Lucrative Industry

China’s economic reform resulted in hospitals having to rely on the sale of services to cover their expenses. According to cardiovascular doctor Hu Weimin, the state funding for the hospital where he worked was not enough to cover even staff salaries for one month. He stated, “Under the current system, hospitals have to chase profit to survive.”¹

The government, in addition to withdrawing funding, imposed price controls on basic health services. These price controls were not comprehensive, leaving new technologies and drugs untouched. In addition, hospital doctor salaries were changed to include a bonus component based on hospital revenue. Blumenthal and Hsiao wrote, “The result was an explosion in sales of expensive pharmaceuticals and high‑tech services.”²

All these changes drove hospitals to perform transplant surgeries; a new technology not covered by price controls that provided private revenue not only from the operations but also from the required post-surgical anti-rejection drugs. Transplant surgery and postoperative care have become a leading source of income for many hospitals in China.

For instance, the Organ Transplant Center of the People’s Liberation Army Hospital No. 309 in Beijing stated, “Our Organ Transplant Center is our main department for making money. Its gross income in 2003 was 16,070,000 RMB. From January to June of 2004, income was 13,570,000 RMB. This year (2004) there is a chance to break through 30,000,000 RMB.”³

A report by World Journal in March 2015 quoted Huang Jiefu as saying that a liver transplant costs at least 600,000 RMB (about $96,000 USD) and that a kidney transplant costs more than 300,000 RMB (about $48,000 USD).⁴ At the end of 2006, Huang Jiefu stated to Caijing Magazine, “Organ transplantation is developing as a tool for hospitals to make money.”⁵

Selling Organs

Because there were no guidelines for transplant fees in China, the prices for transplants ranged from tens of thousands to hundreds of thousands RMB. These included pharmaceuticals, surgery fees and organ acquisition, including preservation and transportation costs.⁶

As of 2007, the website of the China International Transplant Network Assistance Center (CITNAC), which was established under the organ transplant department of the First Affiliated Hospital of China Medical University,⁷ listed transplant prices for foreigners. Kidney transplants cost more than $65,000 USD, liver transplants were $130,000, and lung and heart transplants each cost around $150,000.⁸

On February 26, 2013, Huang Jiefu expressed in a Xinhua News article, “A certain stimulus mechanism is to be introduced into China’s organ donation system by giving out certain humanitarian aid and receiving economic compensation.”⁹ This implied that no compensation was given to donors or their relatives for organs obtained before 2013. The Guangzhou Southern Weekend reported in March 2010 that since 2000, the sale of organs for transplants has become “a mine of high-grade ore that can’t be exhausted.”¹⁰

On March 31, 2006, a senior military doctor of the General Logistics Department of the Shenyang Military Command wrote to the Epoch Times, “China is the center of international live organ trading, and has accounted for more than 85% of the total number of live organ transplants in the world since 2000. According to the data reported to the Central Military Commission, a few people have been promoted and became Generals due to their ‘achievements’ in this field.”¹¹

He also said, “The military acts as the organ transplantation management system … There is a huge source of living organs. Many military hospitals report their transplants to their supervising authorities. At the same time, they also carry out organ transplants on a large scale in private. This leads to the fact that actual numbers are much higher than the official statistics.”

The People’s Liberation Army General Logistics Department is in charge of allocating organs sourced from prisoners in detention facilities. The department receives cash (or foreign currency) when selling organs to hospitals, which pay for the organs. The bulk of the transplants are conducted in military hospitals, while the organs sold to civilian hospitals were just for extra profits. The purpose was to use these hospitals as shop windows and advertisements to overseas customers.¹²

Kidney Transplant Cost

Below are the average costs of kidney transplants in different regions between 2000 and 2004, as reported in academic papers:¹³

We found lower prices in various media reports:

The Qilu Evening News reported on July 28, 2003 that the General Hospital of Jinan Military Command charged 30,000 to 40,000 RMB for a kidney transplant and 20,000 to 40,000 RMB per year for immunosuppressive drugs thereafter.¹⁴

It was reported in April 2006, patients paid only 50,000 RMB for kidney transplants at the Second Hospital of Dalian Medical University.¹⁵

According to an archived webpage from 2008, Changhai Hospital of the Second Military Medical University advertised an average hospitalization fee of 50,000 RMB for kidney transplants.¹⁶

According to a webpage dated in 2010, at the First People’s Hospital of Changde, the average cost for a kidney transplant between relatives was about 60,000 RMB with no complications, or about 80,000 RMB from a cadaveric donor.¹⁷

It was reported that in early September 2014, a patient paid 600,000 RMB in cash to the First Affiliated Hospital of Zhengzhou University, which was able to find a matching kidney for him in one day. The transplant surgery was done the following day.¹⁸

A people.cn report from November 16, 2015 indicated that The First Affiliated Hospital of Xi’an Jiao Tong University Medical College requires “hundreds of thousands of RMB” for a kidney transplant.¹⁹

Liver Transplant Cost

Between 1995 and 1999, liver transplant surgeries at Wuhan Tongji Hospital required 10 hours, and the cost averaged between 300,000 and 400,000 RMB and peaked at 800,000 RMB. By 2000, the cost had decreased to 190,000 RMB and surgery time to 7-8 hours.²⁰ By 2001, the institute could usually keep the liver transplant cost below 150,000 RMB; the surgery took 4 hours, which represented the best in the country. In August 2011, the institute performed a liver transplant for 110,000 RMB, the lowest nationwide.²¹

In 2009, the cost of a liver transplant at Peking University First Hospital was between 160,000 and 200,000 RMB, and included surgical fees, in-hospital monitoring, pharmaceuticals, and examination fees for around three weeks after the operation.²²

Lu Shichun, director of the Beijing You’an Hospital transplant center, revealed in a media interview in 2011 that the fee for liver transplants differs among transplant centers and averages around 400,000 to 500,000 RMB.²³

In 2016, Wuhan Union Hospital, a sister institution of Tongji, advertised its liver transplant cost at around 150,000 RMB.²⁴

Heart and Lung Transplant Cost

As of 2016, a heart transplant averaged around 250,000 RMB with 3,000 to 5,000 RMB per month for postoperative immunosuppressant medication at the Fuwai Cardiovascular Disease Hospital, an affiliate of the Chinese Academy of Medical Sciences.²⁵

Shanghai Chest Hospital of Shanghai Jiaotong University charged between 200,000 and 300,000 RMB for a lung transplant in 2016.²⁶

Fees Paid by International Patients

Huang Jiefu publicly stated in May 2007, “China is one of the cheapest countries in the world for organ transplants. Liver transplants [cost] about 1/10 of those in the U.S., and kidney transplants are about the same.”²⁷

Interviews conducted by David Matas and David Kilgour with a group of international transplant recipients before 2006 reflected remarkably consistent prices. Below are some examples:²⁸

In 2001, a group of 7 patients who went to China together for organ transplants were each asked to bring $200,000 HKD (about $26,000 USD);

In 2004, an Asian patient paid $27,000 USD for a kidney transplant at the Economic and Technical Development Hospital of Guangzhou;

In 2005, a patient from Taiwan paid $29,000 USD (including “red envelope” money, airline ticket, etc.) for a kidney transplant at Guangdong Province Border Patrol Armed Police Central Hospital in Shenzhen;

In 2006, another patient from Asia paid $26,000 USD in cash for a kidney transplant at the Land Force General Hospital of Wuhan.

Other sources show the cost of a kidney transplant in China runs to $66,500 USD and a liver up to $157,000 USD.²⁹

As reported by Yeson Healthcare Service Network, a Taiwanese broker, a heart transplant at the Zhongshan Hospital in Shanghai can be had for as little as $119,000 USD—a fraction of the $860,000 USD such an operation would cost in North America.³⁰

However, transplant fees are not always low and depend on the recipient’s urgency and ability to pay. For example, in 2014 and 2015, Yang Guang, an expert in Chinese domestic affairs who resides in Denmark, revealed the inside stories of two hospitals affiliated with a medical university in northeastern China: organ transplant prices for foreigners are not fixed. Usually, they would charge $500,000 to $1 million USD. In some cases, those with money who are desperate for an organ have been charged up to $2 million USD for a transplant and hospital stay. A Japanese woman received a young girl’s liver and was charged $5 million USD.³¹

Trends and Factors in Transplant Costs

The main factors driving transplant costs are the treatment itself, including surgery and hospitalization costs, pharmaceuticals, including the ongoing regimen of anti-rejection drugs, and the cost of the donor organ.

Different hospitals charge different fees for transplants but generally follow a common trend. From a few of China’s main organ transplant centers, we see a decline in medical and pharmaceutical costs coinciding with an overall increase in transplant fees.

Between 1995 and 1999, Wuhan Tongji Hospital charged an average of 300,000 to 400,000 RMB and a maximum of 800,000 RMB for organ transplants. In August 2001, surgery fees decreased significantly to around 150,000 RMB on average (the range was 110,000 to 190,000 RMB). The director of the hospital’s organ transplant research institute stated that the decrease in costs was due to the maturation of technology, decrease in operation times from 7-10 hours to 4-5 hours, reduced bleeding, lower cost of blood transfusions, shorter anesthesia times, fewer postoperative complications, and shorter hospitalization times. By 2002, Tongji Hospital had reduced its liver transplant operation time to 4 hours and the cost to below 150,000 RMB, the “lowest in the country.”³²The decrease in medical costs due to improvements in technology and techniques is also reflected at Shanghai General Hospital, which in 2002 eliminated the need for blood transfusions in one-third of its liver transplant surgeries. The entire operation time was reduced to four and a half hours, and the lowest cost was 142,000 RMB.³³

A 2003 investigation of liver transplant costs showed that early-stage recipients had an average pharmaceutical cost of 198,000 RMB every six months after surgery. The same cost for late-stage patients was more than 230,000 RMB. Transplant recipients also need long-term anti-rejection drugs, which cost more than 30,000 RMB per year.³⁴

As of 2003, the surgery fee at Jiangsu Provincial People’s Hospital was one-tenth to one-eighth that of the same surgery in other countries.³⁵

In 2004, Nanjing Drum Tower Hospital’s hepatobiliary department director Ding Yitao told a reporter that the hospital’s liver transplant fee averaged 150,000 RMB, the lowest in the country. Postoperative anti-rejection drugs cost around 3,000 RMB per month for domestically produced products and 5,000 RMB for imported drugs.³⁶

In the same year, the People’s Liberation Army Hospital No. 309 charged 200,000 RMB for liver transplants and 300 RMB per day for anti-rejection drugs.³⁷ Early in the same year, the Oriental Organ Transplant Center charged approximately 250,000 RMB for liver transplants. By 2006, the fee had increased to 400,000 RMB for international patients but remained approximately 200,000 RMB for domestic patients.³⁸

We observed that transplant costs steadily declined in the years between 2000 and 2006, when organ harvesting was brought to light, due to technological development and abundant organ sources. The dramatic decline of surgery costs and treatments made it affordable for a wider range of patients. The ready availability of organs, maturation of technology, and increase in both domestic and international patients led to an exceptional growth in China’s organ transplant industry.

After the organ harvesting crimes were revealed in 2006, according to a report by Jingchu Network in August 2015,³⁹ liver transplants in China cost approximately 600,000 RMB, and kidney transplants cost approximately 300,000 RMB. From these descriptions of costs for liver and kidney transplants from different sources, we see that fees in recent years are significantly higher than those before 2006. However, medical and pharmaceutical costs have trended downward. Therefore, it is most likely that payments for donor organs represent an increasingly large portion of increased transplant fees.

One may naturally wonder if the increase in fees is due to a shortage in organ supplies. This does not appear to be the case though, as Huang Jiefu stated in 2015 that the limiting factors for organ transplantation in China lie primarily in medical costs and availability of transplant hospitals and doctors: “Only the third [reason] is that there are not that many donor bodies; even though donor bodies are abundant right now, there aren’t that many hospitals and that many doctors that can [perform transplants].”⁴⁰

Nevertheless, compared to the number of patients waiting for transplants, hospital transplant capacity and organ available remain scarce resources. Despite an endless line of domestic patients in need of transplants, the profit-maximizing strategy for hospitals is to provide transplants to those most willing and able to pay. This can be seen in the Chinese regime’s push to establish a platform for exporting organs to Taiwan and solicit transplant tourism from abroad.^{41 42}

Furthermore, international patients are being charged up to hundreds of thousands of U.S. dollars more than domestic patients, with fees that are many times the cost of treatment and pharmaceuticals. This takes advantage of the extremely inelastic nature of the market, given that these patients from other countries would otherwise have to wait years for a transplant.

Selling Pharmaceuticals

The tissue type or HLA compatibility of the source and recipient impacts the rate of rejection after a transplant operation. According to the US-based National Marrow Donor Program (www.marrow.org), the compatibility ratio of recipient and donor from a non-immediate family member is quite low, being somewhere between 1% and 5%. That is to say, it takes between 20 and 100 donors to find tissue type compatibility with a single recipient; meanwhile, media reports in China indicate kidney tissue type matching percentage of between 20% and 30%.⁴³

Immunosuppressant drugs can lessen rejection responses due to tissue type incompatibility. Globally, donor sources and patients with six out of ten matching points are considered tissue-type compatible for kidney transplants. The number of matching points has a direct impact on rejection rates and the amount of immunosuppressants required. In China, however, four matching points, or sometimes even fewer, are acceptable. As a result, patients need to rely on large doses of immunosuppressants after receiving transplants. Patients who develop severe rejection responses require a second or even multiple additional transplants. Sale of these pharmaceuticals also provides doctors with a source of kickbacks, contributing to some doctors’ aggressive pursuit of even marginal recipient prospects.

Dong Jiahong, director of the hepatobiliary surgery department at Beijing Tsinghua Chang Gung Hospital, revealed to Xinhua Net, “For a liver cancer patient, an average liver resection may cost 20,000 to 30,000 RMB. Liver transplantation may cost over 200,000 RMB, and there are follow-up costs. Most transplant patients will suffer from rejection issues and need to take immunosuppressants for life. Add in antiviral drugs preventing the recurrence of hepatitis B, and the cost is between 50,000 to 100,000 RMB a year.”⁴⁴

Because immunosuppressant regimens are individualized, they vary among hospitals and patients. Our hospital survey shows that the annual cost for post-transplant immunosuppressants range from 10,000 to 60,000 RMB. The cost decreased over time as domestic immunosuppressants gained a market share. We discuss immunosuppressants in more detail later in this chapter.

Growth in Revenues

The experience and practice of the People’s Liberation Army (Chengdu Air Force) Hospital No. 452 jumped from “township-scale” to that of a “large-scale hospital” in just a few years. Other military hospitals followed suit.

An article “Relying on the Market to Protect the Battlefield” by Xinhua Net and other domestic media in 2009 reported that, when Zhang Cong became the hospital’s president in 2000, the troubled hospital had more than 6 million RMB of debt. Its kidney transplant division used to be the hospital’s best-known department. However, due to the lack of funds to update its equipment, its number of patients decreased day by day.⁴⁵

In 2002, Zhang decided to “borrow a hen to lay eggs” and found an entrepreneur who invested 8 million RMB in the hospital. The investor and the hospital together managed the renal transplant division. After the capital and equipment were in place, its kidney transplantation operation soon “came back to life.”

Five years later, the hospital bought back the facilities, equipment, and management rights from the investor and embarked on a new entrepreneurial path. Very soon, the number of kidney transplants performed by the People’s Liberation Army Hospital No. 452 ranked first among all hospitals in Sichuan Province. After the hospital grew from its original 210 beds to more than 1,000 beds, Zhang became the president of the People’s Liberation Army Hospital No. 309 in 2013.

At Hospital No. 309, the People’s Liberation Army Organ Transplantation Center’s revenue rose from 30 million RMB in 2006 to 230 million RMB in 2010, an increase of nearly 8-fold in 4 years.⁴⁶
The annual income of Daping Hospital, affiliated with the Third Military Medical University, also increased from 36 million RMB at the end of the 1990s, when it began organ transplantation, to over 900 million RMB in 2009⁴⁷, an increase of nearly 25-fold.

Civilian hospitals have also profited from performing transplants. For example, the Second People’s Hospital of the Shanxi Occupational Disease Prevention and Control Center (in reality a kidney transplant center) charges approximately 100,000 RMB for a kidney transplant. Its revenue for 2005 was about 250 million RMB with at least 100 patients on its transplant waiting list.⁴⁸

References