In 1997, the central government eased its control on issuing licenses for non-state medical facilities.

So far, Xuhui District has been a trailblazer in setting up private hospitals and clinics, city health officials said. During the past three years, Xuhui has approved the establishment of more than 70 private hospitals and clinics.

But, said Su Zhujun of the Shanghai Health Trade Association, which oversees the performance of medical staffers, the city's 17 other districts and one county have on average approved the opening of less than five non-state medical facilities during the same period.

Officials concede there is a major barrier to establishing private medical centers: Bills from such hospitals and are not reimbursed under the state health-care system.

Xuhui Health Director Wang Mianzhong said the matter is under discussion by national health officials and coverage may be available in two years.

Private hospitals are also trying to find their niche by offering "ordinary" patients treatment that costs less than what's charged by state hospitals and by offering the best possible treatment for affluent patients for whom cost is not a concern.

With more people moving to the suburbs, small clinics are increasingly convenient since most hospitals are located downtown, city health officials said.

"My clinic works quite well," said Dr. Xue Rulin, who operates a traditional Chinese medicine clinic on Xuhui's Pubei Road, a 30-minute bus ride from downtown. "The number of patients I see a day has increased from 10 to 40."

To compete with local state-owned hospitals, private medical centers are attempting to get patients by offering what is seen as a more "Westernized" service. Tong Yin, president of Ren'ai Hospital in Xuhui, said Ren'ai's "design is much like a hotel, since many local state-owned hospitals are still dirty and crowded."

(eastday.com 09/10/2001)