The following article was published in Korean in February 2019. It provides some background to the controversy over for-profit hospitals, their potential impact on the Korean healthcare system, as well as the way the conservative media have framed the issue.
Since the controversy over Jeju Greenland International Hospital made the news in late 2018, the government of Jeju-do has imposed a condition on foreign for-profit hospitals being established in Korea—that they may treat foreign medical tourists only and not Korean citizens. The Greenland Group filed a suit in February 2019 demanding that the condition be revoked. Court proceedings have continued since then, and in July 2020 there was a third hearing on the matter. The decision is expected to be announced in October.
For-profit hospitals are not simply hospitals that make money. They also return the profits to their investors. Nonprofit hospitals are often founded by doctors or nonprofit organizations, and any profits are reinvested back into the hospitals themselves. In contrast, for-profit hospitals can be used as a means for investors to increase their assets, such as real estate and stocks, and to generate profits from dividends. This is the reason Greenland International Hospital in Jeju, equipped with 47 beds and aiming to provide limited medical services in dermatology and cosmetic surgery solely for foreigners, has been called a Pandora’s box for healthcare privatization.
Numerous questions have been raised by the media regarding the developer of the Greenland International Hospital. Greenland Group is a real estate investment company that has absolutely no previous experience in medical business. Some suspect FDI round-tripping by Korean investors as well. Despite these allegations of regulations being violated, the Ministry of Health and Welfare approved the business plan for the hospital in 2015. This was after the media had discovered that the hospital was mentioned in Ahn Jong-beom’s notebooks as an order from the VIP (former president Park Geun-hye). Greenland Group asked the Jeju government to consider taking it over as a public hospital, but rather than respond to that request the government instead granted permission to open the hospital, overruling the recommendation of the Deliberative Public Opinion Investigation Committee, which had voted with an overwhelming majority to reject the plans.
Healthcare experts point to the ‘vampire effect’ as the major issue in discussions about for-profit hospitals. They worry about the effect a for-profit hospital would have on the management system of nonprofit hospitals, as well as on the whole healthcare system. Jeon Jin-han, head of the Policy Bureau at the Korean Federation of Medical Activist Groups For Health Rights, said, “It is important to report on all the suspicions and doubts, but we also need to look very carefully at why the conservative media and economic newspapers are clinging to this tiny hospital.” Park Gyu-nam, head of the Workplace Conflict Resolution Team at the National Health Insurance Trade Union, remarked, “The danger of for-profit hospitals is that once the floodgates are opened it will affect the whole public healthcare system.” So, with this in mind, this reporter examined the media reports on the Greenland International Hospital.
How do for-profit hospitals threaten nonprofit hospitals?
For-profit hospitals can set their own medical fees, as the National Health Insurance does not apply to them. This is in stark contrast to nonprofit hospitals, which are required to accept National Health Insurance and must negotiate their medical fees with the National Health Insurance Service. This difference is where the ‘vampire effect’ begins.
To make money, for-profit hospitals are highly likely to provide expensive services to the rich. As the use of these hospitals increases, people begin to raise the issue of insurance payments and the mandatory enrollment in the National Health Insurance scheme. If the rich, who pay larger sums for their health insurance, pull out of the mandatory scheme, the funding for National Health Insurance will decrease. This will also weaken insurance coverage.
This will create a crack for private health insurance to squeeze through. As insurance companies begin to provide low cost plans, more and more people will opt for private insurance plans and for-profit hospitals. Experts argue that this will ultimately create an environment that threatens the existence of nonprofit hospitals. Jeon explained, “According to a survey conducted by the Korean Federation of Medical Activist Groups For Health Rights, about 70 to 80 percent of private hospitals are willing to become for-profit hospitals, if the government gives them the green light.”
Jeju governor Won Hee-ryong did attach a condition to the opening of the Greenland International Hospital. The hospital must be strictly open to foreigners only. It was a measure to minimize the effect of this for-profit hospital on Korea’s public healthcare system. However, whether this measure will survive is up in the air. It has no legal basis, as there are no related provisions in the governing law. In fact, the current law states that hospitals do not have the right to refuse treatment. The Greenland International Hospital has already decided to protest against this condition and expressed its intention to take legal action.
The very nature of medical services is another reason large corporations are interested in opening for-profit hospitals. In the healthcare sector, there is an extreme imbalance of power between the service provider (doctors) and customers (patients). Moreover, the ratio of personnel costs to profits is high. Combining this with the fact that for-profit hospitals can set their own medical fees, the medical sector can turn into an infinitely lucrative business. Hospitals are likely to provide unnecessary treatments or drastically reduce medical personnel in order to maximize their profits, which will result in a reduction in the quality of medical services.
The term ‘open-investment hospital’ obscures the truth
The conservative media use the term ‘open-investment hospital’, arguing that this is a more accurate term than ‘for-profit hospital’. The Korea JoongAng Daily, Dong-A Ilbo, Maeil Business Newspaper and the Korea Economic Daily are such news outlets. In fact, in the two days following Jeju governor Won’s approval of the Greenland International Hospital, the Korea Economic Daily and the Korea JoongAng Daily asked, “From small town medical clinics to large-scale hospitals, have there been hospitals that did not pursue profit?” These papers also argued that ‘open-investment hospital’ was the ‘official term’ and the ‘accurate term’ for hospitals like the Greenland International Hospital.
The term ‘for-profit hospital’ is an official one used not only in Korea but also in foreign countries as well as international organizations. The OECD uses the term ‘for-profit hospital’. Some of the media use the expression ‘investor-owned hospital’, but there is no such term as an ‘open-investment hospital’. This newly coined term obscures the fact that the goal of for-profit hospitals is in generating profit for their investors.
Some call it the “advancement of healthcare” but keep quiet about the percentage of public hospitals in advanced countries
Some media outlets argue that we need to use the expression ‘advancement’ instead of ‘commercialization’ in discussing for-profit hospitals. Pointing out the countries that have introduced for-profit hospitals, they assert that “Korea needs to have for-profit hospitals like other advanced countries to enhance the quality of healthcare.”
On December 6 and 7, 2018, the Korea Economic Daily and the Korea JoongAng Daily reported on the approval for the opening of the Greenland International Hospital, stating that “In Germany and France, open-investment hospitals account for 20 percent of all hospitals.” The Korea JoongAng Daily added, “Among the members of the OECD, all of the major countries allow for-profit hospitals, with the exception of Japan and the Netherlands. Even countries with near-socialist healthcare systems, like the UK and Sweden, have both public hospitals and investment hospitals.” In their December 6th issue, the Chosun Ilbo also reported that “The United States, Germany, Singapore, and other major countries around the world have allowed private for-profit hospitals to improve their healthcare systems and vitalize their economy.”
These newspapers, however, failed to report that the percentage of public hospitals in the above-mentioned countries is over 10 times higher than Korea’s. Among the members of the OECD, Korea is ranked at the bottom for the percentage of public hospitals (5.8%). The OECD average is 73.3%. Medical experts explain, “If a country like Korea, where national and public hospitals only account for about 5% of all hospitals, allows for-profit hospitals, there will be no way of preventing the commercialization of healthcare.”
Moreover, the OECD countries that allow for-profit hospitals provide medical services virtually free of charge. In Germany, the government covers all medical fees that are more than 2% of the patient’s income. France, Sweden, the Netherlands, and Australia have ceilings for yearly medical expenses, between ₩200,000 and ₩500,000, and the government takes care of medical fees in excess of those amounts.
The conservative press turns a blind eye to procedural problems
The aforementioned newspapers also neglected to mention the controversy in which the Greenland International Hospital has been embroiled regarding its opening procedure. On January 15, 2019, suspicions were raised about the Greenland Group’s qualifications for undertaking the business, as well as the central government and provincial government’s approval for the hospital, and the “National Movement to Call Off the Jeju For-Profit Hospital and Prevent the Privatization of Healthcare” was launched. The organization recently brought charges against former Minister of Health and Welfare Chung Chin-youb and Jeju governor Won Hee-ryong for dereliction of duty. The majority of the media also raised new questions. However, the conservative newspapers and economic newspapers including the Chosun Ilbo, the Korea JoongAng Daily, and the Dong-A Ilbo did not report on the related issues.
On February 11, the Headquarters of the National Movement held a rally and has been holding an indefinite sit-in in front of Cheong Wa Dae. They are urging the government to call off the opening of the Greenland International Hospital and to turn it into a public hospital. The opening of the Greenland International Hospital has been scheduled for March 5.