China detains 160 in Shanghai healthcare scam

SHANGHAI Tue Apr 15, 2014 12:01am EDT

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SHANGHAI (Reuters) - Chinese authorities have detained 160 members of a criminal gang in the eastern city of Shanghai after the group swindled patients by luring them to fake medical clinics and selling them over-priced drugs, Shanghai police said on Tuesday.

The gang cheated over 500 victims out of 1.7 million yuan ($273,400), employing corrupt doctors to inflate drug prices and prescribe large amounts of medicines to patients, the city's police department said in a posting on its official microblog.

Corruption in China's healthcare system is rife, with a scarcity of doctors and bribery pushing up the cost of care and creating tension between healthcare workers and patients.

Providing affordable, accessible healthcare is one of the key platforms of president Xi Jinping's new government, with China's healthcare bill set to hit $1 trillion by 2020, according to a report from McKinsey & Co.

Over 600 Shanghai police launched a sting operation on April 2, after seven months of investigation, detaining 160 suspects in raids on gang members' homes around the city and seizing crates of medicine and fake firearms, the statement said.

The gang would lure patients into four fraudulent clinics, by placing people at hospitals and metro stations to praise the quality of the care. Unqualified doctors would then sell them drugs at prices often inflated over 10 times the real value.

The healthcare scam, which often targeted migrants who had come to Shanghai for treatment, is the largest of its kind to hit the city, according to a number of official Chinese media reports from the Shanghai Daily paper and Xinhua news agency. They added that of those detained, 114 people had been arrested. ($1 = 6.2191 Chinese Yuan)

(Reporting by Adam Jourdan; Additional reporting by SHANGHAI NEWSROOM; Editing by Michael Perry)

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