Deal focus: Hao recommits to hospital modernization

With more and more diagnostic tests coming online, China's hospitals can store larger amounts of vital patient data. Yet often this information goes to waste because the computer networks on which it is stored cannot communicate effectively.

"One of the concerns that we have heard consistently from hospitals about other products in the market is that data is neither real time nor interoperable," says Elaine Wong, a partner and co-founder of Hao Capital.

Hao's portfolio company DJ HealthUnion, a major developer of IT solutions for hospitals in China, aims to fix this shortcoming with its suite of its proprietary Health Information Union Platform (HiUP). Now the GP has renewed its investment in the company by committing $12.5 million from its $73 million auxiliary fund, which launched last year.

At the time of Hao's first investment in DJ HealthUnion in 2010, the company believed China's healthcare IT sector had the potential to match contemporary advances in Europe and the US. HiUP has since been introduced into hospitals in several major cities. Wong credits its success to increased IT experience among hospital support staff, along with improvements in their ability to identify needed features.

"Chinese hospital IT departments have learned a lot in the last five years. Now they're starting to understand what doesn't work and what to ask for instead," says Wong. "They are asking the right questions: ‘Does this deliver full interoperability, data in real time, and according to international healthcare standards?' They are much more skeptical and selective about service providers."

Hao and DJ HealthUnion believe this growing sophistication will continue to work to their advantage. They plan to keep pushing the value of the products through an educational model, with white papers and demonstration units, rather than a traditional sales approach.

Wong believes that recognizing the customers' knowledge of their own needs is the most effective approach for this kind of product. DJ HealthUnion does this by getting feedback from doctors and implementing some of their requests - for example, by creating a mobile phone interface.

"The more knowledgeable the customer base at hospitals is about what to expect and what kind of demands to make of their service providers, the better off we are," Wong says. "This is not an area where you need to do a lot of hard selling. I think it's much more about market education."

Though Hao's involvement has already reached the five-year mark, Wong stresses that the GP has no plans to exit at this time. However, her thoughts regarding possible exit scenarios have changed over the years.

"We had originally thought that a trade sale was the most likely option. Right now we still think it's highly likely, but given some of the positive response to the new products, we think the company could also pursue an IPO," she says.

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• Topics
• Greater China
• Healthcare
• Expansion
• Technology
• healthcare
• Technology
• Growth capital
• China
• Hao Capital