Ministry cancels hospital on Jeju

Social Affairs

Published: 16 Sep. 2014, 21:25

Ministry cancels hospital on Jeju

The Ministry of Health and Welfare has decided to cancel the establishment of Shaner Hospital, which could have been the nation’s first for-profit hospital, calling into question its management and operating capabilities.

China Stem Cell (CSC), the Korean subsidiary of the China-based Tianjin Huaye Group, has been seeking the government’s approval for the hospital, which was slated to be built on Jeju Island, since 2013.

The endorsement of the medical center was largely viewed as a way to boost the medical industry.

Health and Welfare Minister Moon Hyung-pyo was set to approve the hospital’s establishment this month, but now faces criticism that he was blinded by the possibility of a lucrative investment and did not adequately examine Tianjin Huaye Group, CSC’s parent company.

“We rejected the plan after reviewing an investigation in China by the Ministry of Foreign Affairs as well as CSC’s business plan and its complementary plan,” Choi Seong-rak, the ministry’s director general for health care policy, said on Monday.

Choi further stated that Tianjin Huaye Group was deemed to be an incompetent investor, that the planned hospital lacked an appropriate emergency medical system and that it would be difficult for authorities to monitor illegal stem cell treatments.

The ministry explained that its decision was also influenced by the arrest of Tianjin Huaye Group’s CEO Zhai Jiahua over business-related accusations as well as uncertainties concerning its financial status.

“When we asked about the business conditions at Tianjin Huaye through the Foreign Affairs Ministry, we were told that its claim-obligation relationship was complicated,” Choi said. “We judged that the mother company wouldn’t be able to steadily finance the hospital.”

CSC first requested approval for the hospital’s construction in February last year, but the decision was suspended because the plans lacked an emergency medical system and relevant oversight on stem cell technology, which would have been part of the center’s focus.

In October, CSC managed to sign a memorandum of understanding regarding emergency medical services with a general hospital and removed stem cell treatment from its complementary plan.

But the ministry explained on Monday that the general hospital canceled the MOU earlier this month and that the Jeju provincial government did not come up with regulations to monitor stem cell therapies.

The Ministry of Health and Welfare has since faced criticism for its belated decision, particularly because it was tipped off twice about Tianjin Huaye’s suspect financial and management situation.

The authority originally requested that the Korean Embassy in China investigate the parent company in June to address those concerns. However, the embassy responded later that it could not comply because the situation was deemed a private matter.

BY KIM BONG-MOON [bongmoon@joongang.co.kr]