Recently, the Second People’s Hospital and the Third People’s Hospital in Shantou City, Guangdong Province, completed a merger, with the operating license of the Second People’s Hospital being revoked. Since the beginning of this year, public hospitals in China have been facing a wave of mergers, with at least 20 public hospitals undergoing restructuring. Analysts in the industry have pointed out that after years of expansion, public hospitals are now experiencing overcapacity, imbalances in supply and demand, dwindling revenues, healthcare cost controls, patient loss, and financial difficulties. The trend of further integration is expected to continue in the future.
In a recent announcement by the Shantou City Health Bureau, the operating license of the Second People’s Hospital was officially revoked, signaling the completion of the merger process between the Second People’s Hospital and the Third People’s Hospital to form the Shantou City People’s Hospital.
Of note is that both hospitals involved in this deep integration have a history of over a hundred years. The Second People’s Hospital in Shantou City, formerly known as the Swatow Gospel Hospital founded by the English Presbyterian Mission in 1863, was renamed the Second People’s Hospital in 1953, boasting a history of 160 years. The Third People’s Hospital in Shantou City, which originated from the Yishi clinic established in 1878, was previously a comprehensive tertiary hospital dedicated to tuberculosis prevention and treatment in the eastern Guangdong region.
According to incomplete statistics, over the past three years, more than twenty such integration events have taken place in various regions including Zhejiang, Shanghai, Henan, Shandong, and Hubei.
Due to the “siphon effect” of tertiary hospitals and the retention effect of the grassroots medical network, secondary hospitals have become the focal point of this wave of public hospital integration.
A recent report in “First Financial” pointed out that many healthcare professionals have acknowledged that after years of rapid expansion, the medical system has encountered structural resource surplus and imbalances in supply and demand. Under these circumstances, public hospitals with unclear functional positioning, mainly consisting of secondary hospitals, are experiencing economic pressures and are compelled to seek resource integration. The surplus capacity resulting from the inefficient operation of the healthcare system is beginning to be cleared out.
Most of the public hospitals merging due to poor management are opting to reduce staff and bed capacities. This round of public hospital consolidation represents a significant “reverse” compared to the trend of expansion over the years.
Blogger “Brother Zhang Starts AI” shares a similar opinion. Recently, in a video analysis on social media, he noted a drastic decline in outpatient visitors at secondary hospitals while tertiary hospitals saw a significant increase in patients. With top-tier hospitals exerting pressure from above and community hospitals attracting patients from below, secondary hospitals have become sandwiched in between.
The professional consulting organization “China Report Hall” recently published an analysis stating that data from 2023 shows that the average bed occupancy rate in maternal and child health institutions nationwide is below 65%, with some county-level institutions experiencing empty bed rates exceeding 40%. This supply-demand mismatch directly increases operating costs. Amid limited resources, merging and restructuring operations have become the primary pathway to digest redundant capacity.
Liu Yu, a healthcare professional in Shanghai, revealed to “First Financial” that secondary hospitals have long been caught in a dilemma of being “sucked from both ends.” Over the past few decades of development, medical resources have continuously concentrated upwards, with top hospitals possessing the best talents, patients, and technology. However, following the supply-demand imbalance, these top-tier tertiary hospitals, in order to ensure survival, have begun to “bottom-up,” siphoning off common and chronic disease patients from secondary hospitals.
In fact, hospitals in China, in general, are suffering from losses due to poor management, with the situation being more severe for secondary hospitals.
According to data released by the National Health Commission of the Communist Party of China, 43.5% of public medical institutions nationwide were operating at a loss in 2022, with losses exceeding 1 trillion yuan. While there is no recent data for the past two years, considering the slowdown in economic growth and continuous population decrease during that period, the operational pressure on hospitals is likely only to have increased.
Losses have expanded in recent years. According to data from the National Health Commission in 2025, over 60% of public hospitals nationwide are running at a loss. However, blogger “Silent Majority” speculated in a recent video that the actual figure might be as high as 90%, with the exception of the top tertiary hospitals and some better county-level hospitals, the vast majority of hospitals are operating at a loss.
By the end of 2023, Hao Xiaoning, a researcher at the Development Research Center of the National Health Commission, publicly stated in an interview with the Communist Party’s “People’s Daily” client end, that more than half of the hospitals are currently burdened with varying levels of debt. The reasons for this debt are multifaceted, among which the blind expansion of public hospitals is a major contributing factor to the persistent high debt pressure on public hospitals.
Blogger “Keke Talks History” provided a deeper analysis, stating that with cost controls on healthcare, the elimination of drug markups, and the full implementation of DRG/DIP payment models, public hospitals are facing unprecedented operational pressures. Mergers are seen as a way to survive and thrive in the competitive healthcare market.
DRG/DIP represents two payment models in healthcare reform: Diagnosis Related Groups and Diagnosis-Intervention Packet, respectively.
Regarding the future trend of this wave of public hospital mergers, a report on “First Financial” mentioned that as the consequences of overcapacity and supply-demand imbalances from years of expansion become apparent, mergers and transformations of medium and small-sized hospitals may become a norm in the next few years.
Blogger “Handsome Medical Workplaces” stated that public hospitals are currently facing difficulties such as decreasing revenues, healthcare cost controls, patient loss, and financial struggles. There are over 11,946 secondary hospitals in the country, and conservatively, more than half of them are on the verge of a crisis, requiring immediate transformation for survival.
User “Traditional Culture” remarked that in nicer terms, it’s called a merger, but in reality, it may just be a way for hospitals that can’t make it on their own to band together for mutual support. Patients are voting with their feet, engaging in fitness, running, traditional Chinese medicine, and massage.
The merger of the two hospitals in Shantou City is not an isolated case. This year, Chinese public hospitals are undergoing a profound transformation, with the trend of mergers and reorganizations spreading from first-tier cities to county-level grassroots institutions.
On June 13th, the Health Commission of Huoqiu County, Lu’an City, Anhui Province, announced the revocation of the County’s First People’s Hospital and the County’s Second People’s Hospital, merging them to establish the Huoqiu County People’s Hospital, with the ultimate goal of creating a top-tier hospital.
Public records show that the predecessor of the First People’s Hospital in Huoqiu County was the 131 Hospital of the Chinese military, with 13 affiliated branches and a bed capacity of 1,000 beds. On the other hand, the predecessor of the Second People’s Hospital in Huoqiu County was the Huoqiu County Hospital, with a bed capacity of 800 beds. The planned medical bed capacity for the “14th Five-Year Plan” in the merged institution is set at 2,800 beds.
On June 7th, the Anal Hospital in Ningbo City was entirely relocated to the Second Hospital of Yinzhou District, Ningbo City.
On May 23rd, the Health Commission of Inner Mongolia announced that the application for the merger of the Eighth Hospital of Baotou City with the Central Hospital of Baotou City was accepted, marking the official completion of the integration of the two hospitals.
On May 19th, the Shanghai Gonghui Hospital applied for deregistration and was merged with the Fourth Rehabilitation Hospital of Shanghai.
On May 13th, the new campus of the Yongfeng County People’s Hospital in Ganzhou City, Jiangxi Province, was officially put into operation, having completed the integration with the Yongfeng County Maternal and Child Health Hospital on the same day.
On April 30th, the Health Commission of Zhejiang Province approved the integration of the Hangzhou Maternal and Child Hospital and the Hangzhou Children’s Hospital to establish the Hangzhou Maternal and Child Health Hospital.
On April 25th, the First People’s Hospital and the Third People’s Hospital in Luoyang City merged to form the Luoyang First People’s Hospital.
Both hospitals involved in this merger are also “century-old institutions.” Following the merger, the Luoyang First People’s Hospital will have over 1,200 beds and more than 1,900 staff on duty.
On March 25th, the Dalie Medical Group in Nanhai District, Foshan City, was officially renamed as the “Foshan University Affiliated Third Hospital,” indicating the comprehensive integration of the Fifth, Sixth, and Seventh People’s Hospitals in Nanhai District.
In March of this year, the original Jilin Maternity and Child Health Hospital merged with the Jilin Maternal and Child Health Family Planning Service Center to establish the Jilin Maternal and Child Health Hospital.
In fact, the wave of public hospital mergers began in 2024. In December 2024, the First Hospital of Zibo City merged with the Occupational Disease Prevention and Control Institute. In April 2024, the People’s Hospital of Yixing City established a medical group by joining forces with the Third People’s Hospital and the Maternal and Child Health Hospital.
In June 2023, the First Hospital and the Second Hospital of Fuzhou City respectively led the integration of local Dermatology Prevention Hospital, Children’s Hospital, Psychiatric Prevention Hospital, Maternal and Child Health Hospital, and other medical institutions, forming the First General Hospital and the Second General Hospital of Fuzhou City.
In the same year in March, the First Hospital of Ningbo City merged with the Affiliated Hospital of the Medical College of Ningbo University, forming the Ningbo University Affiliated First Hospital, now the largest top-tier comprehensive hospital in the eastern Zhejiang region.
Apart from public hospitals, non-public medical institutions are also seeking survival through mergers. In May of this year, the Beida Medical Group announced its merger, incorporating the Beida Medical Luzhong Hospital with the Beida Medical Zibo Hospital to establish the Beida Medical Luzhong Medical Management Center (headquarters), with a total of 1,700 open beds after the merger.