China is likely to give green light to 100 percent foreign-owned hospitals, the 21st Century Business Herald reported on September 8, quoting a source close to the Ministry of Health.

Foreign ventures are already allowed to hold a 70 percent stake in private health care facilities. But if approved, the new policy will mark a significant development in the reform of the country's healthcare system.

The affluent coastal area of east China is likely to welcome the news. In Jiangyin City, Jiangsu Province, the local government has been working hard to attract foreign investors to establish high-end hospitals.

Foreign medical institutions, however, are likely to respond cautiously. One German healthcare group spent two years assessing market potentials in the Yangtze River Delta, the most developed area of China. But it encountered difficulties due to restrictive policies and the different operational ideas of its Chinese partners.

In China, 96 percent of healthcare investment is spent in government-sponsored institutions, which some believe is irrational. Cai Jiangnan, a senior researcher on health policy for the Health & Social Welfare Department of the State of Massachusetts, U.S., said basic medical services should be supported by public finance, while the high-end market should be opened up to private capital.

According to Chen Xinzhong, director of the Healthcare Bureau in Zhenjiang which is conducting a pilot reform in the medical insurance system, how much difference the new policy makes will depend on the details of its implementation.