Zhu Yong, a reporter from the Shanghai Youth Daily, had a bitter experience when seeking treatment for his chronic gastritis in the Shanghai Oriental Hospital in Pudong. He later sued the hospital for giving him unnecessary medical examinations and medicines.

While he was waiting for a gastroscopic examination, he was told to take a Type-B Ultrasound examination first.

"When I asked why I should have that examination, the doctor explained that the gastroscopic exam was not available. So they gave me a Type-B Ultrasound examination," Zhu said.

Later the hospital also gave him other examinations, such as those for blood lipids and an electrocardiogram.

"I wonder why they gave me such examinations. My gastritis was not that serious," Zhu said.

With these doubts, Zhu later consulted the hospital and was told that most of the examinations should not have been done.

"I am so angry about what the hospital did to me. The doctors later prescribed medicines to treat my problem, which turned out to be expensive pills," said Zhuu. "But I was told later these expensive medicines could have been replaced by alternatives which were much cheaper."

The nine days of treatment in hospital cost him 3,930 yuan (US$475), most of which was spent on medicines.

"I later found that most of the medicines had been imported at a high price. I even found some of the medicines were not appropriate for my disease," he said.

Zhuu accused the hospital of deceitfully undertaking unnecessary examinations and prescribing expensive medicines just to make a bigger profit.

Better care

The Shanghai Oriental Hospital is not the only hospital to face such accusations.

"In China, many hospitals have to survive by selling medicines. This is no longer a secret. Even the AAA comprehensive hospitals do the same thing to make ends meet," said one director (who refused to give his name) from an AAA hospital in Shanghai.

However, as State-owned hospitals are struggling to survive by selling medicines, foreign ventures have rushed to enter the market.

Two hospitals will soon be established in Shanghai with foreign ventures taking a majority of the share holdings. The whole investment is announced at over 400 million yuan (US$48 million), according to the Shanghai government.

The two hospitals are the first comprehensive ones in China in which foreign ventures have a majority stake.

A US company will invest 120 million yuan (US$14.7 million) to set up a comprehensive hospital in Shanghai's Anting Town together with Anting Hospital, a local comprehensive hospital, according to an official from Anting Hospital.

They have chosen to locate the hospital in an industrial zone in Anting based on automobile and parts manufacturing.

"The process of applying to establish such a hospital is complex and the requirements are quite strict," said Chen Xueping, an official from the Shanghai Foreign Economy and Trade Committee.

But the huge market in Shanghai, with its growing middle class, has attracted foreign ventures despite these strict requirements.

Previously, United Family Hospitals and Clinics, with a US venture background, has provided services in Shanghai after achieving success in Beijing.

Foreign ventures have taken part in the co-operative running of professional hospitals and clinics for a long time.

"They prosper on the basis of the better service they provide, rather than the medicines they sell," said Professor Zhu Renyuan, chairman of the Shanghai Ophthalmology Association.

"Our aim is to set up a hospital where mothers do not fear and fathers can find a seat while waiting," said Li Beijing, founder of United Family Hospitals and Clinics.

"The wall was decorated with plants and beautiful pictures. You could see the pictures of babies smiling in the arms of their parents. I was later told those were the babies born in the room. It felt like a home," said Wang Suyi, who gave the birth to her baby in the hospital.

"I felt shy when I was about to give birth. But the doctors and nurses told me nobody could see into the operating room because it had two doors. The equipments were all in good order and clean. They convinced my husband to stay with me during the operation and encouraged me with warm words. My nervousness faded away."

In such hospitals, the service fee is about 10 times the ordinary level. It costs 500 yuan (US$60) to see the doctor each time.

"Although the public hospitals charge a smaller service fee, they charge you more for medicines. I prefer hospitals like United Family," said Zhang Jing, a Shanghai white collar.

Each doctor only sees 10 patients a day in hospitals like United Family, so as to guarantee they can give enough time to each patient.

"But in the public hospitals, especially the comprehensive ones, each doctor might have to see more than 100 patients every day," said Zhu.

Zhu himself sometimes has to see more than 130 patients in a single day.

Better service has lured many middle class people away from the public hospitals to the new hospitals.

More competition

This competition has upset the local hospitals. "We lose our personnel when these hospitals arrive in Shanghai," said Zhu. "They grab the best doctors and nurses by offering higher salaries, better opportunities for promotion and a better mode of operation."

Some hospitals have responded to the challenge by co-operating with the foreign hospitals and absorbing foreign ventures. Some 200 out of the 600 hospitals in Shanghai have now entered into co-operation arrangements with foreign hospitals and investment capital. The UK and Shanghai, for instance, have signed an agreement to establish a chest hospital.

An academic affiliation agreement was signed between Shanghai Second Medical University (SSMU) and the University of Nebraska Medical Centre (UNMC) early this year to undertake joint efforts in the fields of academic exchange and biomedical research.

To further co-operation through joint programmes, the UNMC said they would send their scientists to China and help Shanghai train high quality health care workers.

A special zone has been set up in Nanhui District of Shanghai to attract foreign investment into health care.

But who will look after the health care needs of people with low incomes and those without health care insurance?

"The joint-venture hospitals target the middle class and rich people while the government gradually reduces its investment in health care. So the reform of public hospitals is vital for everybody, especially for the under-privileged," said Zhu.