Most local gov’t-run hospitals in the red

Amid simmering debate over a provincial government’s decision to suspend operations of a money-losing public medical center, a report detailing the balance sheet of public hospitals nationwide has come to light.

Only one out of 34 local government-run hospitals managed to generate profits for their medical treatment services, according to data published by the Ministry of Health and Welfare in July last year.

The data found that the combined debt of the 34 medical centers reached 514 billion won ($440 million), meaning each hospital averages 15.1 billion won in debt.

The report further raises the question as to whether low profitability can justify the closure of a public health care center, a sticky issue raised after Governor Hong Joon-pyo’s order to temporarily halt the Jinju Medical Center in South Gyeongsang last week.

The governor accused the medical center of having incurred 28 billion won in losses so far.

Despite the downbeat report, many attribute the deficits to the medical centers’ emphasis on serving the public.

“The result is inevitable for public hospitals, taking into account conditions surrounding the institutions,” said Kwon Yong-jin, chief director of Seoul Bukbu Hospital in northern Seoul.

“If private hospitals suffer losses, they can increase costs of treatments that are not covered by insurance to make up for deficits. But public entities simply can’t do that,” Kwon said.

The municipal government requires that the state-funded medical centers be banned from raising fees for non-insurance treatments and funeral services.

Busan Medical Center is known for charging 50 percent lower expenses than regular profit-seeking ones, serving low-income people with modest backgrounds.

To make things worse, state-funded hospitals usually offer services that most private hospitals shun in pursuit of higher profits.

Cheong Ju Medical Center in North Chungcheong has more than 200 beds for the intellectually disabled, while Gangjin Medical Center in South Jeolla operates a 24-hour childbearing center that caters to pregnant women living across the provincial region.

In line with the public-oriented services, the Incheon Medical Center offers free treatments for North Korean defectors and migrants of different nationalities.

The Jinju Medical Center, a 102-year-old facility at the heart of the controversy, serves patients without family members as well as others with social disadvantages, including the disabled and terminally ill people.

The dismal profit margins of the facilities tend to turn away up-and-coming doctors with their lower salaries than private ones.

The provincial government-run-medical centers at Samcheok and Yongwol, both in Gangwon, pay on average 50 million won less annually in total payrolls than private hospitals, while the turnover rate at Cheonan Medical Center in South Chungcheong is estimated at 25 percent.

Despite the lax management blamed for causing huge losses, others still find value in the medical facilities.

“If one applies the supply-and-demand rule to the hospital, shutting it down might look like the answer,” said Kim Gi-nam, head of a department overseeing the public health service at the Ministry of Health and Welfare.

“But we need to take into consideration its function of mainly serving low-income people,” he said.

By Shin Sung-sik, Park Eun-jee [ejpark@joongang.co.kr]