Objectives: For-profit medical institutions were officially allowed to enter the Chinese medical market since 2000, which raised a lot of debate about positioning of for-profit medical institutions. The objective of this study was to compare non-profit and for-profit medical institutions in terms of market scale, medical quality and service efficiency, and to investigate the market potential for for-profit medical institutions in China. Methods: Data were collected from multiple sources, including China Health Statistical Yearbook, National Health Services Survey and China Statistical Yearbook. We assessed the performance of the two types of medical institutions from three aspects: market scale, medical quality and service efficiency. Key findings: The result showed that for-profit medical institutions increased obviously in the cities of China. Compared with non-profit medical institutions, for-profit medical institutions have less market scale. However, medical quality and service efficiency of for-profit medical institutions are mostly the same as those of non-profit medical institutions. Besides, for-profit medical institutions have great market potential in top medical service market in the coming future. Conclusion: For-profit medical institutions have realized great development in China. A quite large potential market still exists for for-profit medical institutions because of the increasing medical service demand and the improving insurance system in China. However, the long-term development of for-profit medical institutions depends on policy design in establishing and implementing fair systems of medical evaluation, technology accreditation and talent assessment. © 2013 Royal Pharmaceutical Society.