ADB expends leasing company loan to boost China’s health system

18 Jan 16

The Asian Development Bank is extending a loan to an international leasing company to up to $75m to help the firm expand badly needed funding for healthcare equipment and facilities in China.

 

Despite a reform programme and efforts to scale up healthcare funding in China, the ADB said shortfalls remain in access to finance in some underdeveloped regions. Lease finance, whereby a leasing company buys an asset on behalf of the user and rents it to them for an agreed period, offers an attractive option for hospitals needing high-value equipment, it said.

Biao Huang, an investment specialist in the ADB’s Private Sector Operations Department, said despite “impressive strides” by the government to scale up healthcare spending and public health insurance schemes across China, there are still substantial differences in quality of services and access to finance.

“This loan to Yingda International Leasing, a Sino-foreign joint venture company with a strong track record in healthcare leasing finance, will give it the longer term funds it needs to help hospitals in underdeveloped regions raise the standard of their facilities and healthcare.”

The ADB said the loan will support the provision of equipment and facilities for hospitals in the western and central regions of China, which fare worse than the country’s coastal east.

The bank said the significant regional and urban disparities in health care quality and access to finance are due to the country’s relatively low healthcare expenditure and decentralised system of healthcare finance.

At least 60% of the hospitals financed under the bank’s loan will be county hospitals, primarily serving rural populations, while the remainder will be directed to lower-tier cities in the target areas.

Funds will be used to lease modern medical equipment and for other investments such as the expansion or refurbishment of hospital buildings. The ADB also said it expects the support for a private healthcare financer to help promote more public-private cofinancing for healthcare funding.

The loan has a tenor of five years, and the ADB added that it also enhances the firm’s access to longer term finance, allowing it to better service its hospital clients and expand its operations. 

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