The "vicious circle" behind the huge advertising in private hospitals

After the state allowed social capital to enter the medical industry, private capital of various channels entered, and private hospitals already accounted for half of the number of domestic hospitals.

According to data released by the Health Planning Commission, as of September 2015, the number of private hospitals in China reached 13,600, surpassing 13,304 in public hospitals for the first time, accounting for 50.55% of the total number of hospitals; in addition, China Health and Family Planning Statistics Yearbook 2015 shows that private hospitals in 12 provincial-level administrative regions including Beijing, Tianjin, Zhejiang and Fujian account for more than 50%.

However, what is not commensurate with the increasing volume is the number of consultations in private hospitals. In 2014, the number of private hospitals was 325 million, an increase of nearly 5 times compared with 2005. However, in the same year, the number of medical treatments in public hospitals exceeded 2.5 billion; public hospitals were hard to find news on the 1st, and private hospitals accounted for only about 10% of the total number of treatments.

Why is such a large volume produced so little the amount of medical treatment, but there are two reasons for this. First, the internal quality supervision of the hospital is difficult, resulting in a mixed industry, and the problems in the business process are overdone. Reputation, at the same time, the extensive management mode and the rude management style, some private hospitals are "profit-seeking", blindly pursue the maximization of interests, neglect the responsibility and morality of the medical itself, and form vicious competition inside, ruining the industry atmosphere. It has seriously affected its own image. The most famous one is the "Wei Zexi incident". Second, compared with public hospitals, the attractiveness of private hospitals to talents is still relatively limited, lacking well-known experts.

How to break the above dilemma, most private hospitals think of only one way, increase advertising, multi-packaging, multi-marketing, in order to enhance the popularity and the amount of medical treatment, and Baidu has become one of the most important channels for competing each other, advertising The effect of the promotion was immediate, and a large amount of publicity brought about a significant increase in revenue. This made many medical institutions, especially the plastic surgery medical institutions called the profiteering industry, obsessed with this and looked at some typical cases.

Huahan Plastic

Nearly 80% of the net profit is placed on Baidu advertising

Huahan Plastic is a typical “Putian Department” medical institution. Its founder is Lin Guoliang, the executive president of the famous Putian Health Industry Association. The current actual controller of the company, Li Xiaolong, is the deputy supervisor of Putian Health Industry Association. Long, through the affiliated South Medical University Friendship Plastic Surgery Hospital, Sichuan Yuehao Beauty Hospital, Beijing Huahan Beauty Hospital, Qingdao Huahan Plastic Surgery Hospital, Changsha Huahan Huamei Beauty Hospital and Nanjing Huahan Qizhi Beauty Hospital, etc. Students, freelancers, and other aesthetic seekers provide plastic surgery services that integrate safety, beauty, art and culture. In 2014, they officially landed on the New Third Board.

According to the Huahan Plastic Annual Report, its 2014 revenue was 247 million yuan, net profit was 2,110,800 yuan, Baidu's advertising fee was 19.521 million yuan, its 2015 revenue was 338 million yuan, and net profit was 2,940,900 yuan. The cost is 66.803 million yuan, of which, the advertising fee paid to Baidu is 23.17 million yuan, accounting for 78% of the company's net profit for the year, its 2016 annual revenue is 543 million yuan, net profit is 23.6681 million yuan, and advertising expenses are 112 million yuan. However, it is clear that the continued increase in advertising costs is accompanied by a continuous increase in revenue.

Xiangyun Medical

Advertising expenses have increased year after year

Xiangyun Medical is also a new three-board company in Putian. The company's main business is to provide patients with diagnosis and treatment services for common skin diseases such as common, difficult, critical skin diseases and sexually transmitted diseases through various skin specialist hospitals. Provide professional medical services such as inspection, treatment and health care to customers with skin beauty needs.

According to Xiangyun Medical's 2015 annual report and share transfer manual, from 2013 to 2015, Xiangyun Medical's operating income reached 170 million yuan, 292 million yuan, and 401 million yuan respectively. The net profit for the same period was -46.414 million yuan and -2.066 million yuan. 378.119 million yuan, advertising costs were 37.9976 million yuan, 41.548 million yuan, 72.767 million yuan, of which, from 2013 to 2015, Xiangyun Medical and Baidu have cooperation, and advertising procurement contracts increased year by year, in 2014 Xiangyun Medical Baidu’s purchase amount was 12.5 million yuan; in 2015, the contract amount rose to 20.67 million yuan.

The huge amount of advertising fees has caused Xiangyun Medical to gradually turn a profit.

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