Yes, I know Congress just passed the Inflation Reduction Act, a big step forward in combating climate change that also has some important healthcare provisions (Medicare negotiating drug prices, anyone?), but, come on, TikTok is buying hospitals! I can’t pass that up.
To be more accurate, TikTok’s parent company ByteDance is actually buying hospitals, through two of its health subsidiaries. As first reported by South China Morning Post, and subsequently confirmed as a $1.5b deal by Bloomberg, ByteDance bought Beijing-based Amcare Healthcare, which runs eight women’s and children’s hospitals in four Chinese cities. As a private system, it targets expats and high income locals.
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And you were excited about Amazon
buying One Medical.
Now, just to be clear, I don’t have a TikTok account
and don’t think I’ve ever even see a TikTok video, but I’ve been tracking it
since 2019. I first wrote about how it could be a harbinger for foreign competition
in the U.S. healthcare system, then about the threat it posed to our privacy,
and marveled at its evolving social influence, such as in political
organizing or job
searches. Whether I like it or not,
whether healthcare is ready for it or not, TikTok is here, and its role is
steadily increasing.
Some experts view this latest investment not so much about ByteDance’s healthcare ambitions as its efforts to placate Chinese authorities, who have recently started stepping on tech companies who get too big (where are you, Jack Ma?) or who spend too much money overseas. As Bloomberg noted:
The deal is also one of the largest to emerge from the Chinese tech industry since regulators began curbing “disorderly capital expansion” in late 2020, discouraging the sorts of big-ticket acquisitions that Alibaba Group Holding Ltd. and Tencent Holdings Ltd. used in previous years to get into and dominate new markets.
I’ll leave the political-economic investment discussion
to others more qualified, especially when those discussions are about the
Chinese government and economy, and take ByteDance’s strategy at its face
value. It is interested in
healthcare. And I doubt that interest is
only restricted to China.
The recent moves don’t make ByteDance a healthcare
company any more than Amazon’s make it a healthcare company (yet), but let’s
remember what ByteDance is. It is not a
social media company dabbling into healthcare as a potential future option, like
Meta is doing with the metaverse. It is
an AI company that happens to run a social media company, as well as popular
news service…and several health-related companies. The AI is the common denominator, not the
videos. It is even selling
its AI to other vendors (or maybe not).
China has made AI a
national priority, with huge investments, Big Data databases to work with,
and applications in many public and private initiatives. Healthcare is one of the areas of heavy AI
investment.
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| Credit: Israel Innovation Authority |
Even more than in the U.S., the pandemic has led to increased use of telehealth in China, and it makes sense that one of ByteDance’s early health investments was a telehealth company. There are numerous large telehealth services in China, including Ping An Good Doctor, WeChat, JD Health, and Alibaba Health. Online healthcare is already estimated to be a $89b market there, predicted to increase to $311b by 2026. Keep in mind that, although China has a much bigger population, its healthcare spending is much lower, estimated to be under $1 trillion, so online health already makes up a big part.
China is certainly a huge market, but, unlike those
others, ByteDance already has a big footprint outside China, though TikTok. It
has the customers, it is learning their preferences, it is navigating the regulatory
barriers, and, for better
or for
worse, it already has plenty of health information/misinformation. If it wants to grow its healthcare business, should
it fight for market share in China from more entrenched rivals, or should it
eye markets elsewhere?
I know what I’d be tempted to do.
The hospitals it just purchased don’t necessarily
offer services that are easily done online – e.g., obstetrics – but the
insights into preferences of expat and high income locals should be useful as
it thinks about expansion in other countries.
Add that to the online information, the telehealth, and the “internet
hospital,” plus the underlying A.I. expertise, and it’s a pretty impressive
array of healthcare capabilities.
Two of the most consistent themes I’ve had over the years are that AI is going to play a big role, including acting as a “doctor” in some respects, and that state/national restrictions are not going to be effective against online options. As I said in the latter article:
State licensing made sense in a world where care was local, when physicians always saw their patients in person. We no longer live in that world…And just wait until we get A.I. doctors, who aren’t “located” anywhere in particular.
So I don’t particularly care that the hospitals
ByteDance bought are only in China and only serve women and children. I don’t care that I can’t currently easily access
their other health options, such as consultations or information. I do care
that it knows how to attract and engage customers, even in other countries, and
that healthcare is an even bigger business outside China as in it.
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| Credit: TikTok |
It may not be ByteDance that breaks the national barriers and comes to the U.S. to challenge our healthcare system. Such an entry may not even come from China. But it is coming, from somewhere. Whoever it is may not only not respect our borders, but also not our regulations or our payment mechanisms.
Make fun of “TikTok hospitals” all you want, pretend TikTok
is just another Facebook or YouTube, and assume our healthcare system is going
to evolve under our direction. Me, I
suspect there’s going to be some “punctured equilibrium”
in which many of our existing healthcare entities may not survive.
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