[Viewpoint] Aiming for better health care

The government’s medical service advancement plan contains most of the solutions that have long been discussed in the medical community. If these solutions are implemented as planned, many problems hindering Korea’s advancement in health and medicine could be resolved. But there is something missing in the plan.

The final plan includes objectives, such as allowing establishment of management service organizations (MSO) of medical corporations, allowing issuance of medical bonds by nonprofit corporations and preparing the ground for mergers of medical corporations.

While management service organizations can reduce operating costs by efficiently managing hospital facilities and workforce, the effect is not likely to be significant.

Also, medical bonds do not seem to help much since a medical institution with credentials solid enough to issue bonds can already get loans from financial firms.

This is why I cannot help but pay attention to the issue of the open investment medical corporation. While these corporations are the key to the advancement of medical services, policy makers put them off because they are controversial.

At present, there are three types of hospitals in Korea. The first are non-profit corporations run by schools or social welfare corporations. The second are hospitals operated by the state or public organizations such as local autonomous government agencies and specialized corporations. The third are private, for-profit hospitals and clinics invested in and managed directly by individual doctors.

Of course, private practice facilities have the most vulnerable capital flow structure, yet they make up about 60 percent of some 2,000 hospitals and clinics in Korea.

The open-investment medical corporations that are under discussion now would entail these private providers going public.

Selling shares in private medical service providers will not only enhance efficiency and transparency of medical management but also arouse a sense of involvement by individual investors. When citizens become shareholders of hospitals and clinics, public interest in medical services will be enhanced.

The national medical insurance system has been supported by the National Health Insurance Corporation’s budget, which is limited by low insurance premiums.

The low-fee system has been maintained since national health insurance was introduced in 1977. Therefore, private medical institutions, especially the small and midsized private providers with less than solid capital capacity, make very low profits and struggle with operational expenses.

They cannot even think of reinvesting, and their businesses are crumbling.

In fact, the bankruptcy rate of small and midsized clinics is over 10 percent annually, and those that manage to survive are struggling to raise funds.

Open-investment medical corporations raise money and improve the poor medical environment through reinvestment in equipment and facilities, helping the small practices improve medical service and advance the industry.

Of course, in the earlier stage of implementation, a few competitive specialized hospitals will be the first to receive investments.

However, the investment will be expanded gradually to small and midsized local clinics, and, ultimately, the door will open to attract capital investment to prepare all the hospitals and clinics to compete to provide quality medical service.

In the system of delivering medical services, small and midsized practices with better accessibility should be saved through reinvestment on facilities and equipment in order to divert the patients favoring a few large hospitals. We can also enjoy the added benefit of cutting total medical costs.

Moreover, as medical services become industrialized, the number of health care and medical professionals will increase dramatically. The higher demand will contribute to alleviating unemployment.

We can also hope to see enhancement of national competitiveness in general.

The Ministry for Health, Welfare and Family Affairs has proposed various measures to realize advancement of the medical industry with often rare enthusiasm to resolve issues that have long been under discussion.

I hope the ministry will complete the work of national health and medical service reform with swift decisiveness and a strong drive.

*The writer is chief of the policy committee of the Korean Hospital Association. Translation by the JoongAng Daily staff.

by Lee Song