Chinese whistle blower Zhang Ligang delivered shocking news during the recent Chinese Enterprise Leader summit. The Chief Executive Officer of the iKang Guobin Healthcare Group, Inc. revealed the chilling fraudulent practices that are prevalent in the Chinese health examination industry.
According to Zhang, these fraudulent practices include having nurses pretending to be actual doctors and draw blood without actually taking the samples to a lab for examination. Essentially, these customers are paying the money, but getting fake results: Their actual health status was never examined by professionals, the report that the patients receive is merely a copy of some random statistics.
It was a game of probability, according to the report. And for companies engaging in such unethical practices, they are not likely to get caught: Approximately 3 out of 1,000 cancer symptoms are detected from regular medical examinations. It means that people wouldn’t even realize that these reports are fake. Even if these ‘fake reports’ actually missed developing issues, the health service companies could easily find something else to blame.
These foul practices may exist in many employee health benefit packages. Zhang Ligang pointed out that health service companies would make very little profit from those medical examinations, which usually cost several hundred Chinese Yuan (approximately 100 US Dollars). Their paths to reaching additional profits has become dangerous: Reducing the operational costs by not doing any real examinations at all.
While Zhang argued that iKang will never engage these practices, his whistle blowing actions triggered a serious trust crisis of the country’s health examination service industry. There is one question that many people will be asking: Can I ever trust my health examination results, and how can I ensure the result I receive is not fake?
Will Government Actions Retain People’s Trust?
In fact, these issues are not rare in the industry, according to the Beijing News, various health examination services across the country have been punished for engaging in fraudulent practices over the past four years. Companies found guilty of fraud were fined and warned by the authorities. However, these measures taken by the Chinese health authorities did not save the industry from falling into a trust crisis.
Beijing-based state media Beijing Daily called on a campaign against these practices that are widely implemented in the industry. Another Beijing News commentary article suggested that those who are associated with serious fraud practices regarding health examinations should be criminally charged. The commentary piece argued that it is the time to increase the costs of breaking the law and make sure the practitioners abide and respect service standards regulated by the health authorities.
It is not that difficult for people to realize that something is wrong with the health service industry. The problem is, will there be a good solution to these issues. And more importantly, can these words, penalties, and potential criminal charges convince Chinese consumers in trusting the domestic health examination service providers in the future?
Perhaps the Health Industry Needs to Learn from Chinese Dairy Products
In 2008, Chinese Dairy Products giant Sanlu Group went bankrupt after the company was found guilty of adulterating poisonous chemical melamine. The defected milk products caused severe kidney problems and led to the hospitalization of more than 54,000 Chinese infants among a total of 300,000 infected. These infants suffered from kidney stones and other kidney diseases.
The government took the scandal very seriously. Several individuals received death sentence because of their wrongful acts and the company ultimately went bankrupt. But the aftermath of the scandal went beyond the convicted company and affected the whole dairy industry. According to a report from Quartz, 10 years after the scandal, Chinese consumers would not trust their domestic milk products. It seems like the trust will never return: as parents rushing and actively seeking imported powdered milk products for consumption, even if the Chinese government has set up stringent standards and requirements for domestic dairy products.
When an entire industry loses the trust of its consumers, everyone loses. Consumers will be forced to buy more expensive products with more restrictions. Businesses are seeing higher costs for productions. And the general public will retain the preconceived notions that has been shaped by the industry’s past mistakes.
Businesses that engage in these detrimental practices may receive additional profits and benefits in the short run. However, it is in fact a poisonous and unhealthy way that exhausts the long-term benefits and profits that the entire industry could enjoy. It is depressing, but it is also the reality that the Chinese health examination services face at the moment.
After the Chinese vaccine scandal that broke out earlier this year in July, many customers are starting to consider taking some of the vaccines in neighboring countries and territories such as Hong Kong, Japan, and South Korea. There will also be the option for them to receive annual medical examinations somewhere outside of mainland China.
It is a typical issue in economics that we are facing here: The tragedy of the commons. No one in particular feels the necessity to protect the industry’s reputation and retain consumers’ trust. Yet when Chinese consumers were completely let down by the industry’s standard, it will be too late to make up for previous mistakes.
Featured photo credit to uschinapress.com