessarily in conflict with each other. In fact, they can integrate and complement with each other”, said Liang Hongze. By now, CR Healthcare has had more than 100 healthcare organizations under its management in Beijing, North China, Central China and South China. The current focus is still on the investment in hospitals to participate as much as possible in the reform of public hospitals. In the future, it will increase its investment in the development and improvement of the healthcare system to promote the establishment of a multi-level comprehensive diagnosis and treatment system that integrates healthcare services and financial insurance to serve the people and the country.

    Liang Zehong said

    “The Community Clinic of Yingfeng Street still needs to invite experts from large hospitals, but I believe that in the near future, doctors in community clinics will be able to meet most of the healthcare demand of local residents. Of course, faced with the increasing need for healthcare resources, we still have a long way to go, but at least we have taken the first step”, said Liang Hongze, whose smiles make us warm in the still chilly wind.

    “All for Public Health” is not only the slogan of CR Healthcare, but also the Spring sunshine that fills everyone with hope.

  • Tremendous Responsibility Behind a Simple Story

    Since half a year ago, Liang Hongze has been actively attending all kinds of activities as the Administrative President of Phoenix Healthcare. On 31st October, 2016, CR Healthcare acquired 490 million shares of the equity of Phoenix Healthcare, accounting for 35.7% of the total, through injecting capital and offering the right of operation, thus becoming the largest shareholder of Phoenix healthcare after the acquisition. At that time, Phoenix Healthcare was the first Chinese hospital group getting listed in the international capital market and the largest company in the healthcare sector using social capital. After acquisition was completed, CR Phoenix Healthcare witnessed exponential expansion, becoming the largest healthcare company in Asia with 13000 beds and 10 million patients being received in total. As it is often said: capital always goes to where it is most profitable. On the day of the acquisition, the price of the shares of CR Phoenix Healthcare grew by more than 35%. The net value of the capital injected by CR in the healthcare sector expanded by more than 5 times, making the acquisition a typical case of large Chinese enterprises liquidizing state-owned capital.

  • Our Philosophy

    As a central enterprise with a history of nearly 80 years, we have been committed to carrying our responsibilities to implement the development concept of “innovation, coordination, green development, openness and mutual sharing” and follow the general requirement of “steadily making progress” to pursue innovative development against all challenges. CR has also been committed to improving the modern corporate system, steadily improving product quality and efficiency and carrying out transformation and innovation to realize value preservation and increase of state-owned assets, foster great wisdom and establish a broad vision.

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