Harvard-Linked Hospital Eyes Expansion With China Billionaire

Feb 17, 2014 6:05 pm ET

Feb. 18 (Bloomberg) -- Brigham and Women’s Hospital is considering a proposal from real estate billionaire Hui Ka Yan to become the first Harvard-University affiliated hospital to expand to China.

Spokeswoman Erin McDonough said that Brigham and Women’s, which trains Harvard Medical School students, is exploring “the possibility of collaborating” with Hui’s Evergrande Real Estate Group Ltd. on a hospital in China. Evergrande said it reached an agreement with the hospital and is seeking a site for the project, according to a company release.

Evergrande announced a donation in December for three academic research centers at Cambridge, Massachusetts-based Harvard, which launched a $6.5 billion fundraising campaign in September. One of the centers, devoted to immunology, would be co-run by researchers at Boston-based Brigham and Women’s. The gift is unrelated to the China proposal, McDonough said. Harvard declined to disclose the amount.

U.S. hospitals and medical schools are eyeing China as its economy matures and demand for health care increases, said Joanne Conroy, chief health-care officer for the American Association of Medical Colleges in Washington. Constraints on pricing from payers for hospital services have also pushed some U.S. medical centers to consider expanding abroad, she said.

Global Branding

“It’s not too surprising that people are looking at China,” said Conroy, who advised a consultant working with Brigham and Women’s on the expansion plan. “With an emerging middle class and health-care system, there are opportunities to expand the global brand and offer health care and expertise.”

A 2011 survey of 311 medical centers by the American College of Healthcare Executives and the American Hospital Association found that 21 had overseas partnerships. Among 12 willing to give details of the arrangements, two -- Tampa General Hospital in Florida and Hartford Hospital in Connecticut -- had partnerships in China. Both arrangements were formed with existing health-care providers in the country, rather than new hospitals.

In addition, Zhejiang University School of Medicine and the University of California at Los Angeles Geffen School of Medicine have a partnership involving student and curriculum exchange.

Private hospital operators are also looking to China for opportunities. Concord Medical Services Holdings Ltd., backed by the Washington-based private equity firm Carlyle Group LP, and Chindex International Inc., a Bethesda, Maryland-based hospital operator, run hospitals in China.

Hospital Model

Evergrande began seeking a partnership with Brigham and Women’s in November because of the hospital’s commitment to global health, McDonough said.

“This component of our mission, coupled with our world- class reputation in clinical care, innovation and discovery through research, and training the world’s medical leaders, has resulted in Evergrande’s request to explore the possibility of collaborating to develop a similar hospital model in China,” McDonough said in an e-mail.

Brigham and Women’s has more than 3.5 million annual patient visits and almost $640 million in research funding, according to its website. The first successful human organ transplant was performed there in 1954, leading to a share in the 1990 Nobel Prize for the hospital’s late surgeon, Joseph Murray.

News outlets in China have written about a deal between Evergrande and Harvard to build a hospital. Beijing-based Caixin Media reported Dec. 6 that the agreement with Harvard is part of Evergrande’s effort to diversify. The new facility would be located in either Guangzhou or Shenzhen, Evergrande said.

Life Story

Last year, China boosted its annual budget for medical and health-care spending to 260.25 billion yuan ($42.9 billion), a 27 percent increase from the year earlier. The government said that it would raise medical subsidies for some non-working residents, extend a pilot insurance program for major diseases and accelerate reforms in public hospitals.

Spearheading the hospital venture is a residential real estate developer who grew wealthy in China’s property boom, which has shown signs of cooling. Evergrande was founded in 1996 by Hui, whose life story echoes the emergence of China as a world economic power. He worked his way up from a steel factory job into management before starting the real estate company.

Fueled by economic growth and the central government’s effort to move population to urban from rural areas, Hui has emerged as China’s 13th-richest person with an estimated net worth of $5.3 billion, according to Bloomberg data.

Separate Statements

Evergrande had 70.2 billion Chinese yuan ($11.2 billion) in sales in the 12 months ending June 30 and has amassed a portfolio of 200 projects in 122 cities, according to data compiled by Bloomberg. Hui, the company chairman, has used his wealth to buy the Guangzhou Evergrande Football Club, a professional soccer team that won national and Asian championships in 2013, and he is a member of the Chinese People’s Political Consultative Conference, a government advisory group.

Hui, who has an honorary doctorate from University of West Alabama, traveled to Harvard with company officials last year to meet with Harvard President Drew Faust.

On Dec. 2, the two organizations issued separate statements disclosing the company’s support for the three university initiatives: the creation of a green buildings and cities center at Harvard’s Graduate School of Design; a mathematical sciences center for undergraduates; and the immunology center. Shing-Tung Yau, a Chinese-born mathematics professor at Harvard and 1982 winner of the Fields Medal, will be the math center’s director.

‘Important Work’

“Evergrande’s wide-ranging support will enable progress across the university,” Faust said in the Harvard statement. “Harvard is fortunate to have been entrusted with this important work for humankind.”

Evergrande also said in its release that the research centers represented a partnership between the company and the university, the world’s richest school with a $32.7 billion endowment.

“Harvard as the world’s most famous school and Evergrande as a global leading enterprise, the future cooperation of us would be full of all kinds of possibilities,” Hui said in a speech, according to the release. “Exchanges and cooperation of us would promote the world’s academic level and progress and development of human society continually.”

Two days later, on Dec. 4, Evergrande published another statement describing an agreement with Harvard that was reached on Dec. 2 to establish a hospital. The statement, which refers to “Harvard Brigham Hospital,” is accompanied by photos of Brigham and Women’s President Elizabeth Nabel.

‘Choosing Location’

“Harvard University and Evergrande Group jointly declared their formal signing of cooperation agreement,” according to the company’s statement. “Today, a major cooperation project is publicized: Harvard will set up Harvard hospital with Evergrande in China. The two parties have reached substantial cooperation results, and is currently at the stage of choosing location for it.”

McDonough, the Brigham and Women’s spokeswoman, wouldn’t confirm that an agreement has been completed, and said Nabel hasn’t been to China to pursue the matter. While the hospital has spoken to consultants about the plan, none have been hired, she said.

Nabel declined a request for comment. Evergrande officials didn’t return calls seeking comment.

Brigham and Women’s, a nonprofit hospital that’s part of the Partners HealthCare system in Boston, is separate from Harvard with its own board of directors. Brigham and Women’s wouldn’t need approval from Partners to move forward with the plan, McDonough said.

Evergrande also said in its statement that the proposed hospital should give “special preferential treatment to Evergrande owners,” which would enhance corporate competitiveness. Brigham and Women’s officials declined to comment.

--With assistance from Dune Lawrence in New York, Wenxin Fan and Bonnie Cao in Shanghai, Daryl Loo in Beijing and Selina Wang in Cambridge, Massachusetts. Editors: Lisa Wolfson, Chris Staiti