Back To Top

[Voice] Should for-profit hospitals be allowed?

With the nation struggling to attract foreign investment ...Should for-profit hospitals be allowed?

To many, profit is something to be regarded with suspicion. But it’s rarely more controversial than when associated with health care. Unsurprisingly, then, a decision by the Ministry of Health and Welfare to introduce regulations for the operation of foreign, for-profit hospitals in the country’s six Free Economic Zones at the start of the month has polarized opinion.

To its supporters, the move gave long-overdue effect to the government’s aims to increase investment and competition in the health-care industry. Officially, foreign hospitals have been permitted since the latter days of the Kim Dae-jung administration, which opened the zones to such facilities in 2002. But no such hospital has yet been established, with the previous lack of clear procedures having been cited as an impediment to potential investors. Songdo, the planned city outside of Incheon recently selected to host the United Nation’s Green Climate Fund, is expected to be the site of the first of the hospitals in 2016.

As per the new regulations, at least 10 percent of its staff and almost half of its capital will have to be foreign. This and similar hospitals will also be separate from the Korean national insurance system. Wholly domestic entities will still be prohibited from operating for-profit hospitals.

These government restrictions aren’t just bad for business, say some investors, but for the health-care system itself.

“The real issue in Korea is lack of capital,” a member of a global private equity firm with eight years’ experience in the health-care sector told The Korea Herald. He wished to remain anonymous because of the sensitivity of the issue.

“Most of the medium to small-sized hospitals ―- usually the hospitals with 100-300 beds -― the bankruptcy ratio of those small hospitals is 9-10 percent per year. They definitely need the cash from other investors, but the government made it impossible to do that.”
 
A surgeon performs spinal surgery on a patient at a hospital in Incheon. Recent moves by the Ministry of Health to allow for-profit hospitals have spurred concerns about the impact on the public health system. (Yonhap News)
A surgeon performs spinal surgery on a patient at a hospital in Incheon. Recent moves by the Ministry of Health to allow for-profit hospitals have spurred concerns about the impact on the public health system. (Yonhap News)
What is a very high standard of health care in Korea is not being matched by the funding necessary for ever more advanced technology, he claimed.

“Without capital, it is very difficult to have a high-quality service; high-quality hospitals and more and more hospitals will be in trouble, simply because of a lack of equity. That happened also in the U.S. in the ‘80s.”

Some doctors agree that the present health-care system is too inflexible. Park Han-son, a psychiatrist at Saint Andrew’s Neuropsychiatric Hospital in Icheon, Gyeonggi Province, said that while they had their downsides, for-profit hospitals would benefit Korean health care.

“Basically, I think that more flexible approaches for the future of Korean medical system are highly needed,” said Park.

“The Korean medical insurance system is too rigid. A lot of medical reformers have difficulty making a breakthrough due to legal limitations. The health and medical industry is one of the most conservative fields. All changes can be harmful to someone, and can be beneficial to someone. But we need to make some changes.”

Distinct roles

While indispensible health care should continue to be provided to all through the public system, Park said, profit-seeking operators could have an important role in specialized care and medical innovation.

“Indispensable medical supports like vaccination, maternal health or nutrition should offered evenly by government funding,” he said. “Cutting-edged medical science or special care could be paid by ‘the benefit principle.’ The public health system and private health system have their own distinct roles.”

Critics of the concept of profit-seeking in health care fear that the presence of for-profit institutions will undermine the entire national health insurance system by luring wealthy patients away from the scheme, depriving it of funds. A report by the Hyundai Economic Research Institute forecast that the introduction of for-profit facilities, while having a potential economic effect equaling as much as 1 percent of GDP, would weaken the public health-care system.

Lee Yong-kyoon, a senior researcher at Korea Institute of Hospital Management, said that the recent moves by the Health Ministry mark a fundamental shift in the delivery of health care in the country.

“Currently, South Korea’s health insurance price follows a single insurance price system which is a controlled payment system,” said Lee.

New territory

“On the other hand, foreign for-profit hospitals allowed to enter the Free Economic Zones are not subject to the obligatory contract of the national health insurance. Since these hospitals are outside the boundary of the controlled payment system of national health insurance, they can differentiate medical services offered in South Korea and are expected to be a turning point of activating the market price mechanism in the domestic health industry.”

Lee said this change of approach in health care could lead to tension and alienation between different strata of society.

“The introduction of expensive foreign for-profit hospitals in the zones may possibly draw social conflict and marginalization between the rich and poor. So, public medical support for the socially neglected people should be reinforced.”

Another argument by critics of liberalization of the sector is that doctors could be lured by higher salaries away from national insurance-covered hospitals to money-making facilities, a concern shared by Park.

“It is a major concern when it comes to the introduction of profit-making medical cooperation. We should not rely on the sense of doctor’s Hippocratic duty in maintaining a modern public health system. If we want for more talented doctors to work for public hospitals, we have to pay for it. There is no such thing as a free lunch.”

Inequality in provision of services is another concern. A study in 2010 by the Korea Institute for Health and Social Affairs predicted that the public would be saddled with an extra 1.5 trillion won ($1.4 billion) in health-care costs were 20 percent of the country’s private hospitals to become profit-seeking.

For Park, the solution to concerns regarding health-care polarization is to be proactive in funding for the disadvantaged, rather than restricting certain types of involvement in health care.

“Everyone has a right to get enough food to live regardless of his or her economic status. But it doesn’t mean everyone has to eat the same foods.

The gap between the rich and the poor is an undeniable fact. So, the limited budget of government should be invested for social and economic minorities, not for all people.”

By John Power (john.power@heraldcorp.com)


Readers’ voice

For-profit hospitals...

Despite the moral dismay it may bring to society since the basic duty of a hospital is to take care of patients regardless of their financial situation, if both nonprofit and for-profit hospitals coexist, for-profit hospitals will transform and bring the health care field to another level through incentive-oriented approaches.

Every market moves based on incentives. That means no matter how essential a good is to a group of people, if there’s no incentive for a market to produce such a good, then it’s likely that it will not be produced. Unlike non-profit hospitals which do not have to worry about incentives due to the support from the government, for-profit hospitals, like other businesses, move by incentives. And this incentive-oriented approach is what pushes private hospitals to provide better services to patients.

Since the government does not support private hospitals, they need to work a way out to raise their popularity so that they can survive by earning more profits. In order to attract a larger crowd, they need to build a good reputation and credibility by displaying a lower level of failure and also by developing a brand new system to conduct operations easily and more cost-effectively. For-profit hospitals need to compete with other hospitals to survive. That’s why they are not only more careful with their medical approaches as stated above, but they are also putting efforts to differentiate and personalize their medical systems as to increase the level of satisfaction of each individual. There are some individuals who are ready to get a personal and a new level of medical service even if they have to pay more. Non-profit hospitals usually cannot provide such services but the for-profits definitely can and would love to, to increase their consumer bases. By providing personal services with longer care hours and special diagnosis adjusted to individuals, private hospitals can help each patient be more satisfied than one would have been at a public hospital.

Of course, there are people who argue that it’s morally wrong for hospitals to provide their services only to the patients who can afford them, but I am talking about a case in which both public and private hospitals co-exist. This way, patients will have more to gain from more choices they can make.

― Im Ji-young, Changwon, South Gyeongsang Province

Gardening on the Han…

The cool breeze brushed against my face, a pleasant relief from the sweltering heat. My family had come to collect our surprise gifts that awaited us every week. A smile lit on my father’s face as the rest of us rushed to harvest our newly ripened vegetables. Sun-kissed cherry tomatoes soon rested in my hands, gleaming red like the radiant sun above. My younger sister began to pick lettuce leaves, only stopping when startled by the occasional spider crawling out from its hiding spot. However, my family had not come to the country or some farm. In fact, we were in the middle of Seoul, surrounded by the Han River and the glistening skyline.

Seoul is arguably the “soul” of Korea, a city teeming with people, business opportunities and new technology. However, Seoul has yet to fully become a city acclaimed for maintaining a clean environment and contributing to a greener world. To improve such conditions, the capital city has recently taken considerable steps to provide a clean, green environment for its citizens. One of such efforts has been creating a community garden.

Nodeul Teotbat, or Nodeul Garden, is a community garden located on Nodeul Island, a small Han River island near Yeouido. The project to create this garden, along with a similar one at Yongsan Park, was opened this year by the Seoul city government to raise citizens’ awareness of the environment and encourage participation in creating a “greener” Seoul. Around 22,000 square meters of land were cleared and allocated for use for Nodeul Garden. Citizens wishing to participate in growing the garden applied at the beginning of the year. Around 500 families and individuals were chosen and each given 2 pyeong, or roughly 7 square meters, of land. The amount of apportioned land may seem modest, but to inexperienced city dwellers, the size cannot be more suitable. For me, the task of raking out rocks, pulling weeds and smoothing out the soil was harder than I had imagined, and the garden certainly did not seem so small after my shirt was soaked with sweat.

Farm equipment, including rakes and hoes, are kept in a small shack near the entrance, free for use by gardeners. Several farming specialists maintain the entire garden, providing assistance when needed. They are a huge help to inexpert gardeners like me, who, back in June, could not differentiate between weeds and tomato plants or even recognize what I had planted.

Other than the garden itself, unique facilities within Nodeul Garden are designed to be environmentally friendly. Wooden benches and traditional lookout sheds line the edges of the garden, all made out of recycled wood. The water from water faucets is saved and reused for plants. There is also an “ecology restroom,” where contributions made by gardeners are stored and later used to make organic compost. The Han River Bridge, stretching across Nodeul Island, provides convenience in reaching the garden by both foot and car. The garden, however, lacks a large parking lot; instead, use of public transportation is encouraged for those wishing to come. Several subway stations are located nearby on both sides of the bridge, the nearest being Nodeul Station (Line 9). Additionally, a busy bus stop sits directly in front of the garden, offering the place ease of access by public transportation.

The use of chemical fertilizers is strictly forbidden. The garden, alternatively, offers organic compost available for purchase, which is made using leaves, natural materials and, as mentioned before, contributions by gardeners. Chemical pesticides are replaced by marigolds, flowers known to naturally repel harmful insects, and natural pesticides obtained from ginkgo leaves, mustard, peppers and other organic ingredients.

To further extend citizen participation, the agricultural specialists of the garden have created a website offering information on events or gardening, and where users are free to leave posts or comments. Events held at the garden include “YugiDay,” or “Organic day,” a play on words in Korean referring to both the date of the celebration, the second of June, and the word “organic.” The day was chosen to promote organic farming and eco-friendly styles of life through a festival.

Nodeul Garden has shown me that to have green thumbs, you need a green garden. The leaves of crops retain a bright green luster and pests are seldom found, despite the lack of chemicals used. The flowers used for natural pest control add a colorful harmony to the luxuriant garden, checkering the green terrain with beautiful shades of red, yellow and purple. The organic fertilizer has proven itself to work by presenting a bountiful harvest this summer.

Even though Nodeul Garden is a relatively small place, it has sprouted the seed for future eco-friendly activities for Seoul and for Korea. The garden is an innovative approach to connect citizens together, let them beware of environmental issues and offer a fun way to join in becoming green. The garden has not only yielded healthy, scrumptious vegetables, but it has also given citizens a sense of responsibility towards protecting our environment and a belief that such actions can start small, even from growing a community garden. This is what Nodeul Garden wants all Seoulites to truly harvest: love and care of our environment.

― Kang Dong-woo, Seoul Global High School, Seoul
MOST POPULAR
LATEST NEWS
padcast
Korea Herald Youtube
subscribe