Jeju's for-profit hospital wins legal victory

Greenland International Hospital in Seogwipo, Jeju Island [JDC]

A local court ruled against the Jeju government’s decision to prohibit a Chinese operator from treating domestic patients at its for-profit hospital on the southern tourist island, saying the ban was “baseless.”

The verdict by the Jeju District Court on Tuesday marks another win for Greenland Jeju Healthcare Town, a subsidiary of Shanghai-based real estate developer Greenland Group and operator of Greenland International Hospital in Seogwipo, Jeju Island. The Chinese operator has been at odds with the Jeju provincial government for years over plans to run Korea’s first for-profit hospital.

All hospitals in Korea are run by nonprofit corporations that reinvest profits back into the hospitals. A for-profit hospital, on the other hand, is investor-owned, meaning its main goal is to make money for its shareholders.

By law, the only places in Korea that can host for-profit hospitals are Jeju Island and free economic zones such as Incheon. But no foreign investor has established a for-profit hospital except for Greenland Jeju Healthcare Town, due to fierce resistance from local civic groups, who fear such hospitals will undermine the country’s public health care system and inflate medical bills.

Greenland Jeju Healthcare Town invested 77.8 billion won ($64 million) and completed building Greenland International Hospital in July 2017 after receiving approval for its business proposal from Korea’s Ministry of Health and Welfare in December 2015.

The next step was to receive a business license from the Jeju government. But wary about local opposition, the Jeju government granted only a conditional business permit in December 2018, allowing the hospital to treat only foreign patients. The Chinese developer pushed back and refused to open the hospital unless it was allowed to treat local patients as well.

In April 2019, the Jeju government revoked the conditional business permit on grounds that Greenland Jeju Healthcare Town did not obey Korean law, which states that all medical institutions must begin operation within 90 days of receiving a business license.

Greenland Jeju Healthcare Town took the case to court, marking the beginning of a long legal battle. During that time, it sold nearly 75 percent of its shares to a Korean company.

In January, the Supreme Court ruled in favor of the Chinese developer and said the Jeju government had no right to revoke Greenland Jeju Healthcare Town’s business permit. The Jeju District Court followed up Tuesday with the decision that the Jeju government cannot ban the hospital from accepting local patients.

Jeju officials told the local press this week that they were “baffled” by Tuesday’s court decision and thought the decision would be in its favor because most of the hospital's shares have been handed over to a Korean company. Under Jeju law, a for-profit hospital must have more than half of its shares owned by foreign investors to operate on the island.

The Jeju government said it would review Tuesday’s verdict and discuss with its legal team whether to appeal.

How Greenland Jeju Healthcare Town will react remains to be seen, but if past comments offer any hints, the Chinese developer said several times that it was willing to open the hospital if it receives permission to treat local patients.

BY LEE SUNG-EUN, RHEE ESTHER [lee.sungeun@joongang.co.kr]