This paper studies the innovation and strategy used by Tawan¡¦s small and medium size of hospitals and clinics to break the revenue control by national health insurance. We found that to increase the competitive advantage and to compete with the non-for-profit hospital conglomerates, many small and medium size of hospitals and clinics either form alliance with other clinics or conduct chain operation to enjoy the economy of scale and economy of scope. Through case studies, this paper found the many characteristics for a successful healthcare chain operation to succeed in Taiwan. We found that the chain operation needs to have enough resource to expand on her own or need to have enough incentive for the franchisee to join the franchise organization. One effective attraction provided by the franchise organization is to have an effective training platform for the franchisees to grow their business. Another key factor for a healthcare franchise organization to succeed is the ability to do vertical integration within the same chain operation. Conducting asset swap with franchisee¡¦ hospital or clinic and let franchisees own part of the franchise organization¡¦s stock are effective strategy to attract independent hospital or clinic to join the franchise organization. Therefore, a successful healthcare franchise organization will almost want to pursue a stock listing in Taiwan or abroad. In particular, we study the business models for Missioncare medical group in Taoyuan and Darwin healthcare group in Taichung and Dr. Wells group in Taipei. Both Darwin and Dr. Well operate successful chain operation for dental clinics in Taiwan. We compare and contrast their business models and through the financial analysis, we summarize the pros and cons for each business model. Our key contribution for this paper is to identify the key factors for a Medical chain operation to succeed in Taiwan. Once the profitable business model is established, new hospitals or clinics could be set up quickly based on existing models and expenditures could be minimized through joint procurement and resource sharing.