Creating Momentum for a New Stage of Growth Through Investor-Open Hospitals

Jeju Green International Hospital, the country’s first for-profit hospital, has received approval to open. This marks the first tangible result in 16 years since the Kim Dae-jung administration first considered establishing for-profit hospitals in 2002. Although it is only a half measure, as the approval applies solely to foreign patients, it is still significant in that it creates an opportunity for the medical system, which has remained stuck in an outdated model, to advance a step further toward an investment-open structure.

The term “for-profit corporation” refers to an investment-open medical corporation. Because existing hospitals have operated under an investment-closed structure, capital investment has not been easy, and this has long contributed to inefficiency and backwardness in the medical sector. Medical tourism has been lost to hospitals in neighboring countries, while hospitals have pursued profits by prescribing unnecessary drugs and neglecting consumer welfare. Although approval has been granted to only one corporation in Jeju, removing regulations that have restricted investment in the medical field could also spur other hospitals, raising expectations for greater efficiency across the healthcare sector and improvements in service quality.

There is a clear difference between a situation in which all hospitals remain trapped in the outdated investment-closed model and one in which at least some hospitals can receive normal investment. The effects of investment can be seen directly, making it possible to compare which system is better. Those who advocate medical socialism fiercely oppose investment-open hospitals because they likely worry that if even one better model exists, it will become difficult to preserve the closed system. In any field, only an open system that recognizes diversity can prevent not only consumers but also workers in that field from being confined in a closed system.

If capital investment becomes easier, not only can the quality of medical services improve, but the cost of those services can also fall, thereby increasing benefits for medical consumers. Opponents argue that allowing capital investment will raise medical costs, but this is incorrect. In any sector, when capital investment becomes easier, investment activity becomes more vigorous in the market, strengthening competitiveness and bringing about lower prices. Capital investment either lowers costs or increases benefits, which results in higher productivity and ultimately leads to lower prices for consumers.

The for-profit hospital approved in Jeju this time is expected to increase local employment and create a new boom in medical tourism. Local residents should remain vigilant so that regional development is not hindered by the opposition of medical socialist forces and some doctors seeking to protect vested interests.

With the opening of this for-profit hospital, progress is also expected in advancing healthcare publicness and the national health insurance system. It can provide momentum for the development and promotion of advanced medical devices and technologies, and it may become the first step toward higher-quality services.

Healthcare essentially belongs to the private sector. More than 90% of hospitals are private, while less than 10% are national or public hospitals. Of course, even national and public hospitals cannot continue operating while running deficits. Efforts are needed to strengthen the competitiveness of the medical sector through normal investment activity.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

---

Original title: 투자개방형 병원으로 한 단계 발전하는 계기 마련

Author: Sung-no Choi

Date: 2018-12-11

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=25&idx=11289