6 hospitals to be probed for kickbacks

The Seoul Central District Prosecutors’ Office is set to launch an investigation into six major university hospitals on suspicion of pocketing kickbacks allegedly offered by drug companies in exchange for the hospitals using their products.

The plan is part of the government’s wider efforts to curb the illegal marketing scheme entrenched in the medical industry that benefits doctors but doesn’t necessarily benefit the health of patients.

The six hospitals are: Yonsei University’s Severance Hospital, Catholic University of Korea’s St. Mary’s Hospital, Wonkwang University Hospital, Konkuk University Medical Center, Daegu Catholic University Medical Center and Korea University Anam Hospital.

Among them, Yonsei’s Severance Hospital is thought to have received the largest amount in kickbacks of 36 billion won ($32 million), followed by St. Mary’s Hospital. The other university-affiliated hospitals allegedly received at least 400 million won.

The Ministry of Health and Welfare asked the legal authority to look into the case to determine whether the hospitals can be held legally responsible.

According to the ministry and Health Insurance Review and Assessment Service, the hospitals and pharmaceutical firms made deals through wholesale stores in an attempt to elude regulations.

The wholesale stores alledgedly hand over cash incentives to the hospitals in “donation form,” while drug companies fabricate transaction records. The probe is most likely to be conducted by a special investigation organization specializing in illegal marketing tactics in the medical field.

But a source familiar with the matter didn’t rule out the possibility of district legal offices handling their own cases.

“The kickback money was given in the form of donations, so we are looking into it whether it’s punishable or not,” said a source at the Central District Prosecutors’ Office. “We need to apply a certain standard to get the investigation going.”

The named medical centers said their actions are not in violation of the law.

“We hired a lawyer to look into the matter, and the lawyer said we didn’t do anything that violates the law,” said a hospital worker at the Severance Hospital who wished to remain anonymous. “The donated money coming from the hospital was used to fund scholarship and building university facilities, which doesn’t breach any regulations.”

Under the law, doctors cannot take money from drug companies, but many drug companies are known to give doctors cash as well as perks, such as lavish free lunches and golf outings.

By Shim Sae-rom, Park Eun-jee [ejpark@joongang.co.kr]