China's new rules on internet healthcare are expected to benefit internet hospitals and foster the healthy and sustainable development of the sector, industry experts said.

The comments came after the National Health Commission issued draft rules last month, imposing tighter regulation over China's fast-growing internet healthcare industry. The rules require physicians to authenticate their real identity before providing consultation to ensure real-person services. Using substitutes, or artificial intelligence software, will not be allowed for such services anymore.

Leveraging online consultations on internet healthcare platforms to sell prescription drugs will be prohibited. The rules proposed the personal income of healthcare workers must not be linked to income from drugs and medical examinations, and doctors must not designate locations to purchase drugs and consumables.

"This is the first detailed document launched for internet healthcare since 2018. It raised specific requirements for various links in internet healthcare, including institutions, personnel, business and safety. It also banned behaviors such as AI-enabled drug prescriptions and drug rebates. The draft rules imposed stricter supervision over the industry," said Zhang Xiaoxu, a research fellow at online healthcare website VCBeat.

The release of the draft rules generated widespread interest in the Chinese healthcare industry, and has been well-received among insiders. The move is seen as beneficial to the development of the internet healthcare industry, especially for some large digital medical platforms that engage in strictly online medical services.

Liao Jieyuan, founder of China's leading digital medical service platform WeDoctor, believes the move released a clear signal that online medical consultations should be of the same quality as those provided by brick-and-mortar institutions, reflecting China's determination to develop digital medical services essential for standardized development and market expansion of internet healthcare.

"China's internet healthcare industry has been developing rapidly. Industry players have made a lot of explorations in increasing the efficiency and accessibility of medical services. These rules offered more guidance for the explorations," said a market analyst with JDH Online Healthcare who refused to be identified.

"The draft rules raised a lot of requirements for increasing the quality of medical services, and is dedicated to promoting the development of internet healthcare in a safer, more standardized manner," said Wang Hang, founder and CEO of online healthcare platform Haodf, during an interview with VCBeat.
There had been disorders in the internet healthcare sector, including using AI to give or approve prescriptions. Thanks to the newly released document, the situation will be improved in the near future, experts said.

"The disorders are hindering the development of internet healthcare, but with the latest move, those operating in accordance with rules and regulations will be better protected," the JDH analyst said.

While imposing stricter regulations on the industry, the document did not set restrictions for online follow-up visits, offering online physicians more autonomy.

The analyst said that although currently internet healthcare services are only offered during follow-up visits, with the broader application of technologies such as 5G, AI, big data and cloud computing, it is expected that internet healthcare will be applied in more scenarios.

A report from the Internet Society of China showed that in 2020, the internet healthcare market surged 47 percent year-on-year to 196.1 billion yuan ($30.7 billion). By December, the number of China's online healthcare consumers reached 215 million, taking up 21.7 percent of total netizens. The market is estimated to reach 283.1 billion yuan by the end of this year, up 45 percent year-on-year.

According to the NHC, as of June, the number of internet hospitals in China had exceeded 1,600. The first internet hospital in China was established in 2015 in Wuzhen, Zhejiang province, by WeDoctor.