Foreign businesses will get the chance to break into the Chinese medical market in a big way, thanks to the latest series of measures aimed at encouraging the development of private hospitals.

The changes that allow fully foreign-owned hospitals to be established on the mainland are among initiatives forwarded by the State Council, China's Cabinet, on Friday in a document about encouraging the development of private medical institutions.

The document was sent to departments including the National Development and Reform Commission and the ministries of health and finance.

Currently, foreign investment in a medical institution is limited to a maximum of 70 percent of total investment. At the moment, institutions can be run as joint or cooperative ventures.

With pilot projects to be introduced first, the medical care market will be gradually opened further to overseas ventures and the authorities will streamline procedures required for applications, the document said.

Chen Pei, a former executive at a top United States healthcare institution in Beijing, said the policy is encouraging and will trigger significant change in the industry.

"Previously, the foreign-funded or private capital-funded hospitals experienced unequal treatment, if compared with public hospitals," Chen said, explaining that foreign-funded hospitals made investments and shouldered investment risk on their own.

"The attitude of the government will inspire them to do business in China and it will result in a competitive market," he said.

But he was worried whether the central government policy will be carried out by governments at all levels.

"I have seen many good policies fail to realize their original goals and I hope this one can bring tangible benefit for society."

Unlike before, health and commerce administrations at the provincial level, under the new policy, will be responsible for handling registration applications by joint venture hospitals. The health and commerce ministries will be in charge of registering the solely-foreign-owned hospitals, the document said.

"The influx of foreign-funded hospitals into China will help better meet the rising demands of the public for high-end quality medical services," said an unnamed leading official from the Medical Reform Office of the State Council.

Also, the diversification of investment in the healthcare industry is high on the government's agenda for ongoing medical reform, he said.