In Wuxi City, Jiangsu Province, a privately-owned hospital is suspected of swindling insurance premiums through large-scale fabrication of medical records and has been shut down. The hospital has close relations with the controversial Putian system of private hospitals in China.
On September 24, the Wuxi City Medical Security Bureau in Jiangsu Province issued a notice stating that the issue of “Wuxi Hongqiao Hospital” deceiving medical insurance has been verified. The government-designated medical insurance qualification of the hospital has been revoked, and criminal cases have been filed by the public security organs.
The notice also mentioned that 15 individuals including the legal representative and director of Wuxi Hongqiao Hospital have been taken into custody. The hospital has ceased operations.
Due to the hospital’s inability to support medical insurance payments, relevant patients have been gradually transferred to other hospitals. With the arrests of the hospital’s top management, employees are likely to face possible dismissals.
Wuxi Hongqiao Hospital is a privately-owned secondary first-class comprehensive hospital. According to its official website, the hospital has 160 beds and over 500 employees.
The insurance fraud case of Wuxi Hongqiao Hospital originated from a whistleblower within the hospital, a radiologist named Zhu Chenggang.
According to reports from the CCTV, Dr. Zhu Chenggang of the Radiology Department of Wuxi Hongqiao Hospital recently revealed that since last year, the hospital’s system has shown some medical records of patients that had never undergone imaging examinations in their department. These individuals had not taken any images at the hospital, and there were no imaging numbers archived by the radiology department, yet the medical records indicated “diagnoses based on imaging results.”
Dr. Zhu Chenggang stated that all these medical records were completed by a doctor surnamed Chen from the hospital’s health check center, who did not have the authority to access CT or MRI equipment in the radiology department. As a result, radiologists suspected that the hospital was fabricating medical records to defraud medical insurance.
It was reported that Dr. Zhu Chenggang discovered these issues since July last year. He displayed photos of medical records from 99 “patients,” which were only a portion of problematic records he captured while working.
In March this year, Dr. Zhu Chenggang took photos of medical records without imaging numbers for evidence and reported them to the hospital’s senior management. While awaiting investigation results, Dr. Zhu Chenggang found that the medical records he reported suddenly had imaging numbers and images again. Upon careful comparison, he found that these imaging numbers existed only in the computer system, and there were no corresponding patients’ records in the radiology department. Additionally, the coding format of the imaging numbers in the computer system differed from the routine coding in the radiology department.
Dr. Zhu Chenggang also discovered more issues: first, the imaging of several “patients” closely resembled images of other individuals. Second, the hospital’s query system indicated some patients’ MRI examinations with timestamps differing by only one minute, despite such examinations usually taking 10 to 15 minutes. Third, the images and corresponding diagnoses had left-right orientation errors, as during imaging, patients must face the doctor, making the left side in the images correspond to the patient’s right side.
Shortly after Dr. Zhu Chenggang reported these new findings to the higher authorities, he and his colleagues discovered that the radiology department had lost the authorization to view images dating before August 2023. The hospital claimed it was due to a “system upgrade error.”
After receiving the whistleblower report, the Wuxi City Medical Security Bureau spent over two months without conclusive results. It was only through the intervention of the National Medical Security Bureau that the senior staff of Wuxi Hongqiao Hospital were apprehended.
Signs of the “Putian system” can be detected among the shareholders of Wuxi Hongqiao Hospital.
According to commercial information, the largest shareholder of Wuxi Hongqiao Hospital is Shanghai Medtrend Hospital Investment Group Co., Ltd., holding a 40% stake. The third-largest shareholder is Zhejiang Medtrend Hospital Investment Management Co., Ltd., with a 17.5% stake.
Medtrend Group was established in 2003 by Putian native Chen Guoxing and he served as an executive director. There is a saying that Putian hospitals are operated by four major families, namely “Zhan, Chen, Lin, Huang.” Chen Guoxing is the nephew of one of the representative figures in the Putian system, Chen Jinzhang.
The Chen brothers, Chen Guoxing, and Chen Guoxiong initially held shares in Medtrend Group, but they withdrew in 2017 and 2020, respectively. The current controlling shareholder of Medtrend Group is Wang Weimin, holding an 80% stake. The relationship between Wang Weimin and the Chen brothers remains uncertain.
Moreover, the second-largest shareholder of Wuxi Hongqiao Hospital is Shanghai Fu Yi Venture Investment Co., Ltd., with a 22.5% stake. Lin Mingxiong, the controlling shareholder of Shanghai Fu Yi Company, also serves as a director of Xuzhou Jiulong Maternity and Child Hospital. According to previous reports in Chinese media, Xuzhou Jiulong Maternity and Child Hospital is also part of the Putian system.
Established in 2005, Wuxi Hongqiao Hospital had capital participation from the Putian system.
In addition to investing in Wuxi Hongqiao Hospital, Medtrend Group has investments in at least eight other hospitals, including Shenzhen Ganglong Hospital, Hangzhou Tianmushan Hospital, Shanghai Minhang Hongqiao Hospital, Wenzhou Jianguo Hospital, Shanghai Jianqiao Hospital, Kunshan Hongqiao Hospital, Shenzhen Jianguo Urology Hospital, and Hangzhou Jianguo Obstetrics and Gynecology Hospital.
These hospitals have currently not been affected by the insurance fraud incidents.
The Putian system is a privately-owned medical system run by practitioners from Putian City in Fujian Province and is considered a unique healthcare business model in China. The name has gained notoriety in China because it controls around 80% of the private medical market share in the country.
Starting in the 1980s, itinerant doctors initially advertised treatments for diseases such as sexually transmitted infections and skin conditions by posting small ads on telephone poles, earning their first wealth throughout China. They later shifted to advertising on television and in newspapers, expanding their treatment offerings.
Recognizing operational flaws in some local hospitals, they began subcontracting departments within hospitals, thereby legitimizing unlawful medical practices. They acquired struggling public hospitals, collaborated with PLA hospitals, and expanded through secretive chain developments.
Putian-affiliated hospitals specialize in specific medical fields such as men’s health, women’s health, infertility treatments, dermatology, plastic surgery, etc. This specialization avoids the complexities of managing general hospitals, while services in these fields tend to have higher charges. Many Putian hospitals operate in legal gray areas, and their medications are rumored to include secret “unbeatable” formulas.
In China under the leadership of the CCP, earning substantial profits without official support is nearly impossible, a knowledge well understood by the Putian system. In 2014, entrepreneurs from Putian members engaged in the medical industry worldwide jointly established the Putian (China) Health Industry Association, with Chen Zhili, former State Councilor of the People’s Republic of China and Vice Chairman of the Standing Committee of the National People’s Congress, serving as the chief advisor.
Chen Zhili, a native of Fujian, previously held positions as a member of the CCP Central Committee, Chairperson of the National Federation of Women, and Minister of Education. Besides, she has an extremely crucial identity, as it is widely rumored that Chen Zhili was one of the mistresses of the former CCP leader Jiang Zemin. Hiring Chen Zhili as an advisor signifies direct access to the Central Government.
Over the years, Putian system hospitals have faced controversies due to excessive treatments, false advertising, and frequent medical accidents, yet they have not only survived but expanded. Reports indicate that over ten years ago, there were over 8,000 Putian-affiliated hospitals worldwide.