[Outlook]A healthy hospital market

Strategy and Finance Minister Yoon Jeung-hyun always says what he has to under any circumstance. He’s known for his strong leadership. He can persuade people without offending them.

When President Roh Moo-hyun was in office and some former democracy activists who were core members of the government leaned too far to the left, Yoon often emphasized that we should protect capitalism and the market economy. He recently talked determinedly about the medical industry and education in a forum. He said, “Whenever these issues come up, I feel heavy in my chest. I feel afraid to mention them, but we now have to deal with them head-on.”

“Isn’t it a shame that we can’t resolve these issues even though everybody knows all too well about these problems?” he continued. He added, “It’s a shame we don’t have a hospital for foreigners in the free economic zones.”

His words were convincing, as we are now desperate for both jobs and dollars. As the medical industry is labor-intensive, when 1 billion won ($645,000) is generated, 16.3 new jobs are created. That’s more than three times more than in the manufacturing industry, which has 4.9 jobs for the same figure.

The medical industry also contributes to attracting foreign capital. Thailand, for instance, has allowed profit-making medical corporations and fostered talented medical staff. As a result, the country has become the best medical hub in Asia. In 2007, 1.5 million foreign patients went to Thailand for medical purposes.

Korea’s medical system has plenty of merits. Talented students flock to medical schools. They are good at working with their hands and the quality of medical services is very good. It is said that our rate of curing stomach and lung cancer is among the highest in the world. Medical equipment is good and fees are relatively cheap. Why do we keep a closed medical system when we have all these good conditions?

The problem is, as Minister Yoon diagnosed, the medical sector is not regarded as an industry and there is a stigma against turning hospitals into profit-making firms.

Approving such hospitals will have a range of positive effects, such as attracting expert managers and foreign patients, as well as the development of different products with insurance companies. Because of this, not only the United States and Singapore but also socialist China have made it possible to run profit-making hospitals.

The former administration knew that was the right way to go. Right after his inauguration, former President Roh Moo-hyun pushed for growth in the medical industry. But his administration lost its driving force as civic groups opposed the measure, arguing that it would ruin the domestic medical system and cause polarization in medical services.

Opponents maintained that if medical services, which are generally regarded as public resources, were to become commercial resources, the services would become more expensive and talented medical workers would focus on the rich.

Rhyu Simin, then the health minister, confessed that resolving the issue of allowing profit-making medical corporations was nearly impossible because the subject immediately became ideological as soon as the word “profit” was mentioned.

Things have been the same ever since the incumbent administration took office. The talk about allowing medical corporations to pursue profit disappeared completely after last year’s candlelight vigils.

At that time, the Michael Moore documentary on the American health care system, “Sicko,” was playing in Korea and sparked unreasonable worries over polarization in medical services. The film begins with a scene where a man has two fingers cut off while working and can only afford to get one reattached because he doesn’t have health insurance.

However, things are different here in Korea because everyone is entitled to state-sponsored health insurance. In the United States, most people have private health insurance programs.

Nevertheless, concerns spread that hospital staff would only attend to rich people if the current system, which requires all hospitals to accept patients with national health insurance, were abolished and private health insurance was introduced.

In July last year, an effort was made to open a profit-making medical corporation in Jeju Special Self-Governing Province as a model, but it didn’t succeed due to the opposition of residents.

The official stance of the Ministry of Health, Welfare and Family Affairs is that the direction is right but nothing will be implemented for the time being. If this persists, the quality of medical services in most hospitals will remain at the level it is now, which is not very competitive.

If profit-making medical corporations are permitted while preserving the basic framework of the national heath insurance program, the side effects won’t be serious and hospitals can boost their competitiveness. The market’s auditing system can break the equation that allows for-profit hospitals to be owned by individuals, and it can calm the worry that such hospitals will only cater to the rich.

If things are still difficult, profit-making corporations can be permitted to run hospitals as an experiment.

The incumbent economic team reportedly plans to create an engine to make Korea an advanced nation by easing business regulations. Minister Yoon also revealed that he would address this issue directly. But a sensitive issue like allowing hospitals to pursue profits can’t be resolved by him alone.

President Lee Myung-bak must endorse it and give his support. Lee must regain the pragmatism that he has lost due to the candlelight vigils and boldly push through tasks that he thinks are right for the country’s economy, even if it causes criticism. The incumbent administration is the right government for the job.

*The writer is an economic news editor of the JoongAng Ilbo.

by Park Eui-joon