When walking into a restaurant, people usually have a sense about how expensive the food would be.
But when it comes to cosmetic surgery clinics here, it is a different story. Not many -- perhaps none -- openly display the price of their services or procedures, not to mention the specs of medical equipment they use.
“Say that I want to receive a skin toning laser treatment and there are two hospitals. One uses equipment that costs 200 million won (about $180,000), and the other uses outdated equipment worth 30 million won. But they charge the same price. I think this is not fair on patients’ accounts,” said Hong Seung-il, co-founder and CEO of Healing Paper, the company behind cosmetic surgery review app Gangnam Unni.
Seeing such a gap, he and his classmate from medical school saw a promising business opportunity.
In 2015, the doctor-turned-entrepreneurs launched the app, borrowing the name from the Gangnam district, the Beverly Hills of Seoul and a mecca of plastic surgery. It was years after the duo had tried to launch a different medical service app, Healing Paper -- to no success -- that targeted patients with chronic illnesses.
Roughly translated as “sister from Gangnam,” the name of their new venture was a reflection of their ambition to make it the go-to app for people interested in going under the knife.
“Interested in a little nip and tuck? Ask this (older) sister from Gangnam. That was the idea,” Hong said in an interview with The Korea Herald. Local takeoff
It was a switch in the right direction. South Korea, often described in the foreign media as “the world capital of cosmetic surgery,” has a fortunate combination of a high smartphone penetration rate, solid e-commerce environment, a huge base of potential cosmetic surgery clients, and most importantly, the lack of similar services.
It took about two years for Gangnam Unni to establish a foothold among the local cosmetic surgery clientele. Gangnam Unni was able to turn a profit by 2017.
“The platform posted a twofold growth every year before the outbreak of the COVID-19 pandemic last year,” he said. The company’s annual sales, which stood at 160 million won in 2017, ballooned to 8.5 billion won in 2019.
In 2020, however, growth had started to slow down a bit. Sales increased by only 30 percent on-year to 12 billion won, due to the COVID-19 pandemic.
To date, it has secured around 2.8 million users in South Korea and around 400,000 reviews and ratings of local cosmetic surgery hospitals. About 750 clinics are present on the app.
Hong says his goal is to make the app a casual online space for all age groups.
At a young age in Korea, people consider major undertakings like double eyelids, nose jobs and liposuction, but as they grow older -- typically over-30s -- they prefer visiting clinics on a regular basis for less invasive procedures, he said.
Hong, citing industry data, said that around 20-30 percent of patients at clinics specializing in cosmetic procedures are regulars who visit there at least once a month.
“Our goal is to make Gangnam Unni a platform that every age group uses at least one or two times a month,” he said.
Gangnam Unni has so far attracted a total investment of 23 billion won, including 18.5 billion won in funds raised in April last year from Legend Capital, KB Investment and Hana Ventures.
Gangnam Unni earns money only by displaying advertisements from registered hospitals. For every click on the consultation booking button in the app, these clinics earn credits which can be used for payment of advertisement fees.
The company had tried a different monetization model, but later gave up due to regulation restrictions.
In many other countries, including China and Japan, platforms like Gangnam Unni could charge hospitals commission based on the costs that patients pay for medical services booked through the platform.
But the Medical Service Act in Korea prohibits such financing, Hong explained.
“In the past, hospitals invested their resources in luring patients. The (current) medical law was introduced as a response to that, with an aim of preventing hospitals from spending excessive expenses,” he said.
It is not just the monetization model that is dragged down by tight regulations here. The company’s other attempts to reinvent the way medical services are provided have also faced regulatory setbacks.
In 2019, Healing Paper introduced a video consultation feature on Gangnam Unni, allowing users to ask doctors about what can be done to specific areas of their face or body parts. The service, however, was discontinued, as doctors feared it could be seen as violating a law banning telemedicine.
“It’s a shame that the law did not allow doctor-patient matching on online platforms. If it wasn’t for the law, we could have further advanced our webRTC-based telediagnosis model by now,” Hong said.
Although he believes that deregulation would help advance the local health care industry, the businessman said the firm is “OK” with the current market environment.
There is already plenty of growth potential, Hong continued, as long as it holds onto the No. 1 position in South Korea, home of the ever-growing K-beauty trend.
“South Korea and Gangnam have a symbolic importance” in medical tourism as well as in the regional cosmetic surgery industry, Hong said. Global expansion
As the novel coronavirus decimated medical tourism, Healing Paper switched strategies to directly launch its services in overseas countries -- namely Japan and China.
Last year, the firm acquired Lucmo, which was Japan’s No. 2 cosmetic surgery platform with 150,000 users and 100,000 beauty clinic reviews. It has increased its efforts to secure Japan’s largest medical and aesthetic clinic operators, including Shonan Beauty Clinic, Shinagawa Cosmetic Surgery group and Takasu Clinic. The number of cosmetic clinics registered on Gangnam Unni in Japan stands at around 330, the company said.
Going forward, Japan could deliver bigger profits to Healing Paper, more than Korea, Hong said as Japanese laws allow platforms to collect commissions on surgeries or procedures conducted via the app.
The costs of beauty treatment in Japan are two or three times higher when compared to those in South Korea. For such reasons, Hong expects that many Japanese app users could be interested in visiting South Korea for a nip and tuck once the pandemic is over.
Among Japanese people who have received plastic surgery, 32 percent have visited South Korea to get procedures done, Healing Paper said, quoting Japanese market data.
In China, things are not moving as fast.
Healing Paper was to hold discussions with China’s biggest cosmetic surgery social networking apps, like GengMei or So-Young, for potential business partnerships last year. The Korean firm had sought to attract Chinese visitors to South Korean hospitals by providing information of local hospitals to the Chinese platforms, like other white label and API solutions such as Expedia Travel. The plan will have to wait until international travel returns to normal, Hong said.
In another investment, the company acquired technologies that could help the company expand its business portfolio in the future.
Healing Paper acquired Syscode in 2019, a Korean company that develops health care customer relationship management software. Hong said the company would advance its health care CRM software so that it can be sold to both local and foreign hospitals.
By Shim Woo-hyun (firstname.lastname@example.org